OFT Refers Kent Newspaper Merger to the Competition Commission

Jack Humphrey, Regulatory journalist
October 30, 2011 /

The OFT has referred the anticipated acquisition by Kent Messenger Group (KMG) of several newspapers from Northcliffe Media Limited to the Competition Commission for further investigation.

Kent Messenger Group (KMG) is a family-owned media company based in Kent with print, radio and online business interests.

Northcliffe Media Limited is a subsidiary of the Daily Mail & General Trust. It owns the Times (Faversham, Whitstable, Herne Bay and Canterbury) Series, Dover Express Series, News (Medway), Folkestone Herald Series, East Kent Gazette, Thanet Times and the Isle of Thanet Gazette.

These companies publish the only local weekly newspapers in seven local areas in East Kent, including Thanet, Swale, Shepway, Canterbury, Dover, Ashford and Medway.

The OFT’s investigation concluded that the monopoly of local newspapers that would result in these areas risks costlier advertising for businesses and higher cover prices for readers.

This is the first local media merger investigation the OFT has carried out since its review of the local and regional media merger regime in 2009. In reaching its decision the OFT took account of Ofcom’s Local Media Assessment, which provided an overview of the local media sector in the UK and in the South East of England.

During its investigation, the OFT consulted with advertisers and readers to find out whether other regional or online newspapers, websites or magazines would be able to curtail these risks.

The evidence revealed that local weekly newspapers remain a very important means for advertisers to reach local audiences and for readers to obtain local news, despite acknowledging that these media provide some competition.

Amelia Fletcher, OFT Chief Economist and Decision Maker in this case, said: “Local newspapers face significant challenges, including falling readership and increased competition from other media, most notably, the internet. However, this merger would create a monopoly in local weekly newspapers in several local areas across East Kent.”

UK merger law requires the OFT to be cautious in its ‘first phase’ review of mergers.

The OFT is responsible for the first phase of the merger review process, which is usually 40 working days. It has a duty to refer to the Competition Commission (CC) any relevant merger which it believes results in a realistic prospect of a substantial lessening of competition (SLC). At second phase, generally limited to 24 weeks, the CC undertakes an in-depth investigation to assess if a merger will lead to an SLC. If an SLC is likely, the CC decides upon the remedies required.

“We require compelling evidence to dismiss concerns that the combination of such close competitors as these might result in substantially higher prices or less choice for advertisers and readers. The evidence in this case did not permit us to clear this transaction; therefore we think it is appropriate that the merger is referred to the Competition Commission for a more detailed ‘second phase’ review,” Fletcher added.

 

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