Background on Key Players and Relevance
The Argentine National Commission for the Defense of Competition (CNDC) has raised objections to Telecom’s acquisition of Telefónica’s local assets. This development is significant as it involves two major players in the telecommunications sector, with Telecom being controlled by Cablevision Holding—a partnership between the Fintech fund and key shareholders of Grupo Clarín. Telefónica, a Spanish group, had previously announced its intention to sell these assets.
CNDC’s Objections and Next Steps
According to the CNDC’s objection report, the merger poses substantial risks due to its potential effects on competition across various telecommunications markets. The CNDC anticipates convening a special hearing, yet to be scheduled, “to analyze possible measures that could mitigate the potential negative effects of this concentration operation on competition.”
Telecom has been given a 15-day window to submit any considerations they deem “appropriate” regarding the objection report and propose solutions to address competition concerns, as per their communication with the National Securities Commission (CNV).
Telecom’s Response and Timeline
Telecom claims the CNDC’s decision is “premature” since they have not yet submitted Form F2, which notifies the CNDC of such transactions. Telecom still has until June 30 to submit this form. They argue that being asked to present considerations and solutions for a decision based on incomplete information infringes upon their rights, potentially leading to further legal proceedings.
“We were not even given the chance to present our arguments and demonstrate that, given the level of investment involved, there is no ‘economic harm’ but rather a positive outcome,” Telecom emphasizes.
CNDC’s Decision-Making Process
The CNDC’s objection stems from requests submitted by third parties, including Telecentro, the Argentine Association of Consumers and Users (Acuda), and individual shareholders of Telecom and Telefónica’s employee ownership programs. These programs emerged from privatization efforts that distributed parts of the operators’ capital to their employees.
Transaction Details
Telecom acquired Telefónica’s local assets for $1.25 billion on February 24, following Telefónica’s announcement to sell these assets a month prior. The transaction took place immediately, with Telecom paying the full amount at that time.
However, shortly before the announcement, the government—led by President Milei—expressed strong opposition to the deal. Amidst tensions with Clarín, the President anticipated a thorough examination of the transaction. The initial official decision was a Secretary of Commerce resolution ordering a six-month freeze on any transaction effects, maintaining both operations separate until the CNDC issued a ruling.
Two weeks ago, Telecom secured a court judgment suspending this resolution.
Key Questions and Answers
- What is the main issue? The Argentine National Commission for the Defense of Competition (CNDC) has raised concerns about the potential negative impact on competition in various telecommunications markets due to Telecom’s acquisition of Telefónica’s local assets.
- Who are the key players involved? Telecom, controlled by Cablevision Holding (a partnership between Fintech and Grupo Clarín shareholders), and Telefónica, a Spanish telecommunications group.
- What is Telecom’s response? Telecom claims the CNDC’s decision is premature, as they have not yet submitted Form F2. They argue that being asked to propose solutions based on incomplete information infringes upon their rights.
- What is the timeline for further developments? Telecom has 15 days to submit considerations and proposed solutions regarding the CNDC’s objection report. A special hearing has been anticipated by the CNDC to analyze potential measures to mitigate negative competition effects.
- What led to the CNDC’s objection? The objection stems from requests submitted by third parties, including Telecentro and Acuda, as well as individual shareholders of Telecom and Telefónica’s employee ownership programs.
