Competition Authority rules against Ongoing/Vertix/Media Capital merger as a result of ERC Advisory Report

The Competition Authority (CA) has ruled against the Ongoing/Vertix/Media Capital merger operation as a result of the negative and binding report issued by the Media Regulator, ERC.

The decision delivered by the CA today terminates a procedure that included the following successive stages:

  1. On 8 October 2009, under Article 9 of the Competition Act, the CA was notified of a merger operation between companies that would consist of the acquisition, by the undertakings Ongoing Media SGPS SA and Vertix SGPS SA, of joint control of the undertaking Grupo Media Capital SGPS SA. This would take place by means of the first mentioned undertaking’s acquisition of shares representing up to 35% of the acquired company’s registered capital, as well as on the basis of the shareholders’ agreement to be signed between Ongoing and Vertix;
  2. On 14 October 2009, in the light of the fact that the economic activities of the participating companies are subject to sectoral regulation, the CA made a request to ERC (the Media Regulator) and ICP-ANACOM for advisory reports on the merger operation under analysis, in compliance with Article 39 (1) of the Competition Act;
  3. On 29 October 2009, ICP–ANACOM issued its advisory report, considering that the merger operation notified would not result in any increase in Ongoing’s market share in the electronic communications market;
  4. On 30 October 2009, Impreger – Sociedade Gestora de Participações Sociais SA presented itself as a party with counter-interests in the proceedings;
  5. On 10 February 2010, ERC issued its final report, stating “its opposition to the merger project notified as long as Ongoing has not carried out the sale [...] of the number of shares in Impresa’s registered capital that will make its shareholding in this company always less than 1% of the registered capital, with Ongoing being prevented from (i) increasing its shareholding in Impresa’s registered capital beyond the limit stated or (ii) interfering, directly or indirectly, separately or jointly with other shareholders, in Impresa’s internal affairs – whether corporate, editorial or of any other nature – as long as it remains a Media Capital shareholder.”;
  6. On 30 March 2010, after the Hearing of Interested Parties had been duly held – between 4 and 18 March – and the Observations received had been analysed, the CA issued its final decision.

 

It is to be stressed that, in the light of the binding nature of the advisory report requested of ERC, under Article 4 (2) of the Television Act / Law No. 32/2003 of 22 August, and the inability of the merger control proceedings instigated at the CA to advance in the absence of the report, the time limit for this Authority to reach a decision, provided for in Article 34 (1) of the Competition Act, remained suspended. This period ran, precisely, from the request for the report on 14 October 2009 to the reception of ERC’s final Advisory Report on the 10th February.

In view of the ERC Advisory Report findings and the fact that the public interest in safeguarding diversity and pluralism, as expressed by ERC in its report, determines that the projected operation cannot be implemented, irrespective of what the conclusion of the competition-law assessment would be, the Competition Authority has declared its opposition to the operation notified, to protect this asset of public interest. It acted under the powers conferred on it by Article 17 (1) b) of its statutes, approved by Decree-Law 10/2003 of 18 January, and on the basis of Article 107 of the CAP (Code of Administrative Procedure), in combination with Article 39 of the Competition Act and Article 4 (2) of Law No. 32/2003 of 22 August.

(Nº: 4/2010)