Sign up for our daily briefing
Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.
Catch up on coronavirus stories and special reports, curated by Mike Allen everyday
Catch up on coronavirus stories and special reports, curated by Mike Allen everyday
Denver news in your inbox
Catch up on the most important stories affecting your hometown with Axios Denver
Des Moines news in your inbox
Catch up on the most important stories affecting your hometown with Axios Des Moines
Minneapolis-St. Paul news in your inbox
Catch up on the most important stories affecting your hometown with Axios Twin Cities
Tampa Bay news in your inbox
Catch up on the most important stories affecting your hometown with Axios Tampa Bay
Charlotte news in your inbox
Catch up on the most important stories affecting your hometown with Axios Charlotte
AP
Brazil's antitrust authority said the merger of AT&T and Time Warner should not be allowed to go through unless the companies agree to changes, such divesting certain assets, to prevent the combined company from hurting competition.
Why it matters: Brazil is one of the remaining countries (along with the U.S.) that needs to sign off on the $85 billion deal, which has gotten regulatory authority from 16 countries. While it's hard to know how the recommendation will impact the U.S. review, it will likely be noticed by the Department of Justice since critics of the deal have drawn parallels in the U.S. market.
"I think this will harden any existing concerns DOJ has about the deal," said Gene Kimmelman, former DOJ official who is now CEO of Public Knowledge, an opponent of the merger.
Specifics: "The new company would also have the capacity and incentives to take various forms of discrimination against its competitors in both markets, which could weaken the competitive environment." the Brazilian antitrust authority, known as CADE, said in a statement Tuesday, according to a translation by the FT.
- CADE also said the proposed deal would allow Time Warner to gain access to sensitive information from all its competitors through Sky (one of Brazil's biggest operators, of which AT&T owns a 93% stake, according to Bloomberg).
- And AT&T would have access to conditions negotiated by its rivals through Time Warner (one of Brazil's largest pay-TV programmers), "significantly harming businesses and consumers in the pay-TV segment."
In the U.S. A coalition of public interest and consumer groups made a similar argument in a letter to the DOJ last month:
"As both a major programmer and a major distributor, it would be able to use information from both sides of the negotiating table to give itself better deals than its rivals can obtain—it would necessarily know, for instance, what its programming rivals are charging for their content, and what its distribution rivals are paying."
AT&T disagrees: AT&T says the deal benefits consumers by providing more content options and will no have anti-competitive impacts on the market. "AT&T and Time Warner will work with Cade to clarify any issues they may have to promptly reach a final resolution on the matter," the company said in a statement.
What's next: In Brazil, a decision is expected in November, although that deadline could slip up to 90 days. In the U.S., authorities are reportedly pretty far along in the review and are discussing conditions with the companies, according to WSJ, indicating that the deal is on the path to approval. Chile also must finalize its regulatory review. AT&T still expects the deal to close by the end of the year.