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Cisco / Tandberg video-conferencing merger cleared by the European Commission at Phase I

On 29 March 2010 the European Commission approved, subject to remedies, the acquisition of Tandberg, one of the leading players in the market for video-conferencing solutions, by Cisco. The Commission's investigation focused on whether the transaction would give rise to horizontal concerns in the market for video-conferencing products. The Commission found that high-end video-conferencing systems for dedicated rooms (typically involving three screens) should be regarded as a separate market and that the merger would combine two leading firms in a market so defined. The Commission however concluded that, especially because video-conferencing is a fast growing area, the threat of entry would eliminate any potential anti-competitive effects of the merger in this market - provided the merger was accompanied by a remedy which would ensure that the products of new entrants could interoperate with the products offered by the merging firms. To this end, Cisco agreed to divest to an independent industry body a communications protocol the company had developed for interoperability between three-screen video-conferencing systems.

The Commission also considered possible vertical concerns arising from Tandberg's position as a supplier of an input - multi-point control units (MCUs) - used in many video-conferencing sessions involving three or more parties. The Commission dismissed the vertical foreclosure concerns and concluded that sufficient competition exists in the market for MCUs to ensure that the transaction would not have a significant impact on the market.

The Commission also investigated possible conglomerate concerns arising from Cisco's position in other network products. The Commission dismissed the conglomerate concerns on the grounds that the products in neighbouring markets are rarely purchased together with video-conferencing equipment and there is little scope for Cisco to engage in any kind of anti-competitive pure or mixed bundling strategy post-merger.

A CRA team including Bob Stillman, Hristina Dantcheva, Andy Parkinson and Tom Traill assisted the parties throughout the EC investigation.

For more information, see EC Press Release.

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