When the Competition Bureau assesses a proposed broadcasting acquisition, its concern is whether the transaction will result in a substantial lessening of competition, typically in media advertising markets. What objectives the Canadian Radio-television and Telecommunications Commission (CRTC) seeks and how it pursues them are not as well defined. The basic premise of this paper is that if the legislated objectives of the CRTC and the Competition Bureau conflict, then circumstances will arise when the agencies' decisions with respect to the acquisition of broadcasting properties will not be compatible. However, if it is the manner in which a particular objective is pursued that is the source of conflict, rather than the objective per se, resolution is possible. Based on fifteen recent decisions by the CRTC, we conclude that it is how the CRTC pursues its objectives, rather than the objective themselves, that is the source of conflict. Specifically, the CRTC, in pursuit of its objective of supporting Canadian performers, producers and the like, applies 'tangible benefits' tests when assessing applications for the transfer of ownership or control of broadcast licences. In order to afford these additional costs, broadcasters must earn above-normal profits; i.e., profits greater than what would obtain in competitive advertising markets. In exchange, the CRTC bestows on these licence holders market power in media advertising markets. Moreover, it protects these above-normal profits by restricting entry, thus detracting from the CRTC's 'diversity' objectives. These above-normal profits exceed payments made in the form of 'tangible benefits'. As a result of the exploitation of this market power, advertisers pay rates above those which would obtain in competitive markets and, ultimately, this results in higher prices for consumers. A large part (all in the case of radio broadcast acquisitions) of these 'tangible benefits' is in the form of grants to CRTC-approved cultural associations. Yet, in the cases examined, the total amount is small in comparison to what these associations receive from other government sources, notably the Department of Canadian Heritage. A less distortionary policy alternative would be to fund all of what these beneficiaries receive out of general tax revenues (via Heritage Canada) and for the CRTC to cease applying its 'tangible benefits' tests. Such an alternative would have a number of advantages relative to the current one, including reduced transactions costs for the CRTC and applicants. Moreover, it is likely that the incidence of the CRTC's levy is more burdensome on consumers than the extra tax revenues required by the alternative policy. If adopted, protection of excess profits would no longer be a rationale for restricting entry, and entry would further the CRTC's diversity objectives without threatening its other objectives (e.g., Canadian content). Moreover, as the CRTC would have no longer have any reason to favour anti-competitive broadcasting acquisitions, the Competition Bureau could pursue its objective of blocking anti-competitive acquisitions unencumbered. The public's and both agencies' interests would be served by this policy alternative
