Joint Committee on Draft Communications Bill Report


(i) Media ownership controls and competition law

218. For many years, a number of special limitations on media ownership have been in place. These take the form of general prohibitions on ownership, restrictions on ownership of particular combinations of broadcast media, restrictions on cross-media ownership and a specific merger regime for newspapers. In this area, the Government's view is that

"competition law alone is not sufficient. It can address issues of concentration, efficiency and choice, but it cannot guarantee that a significant number of different media voices will continue to be heard, and it cannot address concerns over editorial freedom or community voice."[409]

219. Media ownership restrictions are in place to act as a bulwark for plurality in media. Plurality is seen as being important for three reasons:

  • it ensures that no individual or corporation has the power to limit the freedom of expression of opinion in an industry which is central to the democratic process;
  • it should secure a plurality of sources of news and opinion and prevent the information agenda being slanted in a particular direction; and
  • it helps to maintain cultural diversity and vitality.[410]

220. Specific media ownership controls above and beyond those arising from competition law, and the considerations of concentration, efficiency and choice to which the merger regime can have regard, are perceived by some as a restraint upon the free operation of markets and the economic efficiency gains that are held to arise from such free operation. All decisions on media ownership controls are thus seen as reflecting a balance between plurality and cultural considerations, on the one hand, and economic efficiency, on the other.

221. A number of submissions we received argued that the current restrictions on media ownership, derived from the Broadcasting Acts of 1990 and 1996, and, in the case of newspaper ownership, from the Fair Trading Act 1973, either represent appropriate levels of control or a minimal level of control that ought to be enhanced. The National Union of Journalists argued that any relaxation would lead to concentration of ownership and in turn "a reduction in diversity and range of content".[411] The Directors Guild of Great Britain also argued that the restrictions were a safeguard against dominance, and that dominance was "potentially bad for quality and creativity".[412] Professors Steven Barnett and Janet Seaton argued that consolidation will "reduce still further the plurality of voices essential for a healthy democracy", while bringing few economic benefits to television, given the pivotal role of domestic advertising in determining revenue.[413]

222. Others have questioned the rationale for maintaining any particular restrictions on media ownership beyond those arising from competition law. The Culture, Media and Sport Committee of the House of Commons has argued that "the case for particular restrictions on media, or cross-media, ownership in any sector is now out-dated" and called for the lifting of all restrictions.[414] News International and BSkyB have argued that media ownership should be subject to general competition law and that the provisions of the general law would be able to tackle the issue of plurality. Following the enactment of the Enterprise Bill, the application of this principle would imply the removal of governmental control over media ownership decisions.[415] It has been argued that the general application of competition law criteria could be combined with a specific plurality test for media mergers of a kind the Government has already sketched out.[416]

223. The Government's proposals contained in its Policy document published on 7 May, fleshed out in draft Clauses published on 31 May and a memorandum provided to us on 3 July, maintain the principle of specific restrictions on media ownership, but the broad thrust of the proposals, as foreshadowed last November, is "deregulatory" in approach.[417] The Government's rationale for liberalising and simplifying media ownership is threefold. First, the Government maintains that the current rules have proved inflexible and inconsistent in their effect in the face of changing media markets.[418] Second, it argues that the changing nature of media markets, and in particular the greater multiplicity of outlets facilitated by digital technology, helps to increase plurality and thus necessitates fewer controls to ensure plurality.[419] Finally, the Government believes that liberalisation can bring real economic advantages, creating more British media players of a size to compete effectively on an international stage, attracting more investment into British media markets and encouraging larger media players to provide a more diverse output in order to avoid competition for audiences with other stations that they own.[420]

224. We consider that the merger regime that will be established following the passage of the Enterprise Bill into law provides significant protection against mergers in the media sector that entail a substantial lessening of competition. However, insofar as media mergers are to be the subject of consideration by the OFT, and final determination by the Competition Commission if referred to them - as opposed to being subject to specific legislative restrictions for certain licences and for newspaper mergers - the utmost regard ought to be given to issues of plurality. If the competition authorities were to be given a power to consider plurality issues explicitly and developed a track record of considering them satisfactorily, this would facilitate a significant reduction of direct legislative limitations on media ownership. We recommend that the general merger regime, as introduced by the Enterprise Bill, be amended by the Communications Bill to permit the OFT and the Competition Commission to have regard to plurality, as well as the issue of substantial lessening of competition, in reaching decisions on media mergers. For these purposes, we recommend that plurality be specified as a consideration in respect of which the Secretary of State may serve a public interest intervention notice and that plurality be defined as:

    "The public interest in - (i) the maintenance of a range of broadcast media owners and voices sufficient to satisfy a variety of tastes and interests; (ii) the promotion and maintenance of a plurality of TV, radio and other broadcast media owners, each of whom demonstrates a commitment to the impartial presentation of news and factual broadcast programming; and (iii) the promotion and maintenance, in all media including newspapers, of a balanced and accurate presentation of news, the free expression of opinion and a clear differentiation between the two."

225. The Government proposes, and Clause 268 would provide, that OFCOM undertake a review, at least every three years, of the legislative restrictions on media ownership and the newspaper merger regime.[421] We welcome the proposal to give OFCOM a duty to review media ownership laws including those relating to newspaper ownership on a periodic basis. We consider that the first such review, three years after the coming into force of the Act, could be of crucial importance, given the knowledge of media markets and their regulation that OFCOM will by then have acquired.

226. In giving effect to OFCOM's reviews, we recommend that the plurality test, as specified above, should be a specified public interest consideration in relation to the powers to refer for a market investigation under Part 4 of the Enterprise Bill.

409   Policy, para 9.16. Back

410   Consultation on Media Ownership Rules, Department for Culture, Media and Sport, November 2001 (hereafter Media Ownership Rules), para 1.7. Back

411   Ev 520, para 4.1. Back

412   Ev 476, para 2.4. Back

413   Ev 439, section 2. Back

414   HC (2001-02) 539-I, para 84. Back

415   Q 902; Ev 221, paras 38-40. Back

416   Media Ownership Rules, p 43. Back

417   Media Ownership Rules, para 1.5; Policy, para 9.1.5. Back

418   Policy, p 4 and para 9.1.4. Back

419   Media Ownership Rules, paras 1.9, 3.6; Policy, pp 3-4. Back

420   Policy, pp 3-4; Media Ownership Rules, paras 1.4-1.5,1.8. Back

421   Policy, para 9.8; Ev 395, para 7.1. Back

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Prepared 31 July 2002