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Chilean Competition Tribunal fines Disney $2.3 million USD for providing misleading information in 21 Century Fox’s acquisition notification.

04 / 03 / 2024

The Chilean Competition Tribunal upheld the National Economic Prosecutor’s Office’s (FNE) accusation against TWDC Enterprises 18 Corp., a subsidiary of Disney, for providing incorrect or misleading information when it notified its merger with 21 Century Fox (Fox) in 2018. In the decision, the Competition Tribunal imposed a fine of $2.3 million USD approximately.

The Competition Tribunal found that Disney breached the Chilean Competition Law (article 3° bis (e) of Law Decree No. 211), because the company informed, at the moment of notification, that it did not have certain documents required by law and regulations, and later, that it only had two of those documents. However, according to the evidence, Disney had at least 29 additional documents that were not reported at the beginning of the procedure.

The Competition Tribunal’s decision -issued on February 27th– states that the infringement was committed by Disney “when the merger was notified, declaring that all the information in its possession was provided at the time of its submission, which turned out to be incorrect and, therefore, false.”

It is important to note that the FNE merger control procedure, which is prior to the concentration and mandatory when a turnover threshold is satisfied, has been in force since 2017.

The Competition Tribunal pointed out that “the provision of truthful and timely information through the notification is an essential element to carry out the merger control, since in this procedure the silence from the FNE works in favor of the notifying parties, which imposes a burden of haste and efficiency on the authority“. The judicial decision concluded that “the notification of the companies concerned requires the highest completeness in order to obtain a well-founded decision from the authority in the shortest possible time.

In the judicial proceeding, FNE argued that the misleading information provided cannot be qualified solely as a minor discrepancy. The Competition Tribunal agreed with that conclusion since the regulation that was breached aims to protect the effectiveness of the merger control procedure from its beginning, so that the notification must be truthful, sufficient, complete, and timely.

The Competition Tribunal also confirmed that, although the law does not require that the misleading information has an impact on the outcome of the FNE’s decision, the unreported documents were relevant since they referred to the competition between ESPN -a Disney subsidiary-, and Fox Sports, which is the ESPN’s closest competitor, to which it merged.

The Deputy National Economic Prosecutor, Felipe Cerda, stated that “this decision of the Competition Tribunal is very important for an effective assessment in the merger control system, highlighting the collaboration that undertakings must maintain with the authority, and, in particular, the seriousness with which information is provided to this FNE, when collecting and submitting the documents required by the law and regulations, considering the short deadlines for making well-founded decisions.”

Originally, the FNE’s claim included another accusation against Disney, for having failed to comply one of the remedies of the clearance decision, which was sending a written communication to all pay-TV distributors operating in the country within a certain period, informing them of the details of some measures. However, in June 2021, FNE reached a settlement with Disney regarding that accusation, in which the company admitted the breach and agreed to pay about $240.000 USD for the benefit of the Treasury.