UK media merger rules to get digital age upgrade

Tadeusz Gielas, competition law expert at Pinsent Masons, was commenting following recently announced plans to modernise media merger laws to better reflect the digital age and evolving news consumption habits.

The UK’s complex merger control rules are governed by the Enterprise Act 2002. They empower the Competition and Markets Authority (CMA) to review anticipated or completed M&A transactions, where certain jurisdictional thresholds are met, to determine if a transaction has resulted or may be expected to result in a substantial lessening of competition (SLC). The CMA has wide powers to address potential competition issue, including by clearing a merger subject to certain legally binding conditions, or even by prohibiting an M&A deal or requiring the sale of the target. The Enterprise Act also empowers the secretary of state (SoS) to intervene in certain M&A transactions on public interest grounds in the media sector.

However, it has now been recognised that the media landscape has changed significantly over the past two decades since the Enterprise Act was enacted, with a substantial shift to online news consumption. The proposed reforms update the public interest merger control rules for media companies, as well as the new foreign state intervention (FSI) regime, by also capturing online news sites which are connected with the UK or a part of the UK.  

The current media mergers regime allows the SoS for the department for culture, media & sport (DCMS) to intervene in M&A transactions involving broadcasters, daily and Sunday print newspapers, and local periodical newspapers. The public interest considerations which can be considered vary between newspapers and broadcasters but include those related to accurate presentation of news, freedom of expression, a plurality of views in newspapers, a plurality of ownership of media enterprises serving different audiences or different parts of the UK, a commitment to broadcasting standards and availability of a wide range of broadcasting in the UK.  Under the FSI regime, added to the Enterprise Act by the Digital Markets, Competition and Consumers Act 2024 (DMCC Act), the SoS can also intervene in M&A transactions where a foreign power seeks to gain control or influence over a UK newspaper enterprise.

Some of the proposed changes also relate to print media. The updated regime will also capture weekly and monthly print news publications circulated in the UK, in addition to daily, local, and Sunday print publications that are already included. The proposed reforms also extend some of the public interest considerations applicable to newspapers and broadcasters respectively, applying the existing public interest considerations across different types of media to a greater extent than previously.

According to the DCMS the planned reforms “will allow for greater scrutiny in the public interest of deals to purchase UK online news publications and news magazines that might adversely impact accurate reporting, freedom of expression and media plurality; widening the scope of the regime beyond television, radio and print newspapers as it presently stands.”

The DCMS has also comment that “our proposed amendments … balance the need to protect the public interest in a digital age with our responsibility to support a competitive and sustainable media environment.”

Gielas said “Contrary to Ofcom’s recommendations, the government has decided against expanding the scope of the media mergers rules to capture ‘news creators’ – any entity that creates news – as the UK government has recognised that such an approach could potentially capture a large number of firms and create a disproportionate burden for businesses, the government and regulators”.  

In a development that will be welcomed by digital firms, the government has confirmed that online news intermediaries, such as social networking sites like Facebook or X, and online news aggregators such as Apple News or Google News, will not be treated as newspapers for the purposes of the proposed legislative changes. This is because they do not have “editorial control” over the content they publish. In particular, they are not responsible for the commissioning of the news that they republish nor the decision to first publish the news.

Giles Warrington, a competition law expert at Pinsent Masons, said “Businesses need to be aware that under UK merger control rules certain transactions may be subject to government intervention on public interest grounds, such as media plurality, financial stability, public health emergencies - alongside or instead of an assessment by the CMA of how the transaction may impact competition on relevant markets.  The UK government’s proposals extend the media organisations which may be caught by a media merger intervention. Additionally, transactions with a UK nexus that have potential national security implications may also be scrutinised under the UK’s national security and investment screening regime.”

The government has launched a six-week consultation to seek views on the proposed changes to media merger rules in a bid to help refine the reforms and ensure they accurately reflect how people consume news today.

Pending the conclusion of the UK government consultation, the proposed changes will be made via secondary legislation. The changes will not apply retrospectively to historic transactions.