CADE unconditionally clears merger between Telefônica Brasil and Winity

In the hearing of 13 September, the Administrative Council for Economic Defense (CADE) approved without restrictions the sharing of telecom infrastructure between Telefônica Brasil and Winity, through the signature of interdependent and complementary agreements.

With the transaction, Winity is to rent the frequency bands 713 MHz to 718 MHz and 768 MHz to 773 MHz in 1,120 municipalities to Telefônica. The deal also grants the use of passive infrastructure, allowing for an expansion of Telefônica's telecommunication services in some locations.  

The agreement also consists of the provision of resources of Telefônica's access network to the establishment of Winity's service network. The aim is to provide coverage and service for 1,102 stretches of roads and 313 locations, as per the obligations assumed with the acquisition of the 700MHz spectrum usage in the 5G roaming auction and, subsequently, as provided in the grant agreement.

According to the rapporteur of the case, Commissioner Sérgio Ravagnani, the transaction shows competitive effects derived from regulatory objectives of the sector’s public policy implemented by the Brazilian Telecommunications Agency (ANATEL),  as the regulatory agency of this market.

Some alleged anticompetitive conducts reported were not enough to raise concerns, so no remedies were imposed.

The majority of the Tribunal concluded that the business presented relevant economic efficiencies that are justified from the regulatory compliance point of view.

CADE and ANATEL cooperated in the review of the transaction, with a technical contribution of the regulatory agency. In addition, CADE is to notify ANATEL of the final decision.  

In his vote, the president of CADE, Alexandre Cordeiro, highlighted the complementary model between regulation and competition adopted in Brazil, mainly the historical partnership between the competition authority and the regulatory agencies. Regarding the decision, the Tribunal highlighted that "CADE will not refrain from adopting competitive measures to mitigate any competition concerns identified in the transactions. In this particular case, however, I agree with the rapporteur's decision and I believe that there is no other solution than to clear the merger unconditionally, considering that the transaction, ex-ante, does not raise any competition concerns".

Finally, it is important to remember that ANATEL has yet to issue a decision on the case.

Access Case nº 08700.008322/2022-35.