IRIS Special 2012 - Converged Markets - Converged Power? Regulation and Case Law
Author: Susanne NIKOLTCHEV (Ed.), European Audiovisual Observatory
Eleven years ago, the European Audiovisual Observatory published the IRIS Special entitled “Television and Media Concentration”.1 Back then it still seemed meaningful to restrict the publication to the regulation of traditional forms of concentration in the broadcasting sector and, to this end, collect and analyse information on specific national concentration rules and relevant competition-law decisions.
Today the means by which enterprises can control the media sector are increasingly subtle and attach to virtually all stages of the value chain. Market power and media dominance can be based on a strong copyright portfolio as much as on the control of platforms and transmission networks. Vertically integrated businesses have advantages over competitors engaged in only one of the markets and therefore dependent on players of the up- and/or downstream markets. The advantages are especially pronounced for those undertakings that are able to build simultaneously on a rich repertoire of audiovisual content, various media services and priority transmission arrangements or that can control such infrastructure.
While eleven years ago broadcasting was most likely the number one audiovisual media service to shape public opinion and to contribute to the prospering of a competitive as well as culturally rich audiovisual media sector, today more and more other services have a wide audience reach and strong market capacities. Accordingly, not only broadcasters but also platform operators and providers of audiovisual on-demand media services are likely to be or to become subjected to legislative, administrative and court actions addressing market power and/or dominant positions. More recently, the issue of dominance has emerged also in relation to manufacturers of reception devices, such as Connected TV sets.
Traditionally, legislators seek to limit the (market) power of individual players in order to keep several competitors in a given market and in order to restrict the impact that any of them may have on the views of the public. Since the audiovisual media sector is converged and services are more and more connected, this traditional approach comes up against questions such as whether and to what extent media-specific regulation is still justifiable or – in the context of general competition law – the question what markets ought to be distinguished given that digitisation and verticalisation of the audiovisual sector has changed the existing business models and practices.
While in a converged environment state intervention through media-specific rules or the application of general competition law continues to be important for regulating the audiovisual media sector, these mechanisms are not (and have never been) the only ones. Traditionally, the audiovisual media sector has also been shaped and strengthened by positive incentives. These were set by the state or privately organised funds in order to promote a viable audiovisual industry that is able and likely to produce and disseminate the type and variety of content considered desirable for society and/or assessed as being (otherwise) under-represented in media offerings. Positive incentives can target practically all activities of the audiovisual industry. Measures reach from the direct funding of projects to beneficial tax schemes, and apply to various geographies, from regional to supranational settings.
The European Audiovisual Observatory has published a very comprehensive report on “Public Funding for Film and Audiovisual Works in Europe”2 offering rich information on the activities and policies of public funding bodies. Additionally, the KORDA database3 informs about the details of individual funding programmes in all Observatory member states. A legal publication of the Observatory4 has already dealt with the manifold obligations that states have imposed on broadcasters to support cinematographic productions. It is because of these additional information resources but also for the sake of keeping this IRIS Special to a manageable size that we have decided not to include information on positive incentive measures in this publication.
Nevertheless, it is important to keep in mind that the policy of a state concerning pluralism and diversity of the audiovisual sector is likely to rely on both types of interventions, that is, restrictive measures in the widest sense and positive incentives. Often the lack of negative interventions can only be understood in light of positive actions in support of the national industry and vice versa.
An alternative to both limiting and encouraging interventions, are content obligations aimed at ensuring a diverse media output. Such obligations exist for various media (e.g. obligation to air children’s programmes, news, etc.) and mainly, but not exclusively, for public service media (linked to their remit).5 Other examples are the positive content obligations of the Audiovisual Media Services Directive regarding European works and works created by independent producers. This publication will not look at their role for the same reason of manageability mentioned before. Rather this publication will focus on the negative incentives, that is, regulation curtailing the freedom of market players to handle their business as they like or see economically prudent. Relevant rules are to be found in the legal framework of the European Union as well as in the national laws.
The first part of this book explores the European Union approach to limiting media power, an approach still dominated by the application of competition law as a result of the fact that competition law continues to be the area where EU law directly addresses market power and exercises strict control over the internal market. The author explains the general functioning of competition law and other regulatory instruments and then specifically how the various services provided in the audiovisual sector are regulated and in particular, what markets are to be distinguished. The activities thereby touched upon reach from producing audiovisual media content to organising, offering and finally distributing services that are all needed to bring this content to the consumer.
The second part of this publication contains a description of the legal frameworks of 11 European countries used to address media power at the very same stages of the value chain covered by the EU contribution. For each of these countries you will find in particular information on the regulation of audiovisual media services and enabling services, platform and converged services, and finally distribution services.
In contrast to the contribution on the EU legal framework, the variety of legal areas that form part of a national regulatory picture is quite large. For example, copyright law (including control of private copyright arrangements) can limit the power of content producers to strike exclusivity deals or it may order the opening of audiovisual media archives to other market participants. Licensing regimes regulate market entry and thus determine which undertakings may at all compete or not compete in a given market. Media-specific anti-concentration rules address dominant and gate-keeping positions in various dimensions. They limit the power of undertakings to dominate any given market but also to concentrate above a certain limit by vertically organising their businesses. And they set limits to simultaneous ownership of similar services which serve different markets (also referred to as cross-ownership). More recently, national legislators have introduced provisions that specifically address gate-keeping functions between an audiovisual media service and its user or an audiovisual media service and its delivering platforms. Legal and policy concepts such as must-carry, net neutrality, access rules and compatibility rules are some of the buzz words which illustrate further the wide range of legal instruments that states might apply to address media power. They also indicate that they might be used in response to very different aspects of market power.
All instances of alleged market power addressed by media-specific rules must generally pass the test of compatibility with general competition law. It is in particular in the area of competition law where the legal framework is detailed by the courts’ evaluation of market power and their delineation of markets.
Given that audiovisual media services are not simply a commercial business but also carry weight for achieving societal and cultural goals as well as state policies, they are often delivered in fulfilment of a public service mandate. For these public service media many countries apply an – at least in some way – altered legal framework for controlling their market power, a fact of which this publication also takes account.
The third part of this book brings in economic background in the form of different overviews concerning audience market shares for television and video online. This data puts the legal information into a real life context.
The fourth and final part of this publication seeks to tie together the common threads in state regulation of media power, to work out the main differences and to hint to some unusual solutions. Here and there it will weave in aspects of EU law that have influenced the national legal frameworks.
The eleven countries were selected for this study because they either represented major markets for audiovisual media services in Europe, or because they could develop outside the corset of the internal market, or because they had some interesting unique feature, for example the ability to attract major market players despite lacking an adequately sized market. In addition we tried to keep a certain geographical balance.
The concept for this IRIS Special was developed in-house with the strong and essential support of our partners, the Institute for European Media Law (EMR) and the Institute for Information Law (IViR). From the partners’ side Alexander Scheuer, Tarlach McGonagle and Catherine Jasserand-Breeman also helped identify the experts who contributed to this study. The same colleagues co-edited individual contributions. We thank all of them as we very much thank the individual authors for working jointly towards more transparency of a truly complicated subject that in many ways manifests the challenges of regulating converged markets and related market power.