Decision Nº M/09/013 from Competition and Consumer Protection Commission, 2009-11-06

• Jurisdiction: Ireland
• Parties: Independent Newspapers (Ireland) Limited,Fortunegreen Limited,The Irish Times Limited,DMG Ireland Holdings Limited
• Date: 06 November 2009
• Decision Number: M/09/013
• Decision Date: 06 November 2009
• Court: Commissioner for Environmental Information

DETERMINATION OF MERGER NOTIFICATION M/09/013 –

METRO/HERALD AM_____________________________________________

Section 22 of the Competition Act 2002

Proposed acquisition of joint control of Fortunegreen Limited by Irish Times

Limited, DMG Ireland Holdings Limited and Independent Newspapers

(Ireland) Limited

Dated 06/11/2009_______________________________________________

Merger Notification M/09/013 – Metro

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Herald AM

i

CONTENTS

SECTION ONE: INTRODUCTION .................................................1

Executive Summary.................................. ................................................1

The Notification............................ ............................................................1

The Undertakings Involved ...................................................................... 2

The Proposed Transaction ........................................................................4

Rationale for the Notified Transaction ......................................................5

The Procedure .......................................................................................... 5

SECTION TWO: Background – Newspaper Readership and

Advertising ..............................................................................9

Introduction ............................................................................................. 9

Newspaper Industry: Outlook and Termi nology .......................................9

Trends in Advertising Expenditure in I reland and United Kingdom ........12

SECTION THREE: Relevant Product and Geographic Market .........15

Relevant Product Market ........................................................................15

Relevant Geographic Market .................................................................. 27

SECTION FOUR: Market Structure ............................................29

Introduction ........................................................................................... 29

Measuring Concentration ....................................................................... 29

Market Structure for Display Newspaper A dvertising in the GDA ...........29

SECTION FIVE: Competitive Effects Analysis – Display Newspaper

Advertising in the GDA ............................................................32

Introduction ........................................................................................... 32

Counterfactual ....................................................................................... 32

Unilateral Effects............................... .....................................................43

Coordinated Effects ................................................................................46

Conclusion............................................................................ ..................48

SECTION Six: Proposals and Remedies .....................................49

SECTION seven: The Determination.........................................50

schedule 1.............................................................................51

Merger Notification M/09/013 – Metro

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Herald AM

1

SECTION ONE: INTRODUCTION

Executive Summary

1.1 The proposed transaction concerns the restructuring of Fortunegreen

Limited (“Fortunegreen”). Fortunegreen, which was the subject of a

merger notification in 2005, was established to publish Metro, a daily

free newspaper, in the Greater Dublin Area (“GDA”). It is curr ently

jointly controlled by Irish Times Limited (“ITL”) and DM G Ireland

Holdings Limited (“DMG”). Under the proposed transaction,

Independent Newspapers (Ireland) Limited (“Independent”) wil l

acquire an interest in Fortunegreen and will contribute Herald AM, a

free newspaper that it currently p ublishes in the GDA, to Fortunegreen.

Herald AM and Metro will cease to be published. Post-transaction,

Fortunegreen w ill publish a single daily free newspaper, Metro Hera ld.

It will be jointly controlled by ITL, DMG, and Independent.

1.2 The Authority has concluded that the relevant market affected by the

proposed transaction is the mark et for display advertising in daily paid-

for and free newspapers in the GDA. In this market, Metro and Herald

AM ar e each other’s closest competitor. However, both free

newspapers currently face compet ition from paid-for newspapers in the

GDA, particularly Evening Herald.

1.3 The Authority has concluded that three c ompetition concerns are likely

to result from the proposed transaction:

• The ability of Fo rtunegreen to compete effective ly in the market for

display newspaper advertising in the GDA may be diminished;

• A forum will be created that could enhanc e the potential for

coordination between the shareholders of Fortunegreen; and,

• A forum will be created that could enhanc e the potential for

coordination between the shareholders of Fortunegreen and

Fortunegreen.

1.4 On 2 November 2009, ITL, DMG, Independent and Fortunegreen

submitted proposals in accordance with section 20(3) of the

Competition Act, 2002, to address the competition concerns arising

from the proposed transaction. The Authority is of the view that these

proposals will be appropriate a nd effective to ad dress the competition

concerns.

The Notification

1.5 On 17 Ju ly 2009, in accordance with section 18 of the Competition Act

2002 (the “Act”), the Competition Authority (the “Authority”) received

a notification of a proposed transaction whereby Irish Times Limited

(“ITL”), DMG Ireland Holdings Limited (“DMG”) and Independent

Newspapers (Ireland) Limited (“Independent”) would acquire joint

control of Fortunegreen Limited (“Fortunegre en”).

1.6 On 17 July 2009, the parties submitted initial proposals under section

20(3) of the Act to address any potential competition concerns arising

from the proposed trans action. Acc ording to s ection 21(4) of the Act,