Competition studies - 1

Directorate-General For Competition

Description

Market definition in the media sectoreconomic issues
Economic policy - Economic and Monetary Union
Information - Documentation
Target audience: All

Sujets

• Market
• Médias de masse
• Economic policy

Informations

• Publié par: DIRECTORATE-GENERAL-FOR-COMPETITION
• Nombre de lectures: 19
• Langue: English

Extrait

EUROPEAN COMMISSION
Competition studies — 1
Market definition in the media sector
Economic issues
Report by Europe Economics
for the European Commission,
Directorate-General for Competition,
Information, communication and multimedia
Media
November 2002Preface and disclamer
This report has been prepared by Europe Economics as part of an assign-
ment for the Media Unit of the Directorate-General for Competition of the
European Commission.
Europe Economics was appointed to produce this report following the
restricted tender procedure COMP/C2/2001/16, which comprised two lots:
lot 1: market definition in the media sector: comparative legal analysis
(awarded to Bird & Bird);
lot 2: mark: economic issues (awarded to
Europe Economics).
The two studies are complementary, and Europe Economics read and took
account of Bird & Bird’s interim report when drafting the present report.
Further information on decisions of the Directorate-General for Competition
of the European Commission in the media sector can be found in the 2002
compilation ‘EU competition policy in the media sector’, available on request
from the Media Unit of the Directorate-General for Competition of the
European Commission.
The opinions expressed in this report are purely those of the authors
and may not in any circumstances be regarded as stating an official
position of the European Commission.
Europe Direct is a service to help you find answers
to your questions about the European Union
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A great deal of additional information on the European Union is available on the Internet.
It can be accessed through the Europa server (http://europa.eu.int).
Cataloguing data can be found at the end of this publication.
Luxembourg: Office for Official Publications of the European Communities, 2003
ISBN 92-894-5659-0
© European Communities, 2003
Reproduction is authorised provided the source is acknowledged.
Printed in Luxembourg
PRINTED ON WHITE CHLORINE-FREE PAPERTABLE OF CONTENTS
1 EXECUTIVE SUMMARY...............................................................................9
1.1 Purpose and Scope...........9
1.2 Structure of the Report.....................................9
1.3 Defining Markets..............................................10
1.4 Market Definition Issues in Media..................................................10
1.5 Framework for Defining Markets in Media Cases........................................................12
2 METHODOLOGICAL ISSUES....................................15
2.1 Introduction......................................................................................15
2.2 Price Discrimination........19
2.3 Bundling...........................................................29
2.4 Advertising and Free Content........................44
2.5 Gateways..........................................................................................55
2.6 Rapid Change..................66
2.7 Convergence....................................................69
3 PRACTICAL ISSUES ..................................................72
3.1 Introduction......................................................72
3.2 Key Steps for Market Definition in Media......................................................................72
3.3 Definition of the Relevant Products..............74
3.4 Assessing Substitutability..............................81
3.5 Cross-checking with Other Evidence...........98
4 CONCLUSIONS.........................................................................................104
4.1 Why Define Media Markets?104
4.2 The Structure of Media Markets...................................................104
4.3 Defining Media Markets in Practice.............106
APPENDIX 1: THE CONCEPT OF MARKET DEFINITION ..............................108
APPENDIX 2: CHALLENGES TO THE TRADITIONAL FRAMEWORK .........123
APPENDIX 3: CATEGORISATION OF TRADITIONAL TECHNIQUES ...........133
APPENDIX 4: BIBLIOGRAPHY ..........................................................................139
3DETAILED TABLE OF CONTENTS
1 EXECUTIVE SUMMARY...............................................................................9
1.1 Purpose and Scope...........9
1.2 Structure of the Report.....................................9
1.3 Defining Markets..............................................10
1.4 Market Definition Issues in Media..................................................10
False problems................................ 11
1.5 Framework for Defining Markets in Media Cases........................12
Weaknesses in the traditional tests................... 12
False solutions................................................................ 12
Key steps for market definition.......................................................... 13
Developing operational guidance...................... 14
2 METHODOLOGICAL ISSUES....................................................................15
2.1 Introduction......................................................15
Definition of the media sector............................................................ 15
Economic characteristics of media industries that affect market definition ....................... 15
Economies of scale and value-based pricing.............................16
Inter-related markets, advertising and free content..................... 17
Stages of production ................................................................................................... 17
Rapid change and convergence................. 18
Structure of the section...... 18
2.2 Price Discrimination........19
The role of price discrimination in the media sector.......................................................... 19
Market definition issues ..................................................................... 20
The case of price discrimination by customer group.................. 20
The case of price discrimination through versioning................... 22
Examples........................................................................................................................... 23
Geographic price discrimination by cable franchise area ........................................... 23
Versioning of books as paperbacks and hardbacks................... 24
Versioning of movie releases...................... 26
Temporal discrimination for durable content ............................................................... 27
Summary of methodological issues .................................................. 28
2.3 Bundling ...........................................................29
The role of bundling in the media sector........................................... 29
The case of bundling to extract consumer surplus..................... 30
The case of bundling as a form of entry deterrence................... 30
Market definition issues ..................................................................... 31
Substitutability between bundled and unbundled supply............................................ 32
Analysis of complements and secondary markets...................... 34
Examples........................................................................................................................... 36
Bundling of pay-television and telephony... 37
Bundling of broadband content................... 39
Bundling of academic journals....................42
Summary of methodological issues .................................................................................. 44
2.4 Advertising and Free Content........................44
The role of advertising and free content in the media sector............ 44
4Market definition issues ..................................................................................................... 45
Treating advertising space as access to an audience................ 46
Treating advertising as content ................................................................................... 47
Markets for the supply of free content......... 47
Examples........................................................... 48
Competition between free-to-air broadcasters............................ 49
Competition between a pay-television operator and free-to-air broadcasters ............ 52
Summary of methodological issues .................................................................................. 54
2.5 Gateways..........................................................55
The role of gateways in the media sector.......... 55
The case of gateways in distribution........... 55
The case of gateways resulting from network effects ................................................. 56
The case of content gateways ....................................................57
Market definition issues ..................................... 58
Markets for gateway services...................... 58
Defining markets in which there is no trade ................................................................ 59
Examples........................................................................................... 60
Digital television platforms 60
Refusal to supply content to an Internet portal............................ 64
Summary of methodological issues.................................................. 65
2.6 Rapid Change .................