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ACN 002 294 920 | ABN 14 002 294 920
Australian Directors
Guild
PO Box 211 Rozelle NSW 2039
PH +61 2 9555 7045 ABN 14 002 294 920
www.adg.org.au
21 May 2015 Dr Richard Chadwick General Manager Adjudication Branch Australian Competition and Consumer Commission GPO Box 3131 Canberra ACT 2601 By email: [email protected] Dear Sirs Application for authorization for the Australian Directors Guild Attached is an application for authorization lodged on behalf of the Australian Directors Guild Limited (the “ADG”) (the “Application”) together with a detailed Submission in Support of the Application. The Submission replaces the earlier version sent on 20 May 2015. The letter from the ACCC to the ADG of 10 April 2015, approving a fee waiver, is also attached. Should you require any additional information, do not hesitate to contact myself or Ms Sabiene Heindl on 0412 039 747 who is assisting the ADG in this important matter. We look forward to hearing from you in due course. Yours sincerely
Kingston Anderson Executive Director, ADG
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ADG Submission in Support of Application for Authorization
1. Overview of the Application
1.1. Purpose of the Application The Australian Directors Guild (“ADG”) seeks authorization from the Australian Competition and Consumer Commission (“ACCC”) to collectively negotiate and give effect to a model agreement for a period of five (5) years on behalf of its members, current and future (collectively referred to as “ADG Members”) which can be used by ADG Members when contracting with producers of television for television series and serials. The model agreement will be negotiated with Screen Producers Australia (“SPA”). This application is sought in accordance with section 88(10)(a) of the Competition and Consumer Act 2010 (Cth) (the “Act”) such that it applies to a person who becomes a party to the proposed arrangements in the future, specifically future ADG members who choose to rely on the model terms of engagement. At the outset it should be noted that the model terms of engagement are not binding on ADG Members and do not preclude negotiations between ADG Members and producers for variations on the model terms of engagement or their own agreements.
1.2. Analogous authorized conduct The ACCC granted authorization to the Australian Writers’ Guild (“AWG”) in 2012 to collectively bargain on behalf of its members, current and future, in relation to model terms of engagement with the Screen Producers Association of Australia for use by its members when contracting with producers of film or television.1 The authorization was granted for current and future members of the AWG who chose to give effect to the model terms of engagement when contracting with producers of film or television. The authorization was for five (5) years, namely until 2017.
2. Industry background It is estimated that there are approximately 500 full-‐time directors in Australia and at least another 350+ part-‐time or trainee directors, based on the total ADG membership of 845 directors, in addition to an estimate of non-‐member directors. ADG membership data for 2014/15 found that 50 percent of its director members earned less than $25,000 per annum. Of ADG members, approximately 55 percent are involved in directing television series and serials and there is overlap in members that direct for television series and serials and film. Television directors generally work individually and compete against a number of other television directors for engagement by production companies and networks for television series and serials. Often the engagement is on the basis of a weekly fee. Production companies engage those working in television production, including directors, on either an employment or contractor basis. Television directors are generally independent contractors
1 The ACCC’s Determination on the Application for Authorization lodged by the AWG in respect of collective bargaining for model terms of engagement on behalf of current and future members with the Screen Producers Association of Australia of 25 January 2012 – referred to as the “AWG Authorization”.
ACN 002 294 920 | ABN 14 002 294 920
commissioned on a freelance basis by production companies and broadcast networks. These production companies range in size from the Australian representatives of multi-‐national corporations such as Warner Bros., NBC Universal, Shine, Fremantle Media, Fox and Sony Pictures to local independent production companies like Jonathan M. Shiff Productions and broadcast networks, like Channel 7 and the ABC. Put simply, ADG Members do not have the financial and other resources to strongly negotiate their own agreements for television series and serials in Australia. The majority of Australian directors have limited access to resources and information on market conditions. They live in cities and towns around Australia and may be geographically disparate from other directors. Furthermore, in contrast to television producers, they generally do not have lawyers and other professionals that are able to provide them with advice on negotiations and contractual matters. Consequently there is a significant power imbalance in favour of the producers and networks given their size and the number of television series and serials that they are likely to commission in a year. There is very little industry information on what constitutes minimum standards of remuneration, rights and working conditions for directors in the television industry. The position of directors can be contrasted to others working in the television production industry. Cast and crew for a television production are generally employed by the production house or network, rather than being independent contractors. They are therefore legally entitled to rates of pay under the Broadcasting and Recorded Entertainment Award 2010 which was made through the Industrial Relations Commission (now Fair Work Australia). The purpose of the model agreement to be negotiated between the ADG and SPA is to provide a valuable benchmark on two levels. First, so that ADG Members and SPA members are aware of the minimum standards when they negotiate their own individual agreements relating to television series and serials. Second, to ensure that minimum standards of remuneration, rights and working conditions for directors in the television industry are recognised at an industry level. The model agreement for television series and serials would not be binding on ADG Members or SPA members. It will still be open for parties to vary the model agreement or negotiate their own agreements separately from the model agreement for television series and serials.
