• First labour analysis in Belgian merger review, authority says
• Media plurality aspects relevant for competition assessment
• Dynamic counterfactual analysis key in declining industry context

The Belgian competition authority’s recent conditional clearance of the merger between the country’s two main French-language newspaper publishers was subject to novel labour market and counterfactual analyses, the head of the authority told this news service.

Even though Rossel’s proposed acquisition of IPM’s newspaper and magazines activities will create a near monopoly, the rapid decline of the industry, elevated fixed costs and the need for investment for the digital transition justify the need for scale for the parties to survive, Axel Desmedt said.

The deal, which was agreed between the two family-owned companies in June last year, will see the owner of Le Soir also gain control of IPM’s La Libre and other written publications. It was cleared by the Belgian watchdog on 3 July.

The authority said in its press release that “Rossel will solely or jointly hold all French-language printed daily newspaper titles” in Belgium.

“The context of French-speaking press in Belgium is one of serious decline of readers,” Desmedt said. Among the issues, he added, are the fact that income once generated by newspaper readers is being replaced by income generated by digital readers, and that fixed costs of journalists and paper distribution is still high.

On top of that, there is increasing competitive pressure on advertising revenues exerted by major digital platforms, as noted in the agency’s press release.

“Given that this is a bit of a scale business, because of these fixed costs, without scale it is very difficult to survive. With IPM, what we saw was that, even though they were able to continue, in a few years it would be extremely difficult for them to remain alive,” Desmedt said.

However, the decision to clear the deal conditionally was not based on a failing firm defence, nor on efficiency arguments brought by the parties, but on a dynamic counterfactual analysis.

The authority did take into account that the merger would bring synergies that would allow the parties to invest more in their transition to digital, but these arguments did not meet all the criteria required for a traditional efficiency defence, the president of the Belgian watchdog said.

The analysis of this merger’s negative impact on competition took place “in the context of a dynamic counterfactual”, he added. “And in that context, it is relevant to consider the situation where, without the merger, you would be faced with increasing costs, decreasing revenues and therefore unable to invest in the necessary digital transformation. As a result, competition would further gradually degrade and journals would ultimately disappear,” he explained.

Labour analysis

The Belgian review of IPM/Rossel also stands out for its focus on the labour market. The authority said that the merged entity would “occupy a unique position as an employer within the print media segment of the market for journalistic services, which could give it the ability and incentive to worsen journalists’ working conditions.”

This is the first Belgian merger review that features a defined market analysis around labour, according to Desmedt. More details on this will be available with the expected publication of the merger decision next week, he said.

This novel labour assessment aligns with the European Commission’s (EC) draft merger guidelines. There, the Commission has introduced competition in labour markets as a factor that could be assessed in competition reviews.

The EC has opened the door to analysing how a merger between employers could have anticompetitive effects for the purchase of labour. Other factors such as the job losses associated with corporate restructuring, for instance, are left outside of this assessment. The revision of the EC merger guidelines has yet to be finalised.

This news service flagged in May that labour market assessments in merger reviews are not expected to be very prominent for EC cases, but they could feature more frequently in national reviews. Belgium’s scrutiny of IPM/Rossel proves this point.

Several commitments offered by Rossel are related to labour. According to the press release, the company committed to continue determining journalists’ working conditions in accordance with the applicable agreements, to establish safeguards to prevent excessive or imposed use of AI, and to adopt a code of conduct for freelance journalists.

However, these remedies were not enough to assuage the concerns of journalists affected by the deal, which have complained about not being an active part of the remedy discussions.

Media plurality

The Belgian competition authority clarified in its press release that it reviewed this deal under competition law, and that rules under the European Media Freedom Act (EMFA) protecting media pluralism and independence fall outside its remit.

The EMFA establishes that EU countries must assess the impact of media mergers on media plurality and independence, in a parallel to their competition reviews. However, Belgium has not yet set the mechanisms to undertake these sector reviews, unlike other countries such as Austria.

Desmedt said that Belgium is going through the legislative process to introduce these changes.

The European Board for Media Services also examined IPM/Rossel, but it can only issue a formal opinion on such media deals if they are likely to affect the functioning of the EU market, and this deal is essentially national in nature, the board said in a press release.

These factors point to a regulatory gap in Belgium when it comes to media plurality assessments, but the case also shows how the national enforcer is trying to bridge this gap.

Even though Belgium’s watchdog said in its press release that media plurality falls outside its remit, it did conclude that the transaction could lead to greater standardisation of content and a reduction in editorial independence.

“The criteria that we are going to look at for the purpose of competition review do overlap, in our view, with some of the criteria that are also set by EMFA for reviewing media plurality,” Desmedt said. “So, it is no surprise that as a result of this decision, the most important remedies we have imposed may also be relevant for the area of media plurality.”

For example, one of the commitments accepted by the watchdog is for Rossel to guarantee different newspapers the resources they need to operate and develop independently.

“We have to have a holistic competition analysis. And plurality, diversity, the possibility of having several views, several scoops, and competition between newspapers can only exist if there is plurality. In that regard, saying that a competition authority should not look at media plurality, I think that’s wrong,” Desmedt said.