Summary

In December 2017, the federal government announced that it had directed the ACCC to undertake an inquiry in relation to media, specifically digital platforms. The digital platforms inquiry was initiated in order to address concerns regarding market power and the current state of fairness in competition between platform service providers within media and advertising markets. As part of its investigation, the ACCC will invite stakeholders, including businesses, to put forward submissions to be taken into account prior to generating a draft, and later, final report of the inquiry. It is recommended that submissions are made, particularly by individuals and business who are affected by the actions of Facebook.

What is an Inquiry?

The ACCC's role is to protect, strengthen, and supplement the way competition works in Australian markets and industries to improve the efficiency of the economy and to increase the welfare of Australians. The CCA guides the ACCC in performing its role in the inquiry.

Ultimately an inquiry results in the publishing of a formal report following an in-depth investigation and analysis of a particular question or area of concern. The process is open to interested parties who wish to put forward their opinion, including members of the general public. Subject to confidentiality, these submissions are published on the ACCC's website.

Upon reflection of previous ACCC inquiries it is evident that the matters considered are often of significant interest to both businesses and consumers. Many of the matters have attracted high levels of attention. Recent inquiries include the electricity supply and prices inquiry, the residential mortgage products price inquiry, and, of course, the digital platforms inquiry. There is no denying that the concerns at the crux of each of these matters have all been subject to widespread speculation and ongoing scrutiny.

The Digital Platforms Inquiry

In December 2017, another public inquiry was initiated by the Australian government regarding the impact of digital search engines, social media platforms, and other digital content aggregation platforms ("Platform Services") on the state of competition in media and advertising service markets.

Pursuant to section 95H(1) of the CCA the Australian Treasurer directed the ACCC to undertake the inquiry stipulating the time frame for the production of the final report, as well as matters to be considered.

The matters specified for consideration include:

  • The extent to which Platform Service providers are exercising market power in commercial dealings with the creators of journalistic content and advertisers.
  • The impact of Platform Service providers on the level of choice and quality of news and journalistic content to consumers.
  • The impact of Platform Service providers on the media and advertising markets.
  • The impact of longer-term trends, including innovation and technological change, on competition in media and advertising markets.
  • The impact of information asymmetry between Platform Service providers, advertisers, and consumers, and the effect of competition in the media and advertising markets.

The chairman of the ACCC has stated that the inquiry "will study how digital platforms such as Facebook operate to fully understand their influence in Australia." The inquiry is not connected with the ACCC's enforcement powers and is not focused on any actual or potential breaches of the CCA by any organisation. Currently, many businesses and media outlets are under the impression that these powerhouse digital platforms are adversely impacting traditional media. According to media buying agency GroupM, it is expected that two companies captured 84 percent of global digital advertising spending in 2017.

The call for the digital inquiry was driven by political interests following major changes to media control and ownership laws as well as "the crisis that journalism is facing in this country."

What Does the Digital Platform Inquiry Mean for the Industry?

In response to an issues paper distributed by the ACCC, all members of the public are invited to provide submissions. Any stakeholder with a vested interest in the outcome and potential consequences of the digital platforms inquiry, should seriously consider a submission in order to have their views taken into consideration.

It is important to note that the inquiry chair has the ability to summon a person to appear to give evidence or produce documents that are specified in the summons. There is scope to apply for this power to be exercised as the CCA provides the inquiry chair with discretion in summoning a person on the basis of an application by another person.

Once summoned, it is essential to adhere to the requirements as failure to attend, without being excused, will result in a fine of $1,100 under the CCA. Similarly, refusing to swear an oath, failing to answer a question required by the inquiry chair and failing to produce a document will all also result in a fine of $1,100 under the CCA. Therefore, due to the risk of being awarded a penalty, it is advisable to seek legal assistance if called upon by the inquiry chair in order to ensure compliance and to protect your own interests.