EconomyFinancialMerger of AT&T and Discovery: competition from Cofece or...

Merger of AT&T and Discovery: competition from Cofece or IFT?

The merger between AT&T and Discovery to create a new streaming content giant returns to the table the debate on whether this type of resolution is the responsibility of the Federal Commission of Economic Competition (Cofece) or the Federal Telecommunications Institute (IFT). ).

This year, the union between the two companies, which was announced in May 2021, must be determined. Until now, Cofece is the one who would resolve the case. For this reason, the Institute in charge of Adolfo Cuevas has already demanded before specialized Courts the referral of the issue, since it considers that the streaming market is within its competence.

The economic competition specialists consulted agree that the lack of clarity in determining which markets each agency is responsible for regulating stems from the same telecommunications reform that was enacted in 2013 to create the IFT, which is in charge of ensuring that competition in broadcasting, telecommunications and granting concessions.

“Since the reform was made, the lawyers were concerned that there were situations that were not easy to delimit. Telecommunications issues are very broad and that is where we must break down what types of activities are proper to that sector and the law does not establish it very clearly. For example, the advertising would seem to be from Cofece, but there is also advertising in the media and these issues would fall to the IFT,” explains Lucía Ojeda, a partner at the Mexican law firm SAI Law & Economy and an expert in economic competition.

Two years ago, both regulatory bodies clashed to determine who was responsible for endorsing the merger between Uber and Cornershop, whose conflict ended in specialized competition courts. Cofece ended up resolving the merger.

For the specialists consulted, the case of the merger between the telecommunications operator and the audiovisual content company must be analyzed by both autonomous bodies. The IFT must be in charge of reviewing the part of the concession to avoid concentration, and Cofece must investigate whether the union of said companies generates competition problems for OTTs and restricted television.

“There should be a concurrence, that is, that the two authorities can authorize the cases. Of course, when making determinations, if they find that there is a specific damage in a market or that a specific condition has to be set, depending on the nature of that condition, it would be clearer who has the power to impose that condition,” he explains. Elena Estavillo, former IFT commissioner.

Víctor Manuel Frías Garcés, a partner at the Greenberg Traurig firm and an expert in economic competition issues, believes that the problems between Cofece and the IFT, which have ended up in specialized courts, cause delays in mergers, such as, he recalled, the case of Uber and Cornershop, which was resolved in a year and a half. It also generates costs for the State. “Your fight over these issues that are coming to court and all these processes cost money,” he says.

Is there a lack of will between Cofece and the IFT to work together?

Although the confrontations that the IFT and Cofece have had come from the lack of clarity in the law, the experts also consider that it is due to a power dispute in seeking to legitimize their attributions, but they must understand that the evolution of the markets , especially the digital ones, are causing their faculties to be closer and closer.

Ojeda considers that this type of vertiginous changes in digital markets can cause economic agents to take advantage of the lack of clarity in the law and the lack of cooperation between the two organizations to generate problems for competition.

“It seems ironic how the competition authorities in the world are very aware of the need to collaborate. There are international, bilateral collaboration agreements and Cofece has many bilateral agreements with competition authorities from other countries, and yet it does not have them with the IFT. Here we are in a very absurd situation”, affirms Estavillo.

Join forces to strengthen their autonomy

President Andrés Manuel López Obrador has shown his disagreement with the work of both organizations and has even threatened to disappear them. Currently, both autonomous entities face an uncertain future regarding their operation and an incomplete plenary session that would put their powers at risk.

For this reason, competition experts assure that Cofece and the IFT must work together to defend their autonomy and strengthen their powers.

“These agencies have proven their efficiency and value precisely when they limit the powers of the Executive or when the Executive says that something is not up to him and a regulatory body is. I think they should be united to defend their autonomy and their very existence. They must form a common front to defend themselves against this attack that aims to make them disappear”, points out Frías Garcés.