On 31 July 2020, the ACCC released for public consultation its draft News Media and Digital Platforms Mandatory Bargaining Code to address bargaining power imbalances between Australian news media businesses and digital platforms, specifically Google and Facebook. A striking feature of the draft Code is the proposal for a binding Final Offer Arbitration (FOA) process to determine payments to be made by a digital platform to a news media business (or collective of news media businesses) if an agreement has not been reached following a formal three month negotiation and mediation process. Under FOA, the digital platform and news media business (or collective) will each have the opportunity to submit a single “final” offer in relation to payment, with the arbitrator choosing one or the other offer. While FOA has been employed to resolve disputes in a variety of contexts and jurisdictions around the world, it is novel for Australia. Another key feature of the draft Code is that it allows news media businesses to negotiate (and if necessary, arbitrate) bilaterally (either individually or as part of a collective, at their discretion) rather than be forced to negotiate as a collective.
Both features were recommended in a CRA submission in response to the ACCC’s earlier Concepts Paper, co-authored by Geoff Edwards and Jennifer Fish. The CRA report recommended the adoption of a bilateral bargaining framework over a mandatory collective bargaining or collection society model, due to the significant heterogeneity in news media business models, content and incentives. Given that heterogeneity, mandatory collective bargaining or a collection society model would be likely to result in significant internal coordination costs, costs of compromise and public detriments, including adverse impacts on original and quality journalism.
The CRA report also raised for consideration and highlighted the attractive properties of FOA as an alternative to conventional arbitration for resolving disputes between digital platforms and news media businesses. Under FOA, because the arbitrator cannot “split the difference” between the positions of the parties and will choose the most “reasonable” of the two final offers, the parties are disincentivised from taking extreme positions during negotiations, more likely to make reasonable offers and more likely to settle their disputes before arbitration. FOA also offers the prospect of quicker and more efficient resolution of disputes. The ACCC recognised each of these advantages of FOA in its Q&A paper on the draft Code, noting that FOA would “discourage ambit claims and provide a strong incentive for both parties to submit their most ‘reasonable’ offers” and “provide much quicker outcomes than conventional commercial arbitration would allow”.