Mexico. The Federal Institute of Telecommunications, IFT, declared Grupo Televisa as an agent with substantial power in the restricted television and audio service (STAR), after resolving the file AI/DC-002-2019, processed in accordance with article 96 of the Federal Law on Economic Competition.
During the XXII Ordinary Session, the Plenary evaluated the Preliminary Opinion presented by the Investigating Authority (IA) of the Institute, the information contained in the File, as well as the information provided by the economic agents that accredited their interest in the matter.
Among the elements considered by the Plenary of the Institute, are the following:
- The relevant market corresponds to the provision of restricted television service in 35 locations. It considered that OTT audiovisual services and the broadcast television service could not be regarded as substitutes for STAR.
- Concluded that the restricted television service provided by any technology (wired, satellite and IPTV) are substitutes for each other. Also, the provision can be individual or packaged.
- GTV is the leader in each of the 35 relevant markets and its positioning has not been countered by its competitors; in addition, this was strengthened as a result of the Concentration. The levels of the Herfindahl-Hirschman Index (IHH) reflect that these are highly concentrated markets.
- The high levels of gtv market share, the high levels of the IHH and its stability over time in each of the relevant markets, are related to a situation of substantial market power.
- GTV's rising price indices and high profit margins provide evidence consistent with the existence of an agent that does not face competitive constraints that effectively limit its ability to set prices.
There are barriers that restrict the entry and positioning of new competitors.
- GTV's current and potential competitors have limited ability to exert significant competitive pressures on GTV.
- The vertical integration of GTV (as a producer and distributor of content for star and as a provider of STAR) and its positioning in the provision of STAR gives it advantages over its competitors to access audiovisual content and the public telecommunications network necessary to distribute them.
- The existence of high costs to change providers that users may face, derived from practices such as the establishment of forced deadlines and penalties for early termination, limits the mobility and ability of users to exercise competitive restrictions on the demand side.
- This resolution of the Institute is given as a result of the investigation carried out by the AI, whose preliminary opinion was issued in September 2019, which was carried out based on the provisions of the Ninth Transitory Article of the Federal Law on Telecommunications and Broadcasting after the merger notice that various subsidiary companies of Grupo Televisa, S.A.B. presented to the Institute in December 2018.
That concentration consisted of the acquisition of all the shares representing the share capital of FTTH de México, S.A. de C.V., whose assets are essentially the residential customers of Axtel, S.A.B. de C.V. for voice, internet and restricted television services through fiber optics, as well as the infrastructure necessary for the provision of those telecommunications services.
In deciding that the concentration complied with the requirements established in paragraphs A to D of the first paragraph of the Ninth Transitory Article, the Plenary of the Institute ordered the Investigating Authority to begin with the corresponding legal investigation.
In this regard, the IA determined the existence of substantial market power on the part of GTV in 35 relevant markets of restricted television, individual or packaged, provided through satellite, cable and IPTV technologies.
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