SerpApi.Org
Competition enforcers in the European Union have signed off on Paramount's $111 billion bid for Warner Bros. Discovery, another key approval as the company fights a legal challenge from a coalition of 12 states.
The European Commission cleared the deal on Wednesday after Paramount agreed to withdraw from United International Pictures, its film distribution joint venture with Universal Pictures. The studio also said it wouldn't enter into any film distribution deal with Universal for the next ten years.
"These commitments fully address the competition concerns identified by the Commission by ensuring that the films of the merged entity will not be distributed jointly with those Universal or Disney," states the commission's release.
The greenlight comes days after a federal judge in California temporarily blocked Paramount from closing the deal. The court will consider next month whether the transaction should be frozen until the case is decided, putting the studio at risk of having to pay hefty financial penalties to Warners shareholders. In June, the Justice Department approved the deal without any concessions.
The commission investigated the impact of the acquisition on the production and distribution of films for release in European Union theaters, plus the supply and licensing of content.
At the production level, the commission found that there's sufficient competition from rivals, including Disney, NBCUniversal, Sony and Amazon MGM. But at the distribution level, it concluded that there'll be "high concentration" and "increased transparency" in countries where Paramount has a partnership with Universal because of the addition of Warners' movies portfolio. The deal would've led to the distribution of Warners' movies via United International Pictures.
Without Paramount's commitment to secure approval of the deal, cinema operators would've faced worse rental and distribution terms. There are also other pledges from the studio related to theatrical distribution in the region.
Paramount must surrender its stake in UIP within 13 months of the closing of the deal.
"Following the positive feedback received in the context of the market test, the Commission concluded that the transaction, as modified by the commitments, would no longer raise competition concerns," the release states.
So far, antitrust enforcers in over a dozen countries have cleared the deal. Regulators probing foreign investments from Gulf sovereign wealth funds in Germany, Italy, France, Romania, Slovenia, Belgium, Czechia, New Zealand and Spain have also approved the merger.
