Wed, Jun 14, 2017 - Page 8 News List

Regrets over NCC’s block of deal

By Chen Ping-hung 陳炳宏

On May 31, the National Communications Commission (NCC) disallowed a bid by multiple system operator Taiwan Optical Platform Co to acquire Eastern Broadcasting Co.

Strictly speaking, there are no legal clauses that give the commission a clear basis to block the acquisition.

As an assessor in this case, I recognized this lack of a legal basis.

Although I respect the commission’s power of administrative discretion, it is hard to avoid certain regrets.

One irregularity is that the commission passed the resolution based on supplementary clauses, to demonstrate its determination to oppose media monopolies, even though a proposed media antitrust law has yet to be enacted.

I suggest that, having disallowed the buyout in this case, the commission should propose its draft media antitrust law as soon as possible, otherwise it will continue to face accusations of applying its administrative discretion in a way that oversteps legal boundaries.

The commission disallowed the merger because vertical integration between cable TV systems and channels would create the largest channel agency on the cable TV platform in Taiwan. The commission determined that the sheer size of the integrated conglomerate would have a great effect on the development of the industry and on the opinion market. On these grounds, the NCC determined that such a merger would do more harm than good to the overall public interest.

However, if one examines the resolution objectively, the way the commission has applied its administrative discretion could indeed easily give rise to controversy.

As Taiwan Optical said in response to the outcome of the deliberations, the commission says that Optical’s nearly 10 percent share of cable TV subscribers puts it in a dominant position that tends toward monopoly, but Article 24 of the Cable Radio and Television Act (有線廣播電視法) states that: “The number of subscribers of the system operators, their affiliates and their directly or indirectly controlled system operators shall not exceed one-third of the total number of subscribers in the nation.”

Taiwan Optical said that it has at most 9.38 percent of subscribers, which is well within the legal limit.

Furthermore, the commission took the view that if the acquisition went ahead, Taiwan Optical would become Taiwan’s second-biggest channel agency, giving it a strong market position that might hamper competition.

In its response, Taiwan Optical said that there are 110 widely viewed channels in Taiwan and its channels account for only 11.8 percent of them.

It said that this does not contravene Article 25 of the act, which says: “Programs provided by system operators and their affiliated enterprises shall not exceed 25 percent of the usable channels,” and hardly puts it in a monopolistic position.

The opinions of the commission and Taiwan Optical form an interesting contrast, with the commission applying its administrative discretion to disallow the acquisition out of concern for its potential effect on the industry, whereas Taiwan Optical objects to the decision on the grounds that it is not breaking any laws.

This clash of opinions highlights the importance and urgency to formulate a media antitrust law, otherwise Taiwan Optical can hardly be blamed for saying that the commission acted unfairly by blocking the buyout on the grounds of market monopoly concerns.

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