What does CCI's anti-trust clearance mean for Disney-RIL merger?
The process of the mega-merger between media stalwarts Reliance Industries Ltd and Walt Disney’s India branch, which will create a $8.5 billion entity, is picking up pace with the two companies having reached the Competition Commission of India seeking an antitrust clearance from the authority. exchange4media spoke to legal experts, well-versed with the industry, to understand what antitrust clearance means for the media landscape and advertisers.
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The antitrust clearance sought by RIL and Disney Star India refers to the approval given by the regulatory authorities to ensure that a proposed merger or acquisition does not create an unfair monopoly or reduce competition in the market.
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According to Advocate Alay Razvi, Partner, Accord Juris LLP, the antitrust clearance strives to safeguard advertisers against the potential adverse effects of diminished competition. “This clearance aims to protect advertisers from potential negative impacts of reduced competition, ensuring that they continue to benefit from competitive rates. This will prevent charging excessive prices, ensure transparency in pricing and bidding processes for ad slots, which can reduce the likelihood of hidden cost and unfair practices, and most importantly, ensure innovative advertising solutions such as better technologies and creative format,” Razvi said. Sharing a similar view, Shashank Agarwal, Advocate, Delhi High Court, said that it involves a review process to assess potential anticompetitive effects and may require certain conditions to be met for approval. “The merger of Reliance, which is already a shark in the Indian markets and Disney, already a giant in the film and television entertainment market, has the ability to create an enormous player in the Indian entertainment market with the ability to control and create a monopoly. “The merger for obvious reasons will also have the ability to impact the advertisers and broadcasters in terms of the fees that it would/might charge for display of their advertisements on its platforms. This is where antitrust clearance is required,” he said. Section 5 and 6 of the Competition Act control mergers of such huge entities which can create even a larger monopolistic market by keeping checks and balances at the time of approval of such mergers, he added. As per Razvi, in the context of this merger, such clearance would involve a regulatory review, market analysis, modifications, if any, and finally approval or rejection of the antitrust clearance. “It is crucial to maintain fair competition to prevent monopoly which can harm consumers and other businesses in the industry. The antitrust clearance of the merger between Reliance Industries and Walt Disney could have several impacts on other competitors and broadcasters in the media industry. This merger could create a stronger and more competitive entity, which can intensify competition for viewership and content acquisition. “This new merged entity will dominate other competitors. This will also increase their investment in technology to get viewership. Good for the consumer but higher cost for the broadcaster,” Razvi said. Experts said this clearance was vital, particularly to assess if it would create an appreciable adverse effect on competition (AAEC) in areas like cricket broadcasting, where both companies have a significant interest. “The Competition Commission of India (CCI) will scrutinize the merger to assess if it would create an appreciable adverse effect on competition (AAEC) in the Indian market or concentrate too much market power in one entity. “This involves evaluating whether the merged entity would unduly limit competition or monopolize the market, particularly cricket broadcasting, which is a significant concern for a market as vast and diverse as India. Antitrust clearance is a crucial step as it involves regulatory scrutiny to ensure the merger does not breach competitive practices,” said Advocate Pranav Bhaskar, Partner, SKV Law Offices. The merger of RIL and Star India is likely to be completed by early 2025. According to reports, the media houses have informed CCI that the combined entity won’t pose a threat to advertisers or competitors, especially in cricket broadcasting. Disney and Reliance currently own digital and TV cricket rights worth billions of dollars for the world's most valuable cricket tournament the Indian Premier League, International Cricket Council matches and those of the BCCI. The CCI is yet to issue the clearance. Experts said it could take up to several weeks. According to market estimation, the merged company will control 40 % of TV advertising and 42% of the total TV market share. It is also predicted to command a digital OTT market share of 34%. The new company will have over 750 million viewers across India and will also cater to the Indian diaspora around the globe. For more updates, be socially connected with us on
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