Mexico. On January 31, the plenary session of the Federal Economic Competition Commission (COFECE) analyzed one of the most relevant media acquisitions in recent years in Mexico that will have important implications for businesses ranging from the transmission of sports to film exhibition, as it affects one of the key processes for the modern entertainment industry: the distribution of audiovisual content.
The Walt Disney Company, one of the world's largest media companies, which owns a vast global portfolio of content ranging from the Star Wars universe to the ESPN family of sports channels, announced in December 2017 its intention to acquire 21st Century Fox, which owns film studios and dozens of television channels such as Fox Sports and National Geographic. This transaction, valued at $71.3 billion, was approved by the shareholders of both companies in July last year.
The European Union, Brazil and the United States, among other jurisdictions, have reviewed this operation as it could create harmful effects on competition by uniting two large audiovisual content companies that frequently compete with each other. In the United States, the Department of Justice imposed in June last year a series of conditions for the approval of this acquisition while the European Union gave the green light to the transaction in November also under the fulfillment of some conditions. In Brazil, the Conselho Administrativo de Defesa Econômica (CADE) began in July of last year the review of the purchase and it is estimated that by March it could issue a decision in this regard.
It has transpired that the commissioners of COFECE determined that as far as the markets that corresponded to them to analyze (films, DVDs and marketing), they did not find reasons for concern about possible damages to the competition derived from this merger, so they would have already given their approval.
We will now have to see what the plenary session of the Federal Institute of Telecommunications (IFT) will do, an authority that is responsible for studying the most important or key issues for the telecommunications sector. In this case, we are referring to the effects on competition in the markets for the distribution of audiovisual content through different platforms, such as free-to-air television, restricted television or Internet television.
In this analysis, as the authorities of other countries did, the IFT is expected to carefully study the effects on the different segments of these markets, as it is known that in particular, there are well-founded concerns about the possible harm or risk to competition in what corresponds to sports channels, where the resulting company would represent a high concentration.
This company would have the power to impose conditions on pay-TV systems, to the detriment of users – notably those of the lowest economic packages – who currently have access to the content of sports channels with events of great interest, such as football matches of the local league and other international tournaments.
In the IDET we are certain that in the analysis that the IFT makes on the subject, in the same way as it has done in various decisions it has adopted to strengthen competition in the various telecommunications markets of our country, it will have to pay special attention to the effects on the most vulnerable users to the effects of a reduction in the possibilities of choice, in this case, of sports channels, as it has already done in Brazil, the Administrative Council of Economic Defense (CADE).
Analysis carried out by the Institute of Telecommunications Law, IDET.
