CC provisional decision on radio merger
13 Feb 2013
The Competition Commission (CC) has provisionally found that the completed acquisition by Global Radio Holdings Limited (Global) of Real and Smooth Limited (formerly GMG Radio Holdings Limited) could lead to higher prices for advertisers in seven areas of the UK.
In a summary of its provisional findings published today, the CC has found that in many areas where Global and Real & Smooth stations currently overlap and compete, advertisers buying airtime on a campaign-by-campaign basis, directly or through smaller agencies (non-contracted advertising) could face higher costs for both advertising and sponsorship and promotion activity.
The CC has, however, provisionally concluded that advertisers using media agencies to buy airtime on a contracted basis and national sponsorship and promotion would not be significantly adversely affected.
The CC has provisionally identified seven areas where advertisers could lose out from a loss of competition: the East Midlands; Cardiff; North Wales; Greater Manchester; the North-East; the South and West of Yorkshire; and Central Scotland. The CC estimates non-contracted airtime revenue in the seven areas to be around £50 million. The CC did not find that advertisers would be adversely affected in London and the West Midlands.
Simon Polito, Chairman of the Global/GMG Radio inquiry and CC Deputy Chairman, said:
‘The advertisers most likely to lose out from this deal are those who do not use national media agencies, and so includes smaller and medium-sized companies. These advertisers rely on the presence of competing commercial stations in order to negotiate a good deal.
‘Whilst in many cases advertisers do have alternatives through other media, radio is often an integral part of a wider media campaign and there remain campaigns for which radio advertising is important.
‘We will now look at ways in which we can preserve competition and look after the interests of advertisers in these areas.’
Global operates the Heart, Capital, LBC, Classic FM, Gold and Xfm radio brands across the UK, while GMG Radio operates stations under the Real, Real XS and Smooth brands.
The CC has also published a Notice of Possible Remedies which sets out ways the loss of competition in the seven areas identified might be addressed. These include Global selling the whole of the acquired business, the whole business apart from those stations in London and the West Midlands or selling individual stations in the affected areas. The full provisional findings report will be published on 15 February. All published documents and other information relating to the inquiry can be found here.
The CC would like to hear from all interested parties in writing about the provisional findings by 5pm on 6 March 2013 and the Notice of Possible Remedies by 5pm on 27 February 2013. To submit evidence, please email Global-GMG@cc.gsi.gov.uk or write to:
Inquiry Manager Global/GMG merger
Notes for editors
1. The CC is an independent public body, which carries out investigations into mergers, markets and the regulated industries.
2. The members of the Inquiry Group are: Simon Polito, (CC Deputy Chairman and Inquiry Group Chairman), Stephen Oram, Alexander Johnston and Ian Jones.
3. The Office of Fair Trading (OFT) referred the case on 11 October 2012 and the CC has been asked to decide whether the acquisition may be expected to result in an SLC in any market or markets for goods or services in the UK. The statutory deadline for the publication of the CC’s final report is 27 March 2013.
4. The Enterprise Act 2002 empowers the OFT to refer to the CC completed or proposed mergers for investigation and report which create or enhance a 25 per cent share of supply in the UK (or a substantial part thereof) or where the UK turnover associated with the enterprise being acquired is over £70 million.
5. The CC has a 24-week period in which it is required to publish its report, which may be extended by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period.
6. Further information on this inquiry, including the terms of reference and other key documents, as well as on the CC and its procedures, including its policy on the provision of information and the disclosure of evidence, can be obtained from the CC website at: www.competition-commission.org.uk.
7. Enquiries should be directed to Rory Taylor or Siobhan Allen or by ringing 020 7271 0242.