The amendment to the Organization to Assign Radio Frequencies and to Regulate Broadcasting and Telecommunications Services Act (2010), which dissolved the sub-commissions of the National Broadcasting and Telecommunications Commission (NBTC), means the commission is now the sole regulatory body in the broadcasting and telecommunications sectors.
In January 2018, the NBTC amended the merger rule for the telecoms industry. Later, in August, in an attempt to align broadcasting and telecoms regulations, the NBTC issued a Notification re: Regulating Measures for Business Merger in Radio and Television Broadcasting Businesses for the broadcasting sector, which replaced the previous 2014 NBTC Broadcasting Merger Notification.
The 2018 notification aims to align with the telecoms merger rules, relax the complicated merger process for broadcasting businesses, and promote competition among licensees.
Key changes in the new 2018 broadcasting merger notification include:
Shift from merger approval to notification requirements. According to the 2018 notification, the restricted merger between a licensee or a person with controlling power over a licensee must report to the secretary-general of the NBTC at least 30 days in advance, instead of the previous requirement of merger approval from the Office of the NBTC at least 60 days in advance;
Merger within the same business group is now exempted. For mergers between a licensee or a person with controlling power over a licensee in the same business group, or affiliates, the licensee must report to the secretary-general of the NBTC after the merger has been completed. This is a new concept.
Obligation to report share purchasing at certain threshold percentages. The 2018 notification requires a licensee or a person with controlling power over a licensee to report to the secretary-general of the NBTC within seven days after the purchase has been completed, when purchasing shares passing specified total share thresholds.
Removal of cross-shareholding restriction. Under the 2018 notification, cross-shareholding between licensees is no longer restricted.
Business dominance by mutual benefit persons is no longer prohibited. Under the 2018 notification, business dominance by mutually benefitted persons in the broadcasting market is no longer prohibited. Instead, in case of business dominance by mutually benefitted persons, which may result in monopolization or lessen or restrict competition, the NBTC may issue specific measures to ensure competition in the market.
Herfindahl-Hirschman Index is changed. For horizontal mergers, the ratio of the Herfindahl-Hirschman Index (HHI) is increased to more than 2,500 (instead of 1,800) and the HHI increases more than 100 (instead of 200) after the merger. The 2018 notification should facilitate easier broadcasting business mergers for all formats including digital television, cable television, satellite television, IPTV and radio.
Business Law Digest is compiled with the assistance of Baker McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact Baker McKenzie by emailing Danian Zhang at [email protected]