Antitrust Authority approves major cable transaction

On December 2007, the Argentine Antitrust Authority (“CNDC”) approved the concentration of the operations of Cablevision and Multicanal, the two main cable TV operators in Argentina. Although the transaction created several horizontal and vertical relationships with the potential to raise concerns from the antitrust perspective, particularly in the market of pay-per-view TV where the resulting market share in some locations reached a 95% of concentration, the CNDC granted clearance to the operation on the grounds that, albeit the high levels of concentration, it would create enough efficiencies to benefit consumers and would have a positive net social value.

When analyzing the pay-per-view TV market, which as a result of the transaction would be highly concentrated, the CNDC stressed that the availability of new technologies such as the so-called “triple play” (cell phone TV) would play an important role in the near future and, therefore, should be taken into account as a possible entrant in the market.
Crucial to the approval of the transaction was the CNDC acceptance of the commitment offered by the parties, pursuant to which they undertook to, during a 2-year term as from the approval of the transaction: i) guarantee the availability of their TV signals to other cable TV operators; ii) allow independent TV signals to be included in the TV schedules offered by the parties; iii) make several investments enabling more customers to enjoy better image quality, a larger variety of contents and more services; iv) maintain tariffs at a fixed price in several locations, where due to the economic concentration there are no alternative cable TV providers; v) offer a special social service at a reduced tariff for the low-income population; vi) provide free cable TV to hospitals, schools, police stations, firefighters and elderly’s homes; and vii) inform the CNDC every 3 months on the implementation of the investment plan.
Due to the commitment obtained, the CNDC unconditionally approved the transaction, which constitutes a precedent with respect to the acceptance by the CNDC of the improvement of the quality of a service as a gain in efficiencies sufficient to justify high levels of concentration in a market.

For further information on this topic please contact Julián Peña