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Cade approves the acquisition of Fox by Disney with restrictions

Merger and acquisition

The acquisition was approved under a Merger Control Agreement
published: May 06, 2020 07:44 PM last modified: May 06, 2020 07:44 PM
by International Unit

The Administrative Council for Economic Defense (Cade) approved the acquisition of Twenty-First Century Fox by The Walt Disney Company, in the judgement session of this Wednesday (6 May). The transaction was approved under a Merger Control Agreement (ACC in its acronym in Portuguese).

The Rapporteur Commissioner, Luis Henrique Bertolino Braido, highlighted in his vote that, during the review stage of the merger, Disney made a new attempt to sell Fox Sports channel. However, despite the efforts, and considering the current economic moment given the pandemic of the new coronavirus (Covid-19), it was not possible to continue with the disposal of Fox Sports channel.

Therefore, behavior measures were negotiated with Disney to mitigate previously identified issues and ensure that a variety of sports programs is available to Brazilian viewers.

Commitment made

According to the agreement signed, Disney is committed to maintain all sporting events now distributed in Brazil in their program schedule for three years or until the end of their respective contracts. The company may as well maintain the main Fox Sports channel with the same quality standard as available nowadays, including the broadcast of the Copa Libertadores da America soccer games, until January 1, 2022. After this date, the events of this sports tournament shall be broadcasted in one of Disney’s affiliated channels, until the end of the current contract with Conmebol.

In addition, the agreement foresees that Disney shall return the Fox Sports brand in advance, in case chooses to end the broadcast of this channel, leaving fox Sports free to be used by any other interested group, upon a commercial agreement with its owner.

“In the specific case, I think Cade is responsible to protect the variety of sports programs available to the consumer. In my view, that would be a way to pass on to consumers part of the gains and efficiency resulting from this merger,” stated the rapporteur.

Case History

On February of 2019, Cade approved the acquisition of Fox by Disney under the condition of, among other measures, the sale of Fox Sports channel. Although the parties endeavored to comply with the decision, the sale did not occur within the time stipulated by the Tribunal. For that reason, Cade decided, in November of the same year, to review the transaction.

The Disney/Fox transaction was notified in 25 jurisdictions and culminated in collaboration among antitrust authorities from different parts of the world. In Latin America, there was international cooperation with agencies from Mexico and Chile.

Additionally, the Tribunal decided to start an investigation to ascertain possible discriminatory conducts resulting from unfair practices on the contracts between producers and pay-tv operators. According to the Rapporteur Commissioner’s vote, it is necessary to ascertain, for instance, which producers charge different prices for distributing sports channels to the operators, and whether these possible distortions to free competition have an impact on the pay-tv final consumer. 

Access the Administrative Case 08700.004494/2018-53