The clearance was subject to the signature of a Merger Control Agreement.
On 13 September, the Administrative Council for Economic Defense (CADE) cleared with conditions a 14-year extension term for the activities of the JV Simba Content, a joint venture amongst SBT, Record, and RedeTV. The company provides video production and other services for the media sector.
In 2016, CADE cleared with conditions the Simba joint venture. In 2022, since the term for the operations was about to expire, the companies notified CADE to request for its extension.
The merger received clearance from the Office of the Superintendent-General last June. However, the Associação NeoTV, an interested third party, appealed the decision and the case was submitted to the Tribunal of CADE for analysis.
Commissioner Victor Oliveira Fernandes analysed the anticompetitive restraints of the agreement amongst the companies, the impact on the prices, and the risks of coordination amongst them. The investigation pointed out that Simba could use the position of the broadcasters part of the joint venture in the market to harm small pay-tv service providers. Due to the highly concentrated nature of this market, smaller TV providers do not have enough bargaining power.
The authority conditioned the clearance to the signature of a Merger Control Agreement to solve any competition concerns.
The companies committed to free negotiations of license fees of large companies and billing rules to medium ones, in accordance with the most favoured nation (MFN) clauses. The agreement also foresees changes in the billing rules in the MFN clauses for smaller TV providers, the same as the ones used for medium TV providers. There is an estimate of a 9-month transition period, in which licensing of broadcast television will be free, according to the Merger Control Agreement signed in 2016.
"The Merger Control Agreement will avoid negative competitive effects from the transaction which impair its clearance without conditions. By signing the agreements, Simba can continue its activities with benefits to the market and the consumers", he concluded.
Regarding the Schedule Term, the Tribunal allowed Simba to perform its activities for a period of 14 years. It granted a longer term than the previous Merger Control Agreement, as there was no evidence that the company's operations caused any competitive harm.
Source: Gov.br
