The Commission for the Protection of Competition imposed a total of CYP 535.000 in fines on LTV Public Co. Ltd., Multichoice Holdings (Cyprus) Ltd (MCC) and the Dutch NetMed for violation of its competition rules.
CPC Chairman George Christofides told reporters that the fine on LTV will amount to CYP 275.000, on MCC the fine will amount to CYP 130.000 and on NetMed NV, also CYP 130.000.
The CPC called on all companies to immediately comply with its order and to stop uncompetitive business practices that violate the CPC charter.
LTV dominates the pay-TV market in Cyprus with some 60,000 subscribers, and until now, it had an exclusive distribution deal with MCC, which it now wishes to break in order to offer its content to miVision, the digital platform of CYTA.
The CPC ruled that the exclusive distribution agreement that LTV has signed with MCC from June 21, 2004 and another agreement with MCC majority shareholder NetMed from June 23, 2000, which prohibits LTV from entering into any commercial agreements with any other competing channel distribution platforms, are in violation of Article 4(1) of the Competition Law and are null and void
The CPC also decided that a clause in the Shareholders Agreement between LTV and NetMed violates Competition Law, given its duration and the range of sectors it covers. According to the CPC, this clause gives a competitive advantage to MCC against competitors and prohibits potential competition.
The two companies were at fault for the exclusive distribution of LTV content and due to the “long duration” of their agreement.
Though the development might have come as a relief to LTV executives, the subscriber channel will not get all it wants, as it was slapped with the heaviest fine by the CPC.
Takeover to proceed
With the CPC declaring the deal as uncompetitive, it now paves the way for LTV to acquire a controlling stake in MCC through its public tender offer, which was accepted by 27% of MCC shareholders by end of May.
The preliminary agreement provided that LTV and Alfa would remain on Multichoice’s satellite platform until 2010, while at the same time LTV and Alfa would supply their content to miVision.
Once all the pending issues are resolved, then LTV and CYTA will sign their content agreement deal, which will net LTV in excess of CYP 300 mln in revenue over the next 15-years.
But this arrangement itself is under the scrutiny of the competition watchdog, after private telecom providers complained of the creation of a super cartel in the market.
PrimeTel and OTEnet, which are spearheading the campaign to block the LTV-miVision deal insist that they will only pull back if LTV gives them the same content that it is providing to miVision at the same cost and on the same terms.
PrimeTel and OTEnet believe that if LTV is forced to provide them with local football and other programming content, then they will be able to compete head on with CYTA.
The crux revolves around the switch over to digital television in 2012. Any company wishing to offer pay-TV will need to either go digital – meaning they’re dependent on CYTA’s infrastructure and grip on the market – or they’ll have to settle for the more conventional satellite transmission, which supports a limited number of channels by comparison.
Meanwhile, Multichoice has taken legal action against LTV for breach of contract, saying that they have been left out in the cold with the CYTA deal. LTV counters it is not bound to its partner.
