UTV bid suffers from watchdog's scrambled policy on ownership

Most, perhaps all, people would recoil from being described as abusive or as an abuser.

It is also a great commercial transgression to abuse a dominant position. For a business to have been found out practising any market abuse can undermine the highest reputation - commercial, ethical or personal. The tests by which abuse of dominant position is proven have to be rigorous and usually involve evidence of some actual behaviour. Under competition and merger law, a dominant position itself is not an offence, but the abuse of that position is.

In this context, for a business to find itself open to the presumption of the potential abuse in some way, merely by virtue of any one shareholder exceeding 27 per cent of ownership, is very unfair. This is the policy chosen by the Independent Radio and Television Commission (IRTC) for ownership of independent commercial radio stations.

The rule is facing an immediate test this month regarding the proposed takeover by Ulster Television of County Media in Cork, which has licences for three Cork radio stations.

Most people accept that the ownership and control of media outlets is different from other businesses because of the role they play in democratic opinion forming. This is why the Newspaper Commission examined ownership and control issues for that media and why the Competition and Mergers Review Group was asked to consider media cross-ownership.

The IRTC's 27 per cent rule is not about cross-ownership, but about the ownership of single outlets, irrespective of their market share. There is no basis, in terms of competition policy or the prevention of abusive commercial behaviour, for such a low ownership threshold. The basis, if any, of the IRTC policy must be its view of common good considerations.

I cannot see that any analysis of the common good in relation to media ownership could logically lead to a single ownership threshold of 27 per cent of each media outlet. That rule is not applied to newspapers or television, even by the IRTC, which has permitted stakes in TV3 of 45 per cent. Nor does it apply to 100 per cent State ownership of RTE. E Guide.

The issue of media ownership was debated in the Dail in 1998 in the defeat of a Private Member's Bill of the former arts minister Michael D. Higgins. His Bill sought to prevent any person owning more than 25 per cent of any two media, not exactly the same as the IRTC's 27 per cent rule, but both coming from the same stable. Deputy Richard Bruton of Fine Gael argued that merger law should govern ownership and that a 25 per cent rule was too rigid. Ironically, Deputy Higgins's Bill would have allowed buyers from other EU member states an exemption.

The present Minister for the Arts, Heritage, Gaeltacht and the Islands, Ms Sile De Valera, at the time drew attention to the report of the Newspaper Commission in 1996, which is also valid for radio stations. It said: "Any issue of concentration of ownership in the media should be considered on a media-wide as well as on a single media basis and in any such consideration effect should be given to the difference in consequences arising from such concentration in one branch of the media and concentration in different branches."

The IRTC's 27 per cent rule does not meet the media-wide test nor does it leave scope for analysing differences in the actual consequences of a change of media ownership.

The rule also doesn't sit well with the six considerations that the Competition and Merger Review Group said should apply in examining common good issues in the context of cross-ownership.

These were "the strength and competitiveness of the indigenous newspaper industry; the plurality of ownership; the plurality of titles; the diversity of views in Irish society; the maintenance of cultural diversity; and the position in the media market generally of any of the enterprises involved in the proposed merger or takeoever".

Applying similar tests to radio, it is impossible to see how one could arrive at a blanket prohibition on an ownership of more than 27 per cent of any one radio station.

It seems UTV is prepared to challenge any IRTC ruling against its purchase of County Media in the European Court of Justice. My bet is that the 27 per cent rule would be quickly overridden.

It would be a pity if it took such time and money to demonstrate that a groundless policy is also groundless in law.

Oliver O'Connor is contributing editor at Finance and Finance Dublin. E-mail: ooconnor@indigo.ie