A merger between the Indian unit (Culver Max Entertainment/Sony Pictures Networks India) of Japan’s Sony and Zee Entertainment to create a $10 billion TV enterprise will potentially hurt competition by having “unparalleled bargaining power”, India’s antitrust watchdog found in an initial review, according to an official notice seen by Reuters.

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

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, a Reuters report from New Delhi stated.

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 immediately respond to requests for comment. Representatives of Sony in Japan did not respond outside regular business hours.

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.

“Such apparently humongous market position would enable the combined entity to enjoy an unparalleled bargaining power,” the CCI said in its notice, adding the combined entity could increase the price of channel packages.

It gave the two companies 30 days from August 3 to respond.

The initial review shows the deal is likely to cause an “appreciable adverse effect on competition”, the watchdog said. “Thus, it is considered appropriate to conduct further inquiry into the matter”.