Future’s anticipated acquisition of Miura (Holdings) Ltd, the parent of Imagine, could face an in-depth investigation over competition concerns.
Future plc (Future) and Imagine Publishing Ltd (Imagine) are both prominent publishers of specialist magazines as well as bookazines, applications and websites. Their titles overlap in computing, website design and 3D modelling, gadgets, gaming, sci-fi, and photography.
In its initial investigation, the Competition and Markets Authority (CMA) found that after the merger is completed, the companies’ titles will be sufficiently constrained by competing magazines or similar online content with the exception of sci-fi magazines.
The companies’ sci-fi titles (‘SFX’ and ‘Sci-Fi Now’) compete closely and the available evidence showed that other magazines and online content only impose a limited competition constraint. By reducing competition between sci-fi magazine titles, the merger may therefore lead to higher prices or a reduction in choice and quality for readers.
The merger will therefore be referred for an in-depth investigation by an independent group of CMA panel members unless Future and Imagine can offer an acceptable solution to address these competition concerns in a clear-cut manner.
Sheldon Mills, Senior Director of Mergers and decision maker in this case, said:
These magazines are specialist interest titles and the readers are hobbyists or professionals. The companies put to us that the magazine industry has faced a structural decline due to growth of online advertising and readership. We found some evidence in this case that readers and advertisers consider online content to be a good alternative to print magazines, but not in all areas.
In sci-fi, the evidence pointed towards print magazines serving a distinct need for readers and so, unless this aspect of the merger is changed, the merger may increase the incentive to raise the price or reduce the quality of those magazine titles – particularly to the detriment of the readers.
Notes for editors
The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law. For more information on the CMA see our homepage or follow us on Twitter @CMAgovuk, Flickr and LinkedIn. Sign up to our email alerts to receive updates on merger cases.
Under the Enterprise Act 2002 (the Act) the CMA has a duty to make a merger reference, resulting in an in-depth phase 2 merger investigation, if the CMA believes that it is or may be the case that a ‘relevant merger situation’ has been created, or arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation; and that 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.
Under the Act a ‘relevant merger situation’ is created if 2 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 (‘the turnover test’) or as a result of the transaction, in relation to the supply of goods or services of any description, a 25% share of supply in the UK (or a substantial part of the UK) is created or enhanced (‘the share of supply test’).
The CMA considers that it is under a duty to make a phase 2 merger reference in this case under the Act. However, the duty to refer is not exercised while the CMA is considering whether to accept undertakings in lieu of a reference. Future and Imagine have until 14 October 2016 to offer an undertaking to the CMA that might be accepted by the CMA. If no undertaking is offered or accepted, then the CMA will by 21 October 2016 refer the merger for a phase 2 merger investigation.
All the CMA’s functions in phase 2 merger investigations are performed by inquiry groups chosen from the CMA’s panel members. The appointed inquiry group are the decision makers on merger investigations. The CMA’s panel members come from a variety of backgrounds, including economics, law, accountancy and/or business; the membership of an inquiry group usually reflects a mix of expertise and experience (including industry experience).
The text of this decision will be placed on the case page in due course.
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