CHAPTER SEVEN
This episode in trade practices law has at least two wider policy implications concerning the ACCC's enforcement procedures which warrant debate and possible reform.
First, the framework used by the ACCC to assess mergers and competition in the communications sector is flawed. This was touched on in Chapter 5 above. The ACCC's single-minded focus on the hypothetical impact of a merger on price competition is misplaced and ignores the key features of the competitive process in hi-tech communications sectors. These features comprise mainly innovation, product quality and gaining consumer acceptance. The analysis must therefore take into account the evolving nature of the market and the fact that product-market definition and industry boundaries are fuzzy, indeterminate and constantly changing. While this book is not the place to discuss the reform of Australian trade practices law or to develop a new framework for assessing dynamic competition, there is a need for a competitive framework which places more emphasis on non-price competition over a longer timeframe, and which incorporates supply-side factors such as economic efficiency and investment incentives in a systematic manner that better balances short- and long-term competition concerns.
Second, the intervention of the ACCC raises questions about its role and enforcement policy. It is received wisdom that the ACCC has become more interventionist than its predecessor, the Trade Practices Commission, and has deployed the media more systematically to publicise its activities. As a result it is reviled by segments of industry and finance. If this is because it has become more effective, then there is no policy issue. But behind the criticism lies a genuine concern that trade practices law has moved beyond its traditional role of preventing anti-competitive behaviour to a more interventionist and proactive stance. Allan Fels, Chairman of the ACCC, has denied the latter: "The Commission [ACCC] is not a social engineer, and it doesn't have a positive role in bringing about the most competitive solutions. Its only role is a backstop, if something is going to worsen competition" (Davidson, 1998, page 18).
Professor Fels's statement ignores the new regulatory role of the ACCC following the reform of Australian trade practices regulation. The Hilmer Committee recommended the integration of telecommunications regulation into trade practices law, and the enforcement of both by the ACCC. (45) Unlike traditional trade practices law, telecommunications regulation seeks to bring about competitive solutions through active intervention. In the ACCC's pay TV merger decisions, the trade practices goal to prevent lessening of competition and the proactive approach of telecommunications regulation clashed, with the clear sacrifice of the interests of pay TV. The concern is that, in its desire to promote competition in telecommunications, the ACCC was offering preferential treatment to Optus under the guise of promoting facilities-based competition at the expense of the more narrow interpretation of its role in blocking mergers which substantially lessened competition. At a minimum, the tensions between competition and communications regulatory approaches have not been adequately resolved, nor have they led to a coherent enforcement policy.
REFERENCES
Australian Broadcasting Authority (ABA) (1996), Broadcast Audiences in the 90s: Trends and Issues No. 4, Canberra.
—— (1998), Broadcasting Financial Results 1996–97, Sydney (diskette).
Australian Broadcasting Tribunal (ABT) (1982), Cable and Subscription Television for Australia, AGPS, Canberra.
Australian Bureau of Statistics (ABS) (1998), Radio and Television Services 1996–97, Canberra.
Australian Competition and Consumer Commission (ACCC) (1996a), Revised Merger Guidelines, Canberra.
—— (1996b), Submission to the Cross-Media Review, Canberra.
—— (1997), Amended Statement of Claim, Sydney, November.
Baimbridge, M., S. Cameron and P. Dawson (1995), "Satellite Broadcasting and Match Attendance: The Case of Rugby League", Applied Economic Letters, 2, pages 343–46.
Baumol, W. and J. Sidak (1994), Toward Competition in Local Telephony, The MIT Press/AEI Press, Washington, DC.
Beazley, K. (1991) "Microeconomic Reform: Progress -- telecommunications", statement by the Minister for Transport and Communications, Canberra.
Beesley, M. (ed.) (1996), Markets and the Media, Institute of Economic Affairs, London.
Besen, S. and L. Johnson (1986), Compatibility Standards, Competition, and Innovation in the Broadcasting Industry, RAND Corporation, Santa Monica (Publication No. R-3453-NS).
Besen, S. and G. Saloner (1989), "The Economics of Telecommunications Standards", pages 177–220 in W. Crandall and K. Flamm (eds), Changing the Rules: Technological Change, International Competition, and Regulation in Communications, The Brookings Institution, Washington, DC.
Brewster, D. (1997), "Pay TV goes bush", The Australian, 3 November.
Brown, A. (1986), Commercial Media in Australia: Economics, Ownership, Technology and Regulation, University of Queensland Press, Brisbane.
—— and M. Cave (1992), "The Economics of Television Regulation: A Survey with Application to Australia", Economic Record, 68, pages 377–94.
Bulletin (1997), "Pay TV's $3 billion Mr Fix it", 23 December.
Bureau of Transport and Communication Economics (BTCE) (1991), Economic Aspects of Broadcasting Regulation, Canberra (Report 71).
