Johnston Press PLC Regulatory News (JPR)

16 Jun 2009 16:16



The OFT has today published its report on the local and regional media merger regime in the UK, as part of the Government's Digital Britain review.

The OFT report, which focuses on local and regional newspapers, recognises that this industry is facing long-term structural changes. Advertising revenues are in steady decline as advertisers who would traditionally use the local press increasingly use the internet to place adverts for houses, jobs and cars. The recent economic climate has also hit advertising revenues generally.

However, the review says that the current merger regime, which is broadly the same for newspapers as for other industries, is well placed to take into account developments such as competition from the internet because it is evidence-based and capable of reflecting market realities.  

The regime is also flexible in that it can take account of valid 'failing firm' arguments, as well as efficiencies and any other benefits to customers brought about through a merger.

The OFT has therefore recommended that no legislative changes are needed to the media merger regime. The OFT proposes that it will formally seek Ofcom's view in future newspaper merger cases, given its specific sector knowledge in the UK. 

The report provides comment on the types of evidence which can assist the OFT in its merger assessments, and background on previous merger decisions in the media sector. However, it warns that the OFT's statutory duties prevent it from prejudging the outcome of hypothetical mergers - and says there would be limited value gained from a piece of 'blue skies' work, carried out with any particular merger in mind, given that the conditions of competition will vary by case and by local area. The OFT review also notes concerns about the potential impact on local press from local authority publications, and recommends the Government review this area further and consider whether intervention, regulation or guidance would be appropriate.

Download a copy of the OFT Review of the Local and Regional Media Merger Regime here: www.oft.gov.uk.

John Fingleton, OFT Chief Executive, said :

'Competition between publishers is important, not just for providing quality, cost effective content to readers, but also to ensure that the most efficient, customer focused, dynamic players take advantage of the structural and cyclical challenges that lie ahead. 

'The current merger regime came into force in 2003, and we are confident that it is fit for the needs of the media sector in the twenty first century. If there are significant transactions that publishers or others are keen to pursue, we will review them on their merits, taking into account the impact on customers and the realities of the marketplace.' 

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