2018 (11) TMI 1043 - Commission - Law of Competition

Proposed Media Merger Gets Green Light: No Harm to Competition in India, Says Commission.

The Commission concluded that the proposed combination does not pose an appreciable adverse effect on competition in India. The analysis covered ... Competition commission - Overlap in production and supply of films to third-party distributors and exhibitors for theatrical release in India - proposed combination relates to the acquisition of 21CF, including its film and television studios, cable and international TV businesses, by TWDC - whether horizontal overlaps resulting from the proposed combination are not likely to result in any appreciable adverse effect on competition in any of the business segments - Held that:- Markets is characterized either by insignificant presence of the Parties or presence of significant competitors. Therefore, the Commission is of the view that post combination, the Parties would not have the ability to foreclose the market for other competitors. In addition, the vertically related markets involving upstream segment of operation and wholesale supply of TV channels and downstream segment of retail supply of audio visual content through DTH are also identified for possibility of any vertical foreclosure. In the upstream segment relating to operation and wholesale supply of TV channels, for reasons already discussed above it is noted that there is no likelihood of AAEC in this business segment as well as in its various sub-segments. Further, for the downstream segment, the Commission notes that though 21CF holds certain equity shares of Tata Sky but the proposed combination is not likely to foreclose the market for other competitors as TRAI has issued various regulations, tariff orders and directions, etc. to generate competition and ensure fair play in the industry. Further, there are competitors of the Parties such as Tata Sky, Dish TV, Airtel DTH, Sun Direct etc. that would continue to provide competitive constraint to the Parties, post-combination. Therefore, the abovesaid vertical relationship is not likely to result in any vertical foreclosure. Considering facts on record, details provided in the notice given under sub-section (2) of Section 6 of the Act and assessment on the basis of factors stated in sub-section (4) of Section 20 of the Act, the Commission is of the opinion that the Proposed Combination is not likely to have an appreciable adverse effect on competition in India. This order shall stand revoked if, at any time, the information provided by the Acquirers is found to be incorrect. Issues Involved:1. Horizontal Overlaps2. Vertically Related MarketsIssue-wise Detailed Analysis:A. Horizontal Overlaps1. Overlap in production and supply of films to third-party distributors and exhibitors for theatrical release in India:- The Commission assessed overlaps in English films, Bollywood films, and Regional films, noting that combined market share for English movies decreased from 60-65% in 2016 to less than 30-35% in 2017. Other global players like Warner Brothers and Universal provide competitive constraints.- For Bollywood films, the combined market share dropped from 35-40% in 2016 to around 15-20% in 2017, with other players like Yash Raj Films and T-Series maintaining competition.- In the regional films segment, the combined market share was 0-5% in 2017, indicating no competition concerns.- Third-party distributors and exhibitors retain significant negotiating power, ensuring competitive constraints post-combination.2. Overlap in the business of licensing of audio-visual contents in India:- The Commission noted overlaps in licensing film-content rights, sports-content rights, and non-film/non-sports content.- In the film-content licensing segment, the Parties produce a small proportion of films, indicating no competition concerns.- For sports-content licensing, 21CF is active, but TWDC is not, as ESPN has licensed its rights to Sony in India.- No AAEC concerns were noted in the licensing of non-film, non-sports content.3. Overlap in the business of operation and wholesale supply of TV channels:- The Commission assessed sub-segments like film channels, infotainment and lifestyle channels, kids channels, Hindi GEC, English GEC, regional GEC, music, and sports channels.- In each sub-segment, the combined market shares and presence of significant competitors like Zee Entertainment, Sony Pictures, and Discovery Network were considered, concluding no AAEC concerns in any sub-segment.4. Retail Supply of Audio Visual Content in India:- The Parties are present through OTT applications like Hotstar and Bindass. The combined market share post-combination would be 30-35%, with competitors like Netflix and Amazon Prime providing competitive constraints.5. Supply of advertising airtime on TV channels in India:- The market share of 21CF is 20-25%, with an insignificant increment from the combination, indicating no competition concerns.6. Supply of consumer products:- The Parties are involved in character merchandising by licensing intellectual property. The combined market share is insignificant, indicating no AAEC concerns.7. Licensing of Music rights in India:- Both TWDC and 21CF have insignificant market shares in this segment, indicating no competition concerns.8. Licensing of Publication Rights in India:- The Parties license intellectual property to third-party publishers. Their combined presence in the market is insignificant, indicating no adverse impact on competition.9. Interactive Media in India:- The Parties engage in interactive media through licensing intellectual property and audio-visual content. Their market share is insignificant, indicating no AAEC concerns.B. Vertically Related Markets1. Upstream segment of licensing of audio-visual content rights and downstream segment of (a) wholesale supply of TV channels, and (b) retail supply of audio-visual content:- Insignificant presence of the Parties or significant competitors in these markets ensures no ability to foreclose the market for other competitors.2. Upstream segment of advertising on TV channels and downstream segment of sale of advertising airtime on TV channels by OTT:- The Commission found no competition concerns due to the presence of significant competitors.3. Upstream segment of licensing of music and downstream segment of sub-licensing of music:- Insignificant presence of the Parties ensures no competition concerns.4. Upstream segment of operation and wholesale supply of TV channels and downstream segment of retail supply of audio-visual content through DTH:- Despite 21CF's equity shares in Tata Sky, TRAI regulations and competitors like Dish TV and Airtel DTH ensure no vertical foreclosure.Conclusion:The Commission concluded that the proposed combination is not likely to have an appreciable adverse effect on competition in India. The order stands revoked if any information provided by the Acquirers is found incorrect, and the information remains confidential as per Section 57 of the Act.