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European Media Freedom Act and M&A - Flying under the radar, but could have a material impact on future transactions

Up till now, the reactions to the European Commission’s (Commission) proposal for a European Media Freedom Act (EMFA) have not so much focused on media transactions. However, unless amended during the legislative process, the proposal would introduce significant media regulatory clearance requirements for M&A transactions in the media sector, with the potential to majorly affect timelines and processes. These provisions have received very little attention thus far but, we will now shine a light on the matters in question.

I. What’s the EMFA all about? 

First things first: What’s the EMFA all about? The EMFA is a proposal for a European regulation with the fundamental objective to strengthen media independence and media pluralism. It comes with both rights and duties for various media players. For more details, see our previous blogpost.

II.  What does the EMFA have to do with M&A?  

At present, when it comes to clearances, M&A transactions are generally reviewed under general merger control and FDI (foreign direct investment) regimes. Regarding media deals, there are already some additional sector-specific notification and clearance requirements. However, these requirements only apply selectively and for instance, in Germany and Austria, primarily for national television stations.

Under the  Commission’s proposal, the requirement for a media-specific clearance is to be significantly expanded to other media players. The stated goal is to set out common criteria and coordination at EU level to facilitate cross-border media services despite the diverging national media pluralism frameworks. What the Commission is proposing is the assessment of media market concentrations potentially threatening media pluralism and editorial independence.

Before going into the implications and our first thoughts, the main aspects of the proposed provisions are as follows:

  • Member States are to provide rules assessing media market concentrations 

The Member States are to provide, in their national legal systems, rules for an assessment of media market concentration. Said rules shall set out in advance objective, non-discriminatory and proportionate criteria for notifying media market concentrations that could have a significant impact on media pluralism including their effects on the formation of public opinion and on the diversity of media players on the market as well as on editorial independence. Moreover, it shall be considered whether, without the media market concentration, “the acquiring and acquired entity would remain economically sustainable, and whether there are any possible alternatives to ensure its economic sustainability”. It is emphasized that the respective assessment shall be distinct from the competition law assessments including those provided for under merger control rules.

  • Designation of a national regulatory authority for the assessment        

The Member States must “designate the national regulatory authority or body as responsible for the assessment” of the impact of a notifiable concentration on media pluralism and editorial independence or ensure the involvement of the national regulatory authority or body in such assessment.

  • Commission and the Board’s right to have a say 

Beyond these national regulations, the Commission “may issue guidelines” to be considered by the national regulatory authorities or bodies when assessing the impact on media pluralism and editorial independence.

Moreover, the Commission and the European Board (replacing the European Regulators Group for Audiovisual Media Services (ERGA), see Art. 8 draft EMFA) get to have a say: The national regulatory authority or body is to consult the Board in advance on any draft assessment. Thereon, the Board itself “shall draw up an opinion” on the draft national assessment. The national regulatory authority in turn is to “take utmost account" of the Board’s opinion. While the early compromises from the Council stop there, the Commission’s proposal went on to state that where the national authority “does not follow the opinion, fully or partially, it shall provide the Board and the Commission with a reasoned justification explaining its position” and envisaged that, in the following, the Commission “may issue its own opinion on the matter”. In the event that a Member State fails to issue an own assessment at all "the Board, upon request of the Commission, shall draw up an opinion".

III.  What's the impact of the EMFA on future media transactions? 

All the signs are that the EMFA’s media market concentration provisions have the potential to bring about a paradigm shift in European media M&A transactions:

  • Significantly extended scope for media clearances

The Commission’s proposal refers to “media service providers” and aims to target media actors in general, thus would significantly extend the scope of media players affected by media clearance requirements. The Commission’s proposal defines this term as “a natural or legal person whose professional activity is to provide a media service and who has editorial responsibility for the choice of the content of the media service and determines the manner in which it is organised” (Art. 2 para. 2 draft EMFA). The proposed definition seems somewhat vague provoking certain ambivalences. According to the recitals, the definition of a media service covers, for example, television or radio broadcasters, on-demand audiovisual media services, audio podcasts or press publications. Additionally, providers of video-sharing platforms or very large online platforms may also fall under the definition of media service provider when exercising certain editorial responsibility. On top, only one of the involved players to a transaction must fall under the definition.

In short, the envisaged provisions would capture a vast variety of media players and remarkably increase the number of affected M&A transactions.

  • Risk for M&A deal certainty

Moreover, in contrast to the established merger control processes, the proposed EMFA currently does not contain any timing requirements for clearance decisions and lacks detail on the envisaged process steps, both crucial for every M&A transaction. If this would stay as is, this could cause significant delays, diverging timelines in different Member States and ultimately uncertainty for deals and their timelines.

  • Decision making on EU level

While the current media concentration assessments take place on national level, under the EMFA the decision-making would essentially be taken to EU level. This is because the Commission may issue guidelines to be considered at the national level. Furthermore, the Board may exert influence as Member States have to take “utmost account of" its opinion. However, both the exact competencies of the Board regarding the national decision process as well as the exact relationship between national authorities and the Board and Commission remain unclear.

  • Fundamental prerequisite of “media pluralism” remains unclear

Finally, the term “media pluralism” and threats to it are at the heart of the envisaged provisions. While everyone agrees that media pluralism is a fundamental pillar for the functioning of a democratic society, neither is there a harmonized definition of the term (or under which circumstances it is threatened) among EU Member States nor does the EMFA provide for such. Therefore, there are concerns that this may cause serious difficulties of interpretation.

IV. What are the next steps? 

The proposal is currently going through the EU’s legislative process, with both the European Parliament and the EU Member States (Council) scrutinising the text and working on their respective positions in the form of amendments.

Work on their respective positions is still at any early stage, with the European Parliament having only recently appointed the lead negotiating team (the first draft opinion was published only this week). In the Council, work is slightly more advanced but early compromise proposals do not give hope for improvement when it comes to media concentrations. Next to a few editorial amendments, there have been no substantial modifications at this stage and thus ambiguities and concerns remain.

There will certainly be pressure to finalise this proposal ahead of the European Parliament elections in May 2024 and thus it is possible we could see a final text by the end of 2023/beginning of 2024.

Following the European Parliament hearings at the beginning of this year, there is more and more noise around the question of whether the EU has the necessary legislative competency for the subject matter regulated by the EMFA and whether this should lie with the Member States.

We would like to thank John-Markus Maddaloni (Research Assistant) for his valuable contribution to this article.




eu digital strategy, european media freedom act