Biennial Report XXII of the Monopolies Commission under § 44(1) ARC, 3 July 2018

In this chapter, the Monopolies Commission examines the developments concerning the market and competition in the sector for audiovisual media. The analysis focuses on the online activities of public broadcasters and the existing regulatory framework for audiovisual media services.

The German State and the public broadcasters must observe constitutional and EU law limits when offering journalistic content via online media. Public broadcasters fulfil a universal service mission that includes a guarantee for their existence and development. However, public broadcasters are not only constitutionally entitled, but in principle also obliged under EU law to specify the universal service mission in such a way that private competitors can plan their activities and that supervision is possible. The State has the duty to secure the fulfilment of this obligation.

According to the State aid compromise between the EU and Germany (2007), the financing of the public broadcasters is existing aid, which must be continuously reviewed for compatibility with the EU internal market. The parameters for financing of the public broadcasters’ online services leave room for interpretation. It cannot be excluded that activities are financed through which public broadcasters can drive competitors out of the market by exercising market power. The three-step test, which is to ensure compliance with the aid compromise at national level, has shortcomings which have an appreciable impact on its practical effectiveness.

Apart from the requirements of EU State aid provisions, further limits for the protection of competition must be observed in the expansion of the public broadcasters’ online services. Public broadcasters are not allowed to force other media companies out of economic and journalistic competition by abusing their market power. Such exclusionary practices are possible insofar as the broadcasters do not limit their offer to socially and culturally relevant content with an added value compared with privately offered content (so called “public value” content). Such activities could commercially impede private media companies in providing their own online services and might also violate the freedom of broadcasting and the freedom of the press of such media companies. The recently agreed adjustments to the Inter-State Broadcasting Treaty (Rundfunkstaatsvertrag) do not take sufficient account of this, either.

Media convergence and the market entries of new providers of audiovisual media, especially in the field of online media, have led to an increase in the intensity of competition. This tends to increase the diversity of opinions, the safeguarding of which is an important goal of media regulation. However, regulation has not kept pace with market developments and changes in consumer behaviour. It should be examined particularly whether the regulation still serves the objectives pursued (in particular, the protection of opinion-forming and decision-making) without disproportionately distorting the conditions of competition. Overall, there is scope for modifying and reducing media regulation.

At the national level, particularly the design of media concentration control should be revised. In the regulation of broadcasting platforms, the regulations discussed on privileged prominence and the existing regulations on allocation of platform capacities and must-carry regulations for infrastructure-based platforms (e.g., cable network operators) appear to be unnecessary. At present, media law regulation of intermediaries (e.g., search engines, social networks) is not necessary either to ensure the diversity of opinions.

At the EU level, the amendment of the Audiovisual Media Services Directive (AVMS Directive) will lead to an overall convergence of the conditions of competition between linear and non-linear media services. However, in view of the regulatory requirements for advertising, the abolition of quantitative advertising restrictions would have been preferable for television broadcasters. The minimum quota for European works for video-on-demand services is questionable, at least in its current form. The extension of the country of origin principle and the collective management of rights in the planned SatCab Regulation has not yet been made competition-neutral. In the currently planned data protection regulations (in particular, the ePrivacy Regulation), a fair balance between the personal data interests of users and the economic interests of companies must be sought.

Download this chapter of the Biennial Report XXII (in German language only)