Takeaways
- Disney and 21st Century Fox are a step closer to completing Disney’s bid for certain Fox assets after Mexico’s primary competition enforcer approved the deal last week. However, the pending transaction remains under scrutiny by Mexico’s telecom and media market regulator. The Federal Telecommunications Institute, or IFT, is conducting the more consequential review of the pending merger in Mexico.
- Similar to Brazil’s antitrust authority, the IFT is likely focusing its review on the merger’s potential effects on the market for pay-TV sports channels. Disney and Fox offered concessions to the IFT on Jan. 24, thereby triggering the renewal of the authority’s 60-working-day review period which is now set to conclude on April 24.
- Separately, in Brazil, the Administrative Council for Economic Defense, or CADE, is reviewing possible remedies for the Fox/Disney transaction. CADE granted Simba, Viacom, RedeTV, RecordTV, SBT São Paulo and BandSports an extension to file additional information until Feb. 15. CADE’s Administrative Tribunal will not issue a decision on the deal until its judgment session on Feb. 27, at the earliest.
While Mexico’s primary competition enforcer has approved Disney’s purchase of certain 21st Century Fox assets, the country’s telecom and media market regulator has not announced its decision on the transaction. The board of commissioners for Mexico’s Federal Economic Competition Commission, or COFECE,
determined last week that the Fox/Disney transaction was “unlikely to affect competition and free market access in the specific markets” the agency assessed.
COFECE examined the effects of the merger in the following markets: (1) film distribution for exhibition in movie theaters; (2) licensing of audiovisual content for home entertainment in both digital and physical formats for downloading or direct purchase; (3) licensing of music for home entertainment in both digital and physical formats for downloading or direct purchase; (4) licensing of non-digital music; (5) live entertainment; and (6) licensing of intellectual property rights for books and magazines, consumer products and for the development of interactive media and videogames. The board of commissioners unanimously authorized the companies to merge in those specific markets.
In January 2019, Fox and Disney modified their transaction to include the transfer of Disney’s participation in the share capital of Walt Disney Studios Sony Pictures Releasing de México to Sony Pictures to eliminate any possible risk to competition in the market for film distribution in movie theaters and mitigate COFECE’s concerns regarding the Fox/Disney merger.
Similar to Brazil’s antitrust authority, the IFT is likely focusing its review on the merger’s potential effects on the market for pay-TV sports channels. On Jan. 24, Disney and Fox offered concessions to the IFT, thereby triggering the renewal of the authority’s 60-working-day review period which is now set to conclude on April 24.
The companies offered conditions after the IFT issued a risk notification, signifying the pending transaction posed a possible risk to competition. Under Mexico’s
competition law, the IFT must notify the merging parties if the authority finds the transaction would present competition risks at least 10 days before the merger is slated for discussion at a plenary session.
Separately, in Brazil, the Administrative Council for Economic Defense, or CADE, is reviewing possible remedies for the Fox/Disney transaction. As Reorg M&A previously
reported, the tribunal requested market participants to indicate whether structural or behavioral remedies would sufficiently address CADE’s concerns about potential harm to competition resulting from the merger.
CADE initially asked Turner, Discovery Networks, Simba Content, Sony Brazil, SBT São Paulo, RecordTV, RedeTV, Viacom and BandSports to provide the information by Feb. 7. However, CADE granted Simba, Viacom, RedeTV, RecordTV, SBT São Paulo and BandSports an extension to file the additional information until Feb. 15. CADE’s Administrative Tribunal will not issue a decision on the deal until its judgment session on Feb. 27, at the earliest.
Reorg M&A’s previous coverage of this transaction can be found
HERE.
--Hannah Deichman and Alexandra Wilts