NEW DELHI: A merger between the Indian unit of Japan’s Sony and Zee Entertainment to create a $10 billion TV enterprise will potentially hurt competition by having “unparalleled bargaining power”, the country’s antitrust watchdog found in an initial review, according to an official notice seen by Reuters.

The Competition Commission of India’s (CCI) Aug. 3 notice to the two companies stated the watchdog is of the view that a further investigation is merited.

Shares in Zee fell nearly 5% in morning trade on Thursday following the Reuters report.

Sony and Zee in December decided to merge their television channels, film assets and streaming platforms to create a powerhouse in a key media and entertainment growth market of 1.4 billion people, challenging rivals like Walt Disney Co.

The CCI’s findings will delay regulatory approval of the deal and could force the companies to propose changes to its structure, three Indian lawyers familiar with the process said. If that still fails to satisfy the CCI, it could lead to a prolonged approval and investigation process, they added.

Zee in a statement said it continues to take all the required legal steps to complete all the necessary approval processes for the proposed merger.

The CCI and Sony in India did not respond to requests for comment. Representatives of Sony in Japan also did not respond.

In its 21-page notice, the CCI said its initial review shows the proposed deal would place the combined entity in a “strong position” with around 92 channels in India, also citing Sony’s global revenue of $86 billion and assets of $211 billion.