CADE Imposes Restrictions and Approves Oi Movel Sale

CADE Imposes Restrictions and Approves Oi Movel Sale
Photo: Photo: 11.02.2022 231

Brazil’s Administrative Council for Economic Defense (CADE) authorized, with restrictions, the purchase of the mobile telephony assets of Grupo Oi by operators Tim, Claro and Telefônica Brasil (owner of the Vivo brand). The endorsement of the deal took place on the 9th of February and was conditioned to comply with measures that mitigate competition risks, provided for in an Agreement on Control of Concentrations (ACC).

“Our mission is to defend the consumer, not the companies. But it is a case with repercussions and more than 40 million users of Oi Movel could be affected in the event of bankruptcy”,

said CADE president Alexandre Cordeiro.

Oi's mobile service business was subject to a judicial auction held in December 2020. At the time, competitors Tim, Claro and Telefônica Brasil presented a joint offer and acquired the assets of this production unit of the group.

After several competitive analysis carried out within the scope of the operation, it was shown that the departure of Grupo Oi from the Personal Mobile Service market results in the reduction of the number of national players operating in the segment from four to three, which generates a high concentration of the market in the offer of mobile telephony in the country.

On the other hand, the understanding is that the bankruptcy of Oi in the SMP market could further deepen the concentration of this sector, at levels higher than those resulting from the business itself, since the main leaders by National Code would tend to absorb most of the company's current customers.

In addition, director Lenisa Prado, who voted to approve operations with restrictions, highlighted, among other negative impacts, that the bankruptcy of Grupo Oi would also have systemic effects on the telecommunications sector in general. It would generate impacts on fixed telephony, broadband and data communication services and other essential services that depend on the company's infrastructure, such as, for example, electronic payments, online purchases, pension and financial systems, post offices and bank service stations.

To address the identified competition problems and enable the authorization of the operation by the antitrust agency, the companies negotiated an Agreement on Concentration Control (ACC) through which a wide set of measures is foreseen that favour and facilitate the entry of new economic agents and the expansion of competitors in the Personal Mobile Service market.

"When considered together with Anatel's constraints and sectoral regulation, CADE's remedies have the potential to significantly reduce barriers to entry and increase the expansion of competitors, mitigating the competition concerns identified during the instruction of the present process",

evaluated Lenisa.

According to CADE's president, Alexandre Cordeiro:

"This is one of the most important cases we have had in recent years, which affects consumers directly. The collectivity is the holder of the rights guaranteed by the antitrust law, so it is important that we fulfil our institutional mission of defending the consumer".

Under the agreement, Tim and Telefônica will carry out offers for industrial network exploitation, in all Brazilian municipalities, with potentially interested parties, with the object of radio frequencies acquired from Grupo Oi, associated with other network elements. The companies will also make available new offers to conclude a contract for the temporary and onerous assignment of radio frequency usage rights (spectrum band rental), by the municipality, with potentially interested parties.



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