Non-Price Unilateral Effects In Media Mergers

Traditional merger assessment has focused on unilateral effects (or non-coordinated effects) stemming from price increases. While non-price unilateral effects resulting in lower quality have always been theoretically recognized, albeit not always addressed in practice, in media markets also unilateral effects resulting in lower product variety have been considered relevant. The recognition of the importance of content variety (also called diversity of content) has led to the definition of specific concepts such as pluralism and internal and external pluralism. As a result, many, though not all, jurisdictions have introduced a pluralism (or plurality of views) test in merger assessment. The issue has regained momentum with recent mergers in the media landscape brought about by the competitive pressure from new media and the changes in media consumers’ consumption behavior. However, whereas unilateral effects due to a price increase and a quality decrease are conceptually similar, it is debatable whether unilateral effects due to lower variety of content can be analyzed in the same way. We here review some recent mergers among media and some relevant results in the economic literature regarding product variety to highlight the relevant issues for the analysis of today’s mergers in media markets.