However, the communications minister has now linked the merger to landline regulation.
The Antitrust Authority has approved the merger between Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) and DBS Satellite Services (1998) Ltd. (YES), ending a saga that has been dragging on since the mid-2000s. The two companies will be able to begin taking steps towards a full merger. This is a process that is expected to be particularly complicated, due to the contingency set by Minister of Communications Gilad Erdan between the merger and regulation of the landline market. Nonetheless, it is clear that the main hurdle that the merger faced is gone, because, for over the years, it was the Antitrust Authority that opposed, and the Ministry of Communications that supported the merger.
In 2006, the regulator objected to Bezeq increasing its holding in Yes and crossing the 50% mark. Bezeq appealed the decision in the Antitrust tribunal, which backed Bezeq and ruled that the merger should be approved, subject to terms. However, in a petition by the Antitrust Authority to the Supreme Court, the court ruled in favor of the regulator, and said that the merger posed a reasonable risk of significant damage to competition, and the merger was prohibited.
In 2009, Eurocom Group asked to buy a controlling stake in Bezeq. Because Eurocom owned 32% of Yes, a situation arose in which the controlling shareholder in Bezeq (Eurocom) was also the controlling shareholder in Yes. For this reason, one of the conditions for the merger between Eurocom and Bezeq to be approved was for Eurocom to sell its stake in Yes. Eurocoms shares in Yes were transferred to a trustee until the fulfillment of the condition of the sale of the shares. The details and dates of the requirement to sell were sealed by the Antitrust tribunal.
The Antitrust Authority recently reopened the matter, in light of Eurocoms request. The investigation revealed that since the decision to object to the merger between Bezeq and Yes, many changes have taken place in the communications market. For instance, in recent years, there have been technological improvements in Bezeqs internet infrastructure, as well as in online broadcasting, today allowing today, more than previously, live TV to be broadcast online. On the surface, it seems that this makes it easier for potential competitors to enter the international television market. Furthermore, it seems that today there are a number of potential competitors who could enter this market. The conditions of the merger are intended to prevent the merged company from making it difficult for parties to enter the television broadcast market using internet infrastructure.
Published by Globes [online], Israel business news – www.globes-online.com – on March 26, 2014
Copyright of Globes Publisher Itonut (1983) Ltd. 2014
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