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45/12 1 June 2012
The OFT has today cleared the acquisition of The Topper newspaper by the Daily Mail General Trust.
The Daily Mail General Trust publishes daily paper The Nottingham Post, and proposes to acquire The Topper, a weekly freesheet publication.
An OFT investigation found that, despite the proposed merger leading to a high combined share of supply of local newspapers and local paper advertising space in Nottingham, there was sufficient evidence that other competitive restraints would protect customers from price increases or reductions in quality.
The OFT found that the appropriate frame of reference for an assessment of the transaction was the supply of local newspapers in the Nottingham area. The OFT did not consider that online media formed part of the same relevant market as local newspapers but took into account the constraint from online and other media in its overall competitive assessment.
In Nottingham, the merging parties had high combined market shares in the supply of local newspapers. However, the OFT found that a number of factors, taken in the round, meant that advertisers would be protected against price increases or reductions in quality. These factors included: the fact that some advertisers, either directly or through advertising agencies, procure advertising space across many different local areas or regions, giving them the opportunity to compare prices across different media channels and geographic areas; some segments of advertisers would continue to have online alternatives such as property or motors websites; and some advertisers were able to self-supply through distributing printed literature direct to homes, as an alternative to newspaper advertising.
In addition, all types of advertisers may be protected by the two-sided nature of the market, meaning that that the merged entity would need to take into account the impact on advertisers, on the one hand, and on readers, on the other, when taking pricing or other business decisions (referred to as indirect network effects).
Taking all this evidence in the round, the OFT concluded that the proposed merger would not raise substantial competition concerns.
OFT Chief Executive, John Fingleton, said: 'The traditional newspaper industry faces significant challenges from online. While this creates pressure for consolidation, it is important that competition in the sector remains strong to protect readers and advertisers.
'While this merger will lead to a very high combined market share in the Nottingham area, we have concluded that, in this case, the merger will not substantially lessen competition.
'The merging parties have provided us with significant evidence to assess the competitive dynamics of local newspaper supply in Nottingham which has shown that advertisers will be protected by other competitive alternatives and the overall constraint placed on the parties due to the two-sided nature of the newspaper market.
'We hope this decision will assist businesses in this sector to assess future transactions in local newspaper markets, and to identify the evidence the OFT will find useful in assessing the impact on competition.'
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