Merger Controls First Edition - J Sagar Associates

Szecskay Attorneys at Law Hungary
undertakings was above 25% (taking into account the number of pharmacies). The HCO grouped such towns into 7
regions, with respect to the fact that pharmacies of a bigger town often substitute pharmacies of neighbouring smaller
towns. (According to the HCO however, these regions are not necessarily geographical markets.) The analysis showed
in each region that the applicant’s group of undertakings either does not profit from, or is unable to close, the downstream
market by refusal to trade with independent pharmacies. Therefore, the HCO did not identify any threat to competition
on the upstream market.
The HCO also examined whether refusal to trade on the downstream market would be a potential result of the concentration,
i.e. whether the pharmacies acquired by the applicant could deny purchasing medicine from the competitors of the applicant.
It has been established that due to existing vertical integrations and vertical agreements between wholesalers and
pharmacies, the downstream market is already closed to a medium extent. However, the HCO concluded that the
pharmacies to be obtained by the applicant would not be able to refuse purchasing from competitors from the applicant.
CONCENTRATIONS IN THE TELECOMMUNICATIONS MARKET
Another case requiring a more elaborate market definition and a careful consideration of effects on competition was the purchase
of FiberNet Hungary Kft. by Magyar Telecom B.V., the owner of Invitel. (Magyar Telecom B.V. should not be confused with
Magyar Telekom Nyrt., a subsidiary of Deutsche Telekom AG.) As the concentration concerning telecommunications
companies consisted of two simultaneous transactions, the HCO therefore also issued two resolutions (Vj-117/2010 and Vj-
118/2010). The first transaction was the sale of FiberNet Hungary Kft. to Magyar Telecom B.V.; and the simultaneous
transaction was the sale (divestiture) of certain cable networks and related customer contracts of FiberNet’s subsidiaries (the
“Assets”) to UPC Magyarország Kft. The sale of the assets was an autonomous decision of the parties to the first transaction
to remove obvious barriers of clearance to the purchase of FiberNet. Due to the obvious factual connection between the two
transactions, the content and method of the two clearances issued by the HCO were also similar.
The HCO determined that the relevant product markets can be divided into two bigger groups, namely retail services and
wholesale/infrastructural services.
The following relevant product markets have been identified in the retail sphere:
• access provision services in connection with the retail wire-based voice transmission services;
• the call transmission segment of the retail wire-based voice transmission services market;
• the retail broadband internet market;
• telephone access and call services to business customers and business internet access and data transfer solutions;
and
• television programme signal distribution services ensuring multi-channel access.
The HCO mentioned that while mobile networks may be providing substituting solutions, it decided not to use broader
market definitions since no competition problems arise even in the narrower markets.
Several relevant geographic markets were identified on the retail market, taking into account which parties or competitors
are present at a given location, and by what means of transmission (e.g. cable, PSTN, WiFi).
The following relevant product markets have been identified in the retail sphere:
• call origination, call termination and transit services on fixed location telephone networks;
• access to fixed location physical infrastructure;
• wholesale broadband access;
• leased-line trunk segment and leased-line termination services;
• dark fibre lease services; and
• underground structure lease/cable location lease.
As regards the retail market of broadband internet services, the HCO took the position that competition is harmfully affected
in small towns/villages, where two different service infrastructures would be owned by the same group of undertakings as a
result of the concentration. The HCO rejected the applicant’s arguments that new service providers could profitably enter
the market either by providing satellite services or by leasing infrastructure from the competitor. The applicant made
behavioural commitments, which became part of the resolution on clearance. At one location, the applicant undertook to
terminate its exclusive agreement with a local infrastructure provider, whereas at two other locations, the applicant undertook
to provide services for three years at the best prices and quality available in its own Invitel network countrywide.
A similar market definition and approach was followed in connection with the related sale of the Assets to UPC
Magyarország Kft. In this latter case, in spite of the diligent review of the details, the HCO did not find any competition
concerns, so it was cleared without prescribing any obligations, conditions or commitments.
HORIZONTAL CONCENTRATIONS IN THE CEMENT MARKET
Finally, in the Holcim/Východoslovenské stavebné hmoty (Vj-153/2009) concentration, the HCO principally examined
the coordinative effects of the concentration, namely, whether the disappearance of a competitor may bring about a tacit
concerted practice between the remaining two competitors. Holcim and Východoslovenské stavebné hmoty (“VSH”)
were both manufacturers and sellers of cement (used for concrete), having a total 35-55% market share. There is one
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