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Digital Economy Bill [HL]

My Lords, in Amendment 8, the noble Lord, Lord Gordon, raises an issue which is critical to the future success of the United Kingdom’s commercial media market but one that is sadly not yet addressed in the Bill. If our commercial media sector is to keep pace with technological developments and the resulting commercial pressures, then the media merger regime in the United Kingdom is surely in need of quite substantial reform. Recent examples of competition decisions have not always been helpful and, in some cases, have led to overseas rivals setting up similar services. I am thinking in particular of the decision concerning Kangaroo, which, to all intents and purposes, denied UK public service broadcasters an opportunity to move into the video on demand market. Instead, we are likely to see American versions such as Hulu offering similar services. This is one example, but there are others. The result is that those contemplating entering into mergers, acquisitions or joint ventures in this country in the media sector face considerable regulatory uncertainty. This has the potential to harm the United Kingdom’s reputation as an attractive place for investment, so we have a great deal of sympathy with the noble Lord, Lord Gordon, in raising the issue. However, I am not yet quite sure that his proposed solution is necessarily the right way forward; indeed, he gracefully admitted that there may be others. Simply moving the regulation regime from the Office of Fair Trading to Ofcom might not, I fear, ensure a more flexible and dynamic competitive environment, particularly if Ofcom is simply working under the same rules. Instead, we believe that it would make sense to look at updating the competition rules for media mergers, perhaps by examining the threshold levels and the criteria by which mergers are examined.