Ericsson’s Red Bee deal referred to Competition Commission

Ericsson announced in July that it had struck a deal to acquire playout and media services firm Red Bee from private equity firm Macquarie Advanced Investment Partners for an undisclosed sum.

The proposed deal, which followed Ericsson’s acquisition of Technicolor’s Broadcast Services Division for £15.9m last year, would significantly boost Ericsson’s presence in the UK playout sector.

In the UK, Ericsson counts ITV among its playout clients, while Red Bee looks after playout for the likes of BBC, Channel 4, UKTV and BT Sport.  

The deal has been referred to the Competition Commission by the Office of Fair Trading (OFT).

OFT chief executive and decision maker in the Ericsson/Red Bee case Clive Maxwell said:

“Not only is there the possibility of price rises as a result of the merger, there is a risk the most complex channels will suffer a reduction in quality in their service levels.”

The OFT revealed that some broadcasters and competitors had complained about the merger and the loss of choice it would entail.

And it said any threat by broadcasters to take playout services back in-house would not be sufficient to prevent prices from rising in the short to medium term.

Ericsson and Red Bee offered “behavioural remedies” in response to the OFT’s concerns, but the OFT said they fell short of offering a clear solution to concerns around competition.

The Competition Commission is expected to report on the case by 16 March.