Mexico. The Plenary of the Federal Institute of Telecommunications (IFT) resolved the procedure followed to determine the existence of substantial power in the restricted television and audio services market, regarding the acquisition of 100% of the shares of Telecable, by various companies belonging to the Televisa Group.
This procedure resulted from the application for a merger notice sent to the IFT on the eighth of January 2015, in connection with that negotiation. On April 20, 2015, the IFT Plenary resolved on the merger notice and ordered the Investigating Authority (IA), a unit endowed with technical and management autonomy, to be heard.
The investigation ended in July 2015, so the corresponding Preliminary Opinion was issued in September of two thousand and fifteen, in which it was concluded that GTV, after the aforementioned concentration, acquired or increased its Substantial Power in 63 relevant markets in the provision of television and restricted audio services (STAR).
After the interested parties submitted their evidence, the IFT determined on 29 February 2016 that there are insufficient elements to determine the existence of an economic operator with substantial power on the basis of the information in the File. In particular, it determined that there is insufficient evidence in that agreement to support the conclusion that GTV may unilaterally fix prices or restrict supply on the analysed markets without its competitors being able to counteract that power.
In its analysis, the Plenary determined the following:
The services of provision of audio and video through broadcast television, OTT (Over The Top) and the exhibition of films recorded in the room, as well as in various formats (Blu-Ray, DVD, among others) are not a substitute for STAR.
In addition, OTTs are not a substitute for pay-TV services, as they do not cover all categories of content offered by STAR providers, nor do they include higher-rated channels. In addition, to have access to them it is necessary to have an Internet access device, and those who provide the OTT service do not need a concession for it as STAR providers do.
In relation to the relevant market analysis, it is necessary to know the competitive dynamics between multi-service platforms and those that offer only STAR. It would also have been necessary to have an analysis that considered the substitution between high-end packages of the STAR against the lower ones. Finally, no certainty was found about the geographical dimension of the market analyzed.
There is insufficient evidence to determine that Televisa has the ability to limit other STAR providers' access to television channels and other relevant content. In addition, the company has a regulatory obligation to give its competitors access to the broadcast TV channels of greater value to audiences (i.e. must offer), a situation that prevents it from using these inputs to limit the ability to compete with other STAR suppliers.
In the sense of substantial power, although the companies that are currently part of GTV have the largest share in terms of subscribers, this element is not sufficient to declare it with substantial power. That is, high market share does not translate into the unilateral ability to set prices or restrict supply within a market. Likewise, its competitors have grown and increased their participation in the period analyzed in the Resolution.
• The growth of the pay-TV market is reflected in a 21.7 percent increase in users between September 2013 and September 2015, and there are no elements within the Dossier to prove that GTV's competitors cannot expand their operations. The above, since in the same period Dish increased its participation from 14.3 percent to 16.8 percent and Megacable went from a share of 14.9 percent to 15.2 percent. For its part, the participation of all the companies that currently make up GTV went from 64.2 percent to 61.1 percent. Of the 3.1 million new users who signed up for the STAR, 28.4 percent went to Dish and 16.6 percent to Megacable.
In a disaggregated way, during that period in the cable platform, GTV went from having 54.3 percent to 50.5 percent market share; and satellite from 73 percent to 69.7 percent.
Therefore, the Plenary resolved that the elements provided for in the Federal Law on Economic Competition (LFCE) to determine the existence of an Economic Agent with substantial power in the STAR were not accredited since the information in the File and Preliminary Opinion does not have sufficient elements that allow this authority to resolve that section I of article 59 of the LFCE is updated.
In terms of the provisions of article 96 of the LFCE, the resolution will be published in the coming days on the Internet portal of the Institute and the relevant data in the Official Gazette of the Federation.
