ACCC does not oppose Nine/Fairfax merger

The ACCC announced it would not oppose the proposed Nine/Fairfax media merger.

See ACCC media release.

The ACCC noted that it received more than 1,000 submissions as part of an 'extensive' investigation which raised 'extremely complex issues', but ultimately concluded that the 'proposed merger was not likely to substantially lessen competition in any market'.

Commentary

Plenty of media - from the Fairfax/Nine group: Max Mason, 'ACCC won't oppose merger of Fairfax Media and Nine Entertainment' (AFR, 8 November 2018), Jennifer Duke, 'Competition regulator gives green light to Nine-Fairfax merger' (SMH, 8 November 2018), Rosemarie Lentini, 'ACCC won’t oppose Nine-Fairfax merger' (Nine, 8 November 2018).

Other media: AAP, 'ACCC gives Nine, Fairfax merger the tick' (SBS News, 8 November 2018), Alex Druce (AAP), '$4B Nine, Fairfax merger clears ACCC hurdle' (The West Australian, 8 November 2018), Luke Henriques-Gomes and Amanda Meade, 'ACCC says it won't oppose Nine Fairfax takeover' (The Guardian, 8 November 2018) and plenty behind The Australian's paywall.

ACCC merger register

The following details have been provided by the ACCC on their merger register:

Summary

Nine and Fairfax are proposing to merge their businesses. Under the proposed merger, Nine shareholders will own 51.1% of the combined entity with Fairfax shareholders owning the remaining 48.9%.

Market definition

The ACCC considered the likely effects of the proposed merger on competition in:

• the creation and provision of news content (including current affairs and investigative journalism)

• the creation and provision of non-news content (e.g. sports, lifestyle and entertainment)

• the supply of advertising opportunities to advertisers, and

• the acquisition of media content from content providers.

For the purposes of this assessment, it was not necessary to reach a concluded definition on the precise scope of these markets.

The ACCC considered the potential effects of the proposed merger on a national basis, as well as in the context of:

• the major metropolitan areas of Sydney, Melbourne, Canberra, Perth and Brisbane, and

• the Newcastle/Hunter region of New South Wales and other regional areas. In Newcastle/Hunter, Nine and Fairfax are the two main producers of local news content.

The ACCC took into account the two-sided nature of media markets, noting that Nine and Fairfax both supply content to consumers and advertising opportunities to advertisers.

The ACCC did not reach a concluded view on whether different media formats (television, newspapers, radio, online etc.) are in the same market or separate markets from the perspective of consumers or advertisers.

Competition analysis

The creation and provision of Australian news (including current affairs and investigative journalism) on a national basis and/or in metropolitan areas

While the proposed merger between Nine and Fairfax raised a number of complex issues, the ACCC concluded that the proposed merger was unlikely to substantially lessen competition in the creation and provision of Australian news.

The ACCC took into account the dynamic nature of media markets and the impact of changing consumer preferences in accessing news content and, in particular, the trend towards consumption of online news.

Information before the ACCC indicated that Nine’s television operations and Fairfax’s main media assets do not compete closely with each other: their product offerings and brand positioning are differentiated, and they generally target different audience groups.

The ACCC also notes that post-merger, a range of alternative news sources will remain, including News Corporation Australia/Sky News Australia, Seven West Media and the ABC/SBS in particular. Other players, including for example, Ten,  The Guardian Australia, The New Daily, Buzzfeed Australia, Crikey and Daily Mail Australia, also provide some degree of competitive constraint on the merged entity.

The ACCC carefully considered the overlap between Nine and Fairfax in the supply of online news content, as the merger would combine two of the larger providers of online news. The ACCC considered that the merged entity would face competition from a number of alternative digital news providers, including news websites by News Corporation Australia, Seven West Media and ABC, and digital natives such as The Guardian Australia, The New Daily, Buzzfeed Australia, Crikey and Daily Mail Australia. Consumption of online news continues to grow significantly and while barriers to establishing a news website are lower than for traditional media such as print newspapers or television, the ACCC notes that there are still significant barriers to monetising journalism online.

The creation and provision of news (including current affairs and investigative journalism) in the Newcastle/Hunter region of New South Wales

The ACCC considered that while Nine and Fairfax are the two main producers of local news content in the Newcastle/Hunter region of New South Wales, they do not compete closely with each other to the extent that the proposed merger would be likely to substantially lessen competition.

The creation and provision of non-news content (e.g. sports, lifestyle and entertainment)

The ACCC concluded that the proposed merger was unlikely to substantially lessen competition in the creation and provision of non-news content because the merged entity will face competition from a range of alternative providers, including the television, print and digital providers noted above.

Supply of advertising opportunities to advertisers

The ACCC concluded that the proposed merger was unlikely to substantially lessen competition in the supply of advertising opportunities to advertisers.

Media agencies and advertisers will continue to have a range of advertising opportunities in each media segment that the merged entity would operate in, including free-to-air television, newspapers, radio and online.

The ACCC also considered whether the merged entity would have the ability and incentive to engage in bundling of advertising opportunities. The ACCC did not consider it likely that the merged entity would engage in anti-competitive bundling, because advertisers generally do not consider that Nine or Fairfax supply any ‘must haves’, and large media agencies generally have considerable bargaining power.

While cross-promotional activity was likely to occur within the merged entity, the ACCC did not consider that such behaviour would be likely to substantially lessen competition.

Acquisition of media content from content providers

The ACCC concluded that the proposed merger was unlikely to substantially lessen competition in the acquisition of media content from content providers.

Nine and Fairfax do not compete closely in the acquisition of content, and content providers will continue to have opportunities to supply to numerous alternative buyers of media content.