7th May 2008 15:00
Office of Fair Trading07 May 2008 59/08 7 May 2008 OFT ACCEPTS UNDERTAKINGS IN BERKSHIRE NEWSPAPER MERGER The OFT has decided today to accept the undertakings offered by DunfermlinePress Ltd (DPL) to address the competition concerns arising from the completedacquisition of eight Berkshire newspaper titles from Trinity Mirror plc. As aresult, this transaction will not be referred to the Competition Commission. The acquisition gave DPL control over the only two local newspapers in theSlough, Windsor and Eton areas and eliminated the close competition between theparties' Observer and Express series of titles in these areas. The OFT'sstarting point in such a case is that any divestment undertakings should beclear-cut in restoring competition lost by the merger, as this avoids the needfor a new and detailed OFT inquiry at the remedies phase. In this case, DPL offered to divest the entire Express series of newspapers toan up-front buyer in order to avoid a reference to the Competition Commission,and the OFT suspended its duty to refer on this basis. DPL subsequently proposed Baylis, the owner of the Maidenhead Advertiser, as theproposed purchaser. Since the Express is also circulated in Maidenhead, whereBaylis is by far the leading player, DPL proposed a customised divestmentpackage comprising all editions of the Express apart from the Maidenheadedition, which DPL will retain. In light of the evidence received from DPL and Baylis, the OFT considers thatthe undertakings in this case constitute a clear-cut remedy that restorescompetition. Overall, DPL's completed divestment of assets to Baylis will takeplace little more than three months since the OFT's original decision suspendingthe duty to refer. This is substantially shorter than in previous cases underthe Enterprise Act, and was largely driven by the OFT's resolve to reduce thetime taken to implement first-phase remedies and thereby restore competition -as was the case here - or to refer to the Competition Commission if no suitableand expeditious solution can be found. Simon Pritchard, OFT Senior Director of Mergers, said:'Our handling of this case has three headline points for future first-phaseremedy cases. First, when questions over the asset package or suitable buyersmay arise, we will manage risk by stipulating an up-front buyer. Second, we willbe open-minded to crafting a customised but comprehensive divestment remedy foran up-front purchaser where this can be done swiftly and without exposingconsumers to risk. Third, speed is important to us, and we are confident that ageneral sense of urgency in executing appropriate OFT remedies is the right wayforward for consumers and business.' NOTES 1. The Reference Test - the OFT has a duty to make a reference to theCompetition Commission if the OFT believes that it is or may be the case thatrelevant merger situation has been created; and the creation of that situationhas resulted, or may be expected to result, in a substantial lessening ofcompetition within any market or markets in the United Kingdom for goods orservices. 2. Under the Enterprise Act 2002 a relevant merger situation is created if twoor more enterprises have ceased to be distinct enterprises; and the value of theturnover in the United Kingdom of the enterprise being taken over exceeds £70million; or as a result of the transaction, in relation to the supply of goodsor services of any description, a 25 per cent share of supply in the UK (or asubstantial part thereof) is created or enhanced. 3. Under section 73 of the Enterprise Act 2002 the OFT may, instead of making areference, and for the purpose of remedying, mitigating or preventing thesubstantial lessening of competition concerned, or any adverse effect which hasor may have resulted from it or may be expected to result from it, accept fromsuch of the parties concerned as it considers appropriate undertakings to takesuch action as it considers appropriate. In doing so, the OFT will have regardto the need to achieve as comprehensive a solution as is reasonable andpracticable to the substantial lessening of competition and any adverse effectsresulting from it. 4. Upfront buyer- as stated in paragraph 119 of the OFT decision of 4 February2008, the OFT considered that, in the circumstances of this case, in particulargiven the loss-making nature of the Express series, a necessary requirement tosuspend the duty to refer and consider undertakings is that the divesture of theExpress series should be to a suitable purchaser approved by the OFT before theOFT consults on the undertakings prior to acceptance. This means that the OFTconsulted publicly on the suitability of Baylis as the proposed purchaser, aswell as any other aspects of the draft undertakings, during the publicconsultation period. 5. Before accepting any such undertakings the OFT shall give notice of theproposed undertakings under Schedule 10 of the Enterprise Act 2002, and considerany representations made in accordance with that notice. 6. The full text of this decision will appear in the mergers section. MEDIA enquiries: 020 7211+Corinne Gladstone 8899 Kasia Reardon 8901Jonathan Marciano 8898 Out of hours: mobile: 07774 134814 fax messages: 020 7211 8961Copies of press notices: Ext. 8993http://www.oft.gov.uk PUBLIC enquiries: 0845 7224499 [email protected] reports and consumer information leaflets are available free from:OFT, PO Box 366, Hayes UB3 1XB 0800 389 3158 [email protected] This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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