Affected market: Radio
Full text of the OFT decision: capital.pdf
Undertakings in lieu of reference: capitalundertakings.pdf
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 Annexe 1.
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.