NEW DELHI (Reuters) -India’s antitrust body has reached an initial assessment that the $8.5 billion India merger of Reliance and Walt Disney media assets harms competition due to their power over cricket broadcast rights, four sources told Reuters on Tuesday.
In the biggest setback so far to their planned merger, the Competition Commission of India (CCI) has privately told Disney and Reliance its view and asked the companies to explain why an investigation shouldn’t be ordered, one of the sources said.
Reliance, Disney and CCI did not immediately respond to requests for comment. All sources declined to be named as the CCI process is confidential.
“Cricket is the biggest pain point for the CCI,” said one of the sources.
The merged company, which would be majority owned by Asia’s richest man Mukesh Ambani’s Reliance, would have lucrative rights worth billions of dollars for the broadcast of cricket, raising fears over pricing power and its grip over advertisers.
Antitrust experts had warned the merger, announced in February, could face intense scrutiny as it will create India’s biggest entertainment player which will compete with Sony, Zee Entertainment, Netflix and Amazon with a combined 120 TV channels and two streaming services.
The CCI earlier privately asked Reliance and Disney around 100 questions related to the merger. The companies have told the watchdog they are willing to sell fewer than 10 television channels to assuage concerns about market power and win an early approval, sources told Reuters.
The companies can still address the concerns of the CCI by offering more concessions, a second source said, adding that the notice for now “is a precursor of things getting complicated.”
“The notice means that initially the CCI thinks the merger harms competition and whatever concessions offered are not enough,” added the person.
A third source said CCI has given the companies 30 days to respond and explain their position.
(Reporting by Aditya Kalra; Editing by Conor Humphries)