Affected market: Publications
The OFT’s decision on reference under section 33 given on 14 December 2006. Full text of decision published 8 January 2007.
Please note that the square brackets indicate figures or text which have been deleted or replaced with a range at the request of the parties for reasons of commercial confidentiality.
Irish News Ltd (Irish News) publishes the leading daily newspaper in Northern Ireland called The Irish News, which contains a farming section within its business pages called Agribusiness. Furthermore, an affiliate of Irish News holds a [ ] per cent share in the Derry News and a [ ] per cent share in three newspapers in the Republic of Ireland - the Kildare Post, the Donegal Post and the Letterkenny.
Johnston Press plc (Johnston) publishes local newspapers throughout the UK, including 31 local weekly newspapers and one farming periodical, Farm Week, in Northern Ireland.
Johnston acquired 8 newspapers, including the News Letter, in Northern Ireland from Local Press Ltd in November 2005. That transaction was the subject of an OFT decision on 5 May 2006 (the Decision) [Note 1]. The OFT decided on 6 October 2006 to accept undertakings offered by Johnston to divest Farm Week in order to remedy the substantial lessening of competition identified in the Decision. Further to the decision, Irish News proposes to acquire the assets of Farm Week from Johnston. The administrative deadline expires on 8 January 2007.
As a result of this transaction Farm Week and Irish News will cease to be distinct. The parties overlap in agricultural publications in Northern Ireland. The OFT believes that it may be the case that, post transaction, the parties supply over 25 per cent of publications with agricultural editorial ( non-advertising) content targeted at the farming community in Northern Ireland and the share of supply test in section 23 of the Enterprise Act 2002 (the Act) is therefore met. The OFT therefore believes that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation.
The parties will overlap in the supply of farming publications in Northern Ireland, namely Farm Week and the Agribusiness section of The Irish News.
In relation to the product frame of reference, the OFT considered in the Decision both readers seeking appropriate editorial and advertising content and advertisers seeking readers. The evidence indicated that in both cases it was appropriate to take a cautious view and assess farming publications on a separate frame of reference from other publications and other types of media. The OFT has received no evidence suggesting that it should take a different view in this case.
In relation to the geographic frame of reference, the OFT concluded in the Decision that on the evidence available, it was appropriate to take a cautious view and assess the geographic scope for farming publications on a Northern Ireland wide basis. Again, the OFT has received no evidence suggesting that it should take a different view in this case.
As a result of the acquisition considered in the Decision, Johnston supplies two farming publications, Farm Week and Farming Life. It is retaining Farming Life, a bi-weekly supplement to its News Letter newspaper that runs up to 72 pages in its Saturday and Wednesday editions. It is selling Farm Week, a weekly farmer’s periodical which is typically around 56 pages. Irish News publishes The Irish News, a daily newspaper, whose Tuesday edition contains a one page farming section within its business pages called Agribusiness.
The Decision concluded that Farm Week and Farming Life were each others closest competitors and found evidence that Agribusiness was not a close competitor to either title. The OFT has found no evidence to the contrary in the course of considering the current transaction, as discussed below.
As part of The Irish News, Agribusiness has a large circulation figure. Considering circulation alone , post acquisition, it appears that Irish News will become the largest publisher of farming publications in Northern Ireland with about 20 per cent (increment about 5 per cent), compared to a similar figure for Farming Life. However the OFT concluded in the Decision that circulation figures overstate Agribusiness’ strength within farming publications in Northern Ireland. This is due to a number of factors. The Agribusiness section itself accounts for just one page contained within the business section of the newspaper, in comparison to 72 pages for Farming Life and 56 pages for Farm Week, which strongly suggests the farming community is not a significant part of The Irish News’ readership. The parties and third parties agree that Agribusiness’ content is better known for its business rather than farming coverage and its advertising sales concentrate on one major customer. A 2004 industry survey (the Millward Brown Ulster survey of Northern Ireland farming publications) also failed to characterise Agribusiness as a viable alternative to Farm Week (or Farming Life).
No third party expressed concerns about the merger. Customers and competitors to Farm Week considered Farming Life, rather than Agribusiness, to be the main publication for readers and advertisers in Northern Ireland. Third parties also found it unlikely that Northern Ireland wide newspapers, such as The Irish News, would expand their small farming sections to something on the scale of Farm Week. The Irish News used to contain a two-page farming supplement called Northern Farmer which ceased publication around seven years ago as it was relatively unsuccessful in the face of competition from Farming Life and Farm Week.
In conclusion, the OFT considers that the available evidence indicates that Agribusiness is not a significant farming publication in Northern Ireland, especially in comparison to the two leading publications - Farm Week and Farming Life. This acquisition will allow Farm Week to remain a strong competitive constraint on Johnston's Farming Life.
The parties overlap in the supply of farming publications in Northern Ireland. Despite Agribusiness’ large circulation as part of The Irish News, the OFT believes that that it is not a close competitor to Farm Week, taking into account comparative size, focus, customer, competitor and survey evidence. Furthermore, post merger, the OFT considers that Farm Week will act as a strong constraint on the leading farming publication in Northern Ireland, Farming Life.
Consequently, the OFT does not believe that it is or may be the case that the merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.
This merger will therefore not be referred to the Competition Commission under 33(1) of the Act.
- OFT decision dated 5 May 2006, Completed Acquisition by Johnston Press Plc of Local Press Ltd.