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OFT refers completed acquisition in broadcast transmission sector to the Competition Commission

117/07    8 August 2007

The OFT has today referred the completed acquisition by Macquarie UK Broadcast Ventures Limited of National Grid Wireless Group to the Competition Commission (CC).

The OFT concluded that the merger of the only two terrestrial broadcast transmission companies in the UK would result in a substantial lessening of competition in broadcast transmission services.

The OFT carefully considered Macquarie's offer of a package of remedies aimed at solving the competition issues, but could not be satisfied that they met the OFT's requirements.

Sean Williams, OFT Executive Director, said:

'The transaction creates a monopoly supplier in TV and radio transmission services in a sector where it is difficult for companies to enter the market. Despite some efficiencies, it appears the merger will likely reduce the overall innovation, quality, and price benefits enjoyed by broadcasters and ultimately consumers. Remedies proposed by Macquarie were a serious attempt to resolve our concerns. However, they do not restore lost competition between two large rival companies that are active at every level of the supply chain and the remedies do not otherwise very clearly replicate all the benefits of such competition. As such, they did not meet the OFT's remedies standard of a clear-cut solution to a clear-cut problem.'

The CC will now explore customers' concerns and the issues raised in greater detail.

OFCOM also provided advice to the OFT on all the issues raised throughout its investigation. The Competition Commission is now expected to publish its response to the OFT's referral by 22 January 2008.

NOTES

1. The OFT has also looked in parallel at the acquisition by two Macquarie funds of Airwave Solutions Limited, which has been cleared today. On the basis of the evidence before it, the OFT does not believe that the Airwave merger raises competition concerns. Each merger is looked at by the OFT on its own merits on a case by case basis.

2. 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.

3. 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.

4. The CC may extend the 24 week period within which it is required to publish its report by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period.

5. A Phase One investigation refers to a first stage merger investigation which, in the UK is the investigation carried out by the OFT, as opposed to a more in-depth investigation by the CC.

6. The full text of this decision will appear in the mergers section.

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