To Mock A Media Merger

To Mock A Media Merger

Oktober 23, 2007

by Amelia Day

Media merger, especially free-to-air television, in Indonesia is pretty much impossible to remedy–if not considered painstakingly and unbearably possible. The calculation of divestiture, remedies to restrict vertical behaviour, and remedies to control outcomes cannot be executed if at the state executive level there are insignificant penalty power nor legal tools.

Even so, for a start, there are steps to overcome this deficiency. I am pretty much concerned about steps that a regulator shall consider. The principle concerns of, for instance, specifically in relation to divestiture remedies. The regulator needs to be clear about the constituents of the divestiture package and ensure that it is maintained until the divestiture is complete. It is also important that thorough assessment of potential purchasers, and the importance of including provision for sale of the package by divestiture trustees at no minimum price.

The cases of past mergers like Global TV/RCTI/TPI (under Media Citra Nusantara’s banner) and Trans TV and TV7 (under Trans Corp’s banner), or the upcoming SCTV and Indosiar (under Surya Citra Media’s banner), the polarization is pretty clear. To cover the legal base, all TV entities remain intact but the transaction goes up one level to their holding companies. This is also to blur the market power they tend to conceal.

For this kind of polarization, I am suggesting evidence-based approach to the development of policy and practice, a methodology based on case studies to use. There are possible ways like to allow meaningful research on their success but sufficiently recent to ensure that they were relevant; to cover a cross-section of different types of remedy and to be focused on those type of remedy most frequently used by KPPU; to include examples of remedies that were thought to have been successful and examples of remedies that were thought to have been unsuccessful; and to include examples of relatively straightforward cases and relatively complex cases.

KPPU must be invested heavily on the effort of the merger control. Today, cases like Temasek in telcos shall be considered further for media merger remedies. This is also to anticipate digital convergence (of platforms, services, devices, and industries). If there are horizontal or vertical or unilateral concerns taking place, the type of remedy shall include restricting behaviour to end-customers, restricting vertical behaviour, and controlling outcomes (price control). KPPU must also forward a detailed learning points, which are grouped thematically: interim remedies; choice and design of final remedies (divestitures and behavioural remedies); negotiation of final undertakings; and ongoing compliance and monitoring. Incentives and penalty for the parties involved in the merger or acquisition must be outlined and be informed to public.

The public participation must also be considered well due to the Indonesian Law of Rulemaking 2004 (UU 10/2004). With rigid and open procedure, KPPU shall also include the participation in a transparent and analytical way.

Last of all, the effectiveness of a remedy depends on action by a third party that is not subject to the remedy; there is a risk that the remedy will not be effective. To anticipate this, political will at the executive level shall be deemed and calculated.