You are here: Home > Cade rejects appeal and maintains approval of transaction between TIM and Telefônica


Cade rejects appeal and maintains approval of transaction between TIM and Telefônica

Merger and Acquisition

Claro appealed against approval of network sharing, but the Tribunal did not recognize competition issues in the transaction
published: Jun 04, 2020 05:16 PM last modified: Jun 04, 2020 05:16 PM
by International Unit

The Administrative Council for Economic Defense (Cade) rejected, in the judgment session of this Wednesday (03 May), appeal against approval of network sharing between TIM and Telefônica Brasil. The Tribunal concluded that no competition issues are recognized in the transaction and decided to maintain the merger approval.

The transaction refers to the signing of contracts of reciprocal onerous transfer of network between Telefônica and TIM, aiming at sharing means of network for the implementation and provision of services evolving 2G, 3G and 4G technologies. The merger was approved without restrictions in April of this year by Cade's General Superintendence (SG/Cade).

In an opinion favorable to the transaction, the SG understood it was not possible to conclude that the commitments made in the agreement will cause competition issues to the market. In addition to highlighting the potential benefits to consumers’ well-being, the SG/Cade considered that possible risks for the agreements have either been mitigated or do not change the current incentives of the companies to subject to any anticompetitive conduct.

Claro, interested third party in the case, submitted an appeal in May of this year, alleging that the General Superintendence’s opinion did not deeply approach significant aspects related to potential anticompetitive effects of the transaction.

Subsequently to the vote of the Rapporteur Commissioner, Lenisa Prado, the members of the Administrative Tribunal concluded this Wednesday that the proposed transaction aims to generate cost savings of infrastructure implementation, which is a legitimate purpose from a competitive point of view. The rationalization of costs is one of the goals of any competitive agent, since such action allows to offer more advantageous prices to its users than those charged by competitors, and it also allows to increase the revenue margin to implement innovations, quality and expansion of infrastructure and services.

“Therefore, I agree with the members of this Tribunal that recognize, based on Anatel’s conclusion, that the contracts of sharings similar to those under examination promote healthy initiatives and do not harm competition, nor do they dampen the competitors urge to win space in a highly disputed market,” concluded the commissioner.

Access the Administrative Proceedings 08700.006163/2019-39.