Grupo Televisa SAB : Mexico Antitrust Agency Says Televisa-Iusacell Ruling Could Change
02/07/2012 | 02:49pm Mexico's antitrust agency confirmed Tuesday that it rejected a proposed joint venture between broadcast and media company Grupo Televisa SAB (TV, TLEVISA.MX) and mobile-phone operator Iusacell, but said the decision could change on appeal if the two sides address problems the deal would create in the television advertising market.
Iusacell and Televisa said last week that the Federal Competition Commission, or CFC, had rejected their agreement for Televisa to invest $1.6 billion for a 50% stake in Iusacell, one of the country's smaller mobile phone operators, on concerns that it would threaten competition in the television advertising market.
Iusacell is controlled by businessman Ricardo Salinas Pliego, who also controls the country's No. 2 television broadcaster TV Azteca SAB (AZTECA.MX). Between them, Televisa and TV Azteca control practically all of the commercial free-to-air broadcast television in the country.
In its statement Tuesday, the CFC said the proposed joint venture causes no risks for competition in mobile telephony but that in broadcast television it carries "serious risks for competition." The commission voted 3-2 against the deal.
Limiting competition in the television market would push up advertising costs, thereby increasing prices of consumer goods that use advertising, adversely affecting consumers, the CFC said. The commission said that the cash injection into Iusacell would be positive for competition in mobile phones, although it could come from "any source other than its main competitor in other markets."
Televisa and Iusacell said last week that they plan to appeal the decision.
The CFC said the two sides hadn't proposed commitments to resolve the associated competition issues during the analysis of the Televisa-Iusacell tie-up, but that they could do so in an appeal. If they address those concerns in an "efficacious and sustained" way, the CFC said, it could approve the transaction on condition that they abide by the commitments.
Both Televisa and TV Azteca have insisted that they compete head-to-head in the television market, and that the Iusacell deal wouldn't change that.
The CFC said that the two commission members who voted to approve the transaction did so on grounds that it would enhance competition in the mobile phone market. America Movil (AMX) unit Telcel, controlled by billionaire Carlos Slim, has around 70% of the mobile phone market, compared with Iusacell's roughly 4% market share.
-By Anthony Harrup, Dow Jones Newswires; (5255) 5980-5176; anthony.harrup@dowjones.com
