CC wins green light for broadcast giants to merge

Clifford Chance has convinced the Competition Commission to allow terrestrial broadcast transmission companies Macquarie UK Broadcast Ventures and National Grid Wireless Group to merge.

The merger, which was first mooted in April 2003, was referred to the commission after concerns that the amalgamation of the only two UK terrestrial broadcast transmission businesses could lead to higher prices and lower service quality.

The commission’s final report on the merger, however, found that the deal could go ahead if both companies agree to a package of measures, including price reductions for customers on new and existing contracts that will hand back £16m to consumers.

The proposed measures will, according to the commission, address the adverse effects of the £2.5bn acquisition – including reducing the risks associated with the impending digital switchover process that will conclude in 2012.

Diana Guy, who chaired the inquiry, said the commission was very conscious that the proposed merger was a unique situation given the critical importance of the digital switchover.

“Customers have told us the proposed measures would be the best way to address the effects of the loss of competition and ensure they receive immediate benefit from the substantial cost savings and synergies arising from the merger,” explained Guy.

However, she added: “This decision [to allow the merger] is dependent on satisfactory undertakings being agreed and, if suitable undertakings cannot?be?agreed,?we will require a substantial divestment.”

The?commission?also recommended the appointment of an adjudicator to resolve disputes. The adjudicator will have the power to resolve any disputes and oversee financial auditing of the digital switchover project.

In addition, media watchdog Ofcom is likely to conduct its own market review of the provision of broadcast transmission services under the Communications Act 2003.

Clifford Chance partner Jenine Hulsmann advised both Macquarie and National Grid Wireless on the broadcast companies’ dealings with the commission, while Jonathan Blackburn, the commission’s in-house lawyer, advised the Government.