Kent Messenger Group has said it can not afford the costs involved in a Competition Commission review of its proposed deal for Northcliffe titles
The Kent Messenger Group has withdrawn its bid for a series of Northcliffe Media titles, after the Office of Fair Trading announced it would refer the bid to the Competition Commission for further investigation.
The KM Group said that throughout the process it had maintained that it would not be able to afford a referral to the Commission, and that in such an event would have to withdraw its bid for the titles within Northcliffe's Kent Regional News and Media division, covering seven areas of East Kent.
Outlining its decision, the OFT said it had concluded that the monopoly of local newspapers that would result in "risks costlier advertising for businesses and higher cover prices for readers".
"During its investigation, the OFT consulted with advertisers and readers to find out whether other regional or online newspapers, websites or magazines would be able to curtail these risks.
"The evidence was clear that local weekly newspapers remain a very important means for advertisers to reach local audiences and for readers to obtain local news, despite acknowledging that these media provide some competition."
Amelia Fletcher, the chief economist and decision maker in this case, added that in the first stage of a merger review it requires "compelling evidence" that the combination of "such close competitors" would not result in substantially higher prices or less choice.
"The evidence in this case did not permit us to clear this transaction; therefore we think it is appropriate that the merger is referred to the Competition Commission for a more detailed 'second phase' review."
Chairman of the KM Group, Geraldine Allinson said the company had invested "a huge amount of time" on the bid in recent months and that the costs and time necessary for a Commission review "would be completely unreasonable for a business of our size and for a deal of this scale".
"The acquisition would have been a good opportunity for our business. However, we have a long list of other developments already in process and we intend to continue to build on our unique blend of multimedia services for the people of Kent."
Former managing director Graham Mead argued in a KM report that the framework for the process is not "at all relevant to the current state of our industry".
"While the teams at the OFT and OFCOM were positive and supportive, almost without exception, there were some painful moments.
"From a personal perspective, it feels that the process is set up for large, corporate deals, not small transactions involving businesses of our size. The time and effort required appeared to be completely disproportionate to the transaction involved."
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