Commentary on Sections Part 5: Competition in Communications Markets Chapter 2: Media mergers
791.The Enterprise Act 2002 (EA 2002) repealed the majority of the merger provisions of the Fair Trading Act 1973 (FTA 1973) and created a new merger control regime. However, the special newspaper merger regime contained in sections 57 to 62 FTA 1973 remained intact. Under the special newspaper regime, a transfer of a newspaper or newspaper assets to a newspaper proprietor requires the prior written consent of the Secretary of State where the newspapers of the proprietor to whom the transfer is made (including the titles being acquired) have an average paid for circulation of 500,000 copies or more per day. Subject to certain statutory exceptions, the Secretary of State cannot give this consent until the Competition Commission have reported on the matter. If consent is not obtained when required, the transaction will be unlawful and void.
792.Consideration of reform of this aspect of the merger control system was deferred so that it could be considered as part of the overall reform of media ownership rules in this Act. Chapter 2 of Part 5 of this Act makes provision for the repeal of the existing newspaper merger regime provisions and the integration of newspaper mergers into the overall structure of the EA 2002 merger regime. Newspaper mergers will no longer be subject to mandatory pre-notification requirements and the criminal sanctions, which underpin the current regime, will not be continued.
793.The EA 2002 provides for decisions on the majority of non-newspaper mergers to be taken by the independent competition authorities (the OFT and the Competition Commission) against a new competition-based test of whether they result in a substantial lessening of competition. This replaces the broader public interest test used in the FTA 1973. However, the EA 2002 also provides a mechanism whereby the Secretary of State can intervene and decide on particular mergers that raise specified public interest considerations, by the serving of an intervention notice. National security is the only public interest consideration currently specified in section 58 EA 2002, although there is a mechanism in the EA 2002 that enables the Secretary of State to add a new public interest consideration or remove or amend an existing public interest consideration. The Secretary of State can serve an intervention notice in relation to any transaction that qualifies for consideration by the competition authorities because it is a “relevant merger situation” (see section 23 EA 2002). She can also serve a “special intervention notice” in relation to mergers involving government defence contractors where the standard qualifying thresholds (i.e. 25% share of supply or UK turnover of company being acquired exceeds £70 million) are not satisfied (i.e. where there is a “special merger situation” - see section 59 EA 2002), allowing these to be examined by reference to the specified public interest consideration(s), but not on competition grounds.
794.Chapter 2 of Part 5 of the Act integrates treatment of newspaper mergers with the merger regime of the EA 2002. However, as newspaper mergers can potentially raise public interest concerns beyond the substantial lessening of competition test, provision is also made for public interest considerations relating to newspapers (the need for accurate presentation of news and free expression of opinion in newspapers, and the need for, to the extent that is reasonable and practicable, a sufficient plurality of views in newspapers) to be specified in section 58 EA 2002 so that the Secretary of State can specify these in an intervention notice or special intervention notice under the EA 2002. Similarly, as media mergers can potentially raise public interest concerns beyond the substantial lessening of competition test, provision is also made for public interest considerations relating to media mergers and cross-media mergers (the need for plurality of persons with control of media enterprises, the need for the availability of a wide range of broadcasting and the need for persons carrying on such enterprises to have a genuine commitment to the broadcasting standards objectives) to be specified in section 58 EA 2002, allowing the Secretary of State to intervene on these grounds. Together, these are referred to as the “media public interest considerations”. Provision is also made for OFCOM to have an additional advisory role where the Secretary of State intervenes in a case on media public interest grounds.