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Local World deal cleared by Office of Fair Trading

Competition watchdogs have today finally given the all-clear to the merger of two regional newspaper groups that created the Local World consortium.

Local World was established on 1 January this year from a merger of the former Northcliffe Media group with Iliffe News and Media.

But three weeks later the Office of Fair Trading announced it was looking into whether the deal would result in a lessening of competition.

Today, following a lengthy investigation , the watchdog announced it was taking no further action.

It is understood that most of the investigations centred on the position of the former Iliffe News and Media daily the Burton Mail

Historically it was a rival to the Derby Telegraph, previously owned by Northcliffe, although there is now very little overlap between the two titles’ core circulation areas.

OFT chief economist Chris Walters, who led the investigation, said: ‘The parties provided significant evidence on each of the overlap titles which led us to conclude that the merger would not result in price increases or reduced choice for customers.

“We hope this case, alongside our other recent merger decisions in this sector, will assist any businesses considering future transactions in local newspaper markets, and help identify the evidence the OFT will find useful in assessing the impact on competition.”

Reacting to today’s decision, David Montgomery, chairman of Local World, said “We thank the OFT for their thorough review and their conclusion.”

DMGT, which previously owned Northcliffe and retains a 37.8pc stake in Local World, also welcomed the announcement.

In a statement, the OFT said it had “carefully examined a range of evidence provided by these companies and third parties for the areas where the Northcliffe and Iliffe print titles overlap.”

It said it did  not examine in detail the parties’ overlap in websites ” given that the parties’ activities in these markets are limited. ”

The statement went on:  “The range of evidence provided by the parties, including data on the number of customers advertising in both parties’ titles and switching their advertising purchases between their titles, showed that the parties’ titles did not compete closely for customers before the merger.

“On the basis of that evidence, the OFT found the merging of the Northcliffe and Iliffe businesses will not result in price increases or reductions in choice or quality for readers or advertisers.”

The OFT also considered whether Trinity Mirror’s 20pc stake in Local World would give rise to competition concerns, through price increases or reductions in quality of Trinity Mirror titles.

“The investigation concluded that it would not, since the loss that Trinity Mirror would incur from increasing prices or reducing quality of Trinity Mirror titles would outweigh the benefit it might derive from such behaviour by virtue of its stake in the rival Local World titles,” said the statement.

The outcome of the OFT investigation was being seen by analysts as a critical test of its attitude to local press mergers.

Last year, its decision to probe Northcliffe Media’s attempts to sell seven of its Kent titles to the KM Group which resulted in the whole deal being called off and two of the newspapers involved closing down.