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OFT considers undertakings instead of reference to the Competition Commission in radio merger

218/04    22 December 2004

The OFT has decided today not to refer the anticipated acquisition by Capital Radio plc of GWR Group plc to the Competition Commission provided that satisfactory undertakings are given to address competition concerns identified in relation to the supply of local radio advertising in the East Midlands. If the parties do not give such undertakings, then the transaction will be referred.

Vincent Smith, the OFT's Director of Competition Enforcement, said:

'Except in the East Midlands, the radio stations of Capital and GWR do not strongly overlap at a local level.  So for national advertisers putting together a radio advertising package they are largely complementary rather than competing alternatives. However, the merger would result in a substantial lessening of competition in the East Midlands. The parties have offered to divest Century 106 FM to address the identified adverse competition effects.'
 
NOTES

1. The Reference Test - The OFT has a duty to make a reference to the CC if the OFT believes that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation; and the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.

2. Under the Enterprise Act 2002 a relevant merger situation is created if two or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million; or as a result of the transaction, in relation to the supply of goods or services of any description, a 25 per cent share of supply in the UK (or a substantial part thereof) is created or enhanced.

3. Under section 73 of the Enterprise Act 2002 the OFT may, instead of making a reference, and for the purpose of remedying, mitigating or preventing the substantial lessening of competition concerned, or any adverse effect which has or may have resulted from it or may be expected to result from it, accept from such of the parties concerned as it considers appropriate undertakings to take such action as it considers appropriate. In doing so, the OFT will have regard to the need to achieve as comprehensive a solution as is reasonable and practicable to the substantial lessening of competition and any adverse effects resulting from it.

4. Before accepting any such undertakings under Schedule 10 of the Enterprise Act 2002, the OFT shall give notice of the proposed undertakings and will consider any representations made in accordance with that notice.

5. The text of this decision will be placed on the mergers section of this website as soon as is reasonably practicable.

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