Brazil's Administrative Council for Economic Defence (Cade) has approved Time Warner's merger with AT&T, the indirect parent company of pay-TV operator Sky Brasil. The anti-trust regulator voted unanimously to accept the deal but, as in Chile and Mexico, imposed targeted conditions to address specific issues it identified. Above all, the companies must keep their operations in Brazil separate and agree not to share sensitive information. The merged company must also disclose the terms of all content licensing and TV programming deals to Cade, which will then determine whether or not they undermine competition in the market.
In a statement, AT&T welcomed the decision, above all the fact Cade’s approval does not require the sale or divestiture of any AT&T or Time Warner assets. The Cade councilor in charge of the case, Gilvandro Araujo, told Reuters that the deal "forces the companies to observe objective non-discrimination standards that are more comprehensive than the usual legal demands".
The Agreement on Concentration Control (ACC) signed between Cade and AT&T is valid for five years. Among the commitments assumed by AT&T is the maintenance of Sky Brasil and Time Warner as separate legal entities with their own administration and governance structures, a ban on the exchange of competitively sensitive information or any communication that may imply discrimination against any third parties. AT&T also assumed an obligation to have Time Warner channel programmers offer non-affiliated pay-TV providers all TV channels licensed to Sky under non-discriminatory conditions. An independent consultant will monitor compliance and report back to Cade.
The USD 85.4 billion transaction is still subject to approval by Brazil’s National Telecommunications Agency (Anatel), which has expressed concern about potential competitive risks in the country from the takeover, as well as the US Department of Justice. However, AT&T has said it still expects the acquisition to close by the end of the year.
