Court Blocks Liberty Global's German Cable Merger

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Malone's Liberty Global bought Kabel BW for $4.5 billion in 2011.

The country's cartel office had approved the deal, which would see John Malone's company create a local cable giant.

COLOGNE, Germany – A German court has blocked the planned merger of Unitymedia and KabelBW, two cable TV companies controlled by John Malone's Liberty Global, overturning a decision by the country's anti-trust authorities.

The appellate court in Dusseldorf found in favor of competitors Deutsche Telekom and Netcologne, which filed a complaint following the merger last year.

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The court said the conditions placed on the deal by Germany's cartel office weren't sufficient to prevent Unitymedia and Kabel BW from having a dominant market position if they merged. The two cable groups currently operate regionally in Germany and do not compete with one another. The court, however, said that without a merger, that would likely have changed over the next few years.

Unitymedia has said it will appeal the ruling at federal court. If the decision is upheld, Liberty will have to decide whether to proceed with the merger under new, more restrictive conditions, or to drop the deal altogether. Malone's cable conglomerate bought Kabel BW in 2011 for just under $4.5 billion and pushed through the merger with Unitymedia last year. Germany's cartel office approved the deal with conditions that required, for example, that Unitymedia give up exclusive rights to contracts from large customers.

The ruling could have wider implications for the German cable market. Vodafone's $10.2 billion bid to take over Germany's leading cable TV group, Kabel Deutschland, still has to pass muster with regulators and the courts.