7026
Office of Fair Trading
04 February 2008



15/08                                                            4 February 2008


   OFT PREFERS UNDERTAKINGS TO 'DE MINIMIS' EXCEPTION IN BERKSHIRE NEWSPAPER
                                    MERGER

The OFT is considering whether to accept undertakings instead of referring the
completed acquisition by Dunfermline Press Ltd (DPL) of eight Berkshire
newspaper titles from Trinity Mirror plc. If satisfactory undertakings are not
given, the merger will be referred to the Competition Commission (CC).
The OFT opened its own inquiry into this completed merger and put in place
'hold-separate' undertakings as the deal gives DPL control over the only two
local newspapers in the Slough/Windsor/Eton area. While the OFT believes that
DPL may lack monopoly power over local advertising - because of internet
competition - it may still be able to raise prices and reduce service as the
merger eliminates close competition between the parties' Observer and Express
series of newspapers.

The OFT's use of its discretion to accept undertakings in lieu of reference has
resolved competition concerns in 22 merger cases in less than five years under
the Enterprise Act regime. Following publication of its revised merger guidance
last November, the OFT has revitalised another means to spare a CC reference -
the 'de minimis' exception.

As the affected market size in this case is below the revised de minimis
threshold of £10 million per year, the use of this exception to a CC reference
was also considered. However, the OFT has today explained that as a general
policy matter it will not exercise its discretion via the de minimis exception
when the harm to competition could, in principle, clearly be remedied by
clear-cut undertakings in lieu of reference.

Only one out of the eight acquired Berkshire newspaper titles creates a
problematic overlap in this case. Unlike in the three previous de minimis cases,
the OFT has judged that in principle it was open to DPL to offer a clear-cut -
that is, effective and proportionate -undertaking. The OFT will now consider
remedies further, as DPL has chosen to offer to divest relevant assets to a
specified purchaser instead of a CC reference.

Simon Pritchard, OFT Senior Director of Mergers said:

'In an obvious case like this, our aim will still be to spare the costs of
reference while restoring the benefits of competition lost by the merger. We owe
it to consumers to make clear-cut remedies the preferred exception to reference
in all suitable cases. Equally, UK business has strongly encouraged the OFT to
solve cases via undertakings in lieu, and clarity on this issue helps companies
plan merger activity with the right incentives in mind.'

NOTES

1. Own-initiative merger inquiries - While the majority of mergers reviewed by
the OFT arise from voluntary notification by the parties, the OFT's
own-initiative inquiry programme has led to remedial action by the OFT or CC in
eleven cases under the Enterprise Act regime. In some of these cases, it is
always possible that the parties would have voluntarily notified the OFT of
their merger at a later date; in other cases, it was clear to the OFT that this
would not have been the case.

2. Initial or 'hold-separate' undertakings - Under the UK's voluntary
notification regime, the OFT nevertheless has a power to accept initial
undertakings (or impose an initial order) to prevent pre-emptive action by the
parties - such as integration of assets, closure of facilities and staff
redundancies - that would prejudice possible remedial action by the Competition
Commission (or by the OFT in an undertakings in lieu case).

3. Undertakings in lieu - Under section 73 of the Enterprise Act 2002 the OFT
may, instead of making a reference, and for the purpose of remedying, mitigating
or preventing the substantial lessening of competition concerned, or any adverse
effect which has or may have resulted from it or may be expected to result from
it, accept from such of the parties concerned as it considers appropriate
undertakings to take such action as it considers appropriate. In doing so, the
OFT will have regard to the need to achieve as comprehensive a solution as is
reasonable and practicable to the substantial lessening of competition and any
adverse effects resulting from it. OFT Guidance specifies that undertakings
should be clear-cut, which means they must be effective and proportionate, and
capable of ready implementation. Before accepting any such undertakings under
Schedule 10 of the Enterprise Act 2002, the OFT shall give notice of the
proposed undertakings and will consider any representations made in accordance
with that notice.

4. Undertakings in lieu cases - The OFT's undertakings in lieu cases include
among others, divestitures of supermarkets (Co-operative Group Ltd/United
Co-op), pharmacies (Boots/Alliance Unichem, Lloyds/IPCC), cinemas (Terra Firma/
Odeon/UCI, Blackstone/UGC), betting shops (William Hill/Stanley, Ladbrokes/Jack
Brown), car dealerships (Pendragon/Reg Vardy, Inchcape/EMH) and funeral homes
(Co-operative Group Ltd/Fairways). For a full list, go to the OFT website.

5. De minimis guidance and early cases - For more details of the OFT's revised
de minimis guidance of 15 November 2007, and its use of the exception in three
cases since, see today's parallel decision - press notice 16/08and earlier press
notices 180/07and 156/07).

6. The reference test - The OFT has a duty to make a reference to the CC if the
OFT believes that it is or may be the case that a relevant merger situation has
been created; and 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.

7. Merger jurisdiction - Under the Enterprise Act 2002 a relevant merger
situation is created if two 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; 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 thereof) is created or
enhanced.

8. Publication - The text of these decisions will be placed on the Office of
Fair Trading's web site at www.oft.gov.uk as soon as reasonably practicable.

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Corinne Gladstone 8899                     Alex Hunter 8900

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