3. The relevant parties
3.1. The Australian Directors Guild The ADG is an industry association that has represented the interests of screen directors since 1982, including through the provision of industrial and professional support and services for its members. In 2015 the ADG was registered as an association of employees under section 26(4) of the Fair Work (Registered Organisations) Act (Cth) 2009 and is able to collectively negotiate on behalf of its members, the majority of Australian television directors. As at April 2015, the ADG had 845 members, encompassing Full and Honorary Members. Fees for membership range from $185 to $660 annually. Full membership is open to any screen director with a minimum of 20 minutes of credited screen time in any medium. Honorary membership is open to all industry professionals who work in any area of film and television production and are supportive of the ADG’s aims and objectives. This also encompasses emerging filmmakers. The ADG also offers student membership for full-‐time students.
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The ADG provides a range of services to its members. This includes an industrial and legal service at no additional cost to its members above the membership fees, for one hour, free consultation per year with one of the ADG’s consulting law firms. These legal costs are covered by sponsorship from a number of law firms who work within the Australian film and screen industry. ADG services also include assisting individual members with the negotiation of their contracts with producers or resolving disputes under their contracts with producers. This approach, based on a case-‐by-‐case assessment, is both costly and inefficient. This is particularly given the increased demand for this service year-‐after-‐year due to increases in ADG’s membership and the rapidly changing environment directors find themselves in with new technologies and international studios expanding into Australia. It is estimated that approximately 50 percent of the ADG’s staff time (two full-‐time employees) is spent in the provision of the industrial and legal service to its members. To address a number of issues at an industry level for directors and to better support its membership, the ADG has recently formed committees of directors across relevant genres of directing for Television Drama, Feature Film, Documentary and Television Commercials. These committees are made up of ADG staff and industry professionals that evaluate information about the television and film industry from the perspective of directors and consider industry issues applicable across these various genres of television and film. The ADG has set up a special committee of Australian directors of television series and serials for the purposes of the negotiation with SPA. This is made up of eight television drama directors who are full members of the ADG and are currently directing television drama and serials across all Australian television networks. The committee will enable a full spectrum of directors to participate and input into the negotiation of the proposed model agreement with SPA.
3.2. Screen Producers Australia
SPA is the largest national industry body representing the interests of television and film producers. SPA represents 300 production businesses. It offers a range of membership levels including:
• Producer -‐ established producers or production companies with more than one producer credit with a broadcast, theatrical or online release;
• Associate – new producers who have not yet earned a producer credit; • Affiliate – businesses participating in the wider screen industry; and • Service and facility business – businesses that directly contribute to the production of screen
content including film distributors, lawyers and other professional services. The majority of producers who negotiate with ADG Members are members of SPA, although membership of SPA is voluntary for producers. When conducting industry negotiations, SPA forms a Negotiating Committee. The details of SPA’s Negotiating Committees are set out on its website where it states that it “regularly negotiates agreements with unions and guilds on behalf of its members” and sets out the detailed and comprehensive process in which it consults with its members, including through the creation of Negotiating Committees.
3.3. Screen Australia Screen Australia is the Federal Government's primary agency for supporting Australian screen production. In partnership with filmmakers, Screen Australia aims to create an Australian industry that is innovative, culturally important and commercially sustainable.
ACN 002 294 920 | ABN 14 002 294 920
Screen Australia was established under the Screen Australia Act 2008 and from 1 July 2008 it took over the functions and appropriations of its predecessor agencies, the Australian Film Commission, the Film Finance Corporation Australia and Film Australia Limited. Screen Australia’s Terms of Trade apply to all producers who obtain funding through Screen Australia. They relevantly provide in clause 1.2 that: Screen Australia also expects all recipients of funding support to act fairly and reasonably in relation to third parties involved in the funded project. Fairness and reasonableness include:
a. Paying at least award minimum rates or, where applicable, any minimum agreed between the relevant guilds, for all work performed by third parties on their project, including key creatives, cast and crew
b. Respecting the rights of all relevant persons, whether those rights be copyright or other intellectual property rights, moral rights or Indigenous Cultural and Intellectual Property rights.
Screen Australia also administers a range of financial incentive schemes to film and television producers in Australia, funded by the Australian government. These relevantly include the producer tax offset scheme. This scheme was introduced in 2007 and provides a 20 percent rebate for domestic television productions. The purpose of the scheme is to stimulate Australian production of film and television.
