Regulation of Media Ownership in the EU 1990 – 2002Dr. Andreas GrünwaldAttorney-at-LawHogan & Hartson Raue L.L.P. Berlin, Germany: Regulation of Media Ownership in the EU 1990 – 2002 Dr. Andreas Grünwald Attorney-at-Law Hogan & Hartson Raue L.L.P. Berlin, Germany Regulation of Media Ownership in the EU 1990 – 2004 Dr. Andreas Grünwald Attorney-at-Law Hogan & Hartson Raue L.L.P Berlin, Germany The National Broadcasting Council of Poland Conference on the Promotion of Media Pluralism Warsaw, December 9, 2004


Outline: Outline National Markets and Regulation  Two Examples European Media Concentration Control  Background, Legal Basis Potential Impact of Converging Media  New Regulatory Models / Existing Proposals Conclusions / Discussion


Germany – Television Market: Average 2003 Audience Share Source: KEK Germany – Television Market


Germany – Regulation: No limit on number of licenses Audience share approach (since 1996) for private broadcasters Relevant threshold (dominant opinion-forming position is assumed): 30 percent audience share (viewers 3 years and older) No cross-media ownership restrictions for national television “Related markets” are considered if audience share exceeds 25 percent Broadcaster’s audience share is fully attributed in case of ownership interest of 25 percent or more Ownership rules are enforced by special authority (Commission on the Concentration in the Media, KEK) Germany – Regulation


UK – Television Market: Average 2003 Market Share Source BARB UK – Television Market


UK – Regulation: Major reform in 2003 (Communications Act 2003) Former audience share model replaced by mix of general competition law (Enterprise Act 2002) and cross-media restrictions Office of Fair Trade may intervene in media merger cases for “public interest” reasons Role of media authority (Ofcom) was reduced to an advisory status Only a few sector-specific rules were maintained Most relevant: Newspaper groups with more than 20% market share may not hold an ITV license (“lex Murdoch”) ITV and Channel 5 may not hold a national radio license No cross-media restrictions regarding Channel 5 license UK – Regulation


Conclusions from National Markets and Regulations: Conclusions from National Markets and Regulations Certain Similarities in Market Structure Strong public service broadcasting in many Member States Private sector dominated by only a few groups of channels Certain Differences in Regulation Different regulatory approach (audience share model, cross-ownership regulation, sector-specific / general competition law) Different regulatory conpetencies Different approach towards non-domestic licensees Different regulatory trends, influenced by national economic interests Possible Arguments Market structures suggest that harmonization is needed Market sizes and regulatory models are too different to be harmonized


Outline: Outline National Markets and Regulation  Two Examples European Media Concentration Control  Background, Legal Basis Potential Impact of Converging Media  New Regulatory Models / Existing Proposals Conclusions / Discussion


Existing Legislation: EC Treaty No specific provisions on media concentration Television Without Frontiers Directive No provisions on media ownership Currently under discussion No media ownership rules to be expected European Convention on Transfrontier Television Council of Europe No provisions on media ownership Currently under discussion No media ownership rules to be expected Existing Legislation


The European Media Ownership Debate (1): The European Media Ownership Debate (1) Major Initiatives by the Commission 1992: Green Paper „Pluralism and Media Concentration in the Internal Market“, COM (92) 480 No definite regulatory proposal by the Commission Potential actions discussed: No action, transparency obligation, or harmonization (directive / order) Main focus on audiovisual sector, not on the press or other media 1996/97: Draft Directives on Media Concentration Ownership restrictions on television, radio and cross-media-ownerships Directive was not adopted, mainly for reasons of lack of competency Both Initiatives were rejected by EU Council


The European Media Ownership Debate (2): The European Media Ownership Debate (2) Major Initiatives by the Commission (cont’d) May 21, 2003: Green Paper on Services of General Interest 10 years after first green paper the Commission called for further comments on European media ownership control March 1, 2004: Speech by Commissioner Viviane Reeding No further plans for sector-specific concentration control but to use general competition law in light of special requirements of the media Potential interpretation: Define markets more carefully March 29, 2004: Report on the Public Consultation on the 2003 Green Paper Interested parties broadly rejected Commission proposal


The European Media Ownership Debate (3): Initiatives by Other European Institutions European Parliament Supported and partly initiated Commission initiatives Until recently called for EU rules on media concentration e.g. Report on the parameters for determining the risks of violation, in the EU and especially in Italy, of freedom of expression and information (April 2004) Economic and Social Committee Initiative Action (March 2000): Pluralism and concentration in the media in the age of globalisation and digital convergence Recommendation: Co-ordinate work of national regulatory bodies through the Commission The European Media Ownership Debate (3)


