Media Monopoly Or Market Fairness? A Look At Antitrust Laws In India

Share

Share

 

In the context of antitrust, the term “trust” refers to a group of businesses that either collaborate or establish a monopoly to determine pricing in a particular market.

As the name, ‘Antitrust’ implies, ‘Anti” refers to the denial of formation of “trust” as defined above.

In all, Antitrust Laws foster market competition while simultaneously regulating the market authority of any organization. It not only prevents the formation of overpowering monopolies by preventing the formation of massive mergers, but it also dissolves firms that have become monopolies.

Necessity Of Antitrust Laws

Several concerns are raised when a company proposes to merge with another, including the potential for a predatory monopoly to result in reduced market competition.

This necessitates a scrutiny to be conducted that must further be consistent with the antitrust regulations of the country.

The Antitrust Laws in India are governed by the Competition Act of 2002.

Regulations

1. Sections 5 and 6: Merger Control

• Section 5 of the Competition Act, 2002 sets asset and turnover thresholds for merger or acquisition notification to the Competition Commission of India (CCI). These levels are based on the assets and turnover of the merging entities.

• Section 6 forbids any merger, acquisition, or amalgamation that could materially reduce competition in the relevant Indian market. Combinations must be submitted to the CCI for approval.

2. Section 6(1): Substantial Lessening of Competition (SLC) Test

• The CCI determines if a proposed merger would likely harm competition i.e., Appreciable Adverse Effects on Competition Markets (AAEC) in the relevant market while considering market concentration, new rivals, and consumer welfare.

3. Sections 20 and 29: Public Interest Consideration:

• Section 20 allows CCI to investigate any combination that it believes has caused or is likely to produce an AAEC. Public interest considerations like consumer effect, market access, and economic efficiency are examined.

• Under Section 20(1), the CCI can assess unnotified combinations that could harm competition. The CCI can launch such combinations independently one year after completion.

• Section 29 provides for the procedure of the same. It describes how the CCI must issue notifications, collect information, and hold hearings while investigating a combination.

4. Section 31: Conditions and Remedies

• It authorises the CCI to approve, disapprove, or modify a combination. If a combination is expected to have an AAEC, CCI may require conditions or adjustments to limit its negative impacts. Structural remedies may require asset disposal, whereas behavioural remedies may involve price, market access, or other competitive promises.

5. Section 43A Noncompliance Penalties:

• The penalty can extend to 1% of the combination’s turnover or assets, whichever is greater.

These provisions ensure that mergers and acquisitions do not hinder competition in the Indian market, upholding market fairness and consumer interests.

Antitrust Laws In Regards To Media Industry

In an industry where control over content and distribution can have far-reaching implications for democracy and consumer choice, antitrust laws are essential for preventing monopolistic practices and ensuring competition.

There have been multiple scenarios where Antitrust scrutiny has been undertaken by appropriate authorities. One such famous case is that of Disney-Fox Merger. Disney’s acquisition of 21st Century Fox was a significant media merger in history. The merger prompted apprehensions regarding market concentration, particularly in the film and television sector. The Department of Justice (DOJ) approved the merger; however, Disney was obligated to divest specific assets, such as Fox’s regional sports networks, to preserve competition in those markets.

In India, the application of antitrust regulations in the media industry has become significant due to the consolidation of traditional media houses and rise of digital platforms.

In the case of CCI v. Google LLC, CCI imposed a sanction on Google for abusing its dominant position in the Android mobile operating system market. CCI determined that Google’s practices had a negative impact on competition, notably in the digital news sector. This was due to Google’s control over the Android ecosystem, which restricted competitors’ ability to reach consumers. This case underscored the difficulties associated with the application of conventional antitrust principles to the swiftly changing digital media landscape.

The merger between Sony Pictures Networks India and Zee Entertainment Enterprises Limited is another example of a significant case that CCI is investigating. The merger prompted apprehension regarding potential for market concentration in the television broadcasting sector. CCI’s inquiry was directed at determining whether the merger would result in AAEC by establishing a dominant entity in the market. Despite the fact that the merger was ultimately approved with conditions, it emphasised the necessity of conducting a thorough examination of media mergers in a market where a small number of actors can have a significant impact on content and distribution.

Although efforts have been taken by CCI, the conventional instruments of antitrust enforcement, such as the AAEC test, are occasionally inadequate to capture the subtleties of digital markets, where data control, network effects, and gatekeeping power are critical. For example, the fine in the Google case was a substantial measure; however, concerns persist regarding the long-term effect on competition, as Google continues to dominate the digital advertising market. In addition, the conditions imposed by the CCI may alleviate some competitive concerns in the context of media mergers such as Sony-Zee. However, the overall market dynamics continue to favour consolidation, which could potentially reduce content diversity and restrict consumer choice.

The rapidly evolving digital media landscape continues to present ongoing challenges. In the digital era, it is imperative to adopt more adaptive and nuanced regulatory strategies that can effectively manage the intricacies of market power. This will guarantee that competition is robust and that consumers continue to profit from a diverse and competitive media environment.

Currently, the proposed merger between Viacom18 and Star India, which represents a substantial consolidation in the Indian media industry, is still being examined by CCI. The objective of the merger is to establish a content production and distribution juggernaut by integrating Viacom18’s robust regional and entertainment offerings with Star India’s extensive sports and general entertainment portfolio. The combined entity could potentially exert significant influence in the sports broadcasting sector, which raises concerns about potential market concentration. The impact of this merger on competition and content diversity in the Indian media landscape will be determined by the CCI’s decision.

Conclusion

Antitrust laws are essential for preservation of competition in the media sector; however, they must adapt to the distinctive obstacles presented by media consolidation and digital platforms. Despite the increasing recognition of these issues in recent cases and regulatory actions, the efficacy of antitrust enforcement remains inconsistent. It is imperative to maintain the competitiveness, diversity, and fairness of the media industry for consumers, which necessitates ongoing vigilance and adaptation of antitrust frameworks.

Authors: Seema Meena, Rea Parikh & Viha Mehta

 

Consult with us.

Lawyers.

Interns and Paralegals.

Disclaimer.

As per the rules of the Bar Council of India, we are not permitted to solicit work or advertise. By agreeing to access this website, the user acknowledges the following:

This website is meant only for providing information and does not purport to be exhaustive and updated in relation to the information contained herein. Naik Naik & Company will not be liable for any consequence of any action taken by the user relying on material / information provided on this website. Users are advised to seek independent legal counsel before proceeding to act on any information provided herein.