—— (1993), Elements of Broadcasting Economics, Canberra (Report 83).
—— (1995), Evaluation of the Transition Period in Australian Telecommunications, Canberra (Working Paper 16).
Burke, F. (1998), "Pay-TV: ACCC takes new look at PBL", Australian Financial Review, 27 October.
Case Associates (1997a), The Economics of League Football, London.
—— (1997b), "MisUse of Network Effects in Competition Cases: Recent Applications to the Computer Industry", Casenote 6.
Congdon, T. (1992), Paying for Broadcasting: The Handbook, Routledge, London.
Crandall, R. (1990), "Regulation, Competition, and Cable Performance", appended to Tele-Communications Inc (TCI's) Reply, Comments in FCC Mass Media Docket 90-04.
—— and H. Furchtgott-Roth (1996), Cable TV: Regulation or Competition?, Brookings Institution, Washington DC.
Davidson, J. (1998), "How Internet Anarchy will end", Australian Financial Review, 20 May.
Department of Justice/Federal Trade Commission (DoJ/FTC) (1997), Horizontal Merger Guidelines (Revised 1997), Washington, DC.
Department of Transport and Communications (DTC) (1989), Future Directions for Pay TV in Australia, AGPS, Canberra.
Dertouzos, J. and S. Wildman (1990), "Competitive Effects of Broadcast Signals on Cable", submitted as an attachment to the Comments of the National Cable Television Association in FCC Mass Media Docket 89-600, March 1.
Dixit, A. (1980), "The Role of Investment in Entry Deterrence", Economic Journal, 90, pages 95–106.
EC Commission (1997), Notice on the definition of the relevant market for the purposes of Community competition law, Brussels, Official Journal C 372/5 (97/C 372/03), pages 5–13.
—— (1998), Cable Review -- Commission Communications concerning the review under competition rules of the joint provision of telecommunications and cable TV networks by a single operator and the abolition of restrictions on the provision of cable TV capacity over telecommunications networks, DGIVB, Brussels.
Egan, B. (1996), Information Superhighways Revisited: The Economics of Multimedia, Artech House, Norwood, Mass.
Fairfax (John) Holdings (1998), "New paths for growth: Equal access to Australia's digital spectrum", John Fairfax Holdings submission to federal government on allocation of digital spectrum, March.
Farrell, J. and G. Saloner (1985), "Standardisation, Compatibility and Innovation", RAND Journal of Economics, 16, pages 70–83.
Federal Communications Commission (FCC) (1998), Report on US Cable Industry, Washington, DC. (CS Docket No.97-141, 13 January).
Federal Trade Commission (FTC) (1992), Comments of the Staff of the Bureau of Economics of the Federal Trade Commission, Washington, DC. (MM Docket No. 91-221, 24 September).
—— (1997), "Background Note", in Application of Competition Policy to High Tech Markets, OECD, Paris.
Fels, A. (1996) "The Commercial Implications of the Links between Pay TV Operators and Free to Air Broadcasters", paper to Australian Broadcast Summit, Sydney, May.
Fowler, M., A. Halprin and J. Schliochting (1986), "'Back to the Future': A Model of Telecommunications", Federal Communications Law Journal, 38, pages 193–4.
Graham, A. and G. Davies (1997), Broadcasting, Society and Policy in the Multimedia Age, University of Luton Press, Luton.
Haring, J. (1985), The FCC, the OCCs, and the Exploitation of Affection, Office of Plans and Policy, FCC, Washington, DC (Working Paper No. 17).
Hazlett, T. and M. Spitzer (1997), Public Policy Toward Cable Regulation: The Economics of Rate Controls, MIT Press/AEI Press, Washington, DC.
Hilmer, F., M. Rayner and G. Taperell (1993), National Competition Policy: Report by the Independent Committee of Inquiry, AGPS, Canberra.
Holthuyzen, F. (1992), "Competition and the need for pro-competitive safeguards: the competitive safeguards framework", Competitive Safeguards Seminar, DTC, Canberra.
Home Office (1986), Report of the Committee on Financing the BBC (Peacock Report), HMSO, London (Cmnd 9824).
House of Representatives Standing Committee on Transport, Communications and Infrastructure (HR) (1989), To Pay or Not to Pay? Pay Television and Other New Broadcasting-related Services, AGPS, Canberra.
Hughes, G. and D. Vines (eds) (1989), Deregulation and the Future of Commercial Television, David Hume Institute, Edinburgh.
Johnson, L. (1994), Toward Competition in Cable Television, MIT Press/AEI Press, Washington, DC.
Jorde, T. and D. Teece (1992), Antitrust, Innovation, and Competitiveness, MIT Press, Cambridge, Mass.
King, S. and R. Maddock (1996), Unlocking the Infrastructure: The Reform of Public Utilities in Australia, Allen & Unwin, Sydney.
