Merged Sony-Zee would have ‘adverse effect on competition’, says Indian watchdog

The Competition Commission of India (CCI) has reportedly decided that the proposed merger of Sony Pictures Networks India (SPNI) and Zee Entertainment will hurt competition in the country and will launch a further investigation into the tie-up.

The merger, announced in December 2021, would create a US$10 billion media behemoth across TV, cinema and streaming with around 92 channels.

However, as per Reuters, the CCI sent a notice to the pair on August 3 saying that the merged entity would have “unparalleled bargaining power” and that further investigation is required before any regulatory approval. 

The report notes that the findings could force the companies to change the structure of the merger. If the CCI was still left unsatisfied, it could lead to an even longer approval and investigation process.

The 21 page notice said that “such apparently humongous market position would enable the combined entity to enjoy an unparalleled bargaining power,” and an “appreciable adverse effect on competition.” 

The notice also detailed that the merged company would have a 45% share of the Hindi language segment – the largest audience in the country – and that it would likely use its strong position in the market to inflate advertising prices. 

It surmised: “The combined strength of the parties is likely to be used to entrench their presence and earn higher profits. This merger is a classic case of the first or second largest player, integrating with the third largest competitors, to become the strong market leader.”

The two companies were given 30 days to respond from the notice’s issue date of August 3.