Completed acquisition by Vibe Radio Services Ltd of Eastern Counties Radio Ltd and Galaxy Radio Wales and The West Ltd

No. Vibe

A report under section 125(4) Fair Trading Act 1973 on the advice of the Director General of Fair Trading, given on 20 December 2002, to the Secretary of State for Trade and Industry under section 76 of the Act.

Please note that the full text of the decision can be downloaded by using the link on the right.

ASSESSMENT

Jurisdiction

The merger satisfies the share of supply test in respect of the supply of radio advertising in the Severn Estuary Licence Area.

The parties

Vibe Radio Services Limited (VRSL) is a joint venture company set up to act as a holding company for the acquisitions of Eastern Counties Radio Ltd (Vibe FM) and Galaxy Radio Wales and the West Ltd (Galaxy).

Scottish Radio Holdings plc (SRH), which owns 51 per cent of VRSL, is a media group with interests in radio and local newspapers. It owns radio stations in Scotland and Northern Ireland as well as stations broadcasting in Cumbria and Southampton. The remaining 49 per cent of VRSL is owned by [GWR Radio Group plc] (see note 1) (GWR), a commercial radio broadcasting group. GWR operates one national analogue station (Classic FM), 32 local stations, three digital radio stations, and two internet services. GWR's sales house (Opus) sells advertising airtime for the group as well as for other independent radio stations.

Prior to the merger Galaxy was owned by [Chrysalis] (see note 2), while Vibe FM was owned by Daily Mail and General Trust plc (50.01 per cent) and GWR (49.99 per cent).

Relevant market

The parties overlap in the supply of radio advertising airtime in parts of South West England. Within this region GWR owns three local stations: GWR FM (Bristol & Bath), GWR FM (Swindon & West Wiltshire) and Orchard FM (Taunton & Yeovil). Galaxy holds the [Severn Estuary licence] (see note 3). SRH has no radio holdings that overlap with any of these stations.

No overlap occurs between the parties in respect of Vibe FM in East Anglia and this aspect of the transaction will not be considered further.

CONCLUSION

The merger qualifies for investigation under the share of supply test of the FTA. The parties overlap in the supply of radio advertising in the Severn Estuary Licence Area.

The parent companies - GWR and SRH - are groups with radio interests across the UK, but the effects of this merger on competition are likely to be confined to the local radio advertising market. Any anti-competitive effects would be felt particularly in the areas where Galaxy overlaps with a GWR station: Taunton and Yeovil where it overlaps with Orchard FM, and the Bristol and Bath environs where it overlaps with GWR FM.

In Taunton and Yeovil, there is a very limited overlap in advertisers between the two stations and a substantial lessening of competition appears unlikely.

In the Bristol and Bath area, GWR and Galaxy appear to be close substitutes on the basis of their comparable audience share, similarities in listener profiles, geographic overlap in an area of concentrated population, and similarity in advertisers. The two stations also represent a substantial proportion of local advertising revenues in this area. The prospect of new entry is limited since the Radio Authority has no plans to issue any additional analogue licences in the Severn Estuary Licence Area. As a result, bringing GWR FM and Galaxy under the same ownership may result in a substantial lessening of competition for radio advertising within this particular area.

The parties have said that, in the event of a recommendation that the merger be referred to the Competition Commission, it would be prepared to give undertakings in lieu of reference. I have carefully considered the undertakings proposed, but do not believe it is possible to devise undertakings which would address the competition concerns that have been identified in such a way as to remove the need for further investigation of this proposed merger.

I therefore conclude and recommend that you should refer this merger to the Competition Commission.

NOTES

1. Please note the company name should read as GWR Group plc

2. This refers to Chrysalis Group plc

3. The parties wished to specify that this is an FM licence

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