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Korea’s Fair Trade Commission says concessions would not prevent harm to competition in broadcast, mobile markets.
South Korea’s Federal Trade Commission (FTC) on Monday formally confirmed its opposition to SK Telecom’s proposed acquisition of TV provider CJ Hellovision.
The antitrust watchdog issued a preliminary decision earlier in July, following a seven-month review, and has now followed it up with a final decision.
The FTC rejected the merger on concerns that it would harm competition in the telecoms and TV markets.
SK Telecom launched its bid for CJ Hellovision in November 2015.
Under the terms of the transaction, SK Telecom agreed to pay 500 billion won (€398.2 million) for a 30% stake in CJ Hellovision held by CJ O Shopping. It would also have the option to acquire CJ O Shopping’s remaining 23.9% stake in CJ Hellovision via call and put options.
Upon completion, SK Telecom planned to merge CJ Hellovision and its fixed-line unit SK Broadband via a stock swap.
In a statement on Monday in Korean, the FTC said the combined company would be the largest TV broadcaster in 21 of the country’s 23 broadcasting regions.
It also noted that CJ Hellovision’s low-cost MVNO service, which operates on KT Corp’s network, has exerted significant downward price pressure on SK Telecom, KT Corp, and LG Uplus.
The FTC said remedies including "behavioural measures" or asset sales were "unlikely to heal" its concerns.
While the Korea Communications Commission (KCC) and the Ministry of Science, ICT and Future Planning (MSIP) have the final say over whether to approve the deal, the FTC’s decision carries a lot of weight and has in all likelihood sunk SK Telecom’s hopes.
"Following the FTC’s judgment to prohibit the merger and stock acquisition, the business combination of SKT and CJH has become impossible," said MSIP, in a Korea Times report. "There will be no practical benefit for us to continue proceeding with the review process."
In the same report, SK Telecom said "it is deeply regrettable" that the deal has been rejected. Similar sentiments were expressed by CJ Hellovision.
