Federal Cartel Office specifies merger rules for the media sector

17 September 2010

Dr Jörg Witting, Fabian von Busse

In dissolution proceedings against news agencies ddp Deutscher Depeschendienst (“ddp”) and Associated Press Germany (“AP”), the Federal Cartel Office (“FCO”) has taken the view that the German media specific merger rules are not limited to newspaper/magazine publishers and radio/TV broadcasters but also apply to news agencies.

For the calculation of the turnover thresholds, section 38 paragraph 3 of the German Act against Restraints of Competition (“ARC”) provides, amongst other things, that the twenty-fold turnover amount is to be taken into account as regards the publication, production and distribution of (parts of) newspapers and magazines and for the production, distribution and broadcasting of radio and television programs. Accordingly, in these parts of the media sector the turnover thresholds for the applicability of merger control regulations are twenty times lower than for undertakings in other sectors.

As corresponding court decisions are not available, it is disputed if news agencies fall within the scope of Sec. 38 para. 3 ARC and are thus subject to the lower turnover thresholds. The FCO now decided that this is the case as the activity of news agencies concerns the production of newspapers. It held that articles provided by news agencies constitute a substantial part of the newspapers’ content as these articles are often merely edited by newspaper journalists. The FCO based its findings on the purpose of Sec. 38 para. 3 ARC which is aimed to ensure the diversity of opinions in the press market. In this respect, the FCO argued that not only the diversity of publishing houses is important but also the number of sources (i.e. news agencies) which are used by newspapers. According to the FCO, news supply is decisive for the variety of news which can be offered by newspapers, so that concentrations on news agency level have the same significance for the diversity in the press sector like mergers of newspapers.

In the present case, ddp/AP’s competitor Deutsche Presse Agentur (“dpa”) had informed the FCO about the consummation of the merger, which had not been notified in advance to the FCO. On a request for information by the FCO, ddp and AP argued that that they did not consider Sec. 38 para. 3 ARC as applicable to news agencies, so in their view the applicable turnover thresholds were not met. The FCO subsequently initiated dissolution proceedings against ddp and AP and sent questionnaires to other market participants in order to assess the impact of the concentration on the market. Surprisingly, the FCO later stopped the proceedings as it found that the relevant turnover thresholds were not met although it considered Sec. 38 para. 3 ARC as applicable.

Due to the termination of the dissolution proceedings, the FCO’s view that Sec. 38 para. 3 ARC is applicable to news agencies will not be reviewed by a court. However this decision indicates that the FCO interprets Sec. 38 para. 3 ARC in a broad way, so that the notification requirements in the media sector must be thoroughly assessed.

Source: http://www.bundeskartellamt.de

Authors