Completed acquisition by Global Radio UK Limited of GCap Media plc

Affected market: Radio advertising

No. ME/3638/08

Please note that the full text of the decision can be downloaded by using the link on the right. What follows are extracts regarding the parties, the transaction, jurisidction and decision.

The OFT's decision on reference under section 22(1) given on 8 August 2008. Full text of decision published 27 August 2008.

THE PARTIES

Global Radio UK Limited (Global) is a privately-owned UK based commercial radio group, the activities of which comprise nine local radio analogue stations grouped under three principal brands (Heart, Galaxy and LBC). These stations are also broadcast on DAB digital radio. Global's stations are essentially limited to London, the Midlands and the North of England. Global accounted in 2007 for approximately 10 per cent of all UK commercial radio revenues.

GCap Media plc (GCap) was formed by the merger of Capital Radio plc and GWR plc in May 2005 and owns a portfolio of 71 local analogue radio licences across the UK, as well as the Classic FM national station. Many of these stations are also broadcast on DAB digital radio. For the financial year 2007, its turnover was some £200 million. GCap accounted in 2007 for approximately a third of all UK commercial radio revenues.

TRANSACTION

On 31 March 2008, a wholly owned subsidiary of Global announced that it had reached an agreement to acquire the entire share capital of GCap for approximately £375 million.

The transaction was completed on 6 June 2008. The OFT accepted initial undertakings from Global on 6 June 2008. On 8 August 2008, the OFT announced its Decision to suspend its duty to refer the completed acquisition by Global of GCap to the Competition Commission (CC) under section 22 of the Enterprise Act 2002 (the Act) because the OFT was considering whether to accept appropriate undertakings from Global in lieu of reference. On 19 August 2008, the OFT accepted revised initial undertakings from Global in relation only to the parties' overlapping activities in the East and West Midlands in respect of which the OFT's duty to refer arose.

JURISDICTION

As a result of the transaction Global and GCap ceased to be distinct. The UK turnover of GCap exceeds £70 million, so the turnover test in section 23(1)(b) of the Act is satisfied. The OFT therefore believes that it is or may be the case that a relevant merger situation has been created.

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 considers that the undertakings provided by Global are clear cut and appropriate to remedy, mitigate or prevent the substantial lessening of competition and any adverse effects resulting from it. The OFT has therefore decided to accept the undertakings offered by Global.

The merger will therefore not be referred to the Competition Commission and the undertakings, which have been signed by Global, will come into effect from this date.

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