2001/718/EC: Commission Decision of 11 October 2000 declaring a concentration to be compatible with the common market and the EEA Agreement (Case No COMP/M.1845 — AOL/Time Warner) (Text with EEA relevance) (notified under document number C(2000) 3009)
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The concentration by which America Online Inc., will merge with Time Warner Inc., within the meaning of Article 3(1)(a) of Regulation (EEC) No 4064/89 is, subject to full compliance with the final proposal for undertakings submitted by the parties and set out in the Annex, compatible with the common market and the functioning of the EEA Agreement.
This Decision is addressed to: America Online, Inc. 22000 AOL Way Dulles VA 20166-9323 United States of America Fax:001-703 265 3992 Time Warner Inc. 75 Rockefeller Plaza New York NY 10019 United States of America Fax: 001-212 586 9812 Done at Brussels, 11 October 2000. For the Commission Mario Monti Member of the Commission (1) OJ L 395, 30.12.1989, p. 1; corrected version in OJ L 257, 21.9.1990, p. 13. (2) OJ L 180, 9.7.1997, p. 1. (3) OJ C 283, 9.10.2001. (4) AOL's press release announcing its fourth-quarter of 2000 financial results. (5) Parts of this text have been edited to ensure that confidential information is not disclosed; those parts are enclosed in brackets and marked with an asterisk. (6) These services allow users to keep track of their friends and colleagues on-line, send instant messages and conduct real time chats with other users. Instant messaging is much quicker than e-mail, and unlike e-mail enables the user to know if the other user is on-line and allows instant conversation. (7) Time Warner owns 74,49 % of Time Warner Entertainment Company, LP (Time WarnerE). The remaining 25,51 % of Time WarnerE is owned by MediaOne Limited Partner, whose parent company has agreed to merge with AT& T Corp. (8) Examples of companies selling downloads over the Internet are CDnow/and Musicmaker. (9) Music publishing consists, inter alia, of the acquisition of rights to musical works and their subsequent exploitation upon remuneration, mostly in the form of a commission charged by the publisher to the author on the revenues generated by the commercial exploitation of musical works. "Self-publishing" takes place when an author promotes, licenses and administers his own works without the help of a professional publisher. (10) According to an article entitled "MP3", by Glyn Moody, in New Scientist of 19 June 1999, Winamp, with 160000 downloads per day, dominates the music player field. (11) Commission Decision: Case IV/M.1439, Telia/Telenor. (12) Commission Decision: Case COMP/M. 1838, BT/Esat. (13) Commission Decision in Case JV 1. (14) See Commission Decision 1999/242/EC in Case IV/36.237 - TPS (OJ L 90, 2.4.1999, p. 6) point 43. (15) Mechanical rights are those necessary for the licensing of the reproduction of protected musical works by mechanical means, such as CDs and MDs to a record company. Performance rights are those necessary for the licensing of the public performance of protected musical works to commercial users such as television, radio, cable and satellite stations, concert organisers, discos, hotels, restaurants, etc. Both rights must be licensed for the on-line exploitation of musical works over the Internet. (16) A publisher controlling the publishing rights in one particular EEA country would be able to control the exploitation on-line of the corresponding musical works, at least, in that country. (17) Commission Decision 71/224/EC, Case IV/26.760 - GEMA (OJ L 134, 20.6.1971, p. 15). (18) Commission Decision 72/268/EC, Case IV/26.760 - GEMA (OJ L 166, 24.7.1972, p. 22). (19) Unique visitors means estimated number of different individuals who access a specific site among the total number of projected individuals. (20) According to Media Matrix. (21) See "The Internet - the rough guide 2000", by Angus J. Kennedy, p. 41. (22) See "Setbacks cast doubts on 'free' Net access", by Chris Ayres, in The Times of 20 July 2000. (23) Report by Jupiter Communication, "Competitive landscapes, UK market - Fourth Quarter 2000". (24) European Audiovisual Observatory Statistical Yearbook 1998, p. 92. (25) It is to be borne in mind that Time Warner's market share, both for mechanical and performing rights, is in no Member State higher than (15 % to 30 %).
