Digital regulation “aficionados” have been busy with the political agreement the EU institutions reached on the Digital Markets Act (“DMA”) and the Digital Services Act (“DSA”). Nevertheless, there is another initiative in the pipeline that may not have received much attention to date, namely the European Media Freedom Act (“EMFA”). This initiative raises a number of questions: Could the EMFA undermine one of the main objectives of emerging legislation, which is to level the (regulatory) playing field in markets where platforms operate? Does the EU have competence to regulate media freedom or media pluralism? Will the EMFA add value to the EU toolkit already in place? Though it is still early days, it is worth reflecting on the above matters because the EMFA could significantly affect the EU media industry and, more broadly, the EU digital economy.
Background
The idea of a European Media Freedom Act was presented about a year ago by Commissioner Thierry Breton. Drawing on the worrying developments in Central and Eastern Europe, Breton mentioned that the Commission currently has limited tools at its disposal to intervene in cases where media freedom and pluralism are undermined. According to Breton, “[the EU needs] to do more, even if [its] competence is limited in the area”. By “more”, Breton meant increasing accountability for actions attempting to control the press and strengthening the governance of public media in order to prevent politicisation. In the 2021 State of the Union address, President von der Leyen stressed that Europe needs a law that safeguards media freedom and pluralism. Earlier this year, the Commission launched a call for evidence for an impact assessment as well as a public consultation, which concluded in late March. The legislative proposal is set to be presented by the Commission in the third quarter of 2022.
In sum, the initiative is at a nascent stage. The main documents indicating where the Commission might be headed is the questionnaire addressed to the public consultation participants and the call for evidence for the relevant impact assessment.
What would the EMFA’s scope be?
Subject-matter scope
The Commission’s questionnaire notes that it “refers to a wide range of editorial media (i.e., those that exercise editorial control over content), including those active in audiovisual, radio and press sectors, independently from their distribution model, be it online or offline. In certain instances, the questionnaire refers also to online platforms which curate and present to the public media content for which they do not exercise editorial control (in particular social networks and video-sharing platforms)”.
The above wording as well as the questions themselves suggest that the Commission primarily targets “editorial” media. This would raise two problems.
First, the Commission uses the criterion of “editorial control” to distinguish between media and online platforms, implying that the former should be the focus of the initiative. The idea that editorial control is a “privilege” of (or a task performed by) media organisations only is outdated. It is clear that, in addition to broadcasters and press publishers, platforms may exercise editorial control over the content they disseminate.Platforms may moderate the (media) content they offer; platforms may remove (media) content on the basis of ambiguous terms of use (even if the removed content is not illegal); platforms may alter, interrupt, or overlay media content in order to serve their own commercial purposes; platforms may rank, index and crawl media content in ways that directly impact on user choice. Granted – platforms do not “write” news stories. But, given the role they play in influencing the variety and quality of the content users access and engage with, focusing on the criterion of “editorial control” to establish a stricter regime for media organisations is reminiscent of the early days of the Internet and no longer reflects how platforms influence the media content consumed. The approach the Commission will follow to defining the scope of the EMFA will determine the effectiveness of the instrument. A good example concerns the introduction of rules for assessing the effects of a “media market transaction” on media pluralism (an idea the Commission alludes to in its questionnaire). If the term “media market” is interpreted narrowly to encompass “editorial” media only, the regime will simply not mirror market realities.
Second, if “editorial” media were indeed the focus of the EMFA, this could significantly affect competition in (news) content markets. A case in point is the potential establishment of pan-EU ownership restrictions that would seek to limit the opinion-forming power held by the media (such restrictions exist in certain Member States whereas others have gradually abolished them). If ownership restrictions were adopted and if those restrictions were imposed on “editorial” media only, the EMFA would exacerbate the regulatory asymmetries in online (media) markets. By means of example, the DMA, which will only apply to “gatekeeper” platforms, will establish the requirement to inform the Commission of any intended concentrations in the digital (including digital media) sector. This is simply a reporting requirement, i.e. the only ownership restrictions online platforms are (and will be) subject to are the EU and national merger control rules. Ownership restrictions are simply an example. The EMFA may widen the regulatory gap and distort competition, especially in cases where platforms and “editorial” media compete head-to-head for audiences. It goes without saying that any regulatory regime has a competition dimension because those undertakings that fall under its scope need to incur significant costs in terms of compliance, risk prevention and fines imposed by regulators.
