Johnson: blocked £16m deal
Competition minister Melanie Johnson has asked the Director General of Fair Trading to consider whether to initiate an industry-wide inquiry into consolidation of the regional press.
In line with a Competition Commission report, she has blocked a £16m deal that would have given Johnston Press virtually 100 per cent of the market in its already strong areas of Northampton and Peterborough.
Johnson noted the commission’s concern over the tendency of publishers to develop clusters of titles. The commission had questioned whether the spread of local monopolies might give rise to a "live and let live" attitude among major publishers – a tacit sharing of the market on a geographical basis.
The minister approved the transfer of four of eight weekly titles in the East Midlands from Trinity Mirror to Johnston Press, but has said the Edinburgh-based company cannot buy the East Northants Herald & Post series, the Northampton Herald & Post, the Peterborough Herald & Post and the Stamford Herald & Post on the grounds it would be against the public interest.
The commission held an extended inquiry into the deal and decided unanimously that Johnston Press could buy only the Brackley & Towcester Post, the Derby Trader, the Harborough Herald & Post and The Trader.
Trinity Mirror and Johnston Press are now considering whether they will go ahead with the partial transaction and a decision is expected this week.
In arriving at its conclusions, the commission considered the effects that all the proposed transfers would have on regional and local reporting and concluded unanimously that none of the transfers would pose a threat to quality and diversity, or to the accurate presentation of news and free expression of opinion.
But the minister said: "I share the majority view of the report that the transfers of four of the titles would have adverse effects on competition in the local newspaper markets.
"I have considered the minority member’s views, but I am persuaded that the majority view is better supported by the available evidence and relevant economics."
The commission decided that:
Johnston would be able to raise prices to advertisers profitably and discriminately in the Northampton and Peterborough area.
A significant minority of advertisers could be expected to experience price increases above the competitive level.
Trinity Mirror would be unlikely to close the four titles if the transfers did not take place. Entry into the relevant markets would also be more likely without the transfers.
Johnston publishes nearly 200 titles in the North East, Yorkshire, the central and east Midlands, the South East and in Scotland.
Trinity Mirror is the largest publisher of regional and local newspapers in the UK, with nearly 250 regional and local titles in the South East, the Midlands, Yorkshire, the North East, the North West as well as in Scotland and Northern Ireland.
By Jean Morgan