Cade must approve with conditions the purchase of Oi’s mobile networks by TIM, Vivo and Claro

CADE (Administrative Council for Economic Defense) must approve the purchase of Oi’s mobile networks by telephony operators TIM, Telefônica (Vivo) and Claro, according to sources heard by the leaf.

To endorse the operation, the agency must require measures to mitigate competition problems, the so-called remedies. The companies told the agency that the measures will allow new companies to enter the sector and expand their operations.

The arguments made this Tuesday (8) were part of an effort to convince the agency to accept the R$ 16.5 billion deal, while competitors and the MPF (Federal Public Prosecutor’s Office) express concerns about market concentration after the operation.

The case is on the agenda of judgments of Cade’s administrative court this Wednesday (9). According to sources, the analysis of the antitrust body should be completed on the same day.

Until the eve of the trial, the different parties interested in the subject faced an argumentative battle at Cade over the effects of the operation. While buyers insist the move will not harm the market, competitors say greater concentration is indisputable.

The Minas Gerais operator Algar Telecom asks that the deal be disapproved or approved with measures to mitigate the problems (the so-called remedies), as it sees the market already concentrated and with great possibility of combination. “All these characteristics will be aggravated by the operation and may generate irreversible damages to consumers”, said the company.

Sercomtel Telecom from Paraná, on the other hand, asked for disapproval, or approval with structural remedies that at least guarantee the existence of a fourth major competitor in the market. Among the measures suggested by the company is the sale of Oi’s assets regionally to local competitors or new entrants.

Sercomtel itself is interested in buying Oi’s assets and says that, therefore, the arguments that Oi would go bankrupt without the analyzed operation should not prosper.

The financial condition of the Oi group was the subject of a presentation by Anatel (Agência Nacional de Telecomunicacoes) at Cade this Tuesday. Two members of the agency made a presentation to CADE’s board members at the request of the president of the antitrust agency, Alexandre Cordeiro.

Oi went into judicial reorganization in 2016 to deal with a debt of R$65 billion and the sale of Oi Móvel is part of an attempt to reposition the group.

The Idec (Brazilian Institute for Consumer Protection) was also heard by Cade and said that the telecommunications sector was the main target of complaints in the Procon (Consumer Protection and Defense Program) in 2020. For the institute, the market structure it is extremely concentrated in the four largest companies and the operation should be disapproved, or approved with medication.

When filing the case, the buyers of Oi Móvel even asked Cade to approve the transaction without restrictions. But after the competitors reacted, they and the antitrust agency began to negotiate measures to mitigate competition problems.

After a first round of negotiations with CADE, the companies presented in November a set of measures that could be combined with each other so that third parties would have access to the networks and could expand their operations in different locations.

Among them were the leasing of radio frequency spectrum to interested third parties and a monitoring committee (trustee) hired by the companies under CADE’s supervision to act as an independent consultant in monitoring the obligations assumed.

Competitors and the MPF considered the measures insufficient and the companies had to reinforce the proposal on the measures to be adopted. Now, Claro representatives claim that the robustness of the new measures unequivocally demonstrates the commitment to address Cade’s concerns.

“The applicants have pledged before CADE’s Court to offer a broad and robust set of solutions, which will allow entrants and competitors not only to enter and provide services in the market, but also to expand their operations,” said Claro’s lawyers on Tuesday.

Over the weekend, the MPF asked Cade to veto the purchase of Oi’s mobile networks by the three competitors.

The regional prosecutor and representative of the MPF at Cade, Waldir Alves, said that a consortium was formed between the three without prior notice to the body. He also called for the opening of a process to investigate possible anti-competitive practices by interested parties.

Tim, Telefonica and Claro denied wrongdoing. Oi, on the other hand, stated that the position of the MPF did not consider “the importance of the operation for the economic recovery of Grupo Oi” and stated that the operation reinforces competition between the three national mobile operators while giving space to other operators.