Read the case study below. In 2022, StreamSphere held 58% of a country's video-streaming subscriptions. It bought a small production studio and made several...

(a) Two indicators of market power are:

• StreamSphere has a 58% market share. [1]
• It owns exclusive content, making it the dominant supplier and potentially able to raise subscription rates. [1]

(b) Exclusive programmes differentiate StreamSphere's service and make it attractive to consumers. [1] A new entrant would need to spend heavily to obtain rights to comparable content or create its own popular programmes. [1] This raises start-up costs, making entry less likely. [1]

(c) A higher subscription rate raises consumers' spending on streaming and reduces their real disposable income. [1] They may consequently reduce spending on other goods and services. [1] Some consumers may cancel or switch to rivals. [1] However, consumers who value the exclusive programmes may remain subscribed despite the increase, showing that their alternatives are limited. [1]

(d) Preventing further purchases could be justified because acquiring more studios may increase concentration and make entry harder for rivals. [1] Control of more exclusive content could allow StreamSphere to raise rates, reduce choice, or lower service quality. [1]

However, further studios may create economies of scale: StreamSphere could fund better programmes and lower average costs. [1] It also faces competition from existing streaming rivals and other entertainment services. [1]

A justified conclusion is that the authority should prevent a purchase if it would substantially reduce competition and consumer harm is likely to exceed efficiency gains. [2] It could allow a purchase with conditions if the gains, such as better content or lower costs, are passed on to consumers. The decision should depend on the likely effect on competition and consumers, not solely on StreamSphere's current size.