Two months ago, Sly Bailey of Trinity Mirror told a Digital Britain conference: ‘All we are asking for is a 21st century merger regime to support 21st century media.”
This week, The Office of Fair Trading published a 105pp annex to Lord Carter’s Digital Britain report. In an accompanying statement, John Fingleton, chief executive of the OFT, argued that the existing merger regime for local newspapers is already ‘fit for the needs of the media sector in the 21st century”.
If this was intended as a rebuke to Bailey, the chief executive of Trinity Mirror didn’t take offence.
Why? Here, it’s probably important to notice that Bailey’s argument has focused less on the law itself, and more on its interpretation. When competition regulators examine markets for unfair competition or monopoly, it matters tremendously how they define those markets.
Here’s Sly Bailey putting her case in an interview with Jeff Randall on Sky News back in March:
‘The problem with that is that the Regulator looks at our industry and very narrowly defines us as print markets, and what we are saying is no, we now operate in a much wider competitive market not least with, with online.”
Here she is making the same point at the Digital Britain conference in April:
‘Any merger regulation which doesn’t take Google, RightMove or Monster in to account isn’t fit for purpose. Allowing us to merge and consolidate is the only way we’ll be able to meet these threats head-on.”
Reading the OFT’s response, it’s clear that the arguments voiced by Bailey (and submitted by the hastily-convened Local Media Alliance) have had an impact. Here’s the OFT response on the question of market definitions:
There is no binding precedent on the OFT or [Competition Commission] to apply a particular market definition (that is, the economic market in which the merging parties are considered to operate), or to carry out its competition assessment in a particular way, for a merger in a sector which has been looked at before.
This flexibility can result in different market definitions being applied in different cases, with the market definition being determined by the evidence.
Specifically, the OFT’s report suggests that data submitted by the LMA was ‘broadly supportive of the case for. . . wider market'[definitions] that include both print-based and online media.
Lord Carter’s suggestion that Ofcom could play a role is also be significant. As the OFT puts it: ‘The OFT will ask Ofcom to provide views, arising from its understanding of media markets, on factors relevant to the OFT’s decision.’Ofcom already performs this role in the case of broadcast mergers.
Yesterday, Bailey also suggested that Ofcom’s involvement might be ‘could be a clever answer to a difficult problem”.
This raises the prospect of Ofcom operating as a discreet sounding board between the regional chains and the OFT. Significantly, this week’s OFT review mentions that the regional chains are at liberty to dicuss mergers and transactions with the OFT before announcing them publicly.
It also reminds the Big Four (as well as other Alliance members, including DC Thomson, Archant and Guardian Media Group) that prospective deals can be ‘fast-tracked’out of the OFT and into the Competition Commission. The OFT advises that by going down this route ‘a more advantageous outcome could be achieved by merging parties”.
The OFT’s careful suggestion that nothing has changed is designed to maintain respect for competition law in other sectors of the economy.
Beneath the surface, though, the regional chains have cleared some or all of the logjam. Expect attempts at consolidation to start making headlines sooner rather than later.