The European Commission has approved unconditionally, under the EU Merger Regulation, the proposed acquisition of MGM Holdings Inc. (‘MGM’) by Amazon.com Inc (‘Amazon’). The Commission concluded that the transaction would raise no competition concerns in the European Economic Area (‘EEA’).
Amazon operates a range of businesses including retail, consumer electronics and technology services, as well as the (co-)production and retail supply of own and third-party audio-visual (‘AV’) content through Prime Video. MGM is an entertainment company, which produces and distributes AV content.
The Commission’s investigation
Based on its market investigation, the Commission found that the transaction, as notified, would not significantly reduce competition in the markets for (i) the production and supply of AV content, (ii) the wholesale supply of TV channels, (iii) the retail supply of AV services, (iv) the production and licensing of distribution rights to third-party distributors of films for theatrical release and (v) the provision of marketplace services. These markets are found to be likely national in scope.
During its investigation, the Commission examined:
- The horizontal overlaps between the activities of Amazon and MGM in the AV content value chain. The Commission found that the overlaps between Amazon and MGM are limited. The parties are primarily active in different parts of the AV content value chain and where both parties are active, their combined market shares are low.
- The vertical links between the activities of Amazon and MGM in the AV content value chain. The Commission found that (i) MGM’s upstream activities as a producer and licensor of AV content are limited compared to other market players’ activities, (ii) MGM’s content cannot be considered as must-have and (iii) a wide variety of alternative content exists. Even in the national markets where Amazon has a sizeable market presence among video streaming platforms, the Commission found that Amazon faces strong competition from other players.
- The vertical link between the activities of Amazon and MGM in the upstream market for the production and licensing of films for theatrical release and the downstream market for the theatrical exhibition of films. The Commission found that MGM’s films represent only a limited share of box office revenues in the EEA and that overall MGM is not among the top production studios, despite its rights over successful film franchises such as James Bond.
- The conglomerate links regarding MGM’s content and Amazon’s existing bundle of AV retail and marketplace service products. The Commission concluded that the addition of MGM’s content into Amazon’s Prime Video offer would not have a significant impact on Amazon’s position as provider of marketplace services.
The Commission therefore concluded that the proposed transaction would raise no competition concerns on any of the markets examined in the EEA and cleared the case unconditionally.
Companies and products
Amazon is a US based multinational company which operates a range of businesses including retail, entertainment, consumer electronics and technology services. Amazon is active in the (co-)production of AV content through Amazon Studios, which is available alongside third-party content on Amazon’s home entertainment offering, Prime Video, available to consumers in the EEA and globally.
MGM is a US based company which is active in the production and distribution of AV content in the EEA and globally. MGM also offers a wholesale channel, MGM+, in a number of EEA jurisdictions via retail distributors Prime Video, Zattoo, and Mediaset.
Merger control and procedure
The transaction was notified to the Commission on 8 February 2022 pursuant to Article 4 of Council Regulation (EC) No 139/2004.
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).