Capital fights to avoid OFT inquiry

Capital Radio is appealing directly to advertisers to write letters to the Office of Fair Trading (OFT) in an attempt to stave off a possible investigation of its 87m takeover of Virgin Radio.

It has supplied a template letter to advertisers, after the OFT made an “invitation to comment” on competition and public interest implications of the takeover. The deadline was June 5.

Completion of the deal depends upon approval from the Radio Authority and the OFT.

Capital is known to be worried that the OFT may scrutinise its potential grip on the London radio sales market.

The combined revenue for Capital and Virgin in London for the first quarter of this year was 77 per cent of the total. Objectors claim that the new set-up will allow predatory pricing and prevent new entrants from gaining a foothold in the London market.

The letter says: “Even though the acquisition will increase Capital Radio’s market share in London, we do not consider that this is of particular concern to us for the following reasons.”

It then lists reasons why the deal would be beneficial, including “expenditure that has moved into radio from other media can as easily move out if Capital Radio or any other radio company takes an overly aggressive view on pricing”.

“We regard both these companies as sensible business partners which recognise the value of happy customers. Capital Radio’s voluntary withdrawal from Media Sales & Marketing is evidence of this.”

Capital is withdrawing from Media Sales & Marketing to ward off possible objections over its share of national sales.

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