On 4 December 2017 the Treasurer, the Hon Scott Morrison MP, issued Terms of Reference (ToR) to the ACCC, directing it to conduct an 18 month long public inquiry into the impact of digital platform services on the state of competition in media and advertising services markets, pursuant to s 95H(1) of the Competition and Consumer Act (CCA) (Inquiry).  ACCC Chair Rod Sims has called this a "world first" inquiry of its kind into digital platforms that goes to “the heart of their business models”.

The Government agreed to undertake the Inquiry as a condition of Senator Xenophon’s support for significant legislative changes to media control and ownership laws under the Broadcasting and Services Act 1992.  It also comes in the wake of growing international interest from competition regulators in digital platforms and their conduct in the use of data and advertising practices.  The ACCC has complemented the changes to media control and ownership laws with its Media Merger Guidelines 2017.  The Guidelines acknowledge how media is delivered and consumed differently, with increasing convergence between old and new media.

The Terms of Reference

The ToR direct the ACCC to look at the impact of digital search engines, social media platforms and other digital content aggregation platforms (PSPs) on media and advertising, particularly in relation to the supply of news and journalistic content, and implications of this for media content creators, advertisers and consumers. 

The ToR include, but are not limited to:

1. the extent to which PSPs are exercising market power in commercial dealings with the creators of journalistic content and advertisers;
2. the impact of PSPs on the level of choice and quality of news and journalistic content to consumers;
3. the impact of PSPs on media and advertising markets;
4. the impact of longer-term trends, including innovation and technological change, on competition in media and advertising markets; and
5. the impact of information asymmetry between PSPs, advertisers and consumers and the effect on competition in media and advertising markets.

An issues paper with a call for public submissions is anticipated to be released in the first quarter of 2018.  A preliminary report is to be submitted by 4 December 2018, and a final report is due by 4 June 2019.  The ACCC will be able to use a range of information gathering powers, pursuant to Part VIIA of the CCA. Those powers, and the breadth of the ToR, are what make it a first of its kind.

Implications of the Inquiry

Mr Sims recognises both the “enormous benefits and opportunities from data-driven innovation”, as well as the timeliness of such an inquiry amidst a key period of transformation in the media sector.

The Issues Paper is anticipated to be released by the ACCC in the first quarter of 2018, which will provide more detailed guidance on the key issues the ACCC will be exploring in the Inquiry.

In the interim, Mr Sims made some noteworthy public comments about the ACCC approaching the Inquiry through two lenses:

• Potential use or misuse of any market power: looking at any asserted market power of PSPs and their potential effect on advertising and media markets; and
• Transparency:  looking at the extent to which people may be misled. In Mr Sims’ words, “If you’re an advertiser, how much do you know about whether your advertising is getting to consumers, if you’re a content provider, how much is getting through and if you’re a consumer how does your news get to you”.

As part of the Inquiry, the ACCC has indicated that it will be keen to hear from content creators, mainstream media, smaller media operators, PSPs, advertisers, journalists, consumers and small business interest groups.

In a recent podcast, Mr Sims has said that the ACCC’s focus of the Inquiry is about giving advice on policy (as distinct from enforcement of the CCA), although an enforcement action could follow if it were to identify any concerning conduct it were identified. To the extent the ACCC is to pursue contraventions of the CCA, Mr Sims has noted in a recent speech that it will particularly be able to do so as a result of the Harper Reforms.

The authors thank Arda Reznikas for his assistance in preparing this insight.