Explaining the Media Bargaining Code

On 18 February 2021, social media company Facebook made the decision to prohibit the publishing and sharing of links (Links) from Australian media companies (News Companies) on the site.  This ban came into effect almost immediately after the Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2021 (Cth) (Media Bargaining Code) passed the House of Representatives.  The ban has roadblocked News Companies from 9 News to the Bureau of Meteorology and even the beloved satirical news provider, The Betoota Advocate.  This article analyses the proposals of the Media Bargaining Code and what the legal effect of non-compliance may be.

What is the Media Bargaining Code?

The Media Bargaining Code is a proposed amendment to the Competition and Consumer Act 2010 (Cth).  According to the Revised Explanatory Memorandum (Explanatory Memorandum) at [1.1], the Media Bargaining Code:

“…establishes a mandatory code of conduct to help support the sustainability of the Australian news media sector by addressing bargaining power imbalances between digital platforms and [News Companies].”

It comes in response to the recommendations made by the Australian Competition and Consumer Commission (ACCC) in their Digital Platforms Inquiry Final Report (Report) to mitigate the imbalance of bargaining power between digital platforms, such as Facebook, and News Companies.^[1]

Who does the Media Bargaining Code relate to?

The Media Bargaining Code introduces mandatory agreements between digital platform corporations (Digital Platforms) and News Companies registered with the Australian Communications and Media Authority (ACMA).

Apart from the broad procedures under section 52E, Digital Platforms are not clearly defined in the Media Broadcasting Code.  However, the Explanatory Memorandum and Report refer to Facebook and Google throughout.  Therefore, it is reasonable to conclude that all social media platforms such as Facebook, Instagram and Snapchat along with search engines Google, Bing and Yahoo would be considered Digital Platform.

If not already registered, News Companies may apply for ACMA registration (Application) in order to be protected under the Media Bargaining Code if:

• their revenue exceeds $150,000 (Revenue Test);
• their primary purpose is to create news content (Content Test);
• they operate predominantly in Australia for Australian audiences (Australian Audience Test); and
• they are subject to the various codes of conduct and standards of practice governing the broadcasting of media (Professional Standards Test).^[2]

Obligations under the Media Bargaining Code

The Media Bargaining Code does not expressly state Digital Platforms must pay News Companies for publishing or sharing news content on their sites.  However, it allows for negotiations between News Companies and Digital Platforms about a ‘core bargaining issue’ relating to the news content it shares on the site.^[3]  A core bargaining issue includes remuneration for publication and sharing on a Digital Platform’s site (Remuneration Issue) under Section 52ZL.

When a Digital Corporation receives a notification to bargain by a News Corporation, it must enter negotiations.^[4]  If the Remuneration Issue is settled, the Digital Platform and News Company must notify the ACCC as soon as practicable as required by section 52ZI.

If the Remuneration Issue is not settled within three (3) months, the News Company may notify the ACCC and arbitration will commence.^[5]  Both parties must then submit a final offer to the arbitration panel and each other within ten (10) business days.^[6]  The panel will then provide a lump sum remuneration amount (Remuneration Amount) that covers the News Corporation for the making, publishing and sharing of its content on the site for the period of two (2) years, as prescribed by section 52ZX(2).

In ascertaining the Remuneration Amount, the arbitration panel is to consider:

• the benefits (monetary or otherwise) of having the news content share on the site to both the News Company and Digital Platform;
• the reasonable cost incurred by the News Company to create the news content;
• the reasonable cost incurred by the Digital Corporation to make the news content available in Australia; and
• the possibility of a particular amount placing an undue commercial burden on the interests of the Digital Platform.

Section 52ZZE of the Media Bargaining Code requires the Digital Corporation and News Company to comply with the arbitration decision.

What concerns do Digital Corporations have?

Google has been vocal about its concerns as to what compliance with the Media Bargaining Code would look like, with its main concern being that the Media Bargaining Code would ultimately require the search engine to pay to display Links.  Google cites multiple sources in criticism of this law, for example, world-wide web inventor, Sir Tim Berners-Lee who, in a submission about the Mandatory Bargaining Code, stated:

“…the [Media Bargaining Code] risks breaching a fundamental principle of the web by requiring payment for linking between certain content online. On the web, the sharing of content rests on the ability of users to do two things: to create content, typically text but also other media; and to make links in that content to other parts of the web.”^[7]

What else will be required?

Sections 52G and 52Z of the Media Bargaining Code requires Digital Platforms to set up a point of contact in Australia within twenty-eight (28) days after they are determined to comply with the Media Bargaining Code.  Section 52Y(c)(i) requires Digital Platforms to provide their point of contact no later than ten (10) business after being registered with the ACMA.  This is to facilitate open communication between News Companies and Digital Platforms.^[8]

What will be the legal effect of non-compliance with the Media Bargaining Code?

