Who's on First? Media Mergers: Interplay Between the Broadcasting Act and the Competition Act

Originally published on May 28, 2002

Introduction

A number of recent media stories have reported on a jurisdictional tussle that pits the Bureau of Competition Policy's general mandate under the Competition Act against the specific mandate of the Canadian Radio-television and Telecommunications Commission ("CRTC" or the "Commission") under the Broadcasting Act.

The Federal Court of Canada has been asked to rule on the respective jurisdictions of the CRTC, and the Competition Tribunal in the context of a proposed sale of media assets. The Federal Court's Decision could well have far reaching implications for future mergers of media companies that are regulated both under the Broadcasting Act and the Competition Act.

The dispute began on December 21, 2001 when the Commissioner of Competition Policy (the "Commissioner") filed an Application with the Competition Tribunal seeking an order prohibiting Astral Media Inc. ("Astral") from acquiring certain radio stations owned by Telemedia Radio Inc. The request for an order of prohibition flowed from the Commissioner's determination that the proposed transaction would result in a substantial lessening of competition in certain French-language radio markets in the Province of Quebec. The Commissioner concluded that the radio advertising market in question was a separate and distinct market from other forms of advertising media such as print (including newspapers, periodicals and outdoor advertising) and television. Consequently, these other forms of media were not viewed as effective substitutes.

In response to the Commissioner's request for an order of prohibition from the Competition Tribunal, Astral Media asked the Federal Court of Canada to issue a declaration stating that the Competition Act does not apply to the proposed transaction and that the Commissioner does not have jurisdiction under the Act to conduct an inquiry in respect of this transaction.

Five months after the Commissioner sought to block the merger, the CRTC issued Decision 2002-90 approving Astral's acquisition of the Telemedia radio stations. In approving the transaction, the Commission determined that the acquisition was in furtherance of the statutory objectives of the Broadcasting Act, consistent with the Commission's Commercial Radio Policy and would "improve the competitive position of private French-language radio in Quebec" (CRTC Decision 2002-90, paragraph 3).

The CRTC's Decision stands in stark contrast to the conclusions of the Commissioner of Competition Policy. In its Decision, the CRTC took the view that the radio advertising market is not a separate and distinct market but rather a subset of a larger advertising market that includes television and print media. To this end, the CRTC accepted evidence led by Astral that in recent years both AM and FM radio stations in Quebec have lost considerable market share to television and daily and weekly newspapers. Second, the Commission accepted Astral's argument that a greater concentration of radio...