The European Commission has set a provisional deadline of July 7 to make its decision on Paramount and Warner Bros. Discovery’s pending $110 billion merger.
An EC spokesperson confirmed to TheWrap that it has been “formally notified” of the transaction and updated its website with the deadline on Tuesday.
Representatives for Paramount did not immediately return TheWrap’s request for comment.
Under its Phase 1 investigation, the EC has 25 working days to decide whether to clear a merger, request remedies or move to a Phase 2 investigation.
During this investigation, the regulator typically requests information from the merging companies or third parties, which can include a questionnaire seeking views on the merger, as well as other contacts with market participants, aimed at clarifying the conditions for competition in a given market or the role of the merged companies in that market.
Towards the end of Phase 1, the commission will hold a “state-of-play meeting” with the parties merging, where they are informed of the results of the phase 1 investigation. More than 90% of all cases are resolved in Phase 1, generally without remedies. If there are competition concerns, companies can offer remedies, which extends the Phase 1 deadline by 10 working days.
If the investigation moves to Phase 2, the EC will conduct more extensive information gathering, including companies’ internal documents, extensive economic data, more detailed questionnaires to market participants, and/or site visits.
A Phase 2 investigation could last up to 90 working days, with the possibility of further extensions of 15 or 20 days or even that timeline freezing until missing information is supplied, and would result in the merger being cleared with or without remedies or being blocked.
If remedies are accepted, they become binding upon the companies. An independent trustee is then appointed to oversee compliance with these commitments.
The update comes as the deal, which has already been approved by shareholders, is on track to close by the end of the third quarter, though Paramount is internally hoping to close the merger as early as July.
In addition to the EC, regulators in the U.K. are reviewing the deal, with a deadline for public comments closing at the end of April. Paramount has also asked the FCC to approve its foreign investment in the deal, with those investors set to account for 49.5% of the equity of the combined company, and met with U.S. Department of Justice officials to discuss the transaction. The DOJ’s Hart-Scott-Rodino review period expired in February, though the regulator can still get involved at anytime in the process.
In addition to federal and international regulators, a group of U.S. state attorneys general led by California’s Rob Bonta are also reviewing the deal and weighing whether to take legal action against the merger. Bonta previously told TheWrap that “red flags are everywhere when you have a merger of this type” and that the states are prepared to “act timely,” but declined to provide a specific timeline for when a decision could be made.
In a recent regulatory filing, Paramount disclosed that it has received subpoenas, or civil investigative demands, from various state AGs that focus on the investigation by the Department of Justice and the competitive effects of the merger. It does not disclose which or how many state AGs sent subpoenas.
In the event the transaction does not close by Sept. 30, WBD shareholders will receive a 25 cent per share “ticking fee” for each quarter until closing. In the event that the deal does not close at all due to regulatory matters, Paramount will pay WBD a $7 billion termination fee.
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