Brazil’s Administrative Council for Economic Defense (Cade) said that the proposed merger of AT&T with Time Warner could present a risk to competition, as AT&T already owns pay-TV operator Sky Brasil.
Both Sky and Time Warner have significant market power, and the merger could create incentives for the companies to disrupt the licensing/programming market, the competition regulator found in a preliminary analysis of the deal.
According to Cade, the deal would allow Time Warner to gain access to sensitive information from competitors through Sky. Likewise, AT&T would have access to conditions negotiated by its rivals through Time Warner. The new company would also have the capacity and incentive to discriminate against competitors in both markets, which could weaken the competitive environment.
The deal could also lead to coordination - even tacitly - between the two largest pay-TV programmers (Globosat and Time Warner) and the two largest operators in the sector (Net/Claro and Sky), significantly undermining businesses and consumers in the pay-TV segment, Cade said.
The Superintendancy of Cade has therefore sent the case before the Cade Court that will have the task of deciding whether to approve the merger. The court may also approve it with restrictions, imposing remedies that remove the identified competition problems.