4. Proposed conduct The proposed arrangement that is the subject of this application for authorization involves ADG Members, who may compete with each other for the provision of directing services for television series and serials in Australia, discussing model terms relating to remuneration, rights and working conditions. The ADG seeks authorization for ADG Members to collectively negotiate and give effect to a model agreement which can be used by ADG Members when contracting with producers of television for television series and serials, including:
• Current and future members of the SPA • Current and future television producers who receive a funding grant(s) from Screen
Australia • Current and future television producers who benefit from the Producer Offset Tax Rebate,
administered by Screen Australia.
Authorization is sought for a period of five (5) years. This is due to the fact that the engagement, consultation and negotiations involved in concluding a model agreement are likely to be lengthy, complex and resource dependant.
5. Model agreement
The ADG is seeking to negotiate a model agreement with SPA that sets out the recommended terms of engagement of ADG Members with SPA members, current and future, for television series and serials. The model agreement to be negotiated with SPA will contain a common set of terms and conditions to be utilized by ADG Members who chose to utilize the model agreement in their negotiations with producers of television for television series and serials. The model agreement may include the rates and terms of pay, copyright and moral rights, credits, conditions of employment, accommodation, travel and transport, rights of termination and dispute resolution.
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6. Market definition
6.1. Services The ADG submits that for the purposes of this Application the market is for the supply of directing services for television series and serials to producers. Australian directors are critical to the creation of television series and serials. They make creative decisions about what will appear on the television through input into creative elements such as the development of the script, the cinematography and its style, the casting and the acting style, the production design, the makeup and costumes, the lighting, the music and soundtrack, the editing and the grading of the final print. The director also generally determines where the camera will be placed, what sort of shot will be shot, whether the actors will be fully visible or obscured and plans how the shots will be cut together. The director also controls the rhythms of the television show. In short, the talents and skills of a director bring the story a distinctive visual style and the unique ability to convey “their message” to the audience. Directors compete to provide these services across a range of television genres including but not limited to, all adults and children’s series, serials, sitcoms and mini-‐series. Directors do not tend to specialize in any one of these television genres, therefore for the purposes of this Application, it is not necessary to consider each genre as a separate market. In line with the AWG’s Authorization, it is submitted that there is substitutability between directing services for television and film more broadly and between television genres.
6.2. Geographic market The ADG submits that for the purposes of this Application, the geographical market is Australia. Directors regularly travel throughout Australia to provide their directing services for television series and serials. They generally travel to the location where the television production is being shot, as determined by the production company from time to time. Therefore the model agreement would apply across all Australian states and territories.
7. Grounds for authorization The Application is made on the basis of section 88 of the Act which enables the ACCC to grant an authorisation to the corporation in respect of the making or giving effect to a contract, arrangement or understanding that may:
a. Constitute a cartel provision b. Have the purpose or effect of substantially lessening competition
In considering the Application, the ACCC must be satisfied that in all the circumstances the contract, arrangement or understanding would result in or is likely to result in a benefit to the public, which would outweigh any detriment to the public. The ADG is of the view that the proposed model agreement would result in a benefit to the public and would not result in a detriment to the public in the terms outlined below.
7.1. Benefit to public The ADG submits that for the purposes of this Application, the benefits that will accrue to the public as a result of the proposed model agreement relevantly include the following:
ACN 002 294 920 | ABN 14 002 294 920
• Increased bargaining power for directors in negotiations and improvements in the level of input that directors have in contractual negotiations: as discussed above, there is a significant power imbalance in favour of the producers and networks in the engagement of directors for television series and serials in Australia. Producers generally have greater experience in dealing with contractual matters and negotiations and therefore are likely to be in a stronger bargaining position. The model agreement will provide minimum standards of remuneration, rights and working conditions for directors in the television industry that are recognised at an industry level. The engagement process for the model agreement put in place by the ADG will enable directors to work collectively through the ADG to provide greater input into the terms and conditions of the model agreement. Increased input of the ADG’s Members into contractual terms in the model agreement may better reflect their collective circumstances, as opposed to those agreements that are negotiated individually or offered by producers, potentially on a take-‐it or leave-‐it basis. Improving the opportunity for ADG Members to input into the model agreement may also benefit SPA’s members by providing a forum through which more innovative contractual solutions and options can be discussed and explored. These outcomes are less likely in individual negotiations conducted for television series and serials.
• Reduced transaction costs for ADG and SPA members: every time directors and producers negotiate for television series and serials (usually on a specific project-‐by-‐project basis) there are substantial transaction costs which may be time specific. The model agreement has the potential to reduce these significantly, which is particularly beneficial for directors who are generally sole contractors with limited time and resources. Individual contract negotiation is time consuming and costly, requiring the drafting and redrafting of contracts and often the need to obtain legal and other professional advice, particularly if there are disputes. In many cases, the ADG supports its members in disputes with producers during or following contract negotiations. Therefore the model agreement has the capacity to reduce the need for such costly support services provided by the ADG and its external legal providers. As each director’s contract with a producer for television series and serials is currently specific to the particular program, this can involve the engagement of lawyers on both sides which is of considerable cost in particular to the individual directors. Up to 10 percent of the director’s fee (income derived from the television series or serial) can be expended on legal negotiations on the contract even for the most simple and straight forward directing engagements.
