The merger between Sony and Zee Entertainment to create a $10 billion enterprise, which will have the potential to hurt competition by having "unparalleled bargaining power", the Competition Commission of India found in an initial review, reported Reuters after seeing an official notice of India’s antitrust watchdog sent to ZEEL and SET.
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The 21-page notice sent to the two companies on August 3, stated that the watchdog is of the view that a further investigation is merited. CCI has given the two companies 30 days from August 3 to respond.
Earlier in December 2021, Sony and Zee in December decided to merge, challenging rivals like Walt Disney Co.
Reuters reported that according to three Indian lawyers familiar with the process, the CCI's findings will delay regulatory approval of the deal and could force the companies to propose changes to its structure. The lawyers also told Reuters that it could lead to a prolonged approval and investigation process, they added.
Zee in a statement said it continues to take all the required legal steps to complete all the necessary approval processes for the proposed merger.
The report mentioned that CCI’s initial review shows the proposed deal would place the combined entity in a "strong position" with around 92 channels in India, also citing Sony's global revenue of $86 billion and assets of $211 billion.
"Such apparently humongous market position would enable the combined entity to enjoy an unparalleled bargaining power," the CCI said in its notice, adding the combined entity could increase the price of channel packages.
The initial review shows the deal is likely to cause an "appreciable adverse effect on competition", the watchdog said. "Thus, it is considered appropriate to conduct further inquiry into the matter."
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