Completed acquisition by Dunfermline Press Limited of the Berkshire Regional Newspapers business from Trinity Mirror plc

Affected market: Local newspapers

No. ME/3315/07

The OFT's decision on reference under section 33(1) given on 4 February 2008. Full text of decision published 7 May 2008.

PARTIES

The Dunfermline Press Limited (DPL) publishes 23 local and regional newspapers in the United Kingdom (UK) including three titles in Berkshire, England [see note 1].

The Berkshire regional newspaper (BRN) business of Trinity Mirror plc (Trinity Mirror) comprises a portfolio of free and paid-for local and regional titles [see note 2] that circulate in the Berkshire area.

TRANSACTION

DPL completed the asset acquisition of BRN on 29 July 2007.

JURISDICTION

The merging parties overlapped in the publication of weekly local newspapers and the provision of advertising space in local newspapers in Berkshire. Post-merger, DPL supplies more than 25 per cent of all local weekly newspapers in the areas in which BRN's titles were circulated. These areas include Slough, Windsor, Reading, Wokingham, Maidenhead, Bracknell and Ascot. The combined population of these areas accounts approximately to one per cent of the UK's population, representing a substantial part of the UK.

Therefore, the OFT concluded in its decision of 4 February 2008 (the Decision) that the share of supply test pursuant to Section 23(3) of the Enterprise Act 2002 (the Act) was met and that a relevant merger situation had been created for the purposes of section 22(1) of the Act.

BACKGROUND

The Decision concluded that, on the evidence available, it is or may be the case that the merger has resulted, or may be expected to result, in a substantial lessening of competition within a market or markets in the United Kingdom, that is, the supply of local weekly newspapers and advertising space in weekly local newspapers in Slough and Windsor. Specifically, the merger created an overlap between the Slough, Eton & Langley Observer (owned by DPL prior to the merger) and BRN's Slough, Windsor & Maidenhead Express series. On this basis, the OFT decided that the merger would be referred to the Competition Commission (the CC) unless the parties gave suitable undertakings pursuant to section 73 of the Act to address the competition concerns identified in the Decision.

DPL offered undertakings to divest BRN's Slough, Windsor & Maidenhead Express series to an up-front buyer, that is to a named purchaser to be identified in advance of acceptance of the undertakings in lieu. The OFT considered that this offer was capable of clearly addressing the competition concerns identified in the Decision and suspended its duty to refer on this basis.

Following suspension of the OFT's duty to refer, DPL proposed Baylis & Co (The Maidenhead Advertiser) Limited (Baylis) as its proposed purchaser for the Express series. However, given that a purchase of the entire Express series would create an overlap with Baylis' existing publication in Maidenhead, the Maidenhead Advertiser, DPL proposed to divest the Slough and Windsor editions of the Express to Baylis (which do not overlap significantly with Baylis' existing business), whilst retaining the Maidenhead edition itself. The OFT met with Baylis as part of the process of satisfying itself that this proposed purchaser had the ability and incentive to restore competition in the supply of local newspapers in the Slough and Windsor areas. As to its ability to compete, Baylis has a long track record of success in running the Maidenhead Advertiser. At the same time, Baylis is not a material existing competitor in the Slough and Windsor areas; accordingly, it has the appropriate incentives to compete in these areas with the Express series comparable to that existing when the Express was under BRN's ownership pre-merger, when the market was characterised by the competitive dynamic between two independently-owned local newspaper series.

The OFT was also satisfied that competition in the Maidenhead area would not be reduced by the Slough and Windsor remedy because (i) there is insufficient evidence to suggest that the Maidenhead edition of the Express was a significant competitor to Baylis pre-merger; and (ii) the OFT could not identify a valid theory based on the local facts under which DPL would have a lesser incentive to compete in Maidenhead with the relevant Express assets than did BRN did pre-merger. As to the latter, it is plausible that DPL has a greater incentive to compete in the area post-divestment than did BRN pre-merger, because under the proposed divestment remedy, Baylis can now offer customers a package of strong titles in Maidenhead (the Advertiser) and Slough and Windsor (the Express), a package which DPL would have the incentive to match.

On 4 April 2008, DPL entered into a business sale agreement for the transfer to Baylis of the Slough & South Bucks Express and the Windsor, Ascot & Eton Express titles, but not the Maidenhead Express title. The agreement was made conditional on the OFT's formal approval of the sale of the titles to Baylis and the acceptance by the OFT of undertakings in lieu of reference by DPL.

CONSULTATION

On 9 April 2008, the OFT published the proposed Undertakings, inviting interested third parties to give their views on them to the OFT by 30 April 2008.

No responses were received during the consultation process.

DECISION

The Decision concluded that the merger would be referred to the CC if the parties failed to give suitable undertakings pursuant to section 73 of the Act to address the competition concerns identified in the Decision. The OFT has decided to accept the proposed Undertakings (pdf 87 kb) offered by DPL in lieu of reference to the CC, as they are, in the circumstances of this case, clear cut and appropriate to remedy, mitigate or prevent the competition concerns identified in the Decision.

This merger will therefore not be referred to the CC and the Undertakings which have been signed by DPL will come into effect from this date.

NOTES

1. Slough and Langley Observer series, Midweek Observer and The Villager.
2. Reading Chronicle series, Bracknell News series, Slough/Windsor/Maidenhead Express series, Chronicle Extra series, Midweek News series and Newbury & Thatcham Chronicle with other series of publications under the titles Great Days Out, Classified Directory, Best of Berkshire, Weddings and Exclusively Yours.

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