Australia: ACCC Releases Media Merger Guidelines

Last Updated: 13 November 2017
Article by Nicolas Taylor and Prudence Smith

In Short

The Situation: The Australian Competition and Consumer Commission ("ACCC") has released new guidelines on mergers in the media industry.

Looking Ahead: The new guidelines provide some—but not sufficient—clarification on how the ACCC will handle media mergers. Below we offer some insights on reading between the lines to get a more clear view.


On November 1, 2017, the Australian competition agency released its revised Media Merger Guidelines. These guidelines update the previous version, which was released in 2006. The ACCC's approach to assessing mergers is set out in its merger guidelines, but owing to the unique nature and role of media mergers in Australia, the ACCC has the view that industry-specific guidelines are valuable.

The need for the revised guidelines arises due to tremendous industry changes since the guidelines were first released in 2006 and because the Broadcasting Services Act 1992 was recently amended to remove two key restrictions on media sector M&A transactions. In particular, Australia has just removed a rule that prevented any one free-to-air TV broadcaster from reaching more than 75 percent of the population and a rule that prevented any one media owner from owning a TV, radio and newspaper property in the same city.

The new guidelines explain that a traditional media property (such as a free-to-air TV network or a daily newspaper) typically competes in most or all of the following eight markets:

  • Wholesale level journalism and news content production
  • Wholesale level creation of sports content
  • Wholesale level creation of entertainment content
  • Retail (i.e. publication or broadcast) of the three categories above
  • Advertising
  • Delivery platforms

In a traditional media delivery model, the players operate in "two sided" markets in which advertising generates the funding needed for the creation of content and delivery and readership drives advertising revenues. "Disruptive" competition tends to "cherry-pick" one or more markets. For example, social media like Facebook cherry-pick the platform and advertising markets while not participating in the creation and retail delivery of content.

ACCC Chairman Sims has publicly stated that he is sympathetic with traditional operators needing to merge to save costs and continue to compete. This attitude is borne out in the recent deals discussed in the new guidelines, all of which were approved.

A key problem with the new guidelines is that none of the included example deals were blocked, so they do not provide a good sense of the reach of the ACCC's likely approach to a media merger assessment. Additionally, the following key questions remain unanswered:

How Would the ACCC Process Applications for Authorization Under the Public Benefit Test on the Basis that a Merger to Monopoly Is Necessary to Fund "Shoe Leather" Journalism?

The guidelines discuss only the ACCC's approach to the competition assessment process, but merging parties can instead apply for authorization on the basis of public benefits. The New Zealand Commerce Commission has already been confronted with such a merger between the two main publishers of daily newspapers. In a decision of more than 300 pages, the agency wrestles with this very controversial issue.

What Evidentiary Threshold Does the ACCC Expect to Be Shown for New Technologies?

Although new technologies that threaten to change the industry are regularly introduced, many technologies fail. Even those that succeed generally only win part of the revenue.

Market Definition Is Key but the ACCC's Method Is Unexplained?

Like its overseas counterparts, the ACCC relies on a traditional antitrust test for deciding what constitutes a market. This involves considering the effects of a "significant non-transitory increase in price" ("SNIP"). However, in many media markets, the SNIP technique cannot be used without controversial modifications because there is often no explicit price paid by consumers. Rather, prices are often nominal and are used to gain statistics on readership rather than to fund content. Instead, the funding often comes from advertising. The ACCC's recent opposition to the oOh!Media merger provides a window into how the ACCC will likely undertake this assessment.

How Will the ACCC Assess the Competitive Effect of Public Broadcasters?

There are two public broadcasters in Australia: the ABC (for general content) and the Special Broadcasting Service (for ethnic entertainment, World News and foreign sports content). Both of these networks are important in content markets, and SBS is also a player in advertising markets.

How Will the ACCC Deal with the Unequal Treatment for Different Media Companies under the Regulations?

As entities other than traditional media companies enter the entertainment space, it is unclear how the ACCC will address inequitable regulations that provide new entrants with a substantial competitive advantage. Open issues include:

  • Tax treatment. Foreign operators may be able to channel profits through favorable tax jurisdictions, whereas licensees and owners of physically printed media are unable to avoid domestic tax obligations.
  • Local censorship laws.
  • Local content requirements. Requirements to produce and broadcast Australian-made products and to carry political advertising during elections applies only to domestic licensees.
  • Regulation of political advertising, such as attributing messages to a natural person and disclosing the party affiliation.

A copy of the media merger guidelines may be obtained here.


Two Key Takeaways

  1. In response to the removal of two key legislative prohibitions on media M&A deals, the ACCC has released its revised media merger guidelines. The guidelines take a sympathetic approach to greater consolidation of traditional players in the face of competition from disruptive technologies.
  2. The guidelines provide little guidance on the "outer bounds" of what is acceptable, and they fail to address a number of central questions that are unique to the media industry.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions