The Competition and Consumer Protection Act 2014 (2014 Act) has implications for media mergers and media business in Ireland from 31 October 2014.
Media mergers are now subject to a more involved process with the introduction of a dual notification to the Competition and Consumer Protection Commission (CCPC) and the Minister for Communications, Energy and Natural Resources. The CCPC will look to the competition aspects of a media merger while the Minister will review the merger from the perspective of media plurality in Ireland (e.g. diversity of ownership/content). A merger which has an EU dimension and requires notification to the Commission in Brussels under the EU Merger Control Regulation will still require notification to the Minister for Communications, Energy and Natural Resources if it amounts to a media merger under Irish law.
Transactions Covered under 2014 Act
The definition of the media business has been widened to include the publication of newspapers and current affairs periodicals over the Internet and the making available of certain audio-visual media consisting substantially of news and comment on current affairs on an electronic communications network.
Under the 2014 Act, a ‘media business’ means the business (whether all or part of an undertaking’s business) of:
- the publication of newspapers or periodicals consisting substantially of news and comment on current affairs, including the publication of such newspapers or periodicals on the internet;
- transmitting, re-transmitting or relaying a broadcasting service;
- providing any programme material consisting substantially of news and comment on current affairs to a broadcasting service; or
- making available on an electronic communications network any written, audio-visual or photographic material, consisting substantially of news and comment on current affairs, that is under the editorial control of the undertaking making available such material.
Under the Act, a ‘media merger’ is defined as a merger or acquisition in which:
- two or more undertakings involved carry on a media business in the Ireland; or
- one or more of the undertakings involved carry on a media business in Ireland and one or more of the undertakings involved carries on a media business elsewhere.
To ‘carry on a media business in the State’ means, in relation to a media business:
- having a physical presence in Ireland, including a registered office, subsidiary, branch, representative office or agency, and making sales to customers located in the State, or
- having made sales to customers in Ireland of at least €2 million in the most recent financial year.
Procedure under 2014 Act
All media mergers must be notified to the CCPC, regardless of whether they meet the turnover thresholds applied to non-media mergers. The 2014 Act provides for the following steps:
- An initial determination by the CCPC that a merger has indeed taken place.
- The CCPC then decides whether the merger should be permitted to go ahead on competition grounds.
- If the CCPC approves the merger on competition grounds, the Minister may decide whether the merger should be permitted to go ahead on the grounds of the ‘relevant criteria' set out in the 2014 Act, which include elements such as public interest and media plurality.
Timelines under 2014 Act
In the case of a media merger, the undertakings involved that notified the CCPC or the European Commission, as the case may be, are obliged to notify the Minister for Communications, Energy and Natural Resources in writing and to provide him or her with full details of the proposal to put the merger or acquisition into effect. The parties are required to notify the Minister within 10 working days of a decision being issued by the CCPC/European Commission, but may notify the Minister at an earlier point in order to have the time periods overlap and close the transaction earlier. The notification to the Minister cannot be made before the CCPC or the European Commission, as the case may be, have been notified.
For the CCPC’s examination of the competition aspects of the transaction, the Phase 1 timeline allows for a period of 30 working days from notification. Generally, this period runs from the date of receipt of a notification but, if the CCPC issues a formal request for information, the period begins from the date that it receives a complete response. As is the case for non-media mergers, the CCPC has the possibility of discussing potential remedies with the parties that would ameliorate the transaction’s effect on competition. The discussion of such proposals, which may become binding on the parties if they are accepted, causes the CCPC’s timeline to be extended to 45 working days. A Phase 2 investigation is to be carried out within 120 days of notification or 135 if remedies are on the table.
The revised timetable as regards the periods given to the Minister to respond is significant. There are 30 working days granted for the Minister’s Phase 1 review, which is extended to 45 working days if remedies have been offered. If the Minister finds that the transaction may adversely affect media plurality in Ireland, the Minister can refer the case to the Broadcasting Authority of Ireland (BAI) to conduct a Phase 2 investigation. The BAI is allocated 80 working days to report and the Minister has a further 20 working days after receipt of the BAI report to make a determination. These timeframes are extendable where formal information requests are issued or remedies are proposed. Any appeal of this decision must be made within 40 days from Minister’s decision.
Ministerial Test for Media Mergers under 2014 Act
The CCPC will no longer have a role in forming or offering an opinion on the relevant criteria in the public interest test. In the context of ensuring a sufficient degree of media plurality, the 2014 Act sets out a statutory test to be applied by the Minister in the discharge of his or her function regarding media mergers.
In this context, ‘plurality of the media’ includes both diversity of ownership and diversity of content. The statutory test is designed to replace the vague definition of “relevant criteria” in Section 23(10) of the 2002 Competition Act, as amended (2002 Act). In conducting the public interest test, the Minister will engage in a consultation process, potentially including calls for public submissions.
