MDDI, IMDA propose tighter approval process for M&As in media sector

[SINGAPORE] The Ministry of Digital Development and Information (MDDI) and the Infocomm Media Development Authority (IMDA) have released a public consultation paper that proposes changes to the Info-communications Media Development Authority Act 2016.

The proposed changes follow the May 2022 issuance of the Code of Practice for Competition in the Provision of Telecommunication and Media Services 2022, which sought to promote effective and sustainable competition in the converging telco, broadcasting and newspaper sector.

The changes will “further harmonise and refine” the treatment of competition in the telco and media sectors, while also strengthening the media competition framework, the consultation paper noted.

Most notably, the Bill seeks to widen the net for merger controls.

Currently, only “regulated persons” – defined as newspaper publishers regulated by IMDA or holders of a broadcasting license – or ancillary media service providers must seek approval from the IMDA before acquiring a 30 per cent stake in a media entity.

The proposed changes seek to expand this coverage, stating that any person – whether a holder of a licence or not – who is acquiring ownership interests of 30 per cent or more must seek the regulator’s approval. The same standard applies to the telco industry.

Calibrated enforcement of competition

The regulators are also proposing a more calibrated approach to anti-competitive behaviour.

Under the current Act, the penalty for anti-competitive behaviour is absolute – any transaction that is deemed anti-competitive will be void.

In the proposed Bill, the regulators provide some form of leeway, so that such anti-competitive agreements will be void “only to the extent” of the infringement.

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In a separate move to reduce regulatory friction, IMDA proposes loosening its grip on pro forma transactions – which it defines as transactions that do not result in changes to the voting power held by shareholders of regulated persons.

Currently, written approval by the authority is required for transactions that meet a specific threshold in changes of voting power, regardless of whether they are pro forma.

To align with the telco regime, the Bill proposes that companies will no longer need to seek written approval by IMDA for pro forma transactions. Instead, companies will only be required to inform the regulator.

Ministerial power

The proposed Bill seeks to transfer the power to order structural separation to regulated persons from the IMDA to the minister.

This means the Bill will provide for the Minister of Digital Development and Information – a post now held by Josephine Teo – to issue a separation order, instead of IMDA.

The separation order can force a dominant media player to divest assets or spin off business units if it is deemed to be making it difficult for competitors to enter the market for media services.

The Bill also seeks to overhaul the dispute resolution process.

Currently, parties aggrieved by IMDA’s decisions may appeal only to the minister, and are unable to request for IMDA’s reconsideration.

The draft law proposes to provide a new mechanism for the authority to reconsider its own decisions and directions. However, the Bill stipulates that an aggrieved party cannot simultaneously appeal to the minister.

In total, 18 new clauses are being introduced in the Bill. Public consultation on it closes on Jan 21.