OFFICE OF FAIR
TRADING News Release (59/08) issued by The Government News Network
on 7 May 2008
The OFT has
decided today to accept the undertakings offered by Dunfermline
Press Ltd (DPL) to address the competition concerns arising from
the completed acquisition of eight Berkshire newspaper titles from
Trinity Mirror plc. As a result, this transaction will not be
referred to the Competition Commission.
The acquisition gave DPL control over the only two local
newspapers in the Slough, Windsor and Eton areas and eliminated
the close competition between the parties' Observer and
Express series of titles in these areas. The OFT's starting
point in such a case is that any divestment undertakings should be
clear-cut in restoring competition lost by the merger, as this
avoids the need for a new and detailed OFT inquiry at the remedies phase.
In this case, DPL offered to divest the entire Express series of
newspapers to an 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 the proposed purchaser. Since the Express is also
circulated in Maidenhead, where Baylis is by far the leading
player, DPL proposed a customised divestment package comprising
all editions of the Express apart from the Maidenhead edition,
which DPL will retain.
In light of the evidence received from DPL and Baylis, the OFT
considers that the undertakings in this case constitute a
clear-cut remedy that restores competition. Overall, DPL's
completed divestment of assets to Baylis will take place little
more than three months since the OFT's original decision
suspending the duty to refer. This is substantially shorter than
in previous cases under the Enterprise Act, and was largely driven
by the OFT's resolve to reduce the time taken to implement
first-phase remedies and thereby restore competition - as was the
case here - or to refer to the Competition Commission if no
suitable and 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-phase remedy cases. First, when questions over the
asset package or suitable buyers may arise, we will manage risk by
stipulating an up-front buyer. Second, we will be open-minded to
crafting a customised but comprehensive divestment remedy for an
up-front purchaser where this can be done swiftly and without
exposing consumers to risk. Third, speed is important to us, and
we are confident that a general sense of urgency in executing
appropriate OFT remedies is the right way forward for consumers
and business.'
NOTES
1. The Reference Test - the OFT has a duty to make a reference to
the Competition Commission if the OFT believes that it is or may
be the case that relevant merger situation has been created; and
the creation of that situation has resulted, or 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. Upfront buyer- as stated in paragraph 119 of the OFT decision
of 4 February 2008, the OFT considered that, in the circumstances
of this case, in particular given the loss-making nature of the
Express series, a necessary requirement to suspend the duty to
refer and consider undertakings is that the divesture of the
Express series should be to a suitable purchaser approved by the
OFT before the OFT consults on the undertakings prior to
acceptance. This means that the OFT consulted publicly on the
suitability of Baylis as the proposed purchaser, as well as any
other aspects of the draft undertakings, during the public
consultation period.
5. Before accepting any such undertakings the OFT shall give
notice of the proposed undertakings under Schedule 10 of the
Enterprise Act 2002, and consider any representations made in
accordance with that notice.
6. The full text of this decision will appear in the mergers section.
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