The Australian Competition and Consumer Commission would make a 'sober, informed decision' on the level of competition that would result from any media mergers, ACCC Chairman, Mr Graeme Samuel*, said today.
"Our analysis [of mergers] is an exhaustive process of examining and defining the market, talking to involved parties, their competitors and their customers and making a sober, informed decision on the level of competition based on the facts, rather than emotive responses or comment in the press", he said.
"What is perhaps even more important than individual ownership levels is the watch we keep over potentially anti-competitive behaviour", he said. "This sort of activity can occur regardless of the level of ownership an individual may hold in another business. Where there is evidence that they may be attempting to harm a competitor through anti-competitive conduct, be it via a financial interest in that competitor or otherwise, the ACCC stands ready and well-equipped to respond".
The ACCC had noted recent acquisitions in the media sector which did raise some "interesting questions".
But the ACCC needed to be mindful that it could not – and the Federal Court would not tolerate – any attempt to take action where any anti-competitive consequences "may be purely hypothetical".
"For example, it has been speculated that the acquisition of a minority stake in a media company might have as its purpose to inhibit or prevent a takeover of that media company by other parties. Leaving aside the question of whether a minority stake prevents a takeover (i.e. the acquisition of control) as distinct from the reality that it might only prevent the acquisition of 100 per cent of the media company, the question for the ACCC is whether that course of action is in itself anti-competitive.
"One can imagine circumstances where it could be, for example, where the media company was in imminent danger of financial failure, which could only be averted by a 100 per cent takeover and preventing that occurring would result in the collapse of the media company with anti-competitive consequences.
"It has also been speculated by a handful of investment analysts and journalists that these acquisitions, such as that made by News Ltd, are to gain seats at the table and potentially to be involved in a possible takeover of Fairfax. But we would get very short shrift in the Federal Court if we were to go to the court and say: 'It's been suggested by some investment analysts from unnamed broking firms that the acquisition by News Ltd of 7.5 per cent of Fairfax is designed to provide a seat at the table of a possible break-up or takeover. We have no idea whether that's the motive, we have no idea whether that will ever occur, indeed we have no idea whether this would ever give rise to News Ltd ever having a seat at the table at Fairfax. Even though we have no idea on any of these issues we want you to deal with this shareholding.
"Suggestions that we should act in this fashion lack any basis in reality and ignore the way the provisions of the Trade Practices Act and the Federal Court work in relation to an anti-competitive transaction that may be likely to occur.
"Companies are not required to notify the ACCC of mergers before they proceed. However, we encourage them to do so, as the ACCC will conduct its inquiries regardless of whether the parties involved have approached us in the first instance or not. Where a merger is likely to raise concerns, the ACCC does not hesitate in seeking injunctions to block deals proceeding, or where they have already occurred, seeking forced divestitures or unwinding of arrangements".
Mr Samuel said the general framework for merger analysis would remain the same for media mergers as it is for all mergers, including that the TPA required that the ACCC must consider the impact of mergers on markets in regional Australia. This had occurred in recent radio acquisitions by Macquarie Bank which required some divestments to ensure competition was not compromised in a number of regional towns and cities.
Links
- ACMA Conference Address [link removed no longer available]