COMMITMENT UNDER ARTICLE 8(2) OF REGULATION (EEC) No 4064/89 In connection with the merger of America Online, Inc., (AOL) and Time Warner Inc., (Time Warner), AOL and Time Warner make the following undertakings pursuant to Article 8(2) of the Merger Regulation and subject to the Commission finding that the merger of AOL and Time Warner is compatible with the common market pursuant to Article 8(2) of the Merger Regulation: 1. AOL Europe share issuance to dilute Bertelsmann. Pursuant to AOL's rights under the Put/Call Agreement with Bertelsmann AG (Bertelsmann) dated 16 March 2000, within three months of the adoption of the Commission decision and unless Bertelsmann first sells its stake in AOL Europe, SA (AOL Europe), AOL will cause AOL Europe to issue shares equal to 1 % of all of AOL Europe stock issued and outstanding following such issuance, to an investor who is not controlled by or affiliated with Bertelsmann AG. 2. Interim Measures until Bertelsmann exits from AOL Europe and AOL CompuServe France. Subject to the completion of its merger with Time Warner, AOL and Time Warner agree that until such time as Bertelsmann AG exits from AOL Europe and AOL CompuServe France SAS, (i) AOL Time Warner will not take any action that will result in Bertelsmann music being available on-line exclusively through AOL or being formatted in a proprietary format that is playable exclusively on an AOL music player, (ii) in the event that AOL should seek to appoint a new CEO to AOL Europe or one of its affiliates, such CEO will not be affiliated with Bertelsmann, (iii) AOL Time Warner will not require Bertelsmann to exclusively promote AOL's ISP services, and (iv) AOL will take all necessary action to ensure that Bertelsmann does not exercise decisive influence or negative control of either AOL Europe or AOL CompuServe France SAS within the meaning of the EC Merger Regulation. 3. (AOL and Bertelsmann have put in place a mechanism by which Bertelsmann will progressively exit from AOL Europe and the French joint venture AOL CompuServe.)* 4. Changes to Bertelsmann Marketing Agreement. Pursuant to the Interactive Services and Marketing Agreement among AOL, AOL Europe and Bertelsmann dated 16 March 2000 (Marketing Agreement) and upon completion of the AOL Time Warner merger, AOL undertakes that: (a) in order to permit Bertelsmann to promote any third party ISP, upon completion of the AOL Time Warner merger, AOL will inform Bertelsmann that it will not enforce section B.2.3 of Exhibit B of the Marketing Agreement which currently prevents Bertelsmann from promoting a third party ISP if the subscriber targets discussed in that section of the Agreement are not met; (b) AOL will inform Bertelsmann that it will not exercise the right under section C.1 of Exhibit B of the Marketing Agreement to reformat Bertelsmann content to make it compatible with AOL's media player in a manner that would promote or favor a format that is not available by license to third parties on fair and non-discriminatory terms. 5. Independent compliance monitor provision. Not later than two weeks after the Commission has adopted the decision authorising the AOL Time Warner merger, AOL Time Warner shall propose the names of three independent and experienced individuals to serve as an independent compliance monitor and the Commission shall select one of the proposed names to serve as independent compliance monitor. The proposal will fully document and justify the independence and experience of the nominees. The Commission will reject all three names only if none of them has the requisite independence and experience, and in the event that the Commission rejects all three names, the Commission will select an independent and experienced individual as an independent compliance monitor. AOL Time Warner will appoint the independent compliance monitor within five working days after the Commission's approval and submit a copy of the signed agreement with the independent compliance monitor which shall include a written mandate of his duties and responsibilities. (a) The mandate will describe the tasks of the independent compliance monitor, the conditions for the replacement of the independent compliance monitor, the discharge of the independent compliance monitor, the reporting obligations and the remuneration. The mandate will have to be approved by the Commission. The parties shall amend the draft if the Commission so requests and will change the mandate upon a reasoned request from the Commission or the independent compliance monitor if the terms of the mandate do not allow the independent compliance monitor to properly exert his functions to monitor compliance with paragraphs 1, 2, 3 and 4 of the undertakings above (the Bertlesmann undertakings). (b) The independent compliance monitor shall serve until such time as Bertelsmann exits from AOL Europe and AOL CompuServe France SAS and shall ensure compliance by AOL Time Warner with the Bertlesmann Undertakings. (c) The independent compliance monitor will take all measures reasonably necessary to ensure that the Bertlesmann Undertakings are respected by AOL Time Warner, and AOL Time Warner will take all reasonable measures ordered by the independent compliance monitor necessary to comply with the Bertlesmann undertakings, within the time period set by him. AOL Time Warner shall also provide the independent compliance monitor with all such assistance and information as the independent compliance monitor may reasonably require. (d) The independent compliance monitor will provide, every six months, written reports in English to the Commission on the progress of the discharge of its mandate, identifying any respect in which he has been unable to discharge its mandate. AOL Time Warner will receive simultaneously a non-confidential copy of such reports. The independent compliance monitor will at any time provide to the Commission, at its request, a written or oral report on matters falling within the independent compliance monitor's mandate. AOL Time Warner will receive simultaneously a non-confidential copy of such reports.
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