CELEX: 31994M0423
Language: en
Date: 1994-03-14 00:00:00
Title: COMMISSION DECISION of 14.03.1994 declaring a concentration to be compatible with the common market (Case No IV/M.423 - NEWSPAPER PUBLISHING) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31994M0423

COMMISSION DECISION of 14.03.1994 declaring a concentration to be compatible with the common market (Case No IV/M.423 - NEWSPAPER PUBLISHING) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 085 , 22/03/1994 P. 0000

 COMMISSION DECISION of 14.03.1994 declaring a concentration to be compatible with the common market  (Case No IV/M.423 - NEWSPAPER PUBLISHING) according to Council Regulation (EEC) No 4064/89  (Only the English text is authentic)  The paper version of the decision is available through the sales offices of the Office of Official Publications of  the European Communities. PUBLIC VERSION MERGER PROCEDURE ARTICLE 6(1)(b) DECISION Registered with advice of delivery To the notifying party Dear Sirs, Subject: <tab> Case No. IV/M.423 - Newspaper Publishing  <tab>  <ind> Notification of 11.2.1994 pursuant to Article 4 of Council Regulation No. 4064/89  1. <ind> On 11th February 1994, Promotora de Informaciones S.A. (PRISA), Editoriale l'Espresso S.p.A.  (Espresso) and Mirror Group Newspapers plc (MGN) notified jointly a public bid for the acquisition of joint  control of Newspaper Publishing plc (NP).  2. <ind> After examination of the notification, the Commission has concluded that the notified operation falls  within the scope of Council Regulation No. 4064/89 and does not raise serious doubts as to its compatibility with  the common market.  I. <ind> THE PARTIES  3. <ind> NP is a U.K. newspaper publishing company which produces "The Independent" (daily) and "The  Independent on Sunday".  Both PRISA and Espresso each already own about 18% of NP's shares, but NP is not  currently controlled by any one individual person or undertaking.  4. <ind> PRISA is a Spanish media holding company with interests in publishing companies, media relations,  and pay TV.  5. <ind> Espresso is an Italian holding company with interests in newspaper publishing and radio broadcasting.   It is controlled by Compagnie Industriali Riunite S.p.A. (CIR), which is in turn controlled by Compagnia  Finanziaria de Benedetti. 6. <ind> MGN is a U.K. newspaper publishing company which produces "The Daily Mirror", "The Sunday  Mirror", "The People" (Sundays only), and other regional and specialist newspapers.  II. <tab> THE OPERATION  7. <ind> The proposed operation consists in the joint acquisition (by way of a public bid) of NP by PRISA,  Espresso and MGN.  III. <ind> CONCENTRATIVE JOINT VENTURE   <tab> a) <ind> Joint Control  8. <ind> If the public bid succeeds, NP will be jointly controlled by PRISA, Espresso and MGN, who together  will control the majority of the share capital of NP and have the right to appoint 6 directors (2 directors each) out  of a total of seven.  9. <ind> The decisions of the Board will be taken by simple majority.  PRISA and Espresso have a separate  agreement which provides that the two groups will vote together as regards the decisions of the Board of NP; this  would effectively give them joint control in the absence of other considerations.  However, MGN will have not  only the right to propose the business plans and the budget of NP but also a veto right in the event that the NP  Board votes against its proposals, in which case the contested matters will be settled by an independent expert  agreed by all parties.   <ind> b) <ind> No coordination of competitive behaviour  10. <ind> There will be no risk of coordination either between the joint venture and its parents, or between the  parents themselves in the UK market for national newspapers.  Espresso and Prisa, although active in newspaper  publishing in other countries, (which, for newspapers, are separate geographic markets, - see section V below)  are not active in the UK national newspaper market by means other than through their shareholdings in NP.  As  regards MGN, the group is already an important publisher in the UK national newspaper market through its  publications in the popular or "tabloid" segment of daily and Sunday newspapers.  As explained in section V on  relevant markets (see below), there is very limited substitutability between tabloid newspapers and so-called  "quality" newspapers such as "The Independent" published by NP.   <ind> c) <ind> Concentration  11. <ind> NP will be jointly controlled by PRISA, Espresso and MGN, given the agreement between PRISA and  Espresso, and the veto rights of MGN.  Moreover, it is very unlikely that a risk of coordination of the competitive  behaviour either between the JV and its parents or between the parents themselves will exist.  In view of the  above, the notified operation is a concentration within the meaning of the Merger Regulation.  IV. <ind> COMMUNITY DIMENSION  12. <ind> CIR, which controls Espresso, has a worldwide turnover in excess of 5.000 million ECU.  The  Community-wide turnover of each of CIR, Prisa and MGN is in excess of 250 million ECU, but these companies  do not achieve more than two thirds of this turnover in one and the same Member State.  Thus the operation has  a Community dimension.  V. <ind> THE RELEVANT MARKET   <tab> a) <ind> The relevant product market  13. <ind> If the wider "media market" is taken into consideration, it would seem evident that regional  newspapers and television/radio are not close substitutes for national newspapers from a consumer viewpoint.   Regional newspapers by definition concentrate on local as opposed to national issues (particularly as far as items  such as sports and business coverage are concerned).  Television and radio, besides their physical (eg portability)  differences from newspapers, offer more rapid coverage of news events, but cannot normally match the range  and depth of newspaper coverage.  14. <ind> Secondly, within the national newspaper market itself, three identifiable "segments" are normally  distinguished, that is, the popular tabloids (eg the Daily Mirror), the mid-market titles (eg the Daily Express),  and the quality segment (eg The Times).  There is a clear element of product differentiation and marked price  differences between the tabloid segment on the one hand, and the quality segment on the other (the two "quality  extremes").  Quality titles are almost twice the price of some tabloid titles, the volume and depth of news  coverage and analysis is far greater, and the range of news items, particularly those dealing with international  issues, is much more extensive.  Different types of reader, in terms of socio-economic groupings are attracted to  the different segments.  In view of these factors, it may be concluded that there is very limited substitutability  over even a short time period between tabloid and quality titles from the readers', or repeat-buyers', viewpoint.   This was indicated by the recent decrease in the price of the quality newspaper "The Times", which had no effect  on the tabloid segment.  15. <ind> Apart from readers, who are the final consumers, the other category of customers for newspapers  consists of companies or agencies who use newspaper "space" as vehicles for advertising (both 'display' and  'classified' advertisements).  Advertising revenue constitutes a very important proportion of total newspaper  revenue, (46% in the U.K. in 1992, the other 54% being derived from copy sales to readers).  In the U.K., quality  papers depend more on advertising revenue than do the tabloids (in 1992, the U.K. quality daily segment  attracted 48% of total advertising revenue, and this constituted 58% of its own total revenue; the corresponding  tabloid figures were 27% and 30%).  16. <ind> Newspaper advertisements are intended to promote the sales of goods and services to readers, and  their success depends crucially on "targeting" appropriate socio-economic groupings.  These latter, as already  indicated, tend to be attracted to specific newspaper segments, and thus it is clear that from the viewpoint of an  advertising agency wishing to purchase newspaper "space", there will be very limited substitutability between the  tabloid and quality segments, which will provide different "channels" through which to reach different socio- economic groupings of readers.   <tab> b) <ind> The relevant geographic market  17. <ind> Although there are some imports and exports of newspapers, and some printing of U.K. newspapers  outside the U.K., this is not significant.  The relevant geographic market is clearly the U.K., given language and  cultural specificities, and the focus of national newspapers on national issues.  VI <ind> COMPATIBILITY WITH THE COMMON MARKET  18. <ind> Given that there is very limited substitutability for consumers, whether readers or purchasers of  advertising "space", between tabloid and quality newspapers, there is no overlap between MGN's and NP's  products (either daily or Sunday versions).  "The Independent" is a quality newspaper which costs approximately  twice as much as the tabloid "Daily Mirror" ("The Independent on Sunday" is also double the price of "The  Sunday Mirror").  On the supply side, although quality and tabloid newspapers could be easily substituted as far  as physical production (printing, etc) is concerned, they are not substitutable from the point of view of quality of  content, quality of editorial comment and so on (as indicated in section VIII below, U.K. regulatory authorities,  will be concerned to maintain this product differentiation).  19. <ind> News International, which produces "The Times" and "The Sun" (inter alia), has larger shares of the  U.K. national newspaper market in terms both of copies sold, and of  total newspaper advertising revenue, than  NP and MGN combined.  20. <ind> Finally, there is clearly no overlap between NP and PRISA or Espresso, which operate on different  geographic markets.  VII <ind> CONCLUSION  21. <ind> It follows from the above that the proposed concentration would not create or strengthen a dominant  position as a result of which competition would be significantly impeded in the common market or in a  substantial part of it.  VIII. <ind> ACTION BY THE U.K. AUTHORITIES UNDER ARTICLE 21(3) OF THE MERGER  REGULATION  22. <ind> Article 21(3) of the Merger Regulation provides that Member States "may take appropriate measures  to protect legitimate interests other than those taken into consideration by the Regulation", such legitimate  interests to include plurality of the media. The proposed transaction involves issues such as the accurate  presentation of news and free expression of opinion, and the U.K. Secretary of State must grant formal consent  under the relevant provisions of the U.K. Fair Trading Act.    23. <ind> The notes annexed to the Merger Regulation include the following passage concerning Article 21(3):   <ind>  <ind> "In application of the principle of necessity or efficacity and the rule of proportionality, measures  which may be taken by Member States must satisfy the criterion of appropriateness for the objective and must be  limited to the minimum of action necessary to ensure protection of the legitimate interest in question.  The  Member States must therefore choose, where alternatives exist, the measure which is objectively the least  restrictive to achieve the end pursued."  24. <ind> In view of this, the Commission must be kept informed of any conditions which the U.K. authorities  might deem it appropriate to attach to the transaction.  For the above reasons, the Commission has decided not to oppose the notified concentration and to declare it  compatible with the common market.  this decision is adopted in application of Article 6(1)(b) of the Merger  Regulation.  For the Commission