On April 16, the Department of Justice (DOJ) announced that it would not challenge a proposal by the Association of Independent Commercial Producers (AICP) to operate an online platform for advertisers and advertising agencies to solicit bids from companies that produce commercials for television, the internet and other media platforms. The DOJ stated its position in a business review letter from Assistant Attorney General Makan Delrahim of the Antitrust Division to counsel for the AICP. Under the DOJ’s business review procedure, an organization may submit a proposed action to the Antitrust Division and receive a statement on whether the division currently intends to challenge the action under the antitrust laws based on the information provided.
As outlined in the AICP’s request letter, bidding on commercial productions is primarily conducted in one of two ways: (1) Agencies solicit bids on behalf of advertisers, or (2) advertisers solicit bids directly, without engaging an agency. Production companies then directly submit responsive bids to the agencies or advertisers, as the case may be. However, the AICP noted that, increasingly, advertisers and agencies are requiring AICP members (the production and post-production companies) to use third-party bidding portals designed to aggregate the input data and provide bidding exchange services. In some cases, advertisers and agencies have formed affiliated entities that offer bidding platform services to the industry as well.
It is this bidding trend that poses concerns to AICP members, not the least of which is “that these third-party portals retain confidential member data and job-specific data and make it available to other, undisclosed recipients.”
To address these concerns, the AICP’s solution was to create its own version of a bidding portal, but with more mechanisms in place to keep bidders’ information safe, secure and open to scrutiny. Specifically, the structure of the platform accomplishes the above goals by relying on four fundamental principles:
- Data Privacy: The bidding platform does not retain any bidder data. Instead, the data lives on the bidder’s private, dedicated database and is presented to the advertiser only for viewing, not for retention. In other words, data is never transferred to any third-party database. This is not true on other third-party portals.
- Transparency: The bidding platform puts AICP members on an even playing field through increased transparency by (a) allowing all bidders to see who has been invited to bid on the same project; (b) providing the same bidding specifications (g., budget targets, timelines, allocation of responsibilities, etc.) from the advertiser to all bidders; and (c) providing information about bid changes to all bidders simultaneously.
- Equal Access: Bids will not be available for review by the advertiser until all bids have been submitted. Additionally, bidders may not be added to the bidding process without all bidders being notified, and a bidder that presents a potential conflict of interest can be removed.
- Security: The AICP has also secured the platform using Bcrypt salt/hash encryption.
Of course, the AICP also insisted that this new composite platform would be pro-competitive, as it would work to invite more participation among members while also keeping everyone’s data private – which ensures bids are made independently, without collusion between parties. This privacy feature, the AICP maintained, was not a function of similar third-party portals.
A more competitive and transparent bidding system can also provide bidding opportunities to a more diverse array of production and post-production companies, in many ways mirroring current trends in the advertising and entertainment industries.
In approving the plan, Delrahim agreed with the AICP that the proposed bidding platform would not have an anticompetitive effect on the market. Delrahim noted that “there does not appear to be a substantial risk of [anticompetitive harm] because the proposed platform would not be used to compile, communicate, or disseminate pricing, transactional, bid, or other competitive information among subscribers, bidders, or third parties.” He went on to say that the fact that the information from each participant would not be made public would ensure that the process remains free of conspiratorial influence. For now, the AICP platform will be protected from potential antitrust investigations; however, as Delrahim maintained in the response letter, the DOJ’s decision not to intervene is predicated on the accuracy of the information given to it by the AICP. Should the DOJ decide that the AICP did not fully or truthfully explain the platform’s activities, it could invite a more discerning look from the government down the road.