Based on the above, in reflecting on the way forward, the Commission would need to thoroughly consider two matters regarding the EMFA’s scope: (a) which platforms disseminate and/or influence the distribution and consumption of media content, and (b) the regulatory asymmetries that the EMFA should avoid. In other words, the Commission would need to assess the levels of substitutability between platforms and “editorial” media and act accordingly. That the ways in which platforms and “traditional” media operate are different may warrant rules adapted to the workings of each category (along the lines of what the Audio-visual Media Services Directive does, which establishes different types of obligations for media service providers and video-sharing platforms). One thing is certain, however: the EMFA cannot but cover online platforms.
Geographic scope
Another thorny issue concerns the geographic scope of the EMFA. The Commission has indicated that the type of act it will propose will be a regulation. A series of recent regulatory initiatives that have taken the form of a regulation, such as the GDPR, the DSA and the DMA, define their geographic scope by reference to whether the recipient of the service is established or located in the EU (i.e., for the EU to establish jurisdiction, it does not matter where the regulated service provider is based). Similarly, in the White Paper the UK government published last week on the future of UK broadcasting (regulation), which sets out inter alia new rules for VOD services, notes that the upcoming regime “will ensure that larger TV-like on-demand providers that are not currently regulated in the UK but who target and profit from UK audiences will now rightly come under Ofcom jurisdiction”.
However, the Audiovisual Media Services (AVMS) Directive is very much linked to where the provider is located. For example, for a Member State to establish jurisdiction over a video-sharing platform, that platform must be established on the territory of the Member State. The reason for that approach may be that the AVMS Directive relies on the country of origin principle (essentially a mutual recognition rule) whereby Member States must ensure freedom of reception of audiovisual media services originating from other Member States.
Will the EMFA adopt the former or the latter approach? This is far from clear at the moment, but the way forward will have significant implications for the media services EU consumers will have access to. For example, should UK media reaching EU audiences comply with the EMFA? If the EMFA establishes media-specific merger rules (the Commission is consideringan obligation that would require Member States to review the effects on media pluralism of transactions involving at least one media company), should companies that are established outside the EU notify a relevant merger to the Member States’ authorities if they plan to provide their services to EU audiences?
These are important issues that the Commission will need to consider carefully, balancing several fundamental freedoms and principles (e.g., freedom to conduct business, freedom of expression, media pluralism).
What rules could the EMFA establish?
In terms of the substantive rules the EMFA could establish, the questionnaire is divided into five distinct areas, which are the following:
- Safeguarding the EU internal media market, media independence and pluralism;
- Transparent and independent media markets;
- Conditions for healthy media markets;
- Fair allocation of State resources in the media markets;
- Governance options.
Based on the issues on which it requested feedback, it seems that the Commission is considering a wide range of options. For example, as regards transparency and independence, the questionnaire refers to the introduction of obligations to disclose ownership structures and the establishment of an EU-level procedure for assessing the effects of “significant” market transactions on media pluralism. Insofar as the fair allocation of State resources is concerned, the questionnaire refers to rules on conflicts of interest for public service media management and independence safeguards for the appointment and dismissal of public service media management.
It is still soon to tell what obligations or prohibitions the EMFA proposal will include. However, many of the options set out in the questionnaire beg two questions: Does the EU have the competence to regulate this area? Would the EMFA add value to the existing EU toolkit?
The competence conundrum
The relationship between EU law and media freedom / media pluralism is complicated, not least due to the EU’s competence constraints in that area. Even though Article 11(2) of the Charter of Fundamental Rights of the EU establishes the (EU’s) obligation to “respect” media freedom and media pluralism, the Charter explicitly provides that it does not afford new powers or tasks to the EU in the field of fundamental rights and principles (i.e., Member States are still primarily responsible for protecting these values in their jurisdiction). The same competence limitations stem from the Treaty on the Functioning of the EU (“TFEU”). Pursuant to Articles 167(1) and 6(c) TFEU, the EU may merely carry out actions to support, coordinate or supplement action taken at the national level in order to promote media policies. In that regard, Article 167(5) TFEU provides that the EU may adopt incentive measures and recommendations, but not instruments that would harmonise national media laws and regulations. The rationale that lies behind assigning the EU subordinate tasks in this domain is that Member States are better placed to develop the relevant legal tools in accordance with their traditions, community needs, and specificities of domestic markets.
