On 9 April 2012, the ACCC accepted a court enforceable undertaking pursuant to section 87B of the Competition and Consumer Act 2010 (the Act) (the Undertaking) from FOXTEL Management Pty Limited (FOXTEL) in relation to its proposed acquisition of AUSTAR United Communications Limited (AUSTAR) (the Proposed Acquisition).
The ACCC considered that in the absence of the Undertaking, the Proposed Acquisition would have the effect or be likely to have the effect of substantially lessening competition in the national market for the retail supply of subscription television services and a number of regional markets for the supply of fixed broadband and fixed telephony products.
The foundation of the ACCC’s concern was that the Proposed Acquisition would bring together the two main subscription television providers in Australia each with a substantial customer base and significant access to key content which would in turn give Telstra, FOXTEL's largest shareholder, greater market power in fixed broadband and telephony markets.
The objective of the Undertaking is to address the ACCC's competition concerns regarding the competitive detriment that would otherwise arise as a result of the Proposed Acquisition. However, the Undertaking is not intended to resolve the competition concerns or structural issues that may have already existed in the relevant markets prior to the Proposed Acquisition. The Undertaking aims to achieve this objective by:
preventing FOXTEL from entering into exclusive content agreements to acquire internet protocol television rights for a range of attractive television program and movie content. By reducing content exclusivity, the Undertaking aims to lower barriers to entry and to promote new and effective competition in telecommunications and subscription television markets; and
further lowering barriers to entry by requiring FOXTEL to provide necessary signal access to linear channels distributed by independent content suppliers (and which FOXTEL itself distributes to its subscribers) to third parties.