Affected market: Radio
Full text of the OFT decision:
Undertakings in lieu of reference:
Undertakings accepted decision
The OFT's decision on reference under section 33 given on 22 December
2004. Full text of decision published 8 March 2005.
Capital Radio plc (Capital) is a commercial radio group, providing
21 local analogue stations and 58 digital programme stations, including
the Capital FM Network, Capital Gold, Century FM, Xfm and Choice FM.
Capital owns outright four local digital multiplexes, has a 50 per cent
holding in three more and minority interests in a further seven.
GWR Group plc (GWR) is a commercial radio group that owns Classic FM
and 30 local analogue licenses (providing 36 local stations) and 35
digital programme stations. It owns a controlling interest in the
national commercial digital multiplex, controls 14 local digital
multiplexes and has a minority investment in one London multiplex. GWR
also has a minority shareholding in Classic Gold Digital Limited (CGDL),
which owns 18 AM licences and digital services.
Capital proposes acquiring the whole of GWR's issued share capital.
The parties notified the anticipated transaction to the OFT on 8
November 2004. The administrative deadline for the OFT's decision was
22 December 2004.
As a result of the transaction, Capital and GWR will cease to be
distinct. The transaction will create a relevant merger situation as
the turnover test under section 23(1) (b) of the Enterprise Act 2002
(the Act) is met. In addition the merged entity will supply over 25 per
cent of national radio advertising in the UK. For completeness, the
parties' activities also overlap in relation to the supply of radio
broadcasting services and digital radio multiplex services in the UK.
By way of a decision of 22 December 2004 (the Decision) the OFT
announced that, on the evidence available to it, the OFT believed that
it may be the case that the merger may be expected to result in a
substantial lessening of competition in the supply of radio advertising
airtime in the East Midlands. A copy of the decision is attached at
On this basis, the OFT decided that the merger would be referred to the
Competition Commision unless Capital gave suitable undertakings pursuant
to section 73 of the Enterprise Act to address the competition concerns
arising from the merger.
Capital offered to give undertakings to divest the Capital Radio station
in the East Midlands, Century 106 FM.
On 18 February 2005, the OFT published the proposed undertakings
inviting interested third parties to give their views on them to the
OFT. The OFT did not receive any responses to suggest that the proposed
undertakings were not appropriate to remedy, mitigate or prevent the
competition concerns identified.
The merger would have been referred to the Competition Commission if
Capital had failed to give suitable undertakings pursuant to section 73
of the Act to address the competition concern outlined above. The OFT
has decided to accept the proposed undertakings in lieu of reference as
they address that competition concern.
This merger will therefore not be referred to the Competition Commission
and the undertakings which have been signed by Capital, the text of
which is attached as Annexe 2 to this decision, will come into effect
from this date.