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Tuesday 04 April, 2000

Dept.Trade&Industry

Newsquest/Johnston/Trinity

Dept Trade & Industry
4 April 2000


NEWSQUEST, JOHNSTON AND TRINITY MIRROR CLEARED TO
ACQUIRE NEWSCOM

Stephen Byers today published the Competition
Commission's report into the proposed transfer of
newspaper titles published by Newscom , together
with their related assets, to Newsquest, Johnston
Press and to Trinity Mirror.

He announced that, in accordance with the
Competition Commission's advice, he was today
consenting to each of the proposed transfers.

Stephen Byers said:

'The Competition Commission has looked carefully at
the effects of the transfer on the accurate
presentation of news and free expression of opinion,
concentration of ownership and on efficiency and
employment.     I accept its unanimous conclusion
that the transfer of Newscom titles may not be
expected to operate against the public interest in
either the Newsquest,  the Johnston Press or the
Trinity Mirror case.

I have considered very carefully representations
made to the Commission about the potential for loss
of press diversity in South Wales if  Trinity Mirror
were to acquire Newscom titles currently circulating
in that area.    In accepting the Competition
Commission's conclusions that the acquisition may
not be expected to operate against the public
interest, I have taken into account its view that
there is no evidence in Trinity Mirror's plans for
the Newscom titles, nor in its previous record as a
regional and local newspaper publisher, to warrant
an adverse finding on this matter.'


The Competition Commission report that, in the UK as
a whole, the transfer would increase Newsquest's
share of the circulation/distribution of all
regional and local newspapers to 14 per cent,
Johnston's to 12 per cent and Trinity Mirror's to
marginally over 25 per cent.  The Competition
Commission believes that the national concentration
arising from any of the proposed transfers would not
adversely affect advertisers, nor would it affect
cover prices, given the importance of maximising
readership in the competitive market in which the
regional and local press operates.  The Competition
Commission notes that barriers to entry are low,
particularly for free newspapers, and that the
market goes beyond newspapers to include advertising-
only publications and existing and emerging
electronic media.     Accordingly, the Competition
Commission concluded that the degree of national
concentration to which any of the proposed transfers
is likely to give rise is not significant in itself
and may be expected not to operate against the
public interest.

At the local level, the Competition Commission
examined areas where both a Newscom newspaper and a
newspaper published by one of the prospective
bidders has household penetration rates of more than
10 per cent.  It found that the only significant
overlaps are between weekly titles, both paid-for
and free. These occurred in parts of Wiltshire (in
respect of Newsquest), in and around Banbury (in
respect of Johnston) and in the South Wales Valleys
and parts of the south coast of England (in respect 
of Trinity Mirror).  The Competition Commission found, 
first, that there are a number of advertising-only 
publications available in each of the areas of overlap.
Secondly, barriers to entry for free weekly
newspapers are so low that should an acquirer of
Newscom close down a title, it would provide an
opportunity for another group or a local
entrepreneur to launch a new title or advertising-
only publication to fill the gap.   The Competition
Commission concluded that the proposed transfers may
be expected not to operate against the public
interest by reason of local concentration.
The Competition Commission also considered the
effect of the transfers on regional concentration.
It noted that a transfer to Trinity Mirror would add
to its already substantial share of local and
regional newspapers in southeast Wales.  It
publishes The Western Mail and Wales on Sunday (the
only Welsh regional newspapers), the South Wales
Echo (the Cardiff-based evening newspaper) and 13
weekly titles along the South Wales coast and in the
Valleys.  Newscom publishes the South Wales Argus
(the evening newspaper for Newport) and a number of
weekly titles.  The Competition Commission received
representations from MPs, Members of the National
Assembly for Wales and others about the increased
strength Trinity Mirror would have in the market and
in the reporting of Welsh affairs.  The Competition
Commission concluded, however, that there is no
evidence in Trinity Mirror's plans for the Newscom
titles, or in its previous record as a regional and
local newspaper publisher, to suggest that the
increased concentration of ownership in south-east
Wales that would flow from the transfer may be
expected to operate against the public interest.  It
does not believe that either of the other proposed
transfers raises regional, as opposed to local,
issues.
It appeared to the Competition Commission that any
of the proposed transfers would lead to efficiencies
through rationalisation of central functions,
removal of costs associated with Newscom being a
public company, increased purchasing power and
better use of printing resources. Although there
would be a limited number of job losses, the
Competition Commission concluded that the transfers
may be expected not to operate against the public
interest on the grounds of efficiency and
employment.


NOTES FOR EDITORS

1.   On 16 December 1999, Kim Howells referred to
  the CC an application by Newsquest under section 59 
  of the Fair Trading Act 1973 to acquire the newspapers of
  which Newscom was a newspaper proprietor as at 10
  December 1999, together with their related assets
  (DTI Press Notice p/99/1034).  On 21 December 1999,
  he referred applications from Johnston and Trinity
  Mirror to acquire the newspapers of which Newscom
  was a proprietor as at, respectively, 16 December
  and 17 December 1999 together with their related
  assets (DTI Press Notice p/99/1049).  The CC
  reported to the Secretary of State on 8 March 2000.

2.   Under the newspaper provisions of the Fair
  Trading Act 1973, the Secretary of State's consent
  is required to a transfer of newspapers or
  newspaper assets to a newspaper proprietor whose
  newspapers including the titles to be transferred
  have an average paid-for circulation of 500,000 or
  more copies per day of publication.  A reference
  to the CC is required, as a general rule, before
  consent can be given.
3.   In February, Newscom launched a new title, the
Weekly Echo.  Dr Howells announced today that he had
approved applications by Newsquest and Johnston for
consent to acquire this title.    Dr Howells
consented on 29 March 2000 to Trinity Mirror's
application for consent to acquire the Weekly Echo.
Section 58(4) of the Fair Trading Act 1973 gives the
Secretary of State discretion to consent to a
newspaper transfer without a reference to the CC in
certain circumstances.
4.   Newscom is the seventh largest publisher of
regional and local newspapers in the UK, with around 4 
per cent of the market.  As at 10 December 1999 it
published 97 local and daily newspapers in the
south and west of England and in south Wales.  It
operates three newspaper printing plants.
  
5.   Newsquest is the third largest regional and
local newspaper group in the UK, with a market share of
  10 per cent. It was acquired by Gannett Co Inc, a
  media group based in the USA, in July 1999.
  Newsquest publishes 186 daily and weekly
  newspapers and operates eight printing plants.
  
6.   Johnston is the fourth largest regional and
local newspaper group in the UK, with a market share of
  8 per cent. It publishes 179 daily and weekly
  newspapers and has nine printing plants.
  
7.   Trinity Mirror is the largest publisher of
regional and local newspapers in the UK, with around 23 per
  cent of the market.  It was created on 6 September
  1999 by the merger of Trinity plc and Mirror Group
  plc. Trinity Mirror publishes 197 daily and weekly
  regional and local newspapers and has 15 printing
  plants.  It also publishes The Mirror, Sunday
  Mirror and Sunday People.
  
8.   Copies of the report 'News Communications &
  Media plc and Newsquest (Investments) Limited/Johnston Press
  plc/Trinity Mirror plc: A report on the proposed
  transfers of the newspapers of News Communications
  & Media plc to Newsquest (Investments) Limited,
  Johnston Press plc and Trinity Mirror plc, Cm
  4680, is  available from The Stationery Office
  limited, price £25.  Press copies are available
  from DTI Press Office.