The ABC and SBS have been been cleared of claims they are competing unfairly with their commercial rivals, following an independent inquiry commissioned by the federal government.

The inquiry, which took six months to complete, found that the ABC and SBS are operating in a manner that is consistent with the principles of competitive neutrality.

“Given their market shares, and other factors, this inquiry considers the national broadcasters are not causing significant competitive distortions beyond the public interest,” the report said.

“There is no evidence that costs are not appropriately allocated. And prices are generally set to market rates.

“Different regulatory circumstances facing the national broadcasters, compared to the private sector, represent parliamentary decisions which are difficult to bring to financial account.”

The inquiry noted that most significant competitive pressures for news, entertainment and advertising are coming from “giant international companies”.

The report acknowledged that free services provided by both media companies are having some competitive impact, with inquiry submissions including complaints about the ABC’s online news service, and SBS’ multi-channel and streaming services.

“But the national broadcasters are established and funded to provide free services,” it said.

“So long as they operate within their statutory charters, they are operating in the public interest.”

Submissions to the inquiry also questioned whether the ABC and SBS were operating within their charters.

“The charters are written very broadly, and reporting against the charters is not detailed or robust enough to settle doubts,” the report said.

“Accountability is difficult, especially as there is no opportunity for charter complaints to be addressed.”

However, the review recommended that changes should be made to increase the transparency of the national broadcasters’ business activities and the way they consider issues of competitive neutrality and their participation in media markets.

One of those recommendations was that the ABC and SBS should provide a statement of intentions covering how they intend to spend their funds in the future.

The report said this action “would provide parliament and the public with greater transparency and accountability of the expenditure of funds”.

The inquiry also noted there were a number of areas where the ABC could improve its approach to cost allocation and pricing “to enhance transparency and give greater confidence that its costing and pricing practices are aligned with competitive neutrality principles”.

The inquiry also recommended the national broadcasters improve their reporting of charter performance in the context of the general principles of competitive neutrality.

“If this enhanced reporting does not occur, the government should consider a way of managing complaints about charter performance in this area,” the report said.

The inquiry was part of a deal the government made with One Nation leader Pauline Hanson back in 2017 in order to get the media reforms across the line.

Both the ABC and SBS welcomed the inquiry’s findings.

“Recognising that the ABC should be able to adapt to new and emerging technology and audience behaviours, the independent expert panel agreed that the ABC is operating in the public interest and in line with its charter,” an ABC spokesperson said.

“The report also found that increasing competitive pressure on domestic media operators is likely to come from international companies, which may lead to further market consolidation such as the Fairfax-Nine Entertainment merger.”

“The panel accepted the ABC’s submissions that it is operating in a manner consistent with the general principles of competitive neutrality.

An SBS spokesperson said: “We are pleased that the inquiry positively reflects the seriousness with which SBS takes its obligations as a public broadcaster, and the diligence we apply to our operations.

“As the terms of reference noted, competitive neutrality principles do not imply that government organisations cannot successfully compete with private businesses.

“SBS is engaging more Australians than ever before as a result of a well-defined strategy, content audiences won’t find anywhere else and efficient operations, all in service of the SBS Charter.

“SBS’s suite of services today brings a diversity of views and perspectives to the domestic media market, telling stories otherwise untold and giving a voice to communities otherwise unheard.

“SBS is committed to maintaining the trust audiences have placed in us for more than 40 years.

“We continually look for ways to demonstrate the value of a dedicated multicultural and Indigenous broadcaster to all Australians in contributing to the vitality of an inclusive society.”

Both broadcasters said they would consider the inquiry’s findings and recommendations in more detail.

Free TV Australia chief Bridget Fair said: “We welcome the conclusion of the panel that changes should be made to increase the transparency of the business activities of the ABC and SBS.”

“While the panel has identified the issues, they have not adequately set out the governance changes needed to address these shortcomings.

“We have consistently said that we stand with all Australians who want strong, vibrant and distinctive national broadcasters.

“However, we do not believe the panel gave sufficient weight to the evidence provided by the commercial sector of competitive neutrality issues associated with recent investment and programming decisions of the ABC and SBS.”

Free TV is also disappointed that the panel identified differences in the regulatory regimes applying to ABC/SBS and commercial broadcasters, but did not recommend any specific changes.

The panel noted other ongoing reviews and referred any matters falling outside of those reviews to the Department of Communications and the Arts for further consideration.

“Given that regulatory neutrality is a central tenet of competitive neutrality, we would have expected to see a more detailed consideration of these issues within the panel’s report,” Fair said.

“The panel has also correctly identified the difficulties with accountability in the absence of a charter complaints handling mechanism, and the need for greater transparency around how the ABC and SBS approach fair competition.

“In Free TV’s original submission, we proposed a new regulatory oversight model based on one already operating in the UK with respect to the BBC.

“This model has provided greater transparency around BBC investment decisions, without negatively impacting on its day-to-day operations. We believe this approach is worthy of further consideration.”