The Competition Commission of India (CCI) has raised queries on the proposed merger of media assets of Reliance Industries and Walt Disney in India, after a preliminary assessment that the $8.5 billion deal could hurt competition. The regulator’s concerns are especially regarding the potential dominance of the merged entity in the cricket broadcasting market, said a source privy to the development.
“After a statement of objections issued by the CCI recently, both companies now have about 25 days to reply to it. Simultaneously, the companies can start negotiations with the regulator on the possible remedies,” a lawyer representing one of the companies involved told FE, on condition of anonymity.
The person said that if the antitrust watchdog is still not satisfied with the modifications submitted by Reliance and Disney, it will ask them to furnish fresh modifications. Given the procedure, the deal will likely be delayed by at least 3-4 months,” he said.
As per the Competition (Amendment) Act 2023, when the CCI is of the opinion that a merger is likely to have an appreciable adverse effect on competition (AAEC), it will issue a statement of objections to the parties and direct them to explain within 25 days of receipt as to why such merger should be allowed. If the CCI does not accept the modification submitted by the parties to furnish revised modification with 12 days. In some cases, the CCI can suo motu propose appropriate modifications of a merger.
In February this year, Reliance, Viacom 18 Media Private Ltd and The Walt Disney Company announced the signing of binding definitive agreements to form a joint venture (JV) that will combine the businesses of Viacom18 and Star India. In addition, Reliance agreed to invest at Rs 11,500 crore into the JV for its growth strategy.
Experts said that the combined entity is likely to have market shares in many segments which would exceed the CCI’s thresholds for combinations. For instance, the combined market share of the two entities in different periods in FY22 stood in the ranges of 40-50%, 60-70% and 40-50% respectively in Hindi, Marathi and Bengali among general entertainment channels. In the Hindi film channels, the two had a combined market share of 30-40% in FY22.
In addition, the combined entity will exercise near monopoly power over digital and TV cricket rights, including for the world’s most valuable cricketing tournament – Indian Premier League. At present, Reliance and Disney are present in nearly all the broadcasting categories, including content production, distribution and aggregation.