CFC approves Televisa-Iusacell merger, with conditions

Mexico’s Federal Competition Commission (CFC) has announced that its Plenum resolved Grupo Televisa and Iusacell’s appeal on its proposed merger. Both firms had requested a review of the CFC’s original decision of January 24th, 2012, that blocked the proposed merger between the number one and number two over-the-air television networks in Iusacell, a mobile telephony company.

The majority decision conditions the merger to the fulfillment of certain provisions that for the first time suggest regulatory coordination between the competition and telecommunications regulators in Mexico (CFC and Cofetel), as they clearly reinforce a decision of Cofetel’s Plenum (just hours before) to open the network TV market to a new player.

Although the merger pertains to mobile telephony, the conditions were imposed in the two markets deemed to pose competitive harm: over-the-air network TV and cable television. If breached, they trigger a dissolution mechanism of the merged entity whereby only one of the parties would retain sole ownership. In addition, a fine of up to 10% of annual turnover would be imposed on the parties involved.

The Plenum’s conditions consist of the following:

•    If a successful tender offer for a third network does not occur within the next 24 months, the dissolution mechanism will begin. The aim is to avoid delaying tactics or the use of excessive litigation to foreclose entry of a potential competitor;
•    Televisa and TV Azteca cannot discriminate in the sale of publicity, that is they must offer all publicity to any telecommunications firms at current market conditions;
•    Televisa and TV Azteca cannot tie the sale of publicity to the purchase of Iusacell services;
•    Televisa and TV Azteca cannot bundle over the air and cable TV content;
•    Televisa and TV Azteca cannot jointly sell their over the air content to cable operators, and;
•    Televisa cannot participate in Total Play, Grupo Salinas’ triple play product offering in Mexico City since Televisa is owner of Cablevision, a direct competitor of Total Play.

Full content: CFC Press Release (in Spanish) and Reuters

Related content: Margin Squeeze in Mexican Mobile Telecommunications

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