COMPETITION COUNCIL DENIES TV3 SHAREHOLDER'S TAKEOVER OF LITHUANIA'S LARGEST RADIO STATION GROUP
All Media Lithuania will not be able to acquire 100% of the shares of three companies that operate the radio stations M-1, M-1 Plus, Lietus, Laluna, Raduga, and the company Reklamos ekspertai. The Competition Council did not clear the transaction after finding that the concentration would create or strengthen a dominant position or significantly impede competition in the radio and television advertising sales markets.
According to the notification of intended concentration received on 22 February 2023, All Media Lithuania, which broadcasts TV3, TV6, TV8 and TV3 Plius television programmes, had plans to acquire three companies operating the radio stations M-1, M-1 Plus, Lietus, