CCI Raises Objections on Reliance-Disney Deal

Syllabus: GS3/ Economy

In News

• The Competition Commission of India (CCI) has raised concerns regarding the proposed merger of media assets between Reliance Industries and Walt Disney in India.

About 

• According to the Competition (Amendment) Act 2023, if the CCI believes a merger may have an appreciable adverse effect on competition (AAEC), it issues a statement of objections to the involved parties, requiring them to justify the merger within 25 days.
• Earlier this year, Reliance, Viacom 18 Media Private Ltd, and The Walt Disney Company announced the signing of binding definitive agreements to form a joint venture (JV) that would combine the businesses of Viacom18 and Star India.
• The merged entity would have near-monopoly control over digital and TV cricket rights, including the highly valuable Indian Premier League (IPL).
• The Competition Commission of India (CCI) previously imposed a fine of ₹1,337.76 crore on Google for engaging in anti-competitive practices concerning Android mobile devices.

Adverse effect on competition (AAEC) & its Impacts

• It is a situation where a business practice, merger, or agreement has the potential to significantly harm competition within a market.
• Impacts of AAEC 
  • Reduction in Consumer Choices: When competition is diminished, consumers often have fewer choices in terms of products or services. This can lead to a lack of diversity in the market.
  • Higher Prices: With reduced competition, companies may have the power to set higher prices, as consumers have fewer alternatives.
  • Barrier to Entry for New Players: AAEC can create significant barriers to entry for new companies, making it difficult for startups or smaller firms to enter the market.
  • Exploitation of Market Power: Such as unfair terms of trade, tying arrangements, or restrictive covenants.
  • Decreased Innovation: AAEC can lead to a reduction in innovation because the incentive to innovate diminishes when competition is weak.

About Competition Commission of India (CCI) 

• It is an autonomous statutory body established in 2009 under the Competition Act, 2002.
• The CCI eliminates practices that adversely affect competition, promote and sustain competition in markets, protect the interests of consumers, and ensure freedom of trade in the markets of India.

Source: TH