Under existing legislation applicable up until 31 October 2014, media mergers must be approved by the Minister for Enterprise, Jobs and Innovation. The 2014 Act sees this role transferred to the Minister for Communications, Energy and Natural Resources. The rationale behind this is that it will lead to administrative streamlining given the expertise on media matters that exists within Department of Communications, Energy and Natural Resources.
Full Media Merger Examination
As part of the Phase 2 investigation, the Minister will request the Broadcasting Authority of Ireland (BAI) to carry out a full media merger examination. In turn, the BAI will publish the fact that the Minister has transferred the media merger to it for a full examination and will invite submissions on the matter, including from the Joint Oireachtas Committee assigned the role of examining matters relating to broadcasting. The BAI may also be assisted by an Advisory Panel appointed by the Minister which is to provide a reasoned opinion in writing to the BAI on the specific media merger in question.
The Advisory Panel shall consist of three to five persons with knowledge of, and expertise in, law, journalism, media, business or economics. Like the BAI, the Advisory Panel will look to the ‘relevant criteria’ which includes issues such as:
- the likely effect of the transaction on plurality of the media in the State;
- the undesirability of allowing any one undertaking to hold significant interests within a sector or across different sectors of media business in the State; and
- the consequences for the promotion of plurality of the media in the State of intervening to prevent the media merger or attaching conditions to the approval of the media merger.
Once the BAI makes its report and the Minister takes a decision, the reasons for the decision will be published.
The changes aim to strike a balance between allowing for expert input and proper procedures, while also allowing a window for public debate. It is clear that the BAI is to play a crucial role in Phase 2 investigations under the new regime. While traditionally the BAI’s area of expertise related solely to the radio and television broadcasting sectors, it will now be asked for its views on issues regarding online and print media. In carrying out these new responsibilities, the BAI will clearly require additional expertise and the appointment of a suitably qualified Advisory Panel to assist it in preparing its report would appear crucial. From a business point of view, it is encouraging that the BAI, the Advisory Panel and the Minister will each be obliged to publish reasoned decisions, which means that a body of precedents should gradually build up to allow parties to predict the outcome of a notification. In the meantime, however, guidance from the Minister on the weights to be attached to each of the elements in the ‘relevant criteria’ would be welcome.
The BAI may charge, receive and recover the costs incurred by it during a full media merger examination from the undertakings that notified the media merger. The expenses incurred by the Minister for Communications, Energy and Natural Resources are to be paid out of moneys provided by the Oireachtas. The standard fee for the notification of a merger to the CCPC is €8,000, as fixed by a Ministerial Order in 2002, and this will be the fee until further notice.
BAI Ownership and Control Policy
In the broadcasting sphere, the BAI has a further oversight role regarding the media interests of individuals or companies in the context of the BAI’s Ownership and Control Policy and pursuant to the Broadcasting Act 2009 (2009 Act). The BAI is responsible for the licensing of commercial and community broadcasting which it carries out through a process of entering into contracts with the respective broadcaster. Part of the BAI’s statutory function is to ensure the provision of open and pluralistic broadcasting services and to promote diversity in the control of the more influential commercial and community broadcasting services. Pursuant to the contracts issued by the BAI to radio and television broadcasters operating in Ireland, such broadcasters must inform the BAI of changes of control. This requirement appears to remain in place under the revised media mergers regime introduced by the 2014 Act.
In particular, Sections 66(2)(i) and 137(2)(i) of the 2009 Act require the BAI to have regard to: “the desirability of allowing any person, or group of persons, to have control of, or substantial interests in, an undue amount of the communications media” in a specified area. These sections relate to commercial radio services (Section 66) and commercial multiplex operators (Section 137). Communications media is defined in the Act and includes broadcasting services, broadcasting services platforms and newspapers or periodicals consisting substantially of news and comment on current affairs. Like the 'relevant criteria' to be applied in a media merger review as described above, this allows for a broader range of issues to be assessed than would happen under the narrower market definitions applied in a review on purely competition grounds.
As with any piece of new legislation, the 2014 Act could be the source of some uncertainty as it becomes operational. In this respect, we would refer back to one of the recommendations of the Advisory Group on Media Mergers which stated that the Minister should publish guidelines to assist undertakings involved in media mergers in knowing how the Minister would in general apply the relevant criteria. Indeed, the 2014 Act expressly empowers the Minister, in consultation with the BAI, to publish guidelines on the general application of the relevant criteria to media mergers which will assist in the making of determinations and which, if issued, must be taken into account by the Minister and the BAI.
The need for certainty and predictability in this issue is vital for the business community and having full knowledge of the requirements for obtaining clearance is more important for market operators than the identity of the particular Minister clearing the transaction.