The Prohibition of the Proposed Springer-ProSiebenSat.1-Merger: How much Economics in German Merger Control?

Springer-ProSiebenSat.1-Merger

tellamt 2006: 55) but, instead, whether such a strategy is profitable at the expense of
consumers or because of better matching the consumer preferences. If consumers
have a preference for a coherent journalistic offer across different media, then the
profitability of cross-promotion goes along with increased consumer welfare and,
thus, represents an efficient outcome. On the other hand, consumers might well value
diversity of journalistic content. It seems probable to assume that both kinds of pref-
erences are distributed among the consumers. However, if a coherent cross-media
journalistic offer is missing pre-merger and independent journalistic offers both in TV
and in newspapers still exist post-merger, then an improved matching of consumer
preferences can be concluded. Since the TV audience market is characterised by four
independent oligopolists with comparable markets shares plus several fringe competi-
tors (see fig. 1 in section 2.1), the crucial market is the newspapers reader market.
According to the market definition of the Bundeskartellamt, over-the-counter news-
papers and subscription newspapers represent distinguishable, separate markets. If
this is an adequate market delineation, worries about a decreasing match of diversity
preferences might be justified. However, some authors criticise this market definition
and emphasise that over-the-counter and subscription newspapers represent substi-
tutes to a sufficient degree.²¹

Altogether, possible beneficial effects of cross-promotion are neglected by the
Bundeskartellamt. Instead, a form-based argumentation - which might stand in line
with the hitherto (pre-more-economic approach) practice of assessing ‘strengthening
dominant positions’ - is applied, and the mere prospect that BILD could improve its
performance post-merger by a rather indirect (content) bundling strategy is assessed
to be an anticompetitive strengthening of its dominant position - without balancing
positive and negative welfare effects. A deeper theoretical and empirical analysis
might or might have not eventually supported the assessment of the competition
agency. In any case, the assessment would have been rooted more thoroughly in eco-
nomic reasoning.

3.2.3 Cross-media Advertising Campaigns

The Bundeskartellamt (2006: 62-66) pictures the scenario that the new conglomerate
could profitably offer integrated advertising campaigns to third parties that comprise
a coordinated media mix of TV and print media. It holds that the AS-P7S1-merger
would allow providing advertisers with a unique cross-media bundle and expects two
types of anticompetitive effects from this: (a) the dominant position of AS (BILD) in
the newspaper advertising market would be strengthened and (b) the collective domi-
nance of the P7S1-RTLGroup-duopoly on the TV advertising market would be
strengthened. Different from the previous sections, cross-media advertising cam-
paigns relate to advertising companies as customers instead of consumers as in the
newspaper readers market.

See e.g. Wessely (1995: 140-160); Dewenter/Kaiser (2005); Sdcker (2005); von Wallenberg (2007).

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