In its call for evidence, the Commission notes that the EMFA will be based on the EU’s “competence to adopt measures for the approximation [i.e., harmonisation] of the provisions laid down by law, regulation or administrative action in Member States, which have as their objective the establishment and functioning of the internal market under Article 114 [TFEU]”.
Given the competence restrictions that prevent the EU from adopting harmonising tools in this area, the Commission’s choice of legal basis comes as no surprise, for what provision other than Article 114 TFEU could the Commission rely on? While the EMFA could tackle issues that could potentially fall under the umbrella of the internal market (e.g., diverging rules raising barriers to the internal market), one may wonder whether using Article 114 TFEU as the legal basis for the EMFA would be backed by the CJEU. When assessing the validity of the legal basis on which an instrument rests, the CJEU takes account of the “aim and the content” of the measure (i.e., the primary objective that the instrument concerned pursues, the principles that underlie it and its ideological premises). The legal test is a strict one: “recourse to Article [114] is not justified where the measure to be adopted has only the incidental effect of harmonising market conditions within the [EU]”. Depending on the Commission’s ambitions, this legal test may leave it with two options. The Commission may decide to propose obligations that go beyond the remit of the EU, in which case the EMFA could be challenged before the CJEU or not survive the legislative process (after all, two thirds of the Member States will need to agree to a text that may require them to let go of competence in a rather sensitive area). Or, the Commission may decide to focus the proposal on aspects that hinder the completion of the internal market, in which case not all problems that the Commission targets would be addressed.
Interaction with other initiatives and instruments
Even if the Commission found a way to overcome the relevant competence hurdles, it would need to carefully consider how the EMFA would add value to the existing EU toolkit. Any new piece of regulation should (a) complement (or meaningfully revise) the currently applicable rules, and (b) be enforced effectively in order to achieve its purported objective.
In the case of the EMFA, the Commission would still need to reflect on how the EMFA will complement the existing regime. The call for evidence the Commission published admittedly does not do a great job at explaining what gap the EMFA will fill. In attempting to explain the need for EU action, the Commission notes that “[n]either the revised AVMSD nor EU competition rules can effectively address the problems [the EMFA could tackle, such as lack of media pluralism safeguards and interference with the operation of media outlets] as such problems go beyond their scope or remit of application”.
Yet, neither the AVMS Directive nor EU competition rules, including State aid control, have reached their full potential when it comes to the protection of media freedom and media pluralism. As regards EU competition law, as a result of the Commission’s focus on price-based tools, content quality and content variety have yet to receive the attention they deserve in antitrust and merger analysis. With respect to State aid control, conflicts of interest for public service media management can be addressed by properly (and consistently) applying the criterion of “effective supervision” set out in the Broadcasting Communication. The AVMS Directive, which Member States have only recently started to transpose into national law, establishes the Member States’ obligation to enshrine in their systems concrete independence safeguards for media regulators. And, as of 2022, the annual reports the Commission produces in the context of the “Rule of Law” mechanism will address concrete recommendations to Member States (President von der Leyen also alluded to the possibility to take action under Article 7 TEU if Members States are not willing to follow those recommendations).
Against the above background, what the Commission seeks to achieve remains rather unclear regarding a number of issues. For example, one of the options the Commission is consideringis the adoption of recommendations addressed to Member States regarding the protection of editorial independence. How would that be distinct from recommendations made in the context of the “Rule of Law” mechanism? Another option the Commission is considering is to regulate public service media by adopting rules that ensure the transparent and fair allocation of State resources. Isn’t that the purpose of (effective) State aid control?
All in all, though media freedom and media pluralism are undoubtedly important values to protect (perhaps more important now than ever), the Commission has yet to make the case that this initiative will be aligned with the principle of conferral and that it will add meaningfully to the existing regime.
Image source: Pixabay