Larouche, P. (1998), "EC Competition Law and the Convergence of Telecommunications and Broadcasting Sectors", Telecommunications Policy, 22, pages 219–42.
Levy, J. and P. Pitsch (1985), "Statistical Evidence of Substitutability among Video Delivery Systems", pages 56–92 in E. Noam (ed.), Video Media Competition: Regulation, Economics and Technology, Columbia University Press, New York.
Lieberman, D. (1997), "Pay TV, Cables and Service Bundling: Challenges for Regulators", paper to Australasian Cable and Satellite Television Conference, 6 February.
Liebowitz, S. and H. Margolis (1990), "The Fable of the Keys", Journal of Law and Economics, 33, pages 1–26.
Little, A. (1998), "Why three into two won't go -- The death of Galaxy/FOXTEL merger", Telemedia, 2, pages 5–7.
McCallum, L. (1999), "EC Competition Law and Digital Pay Television", Competition Policy Newsletter, 1, pages 4–16.
Minasian, J. (1964), "Television Pricing and the Theory of Public Goods", Journal of Law and Economics, 7, pages 71–83.
Monopolies and Mergers Commission (MMC) (1999), British Sky Broadcasting Group plc and Manchester United plc: A Report on the Proposed Merger, HMSO, London (Cm 4305).
Noll, R., M. Peck and J. McGowan (1973), Economic Aspects of Television Regulation, The Brookings Institution, Washington.
Organisation for Economic Co-operation and Development (OECD) (1993), Competition Policy and a Changing Broadcast Industry, Paris.
—— (1995), Telecommunications Infrastructure: The Benefits of Competition, Paris.
Office of Fair Trading (OFT) (1996), The Director General's Review of BSkyB's Position in the Wholesale Pay TV Market, London.
Office of Telecommunications (Oftel) (1996), Submission of the Office of Telecommunications to the Office of Fair Trading Review of Pay TV, London.
—— (1997), Submission to the ITV on Competition Issues Arising from the Award of Digital Terrestrial Television Multiplex Licences, London.
Owen, B., J. Beebe and W. Manning, Jr. (1979), Television Economics, D.C. Heath, Lexington, Mass.
Owen, B. and S. Wildman (1992), Video Economics, Harvard University Press, Cambridge, Mass.
Parish, R. (1968), The Political Economy of Broadcasting, University of New England, Armidale.
Pons, J. (1998), "The Future of Broadcasting", paper to Institute of Economic Affairs conference on Future of Broadcasting, 29 June.
Sappington, S. and D. Weisman (1996), Designing Incentive Regulation for the Telecommunications Industry, American Enterprise Institute, Washington, DC.
Shanahan, D. (1998), "Cabinet overruled digital TV warning", The Australian, 3 April.
Shapiro, C. and H. Varian (1998), Information Rules -- A Strategic Guide to the Network Economy, Harvard University Press, Cambridge, Mass.
Tirole, J. (1989), The Theory of Industrial Organisation, MIT Press, Cambridge, Mass.
Trade Practices Commission (TPC) (1994), Market Definition and Competition Issues in Commercial Broadcast Radio, Canberra.
Veljanovski, C. (ed.) (1989), Freedom in Broadcasting, Institute of Economic Affairs, London.
—— (1996), Promoting Local Network Competition, European Media Forum, London.
—— (1999a), "Market Definitions in Telecommunications: The Confusing Proliferation of Competitive Standards", Computer and Telecommunications Law Review, 5, pages 25–34.
—— (1999b), "The Competitive Regulation of Digital Pay TV", European Economics and Law, 1 (forthcoming).
Wildman, S. and B. Owen (1985), "Program Competition, Diversity, and Multichannel Bundling in the New Video Industry", Chapter 8 in E. Noam (ed.), Video Media Competition: Regulation, Economics, and Technology, Columbia University Press, New York.
Wood, R.J. (1998), Media Regulation in Australia and the Public Interest, Toowoomba.
CASES
Bertelsmann/Kirch/Premiere Case No. IV/M.993 (1998).
Deutsche Telekom/Betaresearch Case No. IV/M.1027 (1998).
Media Council of Australia (1996) ATPR 41–497.
MSG Media Services Case IV/M.469.
News Ltd v Australian Rugby League Ltd (1996) ATPR 41–466.
Nordic Satellite Distribution Case IV/M.490 1996 OJL 53/20.
QCMA (1976) ATPR 40–012.
Queensland Wire Industries Pty Ltd v BHP (1989) 167 CLR 177.
ENDNOTES
45. Hilmer et al. (1993) recommended one regulator covering competition and utility regulation and a new legal regime which could give a right of access to specified "essential facilities" on fair and reasonable terms. While the government did not accept the essential facilities doctrine, an open-access regime administered by the ACCC using an administrative "declaration process" followed by negotiated interconnection terms is now in operation.
No comments:
Post a Comment