CAT 26
15 Nov 2013
Judgment of the Tribunal in connection with an application by Global Radio Holdings Limited (“Global”) for a review under section 120 of the Enterprise Act 2002 (“the Act”) of a decision by the Competition Commission (“the Commission”) contained in a report dated 21 May 2013, which sets out the Commission’s conclusions as regards the acquisition by Global of GMG Radio Holdings Limited, since renamed Real and Smooth Limited (“RSL”) (“the Transaction”). The Commission decided that the Transaction has resulted, or may be expected to result, in a “substantial lessening of competition” in the supply of advertising services to non-contracted advertisers in seven areas, including Greater Manchester. It further decided that, absent any countervailing factors, significant adverse effects would eventuate in Greater Manchester, which would lead to a reduction of competition across the North-West region. The Commission concluded that Global should be required to divest itself of any one of its stations, Capital, Real or Smooth.
Global challenged the Commission’s decision on two grounds. The first related to the meaning of “substantial lessening of competition” in the Act, the second to whether the Commission erred in its approach to remedies as regards Greater Manchester and the North-West region.
On the first ground, it was Global’s case that “substantial” meant “large”, “considerable” or “weighty”, and that the Commission had not asked itself whether Global’s purchase of RSL has resulted, or may be expected to result, in a large, considerable or weighty lessening of competition. It was accepted that the Commission had not asked itself that question but the Tribunal held that it had not been required to do so. The Tribunal rejected the construction of a “substantial” lessening of competition advanced by Global, holding that “substantial” does not have to be construed as “large”, “considerable” or “weighty”. Among other things, the Tribunal considered that a finding that there was a significant lessening of competition should suffice, regardless of whether that lessening was large in absolute terms.
In relation to the second ground, the Tribunal concluded that Global’s challenge also failed. First, the Commission had not erred in finding that the loss of RSL as an alternative for advertisers primarily focused on Greater Manchester would reduce competition. There was evidence to support that finding and it could not be said that the Commission’s approach was irrational, applying the judicial review standard prescribed by section 120(4) of the Act. Secondly, the remedies chosen by the Commission were selected to target the significant adverse effects identified in Greater Manchester and, in so doing, it could be said that they would also remedy the loss of competition in the wider North-West region. It could not be inferred that the Commission took into account “significant adverse effects” it had not identified. Finally, Global was wrong to argue that the Commission had failed to ask itself whether a divestiture of one of RSL’s other stations, Gold, Real XS or Xfm, either on its own or in combination with each other, would meet the requirements of section 35 of the Act. On the contrary, the Commission stated in terms that divestment of Gold, Real XS and Xfm would not “provide an effective constraint in Greater Manchester”.
As a result, the Tribunal unanimously dismissed Global’s application.
This is an unofficial summary prepared by the Registry of the Competition Appeal Tribunal.