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FNE approves with remedies Disney’s acquisition of Fox

21 / 03 / 2019

The National Economic Prosecutor (“FNE”) approved yesterday, with remedies, the acquisition by The Walt Disney Company (“Disney” or the “Company”) of all the shares of Twenty-First Century Fox, Inc. (“Fox”). The acquisition was notified to the FNE on August 31th, 2018.

The remedies consist on four main commitments made by the companies, that shall be enforceable for the term of 7 years since the closing of the deal. These commitments aim to prevent the joint commercialization of Disney’s and Fox’s channels, without distinguish if they have sports, factual or child content. In this way, the company will be prevented from day one to exert the higher negotiating power that will acquire regarding all the channels of its property.

This package of remedies responds to the main risk identified by the FNE during the investigation, that is, the increase of negotiating power that would have the merged entity on the operation and wholesale of paid television channels.

The remedies are the following:

  1. Prohibition of tying and bundling between Disney’s and Fox’s channels.
  2. Prohibition of technical bundling or content transfer, from Disney’s to Fox’s channels or vice versa, of the most relevant sport’s content offered by the parties.
  3. Two arbitration instances, to solve controversies regarding: (i) the negotiation of new licensing deals or their renewal, and (ii) as a consequence of substantial deterioration on the commercialization conditions of the live-sport channels.
  4. The group of A&E channels will be subjected to these commitments if they start to be controlled or distributed by Disney, or if their selling is conditioned to the purchase of Disney’s channels.

According to the FNE, these remedies are proportional, sufficient and effective to mitigate the identified risks. At the same time, they are feasible to implement, execute and monitor.

During the investigation of the merger, as it is usual in the case when the deal has an international reach, the FNE collaborated with other Competition Agencies. Each Agency arrived to their own decision, according to the characteristics of their respective markets.

The decision and report of the approval will be published on the FNE’s website once the redacted version is finished.