The Australian Competition and Consumer Commission (ACCC) today published its final report on its inquiry into digital platforms with a particular focus on the impact of the platforms on media and advertising.

The ACCC’s inquiry has extended beyond competition issues, as it addresses concerns regarding privacy and the provision of certain kinds of content which promote the public interest (particularly news journalism). The ACCC does, however, identify certain competition concerns in markets where digital platforms and traditional media compete, particularly that current regulations do not facilitate “competition on the merits”.

The report includes 23 far-reaching recommendations, although it has avoided recommendations that seek structural reforms of digital platforms. The report includes a recommendation to set-up a dedicated tech regulator, which would provide ongoing monitoring of whether digital platforms are engaging in any anti-competitive conduct and would have the power to enforce any necessary remedial actions.

A recommendation relating to merger law is likely to prove particularly contentious. The ACCC proposes that Section 50(3) of the Competition and Consumer Act 2010 (CCA) be amended to incorporate the following additional merger factors to the non-exhaustive list:

(j) the likelihood that the acquisition would result in the removal from the market of a potential competitor;

(k) the nature and significance of assets, including data and technology, being acquired directly or through the body corporate.

Frontier Economics does not support this recommendation. We consider that Australia’s merger law is deliberately drafted broadly and is capable of addressing issues relating to digital platforms. Past mergers have often included the impact of removal of potential competitors (for example, this was a key consideration in mergers between the Australian Stock Exchange and Sydney Futures Exchange, and between Foxtel and Austar). Considerations relating to barriers to entry created by control of data and technology are very similar to other kinds of barriers to entry. In our view, adding further to lists of extensive lists of non-exhaustive factors is unlikely to assist the courts in making better decisions regarding mergers or acquisitions by digital platforms.

The ACCC has also flagged that it may lobby government for amendments to merger laws to make it more difficult for mergers or acquisitions in certain circumstances, reflecting its dissatisfaction with the resolution of past cases. Frontier Economics does share some of the ACCC’s concerns regarding the treatment of evidence from parties to transactions (see our bulletin Is that a fact?) and the acceptance of behavioural undertakings.

Frontier Economics regularly advises clients in the media and communications sector on a range of matters, including competition. We advised a client in regard to the digital platforms inquiry.

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