• Overcoming information asymmetry through augmented access to resources for directors: competitive and efficient markets operate on the basis that both buyers and sellers are well informed about market conditions. At present, given the disparity in access to resources, producers generally have better access to resources and market information than individual directors. The proposed model agreement will provide directors of television series and serials in Australia with better resources on what constitutes appropriate minimum standards of remuneration, rights and working conditions and will be developed with the input of legal and industry experts. It will improve the quality of information available to directors in contractual negotiations. This will particularly improve the information flow between directors residing and working in different geographical locations.
• Assist Screen Australia in public funding applications: the propose model agreement may also assist Screen Australia in considering its public funding applications as it will provide an objective basis to determine clause 1.2 of Screen Australia’s Terms of Trade. Clause 1.2 relevantly states that Screen Australia must as a condition of its Terms of Trade ensure that recipients (i.e. producers) act fairly and reasonably in relation to third parties involved in the production, including rates of pay. Given the model agreement will be negotiated between ADG Members and SPA members, it has the potential to provide guidance to Screen Australia on what is “fair and reasonable conduct”.
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7.2. No detriment to the public Furthermore, the ADG submits that the proposed model agreement will not result in any public detriment. The model agreement is voluntary and does not prevent directors and producers from negotiating their own agreements for television series and serials. The proposed model agreement simply provides a benchmark for minimum terms of engagement.
The model agreement also does not preclude negotiations on other terms that are not included within the scope of the model agreement or may be varied on a case-‐by-‐case basis, for example, wage rates that may be dependent on the experience and standing of the director or the budget of the particular television series or serials’ production. Given the degree of competition between directors which is based on their reputation and history of work, it is likely that they will continue to vigorously compete for engagement for television series and serials. The proposed model agreement does not provide for collective boycott activity. In the ACCC’s Determination on the AWG Application, the ACCC noted in respect of the proposed arrangement that:2
In particular, the ACCC considers that the collective bargaining arrangements are likely to provide AWG members with a greater opportunity to have effective input into the terms and conditions of their engagement contracts. This improved input provides a mechanism through which AWG members may be able to negotiate more efficient outcomes when compared to a situation where they individually negotiate contracts and/or accept terms from producers on a take it or leave it basis. Collective bargaining may also result in reduced transaction costs and help improve access to information for AWG members. The ACCC also recognises that the outcomes of the proposed collective bargaining arrangements may assist Screen Australia – the Australian Government’s funding body for the screen production industry -‐ in its consideration of public funding applications. The ACCC considers that there is likely to be minimal public detriment as a result of the collective bargaining arrangements as the current level of negotiation between individual AWG members and producers is low, participation in the collective bargaining arrangements and use of the model terms of engagement is voluntary for all parties and the arrangements do not include collective boycott activity.
The ADG submits that similar public benefits and the lack of public detriment will apply if the Application is authorized by the ACCC in this case.
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Contact Officer: Georgina Brett Contact Phone: 03 9658 6439
10 April 2015
Kingston Anderson Executive Director Australian Directors Guild Limited
By email: [email protected]
Dear Mr Anderson
Fee waiver request
I refer to your letter of 8 April 2015 to the Australian Competition and Consumer Commission (ACCC) in respect of a proposed application for authorisation. In your letter you have requested that the ACCC grant a fee waiver in respect of the proposed arrangements.
In particular, you have requested that the fee to be paid in relation to an application for authorisation to be lodged by the Australian Directors Guild Limited (ADG) be waived in full.
In support of your request, among other things, you submitted that:
ADG is a not-for-profit organisation, and
ADG is not in a position to pay the fee for authorisation due to its extremely limited funds.
Having regard to the above, as a person authorised to assess fee waiver requests for and on behalf of the ACCC, I wish to advise that the application fee to be paid by ADG has been waived in full. No application fee will apply to the application for authorisation to be lodged by ADG.
This decision will remain in force for a period of three months. The three month period will expire on 10 July 2015.
A copy of this letter should accompany the application for authorisation to be lodged by ADG. The cover letter to the application should mention that a letter from the ACCC regarding a fee waiver is enclosed with the application. The application together with this letter will be placed on the public register at that time.
If the application for authorisation is lodged by ADG after 10 July 2015, a full application fee of $7500 will apply, unless a subsequent request for a fee waiver is made and ultimately approved by the ACCC.
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Should you have any queries in relation to this matter, please do not hesitate to contact Georgina Brett on (03) 9658 6439 or by email to [email protected].
Yours sincerely
Dr Richard Chadwick General Manager Adjudication Branch
