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FNE approved the merger between AT&T Inc. and Time Warner Inc

08 / 09 / 2017

The Fiscalía Nacional Económica (Chilean Competition Authority or FNE) recently approved the merger between AT&T Inc. (AT&T) and Time Warner Inc. (Time Warner), both of which hold interests in the telecommunications market, with worldwide presence. The transaction was approved subject to certain remedies offered by the merging parties.

In Chile, the merger raised concerns regarding the vertical integration that the transaction created, linking Time Warner’s business as a content provider in the licensing of broadcasting rights relating to TV content, with AT&T’s business as a TV distributor through DirecTV, in retail provision of TV services to end users.

The FNE’s competitive assessment centered its analysis in three different types of competitive harms that might result from the transaction. First, it assessed and discarded a strategy of customer foreclosure, due to the lack of viability the investigation showed. Second, it analyzed the risk that might arise from the exchange of commercially sensitive information between the merging parties, a strategy that was found to be feasible but scarcely significant. Lastly, the FNE analyzed a strategy of total or partial input foreclosure, which posed the greatest competitive concerns identified by the FNE, due to the parties’ ability to significantly lessen competition.

Because of this competitive assessment, on august 22, 2017 the Parties offered certain remedies, destined to mitigate the potential harms identified. These were remedies intended to protect commercially sensitive information, guarantee a non-discriminatory access to Time Warner’s channels in the terms of the Chilean Competition Act, and offer an arbitration clause as a mechanism to solve any controversies that might arise in the negotiation of the licensing of broadcasting rights relating Time Warner’s TV content. This arbitration measure would maintain the pre-integration balance of bargaining power between the vertically integrated parties and their rivals, giving an efficient solution to the input foreclosure risk detected.

Taking into account the international relevance of the transaction, as well as the entity of the risks involved, the FNE decided to accept the remedies offered, finding them effective, suitable and feasible.

This is the fourth merger to be approved by the FNE since the new merger control system came into force on 1 June 2017, and the second one to be approved with remedies to mitigate potential competitive harms.

Finally, the merging parties notified the transaction in several other Competition Authorities, considering its global coverage. The transaction has been approved in the European Union, Colombia Ecuador, Mexico, among others. It is pending the authorization in Brazil and the United States.

Spanish versions

Download resolution here

Download approval report here