UK shows way to media regulation

By Chiang Ya-chi 江雅綺  / 

Thu, Dec 27, 2012 - Page 8

Amid the controversy over the proposed acquisition of some of China Network Systems’ cable TV operations by the Want Want China Times Group, a Chinese student said: “Isn’t Taiwan a free market? Why don’t people have the freedom to buy media organizations? If they run it badly, they will just fall foul of the market.”

The student does seem to have a point, until you realize that the argument ignores the other values that need to be maintained within a free, democratic society, beyond the dictates of the free market. In order to maintain these values, which most people regard as important, there are times when legislation is required to place constraints on individual freedoms.

Let us look at an example. If the free market reigns supreme, then the strong will exploit their market advantage to achieve the conditions that are most advantageous to themselves. However, the Consumer Protection Act (消費者保護法) stipulates that any terms and conditions within standard contracts that are clearly unfair can be invalidated by virtue of that fact. This is a case of legislation placing constraints on contractual freedoms in the interests of ensuring fairness.

Another example is that, while corporations are free to merge and buy each other out, the Fair Trade Act (公平交易法) stipulates that market regulators have the power to reject a proposed merger or acquisition if they believe there is a risk of a market monopoly being created that would be harmful to competition. This, then, is a case of legislation restricting the freedom of business activity in the interest of ensuring healthy competition.

There is no need to enumerate all of the examples in the legislation, suffice it to say that market freedoms cannot be relied upon to regulate everything. Absolute, unconditional freedom left to run rampant in the market place, unchecked by legislation, would mean that the strong would monopolize everything that comes within their interests and do everything within their power to topple their weaker rivals.

In his book What Money Can’t Buy: The Moral Limits of Markets, the Harvard political philosopher Michael Sandel writes that if we make everything a commodity, we erode the shared values that constitute the bedrock of society, leading to an unfair society. As Sandel says: “The more money can buy, the more affluence — or the lack of it — matters.”

Sandel does mention, in his lectures, the challenges faced by the UK and the US concerning the concentration of media control in the hands of a few people, but after reading the recently published Leveson Report on press freedoms in the UK, it became apparent that Taiwan’s legislation guaranteeing plurality of the media and diversity of views is, by comparison, inadequate.

In the UK, the 2003 Communications Act empowers the independent regulator and competition authority for the communications industries, Ofcom, to intervene in media acquisitions, either by other media organizations or by those outside the industry, to ensure that the media environment is conducive to diversity of views and the public interest. Ofcom has certain powers to use, should it feel it necessary. These include refusing a broadcasting or television license, or requiring the company to sell off some of its stock holdings and to refer the case to the Competition Commission to handle. Ofcom also has the right to ensure that the individual in question is qualified or “fit and proper” to run the organization and whether certain restrictions on cross-industry operations are being complied with.

For example, in the UK, nobody controlling more than 20 percent of national newspaper circulation can own more than 20 percent of an independent TV license. It can also check whether same-industry merger and acquisition regulations are being followed. If, for example, the acquisition of a newspaper results in a market share of more than 25 percent, Ofcom has the power to intervene and investigate the deal until it is satisfied that the new group will report factual news and allow for a diversity of views, in accordance with considerations of the public interest.

At the time of the phone hacking scandal in the UK, Rupert Murdoch’s media organization, News Corp, was in the process of bidding for the shares in British Sky Broadcasting (BSkyB) that it did not already own, in an attempt to acquire the organization outright. However, it withdrew the bid after the regulator questioned it.

Murdoch’s reputation took a battering in the UK over the phone hacking scandal, but the actual reason for the decision to refer the bid to the regulator was that his company already had a 39 percent stake in BSkyB and a 37 percent market share in the national newspaper industry. We must not forget that the UK has a robust public media tradition, and the BBC, with its global reach, is far more influential than any privately owned broadcasting corporation.

In 2003 Taiwan had some legislation of its own in this field, to limit the influence of political parties, politicians or the military in the media. Times change and with them circumstances, and we are now faced with the challenge of an acquisition that the legislators had not quite contemplated at the time. Now, it is only through legislation that we are going to be able to protect our basic human rights in the face of pressure from big money.

Chiang Ya-chi is an assistant professor at the Shih Hsin University School of Law’s Graduate Institute for Intellectual Property Rights.

Translated by Paul Cooper