The European Media Ownership Debate (4): Initiatives by Other European Institutions (cont’d) Council of Europe Many activities in field of media concentration Consideration of media ownership control goes back to earlier 1990s October 2000: Report on media concentration in the digital environment Most recently: Presented study on “Transnational Media Concentrations in Europe” (November 2004), suggests ongoing monitoring and possibly a concenvtion on CoE level and further measures on Member States level The European Media Ownership Debate (4)


EU Competency to Regulate Media Ownership (1): Competencies under Existing Legislation EC Merger Regulation (1989, recently amended) Generally applicable to media mergers No special turnover thresholds for media mergers Exclusive EU competency to decide whether a merger falls within the scope of the Regulation Art. 21 Sec. 4: Escape Clause for Member States „Member States may take appropriate measures to protect legitimate interests other than those taken into consideration by this Regulation [...]. Public security, plurality of the media and prudential rules shall be regarded as legitimate interests within the meaning of this subparagraph.“ EU Competency to Regulate Media Ownership (1)


EU Competency to Regulate Media Ownership (2): Current EU Competencies (cont’d) „Newspaper Publishing“ Case, 1994 Application of Merger Regulation escape clause Merger would have been approved pursuant to Merger Regulation provisions UK regulator was nevertheless allowed to reject it for plurality reasons EU Competency to Regulate Media Ownership (2)


EU Competency to Regulate Media Ownership (3): EU Competencies to Harmonize Media Ownership Rules Principle of Limited Legislative Power, Article 5 EC Treaty „The Community shall act within the limits of the powers conferred upon it by [the EC] Treaty and of the objectives assigned to it therein.“ Legislative Competency under Article 151 EC Treaty? „The Community shall contribute to the flowering of the culture of the Member States [...]. [It] shall take cultural aspects into account in its actions under other provisions of this Treaty, in particular in order to respect and to promote the diversity of its cultures.“ However: Article 151 Par. 5 explicitly excludes any harmonization of cultural politics EU Competency to Regulate Media Ownership (3)


EU Competency to Regulate Media Ownership (4): EU Competencies to Harmonize Media Ownership Rules (cont`d) EC Court of Justice on Tobacco Advertising (2000) The EC shall help to ensure a high level of human health protection (Article 152 EC Treaty) However: If EC action qualifies as a measure to primarily promote public health, it may not be a harmonization of national law EU Competency to Regulate Media Ownership (4)


EC Competency to Regulate Media Ownership (5): EU Competencies to Harmonize Media Ownership Rules (cont`d) No Competency under Article 95 EC Treaty Aim of Harmonisation: Achievement of the EC Treaty’s objectives as set out in Article 14 (including improvement of internal market) EC has wide discretionary power when determining potential market hurdles However: There is no internal media market in the EC due to language barriers between Member States Also: EC-wide media ownership restrictions would obstruct EC media market (if existent) rather than improve it EC Court of Justice (Tobacco): No harmonization of advertising restrictions by demanding restrictions on the highest level EC Competency to Regulate Media Ownership (5)


Outline: Outline National Markets and Regulation  Two Examples European Media Concentration Control  Background, Legal Basis Potential Impact of Converging Media  New Regulatory Models / Existing Proposals Conclusions / Discussion


„Total Media Market Approach“ (1995 UK Proposal): „Total Media Market Approach“ (1995 UK Proposal)


Practical Relevance from Today‘s Perspective: Major problems with implementation Which markets to include in extended consideration? Which criteria to use as an „exchange rate“? More a reaction to convergence-driven market changes than a reaction to convergence itself „Real“ convergence issues were not solved: Which markets to include in extended consideration? Which distribution methods to include? Television: Webcasting as audience share? Press: Web hits as part of circulation? “Related Markets Approach” (Germany) seems more practical Practical Relevance from Today‘s Perspective


Outline: Outline National Markets and Regulation  Two Examples European Media Concentration Control  Background, Legal Basis Potential Impact of Converging Media  New Regulatory Models / Existing Proposals Conclusions / Discussion


Conclusions: Media concentration is an issue in many EC Member States TV markets are generally concentrated Regulatory concepts differ significantly, though Media mergers are subject to EC Merger Regulation, but not to sector-specific EC legislation EC has no legislative competency to harmonize media ownership control Article 151 (culture) explicitly excludes harmonization actions Article 95 requires improvements in the internal market Conclusions


Thank you.: Dr. Andreas Grünwald Attorney-at-Law Hogan & Hartson Raue L.L.P Potsdamer Platz 1 10785 Berlin AGruenwald@hhlaw.com Slides: http://www.switch-off.com/ Thank you.