The Administrative Council for Economic Defence (CADE), the country’s business regulator, is concerned about the effects of the merger on the media market.
AT&T owns Sky, a Brazilian pay-TV company, and CADE fears that it would get more favourable deals from Time Warner than other pay-TV competitors. Brazil’s telecoms regulator, Anatel, was waiting for CADE’s decision before expressing its opinion.
“Both Sky and Time Warner have considerable market power. The transaction would create incentives for market foreclosure in the licensing/programming market and in the pay TV market, causing competition concerns,” said CADE’s general superintendence in a report to the regulator’s administrative tribunal last night.
The report warns: “The structure resulting from the transaction would allow Time Warner to access sensitive information on all of its competitors through Sky. In the same way, AT&T would have access to the conditions negotiated by its rivals through Time Warner. In addition, the merged entity would have the ability and incentives to adopt several discriminative measures against its competitors in both markets, weakening the competition environment.”
The report will go to the administrative tribunal for a final decision, but the general superintendence says: “The transaction should not be approved in the form that it was presented.”
It adds: “The tribunal will decide to either approve or disapprove the merger. The tribunal can also approve it with conditions, imposing remedies that eliminate competition issues identified, or sign a Merger Control Agreement … with the parties, aiming at a negotiated solution that address the identified concerns.”
Meanwhile Mexico’s telecoms regulator and its markets regulator have both approved the pending acquisition, AT&T announced last night.
David McAtee, senior executive vice president and general counsel at AT&T, welcomed the decision by Mexico’s Instituto Federal de Telecomunicaciones (IFT) and the Comisión Federal de Competencia Económica (COFECE).
“We appreciate the work of both COFECE and IFT to review, analyse and approve the AT&T-Time Warner merger on its merits,” he said. “The merger of our two companies will bring together the world’s best premium content with the networks to deliver that content to every screen, however customers want it.”
AT&T and Time Warner are also talking to US authorities, including the Justice Department, headed by Attorney General Jeff Sessions. During last year’s election campaign President Donald Trump expressed opposition to the deal, warning it would concentrate media power.
The deal was announced in October 2016, and AT&T and Time Warner said yesterday they “continue to expect to close the deal by year-end 2017”.
However in Brazil CADE said: “The merger was filed on 28 March 2017 and CADE is legally due to issue a final decision within 240 days.” That gives a deadline of 23 November. However CADE says the deadline “could be extended for 90 more days”, which would be in late February 2018.
