While merger is likely to reduce competition, watchdog says, it won’t breach Competition and Consumer Act

This article is more than 1 year old

This article is more than 1 year old

Former prime minister Paul Keating has accused the competition watchdog of intellectual weakness and “recreant abrogation of duty” by not opposing the merger of Fairfax Media and Nine.

The Australian Competition and Consumer Commission announced on Thursday morning it would not block Nine’s takeover, despite acknowledging that it could reduce competition.

The ACCC chair, Rod Sims, said the merger would “likely reduce competition” but added that it was not “likely to substantially lessen competition in any market in breach of the Competition and Consumer Act”.

“This merger can be seen to reduce the number of companies intensely focusing on Australian news from five to four,” Sims said. “Post the merger, only Nine/Fairfax, News/Sky, Seven West Media and the ABC/SBS will employ a large number of journalists focused on news creation and dissemination.”

But, he noted, with the “growth in online news … many other players, albeit smaller, now provide some degree of competitive constraint. These include, for example, the Guardian, the New Daily, Buzzfeed, Crikey and the Daily Mail.”

A long-term critic of Nine, the former Labor leader said the ACCC had consigned the Sydney Morning Herald, the Age and the Australian Financial Review “to the ethical dustbin of Channel Nine”.

Nine's Fairfax takeover: what is the deal and what will it mean? Read more

“A low-rent news organisation, Channel Nine, will have editorial command of the major print mastheads in the country,” Keating said in a statement. “This will poison quality journalism; but more than that, remove chunks of local specific political issues, normally covered by newspapers, from the political debate.”

“The ACCC’s naive waffle in its media statement today that ‘Nine’s television operations and Fairfax’s main media assets do not compete closely with each other’, shows a complete misunderstanding of the role of capital city print journalism in shaping the media debate in television and print on a daily basis,” Keating said.

“What the ACCC has done today is effectively skewer major source media diversity in Australia,” Keating said, adding that it was “an appalling decision”.

The Nine network welcomed the decision by the regulator and is now concentrating on winning the support of Fairfax shareholders later this month.

“We welcome the ACCC’s decision not to oppose the merger of Nine and Fairfax,” said Nine’s chief executive, Hugh Marks.

“It is clear to us the ACCC were thorough in their considerations of the many submissions they received and we welcome this rigorous process, as this is the first merger to take advantage of the government’s media law reforms.

“It is a clear acknowledgement of the changing competitive landscape in our industry, where the ability to compete across a variety of platforms and to engage different audiences is key.”

In a note to staff at the network, Marks said if the Fairfax shareholders’ meeting and federal court approval were forthcoming, the new company would be up and running by December.

He said integrating the two media businesses was not a simple task and urged staff to be “flexible and patient”. He signalled charges in management, location and systems.

Fairfax Media journalists previously raised concerns that the takeover could compromise editorial standards at its major mastheads – the Sydney Morning Herald and the Age.

The journalist’s union, the Media, Entertainment and Arts Alliance said the decision was a “body-blow to media diversity, and the forerunner to future mega-deals that will reduce coverage of matters of public and national interest and do untold harm to media jobs”. MEAA chief executive Paul Murphy said the union would urge the new owners of Fairfax to sign a new charter of editorial independence to guarantee there will be no closures of newsrooms or titles, especially in regional areas, and maintain existing conditions.

“As we saw with the 2011 merger to form Seven West Media, media mergers of scale result in endless cost-cutting to increase ‘synergies’, far fewer journalists and far less local and national public interest journalism, while also wiping billions of dollars of value from the company,” Murphy said.

The new company will be known as Nine Entertainment Company and will begin operating on Monday 10 December.