Takeaways
- Third-party involvement in the antitrust review of the Fox/Disney deal in Brazil is likely to affect how long it takes for the country’s Administrative Council for Economic Defense, or CADE, to analyze the transaction, according to practitioners.
- Whenever there is a lot of involvement by third parties in a merger proceeding, CADE “will have to work harder” to address issues raised by those groups, according to Natalia Salzedas Pinheiro da Silveira, an associate at Lobo & de Rizzo Advogados in Brazil. The authority tries to understand all the arguments being made by the third parties, so the investigation “takes a little bit longer,” she told Reorg M&A.
- Following CADE’s complexity declaration on Sept. 27, the agency requested information relating to pay-TV sports channels and efficiencies from Google, Facebook and the applicants. The applicants’ and Facebook’s response are due by Oct. 11, and Google’s answer is due by Oct. 12.
Third-party involvement in the antitrust review of the Fox/Disney deal in Brazil is likely to affect how long it takes for the country’s Administrative Council for Economic Defense, or CADE, to analyze the transaction, according to practitioners in Brazil who spoke with Reorg M&A. Sérgio Varella Bruna, a partner at Lobo & de Rizzo Advogados in São Paulo, said that the participation by third parties in the proceeding could affect timing by “a couple of weeks to a month,” but it could be even longer.
During a conversation with Reorg M&A, Bruna and Natalia Salzedas Pinheiro da Silveira, an associate at the firm, said that third parties appear to be meeting with CADE commissioners more than usual. Meanwhile, a third antitrust practitioner said a higher level of involvement by third parties is not uncommon for a large merger.
Silveira said that whenever there is a lot of involvement by third parties in a merger proceeding, CADE “will have to work harder” to address issues raised those groups. The authority tries to understand all the arguments being made by the third parties, so the investigation “takes a little bit longer,” she said.
The involvement of third parties in CADE’s review of Fox/Disney could have been a factor in the agency’s decision to issue the
complexity declaration, a fourth antitrust practitioner in Brazil told Reorg M&A. The practitioner added that CADE now understands it should analyze the case more deeply because of the overlaps in the distribution of pay-TV sports channels and the distribution of films for theater exhibition. “The combined market shares [of Fox and Disney] can negatively affect the conditions of rivalry, requiring further analysis,” the practitioner said. “Another point that also requires further analysis is the potential increase in the portfolio power of the applicants and their impact on both markets.”
The third antitrust practitioner said contradictions between third-party statements and the information provided by the merging companies can increase the length of time CADE takes to do its analysis. The authority is going to have to determine which perspective is correct, the practitioner said. Discrepancies between the applicants and the third parties are prevalent in this case. Disney and Fox sought to rebut third-party statements and urged CADE to be wary of the claims made by third parties in a filing submitted by the companies on Sept. 24.
The third antitrust practitioner said there is no specific deadline that is triggered once third parties have submitted all the information requested by CADE, that antitrust practitioner said. The practitioner added that the superintendent may have more follow-up questions for the merging companies and third parties, or it may “move forward to proceeding with the opinion.”
CADE will grant a third party’s request if it thinks the group will “contribute to analysis and has interests that will be affected by the transaction,” said Fabricio Cardim de Almeida, a competition lawyer at Souza, Mello e Torres Advogados in Brazil. Only recognized third parties are entitled to appeal the superintendent’s decision to the tribunal during the 15-day period following the issuance of the opinion. Cardim said it is “very common for there to be appeals” by third parties.
In contrast to the FTC and DOJ, Cardim said, CADE “does not necessarily put more weight on arguments or information” that are presented by a competitor, client, supplier or another type of third party. “One third party could gain more clout compared to another party if they provide CADE with specific information, documents and arguments on how the transaction is likely to directly affect its interests in the market,” he added.
CADE granted Simba, WarnerMedia, Sky and NeoTV admission as third-party intervenors in its investigation of the Fox/Disney deal. The companies requested to intervene to protect their commercial interests that may be impacted by the proposed transaction. Sky asserted in its application that the deal will combine the applicants’ 30 channels currently registered in Brazil, which may increase the applicants’ portfolio power and the risk of abusive market practices. NeoTV expressed concerns with sports channel licensing in its application, arguing that the combination of Fox and Disney would create a near duopoly between Disney’s ESPN and Globosat’s SporTV that could negatively impact the prices paid by consumers. Simba withdrew its application to intervene in the proceeding on Aug. 27.
As this publication previously
reported, CADE is expected to take more than 120 days to complete its review of the Fox/Disney deal following the agency’s declaration of the merger as “complex.” CADE requested information relating to pay-TV sports channels and efficiencies from
Google,
Facebook and the
applicants shortly after the complexity declaration. The applicants’ and Facebook’s response are due by Oct. 11 and Google’s answer is due by Oct. 12.
--Alexandra Wilts and Hannah Deichman