The merger of Sony and Zee Entertainment will hurt the Indian market! Why is the Competition Commission expressing concern?.
New Delhi. The merger of Japanese company Sony and Indian company Zee Entertainment can hurt the domestic market of India. This concern has been expressed by the Competition Commission of India (CCI) in its preliminary review report.
CCI said, the merger of Sony and Zee Entertainment will create a huge TV enterprise of 10 billion dollars, which can hurt the competitiveness of the market due to the immense bargaining power. The news agency Reuters has given this news quoting an official notice. The CCI, in a notice issued to both the companies on August 3, has said that the regulator needs to conduct further investigation in this matter.
Sony and Zee had done in December last year to create a stronger and bigger network by merging TV channels, film assets and streaming platforms of both the companies. This decision was taken in view of the growing entertainment business in India’s 1.4 billion population country, so that it can compete with the giants like Walt Disney.
Deal may be delayed
After this latest disclosure of CCI, there are speculations that now there may be a delay in the completion of the deal of Sony and Zee, because this merger may take some time to get regulatory approval. Legal experts related to the matter say that Indian regulatory agencies can also pressure the two companies to change their structure.
If both the companies fail to satisfy the CCI, they may face trouble in getting approval and the investigation process may also go on for a long time. Zee said that it will take all steps under the law to get necessary approvals so that the merger process can be completed.
Why did CCI become aware?
The Competition Commission, in its 21-page notice, has said that preliminary investigation suggests that after the proposed deal, there will be a very strong venture in the market, which may harm the competitiveness of other companies. This deal will create a single network of 92 channels in the country, while it will also support Sony’s global revenue of $ 86 billion and assets of $211 billion. In such a situation, the new venture may increase the price of its channel and other competitors may also come under pressure to increase the price.
The CCI had given 30 days to both the companies to respond to the notices. If the CCI is not satisfied with their reply, then further inquiry can be conducted in the matter. Earlier, Zee Managing Director Puneet Goenka had said in an interview that the deal would be worth around $10 billion, which is expected to be completed by October 2022.
