Capital-GWR deal clears regulatory hurdles

Media regulator Ofcom and the Office of Fair Trading will not stand in the way of the merger between radio groups Capital and GWR.

Ofcom said today that the proposed £700m deal did not breach any ownership rules and the OFT also gave a regulatory thumbs-up and decided not to refer the deal to the Competition Commission, a move that would have pushed finalising the deal months into 2005.

Although Capital has agreed to sell its Century 106 FM station in the East Midlands because of local competition issues, today’s decisions have effectively a rubber-stamped the deal, which was unveiled after widespread speculation across the industry during the summer of 2004.

Ofcom has also ordered the companies to maintain separate breakfast shows for the Bristol and Bath FM, plus MFM/Buzz’s Wrexham and Chester FM.

The decision has been seen my many as a test case for future consolidation between the UK’s major radio groups.

It is also the first significant decision regarding ownerships issues in a media merger made by the super regulator Ofcom since it gained statutory powers almost 12 months ago.

Vincent Smith, the OFT's director of competition enforcement, said: “Except in the East Midlands, the radio stations of Capital and GWR do not strongly overlap at a local level.

“So for national advertisers putting together a radio advertising package they are largely complementary rather than competing alternatives.

“However, the merger would result in a substantial lessening of competition in the East Midlands.

“The parties have offered to divest Century 106 FM to address the identified adverse competition effects.'”

By Kevin May

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