Insurance and Reinsurance

The Government revokes Cablevisión´s acquisition of Multicanal and a Court challenges the decision.

The Minister of Economy and Finance ratified the decision taken by the Secretary of Domestic Trade (the “Secretary”) whereby it has decided to overturn the Cablevisión-Multicanal transaction, which received antitrust clearance in December 2007. The Minister of Economy, who intervened because of a Court decision removing the Secretary from the case, and also rejected a nullity claim filed by the parties and imposed the parties a six month deadline to unwind their businesses.  The parties have appealed the mentioned decision.

Back in December 2007, the Secretary –based on a non-binding report issued by the National Commission for Defense of Competition (“CNDC”)- unconditionally approved the merger of Cablevisión and Multicanal, the two main cable TV operators in Argentina. Although the transaction created several horizontal and vertical relationships that might raise concerns from an antitrust perspective, especially in the market of pay-per-view TV where the resulting market share in some locations reached a 95% concentration, the Secretary cleared the operation arguing that, albeit the high levels of concentration, it would create enough efficiencies to benefit consumers and would have a positive net social value. Notwithstanding the unconditional approval, the parties voluntarily assumed several commitments, mainly, to make investments enabling more customers to enjoy better image quality, more variety of contents and services, and to inform every 3 months on the implementation of the investment plan.

According to the Secretary, the parties have failed to comply with the agreed investment plan and since the CNDC has argued that the commitments assumed by the parties were essential to the approval of the transaction, it has decided to revoke the approval.

This is an unprecedented measure in local antitrust history since it is the first time the Secretary reverses a transaction that has already been approved.

For further information on this topic please contact Martín G. Argañaraz Luque