On 8 July 2010 the OFT referred the anticipated acquisition by Getty Images Inc of Rex Features Limited to the Competition Commission ("CC") for further investigation under the Enterprise Act 2002.
The OFT found that the merger would combine two of the largest suppliers of photographic images for editorial use by publications in the UK, particularly in relation to the supply of archive and entertainment images.
Based on their profiles and extensive image archives, the OFT considered the parties to be close competitors, and was concerned that if the merger was to go ahead, there may not be sufficient competitive constraints from other agencies or new entrants to replace the loss of Rex as an independent competitor. In particular the OFT was concerned that this loss of competition could enable Getty to increase its prices to customers. These concerns were backed up by concerns raised by a number of publishers, the key customers within the market.
As some of the information available to the OFT in this case was patchy and inconsistent the OFT took the view that it could not satisfactorily rule out these competition concerns. Accordingly, the OFT concluded that the right thing to do was to refer the merger to the CC for further investigation (on the basis there remained a realistic prospect that the merger may result in a substantial lessening of competition).
The CC has up to 24 weeks to complete merger investigations and, importantly, has powers to compel evidence (powers which the OFT does not have).
Following the OFT's reference decision, however, both parties have decided not to pursue the deal which has consequently been abandoned.
This is the first merger to be referred to the CC by the OFT this year. The abandonment of the merger means that there are no merger investigations currently being undertaken by the CC.
To view Community Week, Issue 480: 16 July 2010 in full, Click here.
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