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17 September 2002
In view of Competition Act casework and the soon-to-be-reformed merger control regime, the OFT has decided not to launch a general investigation into local newspaper publishing and the implications of local concentration of publishers. However, it will keep the market under review.
The decision follows the publication of the Competition Commission's report into the transfer of eight titles from Trinity Mirror to Johnston Press and the subsequent invitation from Competition Minister Melanie Johnson at the DTI for the OFT to consider a general investigation of the market.
After carrying out an initial investigation of the newspaper publishing market, the OFT has decided that now is not the time for a full market investigation.
The OFT can address anti-competitive conduct in the local newspaper publishing market through enforcement of the Competition Act 1998. For example, the OFT yesterday fined Aberdeen Journals £1.328 million for abusing its dominant position against a new entrant into the market. The effects of future concentration can also be considered on a case-by-case basis under the general merger control regime or the special newspaper merger regime. Indeed, the Communications Bill proposes to reform the review procedure for newspaper mergers, with all such cases being considered by the OFT (and where appropriate the Competition Commission) on competition grounds on the same basis as mergers in most other sectors.
As well as preparing for its new responsibilities in relation to newspaper mergers, the OFT is currently considering cases involving aspects of the local newspaper industry. The OFT is also reviewing the industry code of practice concerning the supply of newspapers from wholesalers to retailers.
1. Competition Minister Melanie Johnson invited the Director General of Fair Trading to initiate an investigation into local newspaper publishing and the effects of future consolidation in the market in May 2002.
2. The draft Communications Bill was published jointly by DTI and DCMS on 7 May 2002. It will create a single powerful regulator for the communications sector – the Office for Communications (OFCOM) – replacing the existing five regulators (the ITC, Radio Authority, Oftel, Broadcasting Standards Commission and the Radiocommunications Agency).
3. The Fair Trading Act requires mandatory references by the Secretary of State to the Competition Commission of most newspaper mergers. The Communications Bill proposes that mergers in the newspaper industry will be examined by the OFT (and, where appropriate, the Competition Commission) to assess their effects on competition on the same basis as for mergers in most other sectors. The legislation will also identify a newspaper public interest consideration that may be examined in addition to competition. This will relate to the accurate presentation of news, free expression of opinion, and plurality of views in the UK press. Final decisions will remain with Ministers in cases where this public interest consideration is invoked. However, in all other newspaper cases decisions will be taken by the competition authorities.
4. The OFT has made a decision that Aberdeen Journals infringed Chapter II of the Competition Act 1998 by abusing its dominant market position. The company was fined £1.328 million following allegations of predatory pricing (see PN 58/02).
5. The OFT is currently reviewing the undertakings given by newspaper wholesalers to the Secretary of State in 1994 to abide by an industry code of practice regulating their relationship with retailers in the market.
6. In this statement the functions of the Director General of Fair Trading (DGFT) are for simplicity described as the functions of 'the OFT'. The Enterprise Bill proposes to replace the office of the DGFT with the OFT, to which would be transferred the DGFT's functions.
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