New media market definition for trade practices regulation

Monday, 05 March 2007 21:41 Noric Dilanchian

The digital media market has evolved in Australia to a stage where new approaches are needed for market definition by the trade practices regulator, the ACCC.

This message was delivered in a speech today by Mr Graeme Samuel, Chair of the Australian Competition and Consumer Commission (ACCC). He was speaking at Australian Broadcasting Summit 2007 on the topic of "Regulating media and broadcasting networks in a changing media environment."

Mr Samuel began by noting that Australian media is at a "crossroads" with print and broadcast media, telecoms and IT businesses breaking out of "their previous pigeon holes" through digitisation and otherwise, all while major proprietors prepare for the new laws on cross-media ownership.

Mr Samuel ended by noting a shift in the ACCC's categories for analysis of trade practices issues referable to the media, telecoms and IT sectors.

In his 12 page written speech, the ACCC changed approach are among many other interesting observations. Following are extracts from his speech. The headings and emphasis are ours.

On the greater dependency on pipes

"What we do know however, is that most of these devices will depend very heavily on improved ways of delivering content, be it over standard copper cables, new fibre optic networks, mobile phone or other wireless systems or through more traditional forms of broadcasting. We can see all of these delivery platforms as pipes down which the information flows - and the pipes are getting bigger all the time."

On the"substantial lessening of competition" section 50 test

"Regardless of what other tests media companies need to pass before mergers can proceed, they will not be allowed to proceed if they appear likely to lead to a substantial lessening of competition."

"There have been some significant purchases or other financing arrangements by several major media owners in recent weeks and months, which many have interpreted as a jockeying or positioning in preparation for a merger frenzy once the new media law changes come into effect."

"It is important to remember that the prohibition contained in section 50 is against any acquisition of shares or assets that "would have the effect, or be likely to have the effect, of substantially lessening competition in a market."

"The ACCC's challenge during this evolution of the media market will be to promote competition and not allow incumbents to impede the development of competitive choices for consumers."

On market definition for trade practices investigations

"In the past, the ACCC has regarded the media as four distinct products - free to  air television, pay television, radio and print. Those products have been thought of as having little overlap in content or advertising.

With the technological changes I have just mentioned under way, it is clear we can no longer rely on these neat pigeon holes that have been reasonably reliable in the past."

"As those traditional media boundaries blur, focus may shift from the way information is delivered to the actual products media companies offer. If, as we have already noted, television stations, newspapers and radio stations begin offering content in a similar format - let's take video updates of selected news stories as an example - do they suddenly cease to be different? And does that mean that where in the past they may have been considered to be separate markets, does this now make them direct competitors?

For a consumer, it may make little difference if they are downloading their morning update from the NineMSN, Sydney Morning Herald or 3AW websites. In this regard, we now consider there are three main categories the ACCC will investigate as part of its assessment of any proposed merger: the supply of advertising opportunities to advertisers; the supply of content to consumers; and the acquisition of content from content providers."

"The ACCC is also focusing on control of content and content producers. With an increasing diversity in distribution channels, it is essential that content and content production is not concentrated in a manner that can inhibit competitive choices for consumers.

This is the process whereby the Trade Practices Act 1974 and the ACCC can make a contribution to preserving and potentially enhancing diversity in the media offered to the Australian community."

Market definition in trade practices law

What is the legal context Mr Samuel refers to for the "three main categories the ACCC will investigate"? The context includes the concept of "market definition".

For a useful and short statement of trade practices law for market definition see the final section of our January 2007 post, Liquor sector trends and statistics for 2007. There we quote from the recent decision of Justice Allsop in ACCC v Liquorland (Australia) Pty Ltd [2006] FCA 826.

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