Ofcom: A Credible Solution to Bias in Media Public Interest Mergers?

(by David Reader) On 4 February, the House of Lords Select Committee on Communications published its Report on Media Plurality proposing a number of changes to media ownership regulation in the UK. Among the most notable is the proposal to grant decision-making powers to the media regulator, Ofcom, in mergers raising potential media plurality concerns. At present, this role is performed by the Secretary of State but, as has been noted in a previous post by Andreas Stephan, the ability of politicians to undertake this role impartially has recently been called into question. In particular, the close contact between a NewsCorp lobbyist and a Special Adviser to (the then Culture Secretary) Jeremy Hunt during the NewsCorp/BSkyB assessment, as exposed by the Leveson Inquiry, highlights the sheer extent to which politicians can be subjected to undue influence in the media sector. Re-allocating the decision-making role to Ofcom could overcome this problem, but it could equally amount to substituting one problem for another.

Under the current regime, when the Secretary of State decides to make a public interest intervention on media plurality grounds, he or she will receive advice from the Office of Fair Trading (OFT) and Ofcom on competition and media plurality respectively.[1] The minister will then balance the competition and plurality concerns before deciding whether to refer the merger to the Competition Commission or, alternatively, permit or block the merger on media plurality grounds in lieu of a reference. Under the House of Lords’ proposals, however, the institutional arrangement would vary significantly.[2] According to the Report, Ofcom would have the discretion to make interventions which, when notified, would trigger two separate assessments of competition and media plurality running in parallel (the former undertaken by the new Competition and Markets Authority (CMA) and the latter by Ofcom itself). Should a conflict arise between the findings of the CMA and Ofcom on whether or not to permit the merger, the Ofcom Board would be tasked with balancing the conflicting interests and reaching a final decision. This is where the integrity of the proposed new regime begins to unravel.

By arranging the assessment procedure in this way, the final decision of the Ofcom Board is essentially a straight choice between the advice of the CMA and the advice of the Board’s fellow personnel within Ofcom. The Select Committee has itself recognised this potential conflict of interest, suggesting that it may be alleviated by (a) preventing the Ofcom Board members from taking part in the initial plurality assessment, and (b) ensuring the Board is mindful of the potential for judicial review. Whether these conditions would provide an effective safeguard is debatable but, regardless of this, it is bizarre that such a blatant risk of bias should exist within a set of proposals that seek to overcome the perceived subjectivity of ministerial decision-making.

This is not to say that Ofcom is as prone to undue influence as the Secretary of State. For example, the multi-member nature of the Ofcom Board allows for group decision-making, meaning that direct lobbying – such as that observed in NewsCorp/BSkyB – becomes much less workable. Equally, the Board would feel under no pressure to pursue personal ambition or short-term political goals, such as re-election.[3] Yet it would be naïve to assume that Ofcom is immune to regulatory capture. It employs a significant number of former media industry workers for their expertise, which potentially leaves Ofcom prone to the ‘revolving door’ dilemma, whereby former industry workers (who appreciate the unique attributes of the market) may be biased in favour of making decisions that benefit the media industry, rather than the public at large. Indeed, at the time of writing this post, six of the nine sitting members of the Ofcom Board have previously held a private position within the media sector.

Taken as a whole, the Select Committee’s Report establishes some solid foundations for further Parliamentary discussion. Indeed, I have not alluded to the Report’s proposals for a periodic review of media plurality, which warrants praise for addressing some of the questions raised by Michael Harker in another CCP blog post. There is a fear, however, that the report underplays the risk of regulatory capture that Ofcom would face during the decision-making process. The type of influence may not be as observable or newsworthy as that which is associated with ministerial decision-making, but it may nonetheless have the effect of preventing a thorough balancing of the competition and plurality aspects in a case. Rather than seeking to replace the Secretary of State as decision-maker, there may be value in considering further ways to protect ministers from capture in the future. Certainly, given the inherent role of the media in facilitating a democratic society, the constitutional significance of elected representatives should not be understated.

[1] Sections 44(1) and 44A Enterprise Act 2002.

[2] A helpful illustration of the proposed procedure features on page 65 of the Report.

[3] For a useful overview see M.E. Levine and J.L. Forrence, ‘Regulatory Capture, Public Interest, and the Public Agenda: Toward a Synthesis’ (1990) 6 Journal of Law, Economics and Organization 167.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: