Government demonstrates concern with the sale of Oi’s mobile network and forwards case to Anatel – 09/01/2021 – Market

The government expressed concern about the impact that the sale of Oi’s mobile networks could have on competition and competition in the telecommunications sector and referred the case to Anatel (national telecommunications agency) to investigate the possibility of an infringement of the economic order.

The information is contained in an official response sent to questions made by deputy Elias Vaz (PSB-GO) about the purchase of Oi’s mobile network by operators Vivo, Tim and Claro for R$ 16.5 billion, in an operation carried out in December 2020.

In a parliamentary nomination, the deputy suggested to the Ministry of Communications that it institute an administrative proceeding with Anatel to investigate the possibility of an infringement against the economic order and damage to users that may arise from the sale of Oi’s mobile networks.

An official letter signed by the deputy secretary of Telecommunications at the ministry, Nathália Almeida de Souza Lobo, affirms that the “concern of the congressman coincides with that of the federal government, in the sense of promoting a market of broad, free and fair competition, competition and free enterprise “.

Next, the secretary states that the ministry does not have the legal competence to institute a prior administrative procedure to investigate the possible infringement and that, therefore, the matter was referred to Anatel “for the adoption of the applicable measures provided for in the relevant legislation”.

In an informative note, the Department of Policies for Telecommunications and Regulatory Monitoring, of the Secretariat of Telecommunications, says that “the author’s concern is the same as the Ministry of Communications itself when formulating its policies for the sector”.

“Furthermore, it is noteworthy that acts of economic concentration in the telecommunications sector are subject to the controls, procedures and conditions provided for in the general rules for the protection of the economic order.”

The note also says that Anatel is responsible for regulating and inspecting the sector, “including the control, prevention and repression of infractions of the economic order”, while the ministry is responsible for defining sectorial policies.

Deputy Elias Vaz says that the sector is already monopolized and that the purchase of Oi’s mobile networks by the three rivals “concentrates what is already concentrated”.

“This, in my opinion, hurts the interest of society, because it is a very important sector in people’s lives. This hurts the issue of monopoly, the formation of cartels. And we made this formal provocation to the government, because the government was silent in the face of this situation,” he says.

“The government ended up accepting our request and made a request to Anatel. In my opinion, Anatel has to position itself for society, not allowing this concentration to occur. Our expectation is that another company that wants to participate in the Brazilian market can interested, because the competition is good for the users of the country’s telephone system.”

Anatel stated to sheet that in order to guarantee the provision of services in standards compatible with the user’s requirements, necessary measures can be adopted to stimulate competitiveness in the sector.

“If negative impacts are identified for consumers or for competition in the telecommunications market, Anatel may impose restrictions, limits or conditions on companies or groups of companies providing telecommunications services, whether limits or charges, always observing the conditions imposed by legislation, as well as their adequacy to the strict public interest,” he said.

According to the regulatory body, in relation to the specific case of the sale of Oi’s assets, the analysis of the operation is in the phase of gathering information and fundamentals, a period that investigates the consequences of the operation and its compliance with legislation. The phase precedes the agency’s decision-making on the case.

Anatel highlighted that, in the operators’ application to the autarchy, aspects such as legal limitations to economic concentration and the degree of competition will be analyzed.

“The transfer of control will only be approved if it does not harm competition and does not jeopardize the provision of the service,” he said.

Sought by the report, Claro, Tim and Vivo stated that the proposal presented for the purchase of Oi’s mobile assets preserves the competitive aspects in the cell phone segment.

“The asset division will be done in order to strengthen the rivalry between the companies and fully respect the spectrum holding limits set by the regulator,” they stated in a joint note.

Oi had not responded until the publication of this text.

In a statement, the Ministry of Communications said that it does not monitor the competitive environment in the telecommunications market, a task that is incumbent on Anatel and Cade (Administrative Council for Economic Defense).

The ministry said, however, that it awaits the result of the analysis carried out by the two bodies “in case of need for action by this folder”.

The sale of Oi’s mobile networks took place in an unbeatable auction, as part of the company’s repositioning effort to try to get out of the judicial reorganization process started in 2016 to deal with a debt of R$65 billion. Highline, which even negotiated the assets, withdrew from the deal and did not appear at the auction.

The completion of the operation still depends on the approval of Cade, which will analyze how customers will be divided between the three companies to avoid excessive market concentration.

In late July, the board considered the transaction “complex” and indicated that further investigations are needed to assess the likelihood of buyers exercising market power after the transaction.