Congress attacks CCI as Star-Viacom18 merger faces threat of public scrutiny

New Delhi: The proposed $8.5 billion Viacom18-Star India merger may face public scrutiny if both parties fail to address the potential anti-competitive concerns flagged by the Competition Commission of India (CCI), said a Newsdrum report quoting sources.

It is rare for CCI to move for public scrutiny of a proposed deal, as generally, companies concerned present plans to the regulator to address the concerns.

Under the competition law, CCI can push the deal for larger public scrutiny in case there are prima facie concerns of anti-competition aspects. In such a case, the parties concerned will be required to make public details about their proposed transaction for larger consultations.

The regulator also has the power to direct the companies to divest some of their assets to address anti-competition issues.

After the companies filed an application with the CCI for deal approval in May this year, the watchdog sought various clarifications and additional information from the parties.

Also read: Star-Viacom18 merger: CCI flags concerns over monopoly of cricket broadcast rights

The sources said the parties have been served show cause notice asking why detailed scrutiny of the deal should not be carried out as there are anti-competitive concerns in relation to certain business segments, including cricket broadcasting rights.

In the meantime, the proposed merger served as a weapon for the opposition to target CCI and Adani.

The Congress on Wednesday questioned the Competition Commission of India over its approval of all acquisitions by the Adani Group, asking why such institutions "remained passive" as the conglomerate built "monopolies" in critical infrastructure sectors, raising prices at consumers' expense.

Congress general secretary in-charge communications Jairam Ramesh said the Competition Commission of India (CCI) has reportedly raised concerns that the proposed Reliance-Disney merger could stifle competition.

"It is a good time to reflect on how the CCI should have also had the courage to address how the non-biological PM's other favourite business conglomerate is acquiring companies and reducing competition across various industries," he said in a post on X.

The Competition Commission of India (CCI) has reportedly raised concerns that the proposed Reliance-Disney merger could stifle competition. It is a good time to reflect on how the CCI should have also had the courage to address how the non-biological PM’s other favourite business…

— Jairam Ramesh (@Jairam_Ramesh) August 21, 2024

"The CCI is legally required to approve mergers and acquisitions that exceed a certain threshold. Yet, all acquisitions by the Adani Group have been approved, even as the company builds monopolies in sectors like ports, airports, power, and cement -- industries at high risk of market failure and anti-competitive practices -- often through threats and intimidation that have the backing of the powers-that-be," he alleged.

However, it is not clear whether Congress jumped into the matter on its own or if its support was solicited by Reliance Industries.

Also read: Star-Viacom18 merger: Will Hotstar and JioCinema merge in a single app?

Viacom18 is owned by Reliance Industries and Star India is part of the Walt Disney Company.

Once the multi-billion dollar deal, announced in February this year, is completed, it would create the biggest firm in the Indian media and entertainment sector, with over 100 channels in several languages, two leading OTT platforms and a viewer base of 750 million across the country.

As per the notice submitted to CCI seeking approval for the deal in May, the proposed transaction aims to combine the entertainment businesses (along with certain other identified businesses) of Viacom18, part of Reliance Industries (RIL) group and SIPL, wholly owned by The Walt Disney Company (TWDC).

"As a result of the transaction, SIPL, currently a wholly owned entity of TWDC through its subsidiaries, will become a joint venture (JV) which will be jointly held by RIL, Viacom18 and existing TWDC subsidiaries," it had said.

According to the notice, the proposed transaction will not cause any appreciable adverse effect on competition in India.

In the notice, the entities identified several key markets where horizontal overlaps were significant, such as licensing of audio-visual content rights, distribution of broadcast TV channels, provision of audio-visual content, and supply of advertising space in India.

SIPL is engaged in a range of media activities, including TV broadcasting, motion pictures and the operation of an OTT platform. It is a wholly owned entity of US-based The Walt Disney Company (TWDC).

Viacom18 is engaged in the business of broadcasting television channels and operating an over-the-top platform in India and worldwide. It is also engaged in the business of production and distribution of motion pictures.