Freedom of press should not create anti-competitive regime

Freedom of the press is a glorious and much envied regime by the developed economies. However, the balance between a free press and the extent of ownership of the media corporations should be carefully struck. This has always been a difficult question but a new dimension is on the horizon.

The Competition Bill has been with the Legislative Council for some time, and with opposition from the business communities, large and small. The business community is coming to accept that Hong Kong still needs a piece of competition legislation. In any case, the mainland has already had one for some time and it’s difficult to justify why Hong Kong should not have its own competition law regime. The merits of a competition law are plenty but it is based upon the notion that competition is good for economic growth as many of the vices of monopolies and oligopolies will distort the market.

As Hong Kong is a novice in this field, it is necessary to watch closely what happens elsewhere. A competition law regime overlaps with many other aspects of the economy and communities that are also under regulatory control. The Leveson inquiry in the UK is just too obvious as an example.

In the past few weeks, the Leveson inquiry has been making headlines concerning the competition law. The inquiry started off with the British prime minister announcing a two-part inquiry into the role of the press and police in a phone-hacking scandal, on July 13, 2011. That investigation was divided into two parts. Part I covers the culture, practices and ethics of the media, and includes the study of a number of relationships between various sectoral interests of the British society. That would include the relationship between the press and the public, the press and the police, and the press and politicians.

Now, it was the relationship between the press and politicians that made news in the past week. The quest on illegality on phone-hacking on a 13-year-old murder victim, that once triggered public outrage, does not seem to carry much interest. It may recall that Rupert Murdoch had painfully closed his empire’s best-selling Sunday tabloid, News of the World. He had also abandoned a multi-billion-pound takeover bid for a profitable satellite-television company, BSkyB. It’s the problems with BSkyB that calls into the question of the extent to which the media can be close and cozy with politicians.

All these stem from Jeremy Hunt, the culture secretary. In 2010, Murdoch’s News Corporation already controlled some 39 percent of the shareholding of BSkyB. However, News Corporation already owned four national British newspapers. Naturally, many politicians and media rivals fearful of the firm’s weight fought hard against the intended purchase. Some argued against the purchase on the simple ground that it would erode media plurality. By that time, BSkyB had been the target of anti-competitive behavior. The array of offences included the UK’s Competition Commission ruling provisionally that BSkyB was stifling competition and innovation in the pay-TV market for movies. It was alleged that BSkyB’s premium pay-TC cinema business has been earning excess profits for an unusually long time.

Hong Kong’s media is already under some form of competition law regime. The government has the distinct responsibility and power of overseeing media takeover bids. The Competition Bill, although it does not include merger control, will add impetus, if only indirectly, to the scrutiny of the regime. This is because a merger outside the telecommunications industry might render the parties in breach of the First or the Second Conduct Rule and bring merger activities outside the telecommunications industry effectively under control of the Competition Bill.

However, the scope of telecommunication industry is bound to create some grey areas. On top of this, Hong Kong has its Basic Law to guarantee the freedom of the press. To what extent will such constitutional guarantees interact with the new competition law regime is at the moment not closely examined. Media conglomerates owning both the press and the broadcasting media should be more jealously looked at. It may well be right to examine now the forms of oversight and media-ownership rules that work, leaving Hong Kong with a free press that is not too powerful as to become horrible, but still profitable.

The author is a Hong Kong barrister and chairman of the Hong Kong Bar’s Special Committee on Planning and Policy.