A PYMNTS Company

Mexico: Regulator approves Fox-Disney merger – Government questions decision

 |  February 11, 2019


Trouble has broken out after legislators of the ruling party of Mexico—MORENA—questioned the decision taken by the Federal Commission of Economic Competition (COFECE) to approve the proposed merger between entertainment companies 21st Century Fox and The Walt Disney Co. Lawmakers argue possible price rises due to a dominant position that could result from the merger.

The COFECE endorsed the purchase of Fox by Disney, given that the operation has “little chance of affecting the process of competition,” at the end of last week. The legislative body also requested that the Federal Institute of Telecommunications (IFT) avoid a concentration in the market of production and distribution of audiovisual content, a category that corresponds to this other regulatory institute.

The COFECE responded, stating it only had to analyze and approve 6 markets that have nothing to do with the dissemination of audiovisual content or programs, such as football matches, and advertising that are transmitted through telecommunications, and broadcasting services, because legally this pertains to the IFT, whose resolution is pending.

The situation has become even more complex following the intervention of President Andrés Manuel López Obrador, who accused the Institute of conflict of interest when it was revealed that part of the legal team of the companies includes former officials of both this organization and the now defunct Federal Competition Commission.

“Without detriment to free competition, we must reconcile as a right of the audiences not to pay more for an entertainment that is eminently popular,” said congress member Rafael Hernandez, (Morena), referring a possible increase in television prices.

The COFECE’s analysis detected “risk signs” for competition only in the sector for the distribution of films, where there are “at least 12 distribution companies,” but the problem was solved with Disney announcing it would sell its corresponding segment to rival Sony, the official said.

The conflict adds to tensions between the legislature and various autonomous bodies that have sprung up during the first months of the new administration of Andrés Manuel López Obrador. The President of the COFECE, Alejandra Palacios, has openly criticized the direct awarding of the handling of social assistance programs to particular banking institutions, causing a media confrontation and questioning by the financial institutions involved.

Full Content: JornadaFinanzas & El Economista

Want more news? Subscribe to CPI’s free daily newsletter for more headlines and updates on antitrust developments around the world.