Not alerting the ACCC about the settling of the Remuneration Issue is subject to a civil penalty of 600 penalty units or $133,200.^[9]  Not providing a point of contact is subject to an infringement notice issued by the ACCC for 600 to 6000 penalty units or $133,200 to $1,332,000.^[10]  Finally, failure to:

• bargain in good faith;
• participate in arbitration in good faith; or
• comply with the arbitration decision,

will individually be subject to a maximum penalty that is the greater amount of:

“…$10 million,

if the court can determine the value of the benefit obtained and that is reasonably attributable to the act or omission – three times the value of that benefit; and

if the court cannot determine the value of that benefit – 10% of annual turnover during the period of 12 months ending at the end of the month in which the act or omission occurred.”^[11]

Amendments following negotiations (as at 23 February 2021)

Following several days of negotiations between Facebook and the Australian Government, the Media Bargaining Code has been amended to “provide further clarity to digital platforms and news media businesses about the way the Code is intended to operate and strengthen the framework for ensuring news media businesses are fairly remunerated.”^[12]

In a joint media release by The Hon Josh Frydenberg MP, Treasurer and The Hon Paul Fletcher MP, Minister for Communications, Urban Infrastructure, Cities and the Arts on 23 February 2021, the amendments were summarised as follows:

• a decision to designate a platform under the Code must take into account whether a Digital Platform has made a significant contribution to the sustainability of the Australian news industry through reaching commercial agreements with News Companies;
• a Digital Platform will be notified of the Government’s intention to designate prior to any final decision after one (1) month from the date of notification;
• non-differentiation provisions will not be triggered because commercial agreements resulted in different remuneration amounts or commercial outcomes that arose in the course of usual business practices; and
• final offer arbitration is a last resort where commercial deals cannot be reached by requiring mediation, in good faith, to occur prior to arbitration for no longer than two (2) months.

Following the negotiations, Facebook has agreed to restore Australian news pages in the coming days.

Takeaways

The Media Bargaining Code is quickly moving through Parliament and is looking more likely to become law each day.  It will require Digital Platforms, such as Facebook and Google, to enter negotiations with News Companies about remuneration for providing their media services on the platforms.  Nonetheless, non-compliance with the ultimate Media Bargaining Code can result in large civil penalties which are in place to mitigate the imbalance of bargaining power between digital platforms.

Links and further references

Related materials

Google blog post and YouTube video
Sir Tim Berners-Lee, Submission 46 to the Senate Standing Committees on Economics on the Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2020 (18 January 2021)

Legislation

Competition and Consumer Act 2010 (Cth)
Notice of Indexation of the Penalty Unit Amount (Cth) (14 May 2020)
Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2021 (Cth)
Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2021 (Cth) Revised Explanatory Memorandum

Further information about the Media Bargaining Code

If you are looking for advice on your requirements to comply with the incoming amendments to the Competition and Consumer Act 2010 (Cth) or the Act in its current form, contact us for a confidential and obligation- free discussion:

Disclaimer

This article contains general commentary only.  You should not rely on the commentary as legal advice.  Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances.

[1] See ACCC, Digital platforms inquiry – final report (June 2019), 253-7.
[2] Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2021 (Cth) ss 52F-G, 52M-P (Media Bargaining Code).
[3] Media Bargaining Code s 52ZE; Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2021 (Cth) Revised Explanatory Memorandum, [1.15] (Explanatory Memorandum).
[4] Media Bargaining Code s 52ZH; Explanatory Memorandum.
[5] Media Bargaining Code s 52ZL(2)(a).
[6] Media Bargaining Code s 52ZX(4).
[7] Sir Tim Berners-Lee, Submission 46 to the Senate Standing Committees on Economics on the Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2020 (18 January 2021), 1.
[8] Media Bargaining Code, subdivision D.
[9] Media Bargaining Code, items 7, 9-10, ss 76(1)(a)(iaa), (1A)(bab), (4A)(b); Notice of Indexation of the Penalty Unit Amount (Cth) (14 May 2020); Explanatory Memorandum, [1.168].
[10] Media Bargaining Code, items 7, 9-10, ss 52ZG, 76(1)(a)(iaa), (1A)(bab), (4A)(c); Notice of Indexation of the Penalty Unit Amount (Cth) (14 May 2020); Explanatory Memorandum, [1.135].
[11] Media Bargaining Code, items 7, 9-10, ss 52ZG, 76(1)(a)(iaa), (1A)(b), (4A)(e)-(f),(h); Explanatory Memorandum, [1.161], [1.188], [1.207].
[12] Joint media release by The Hon Josh Frydenberg MP, Treasurer and The Hon Paul Fletcher MP, Minister for Communications, Urban Infrastructure, Cities and the Arts on 23 February 2021.

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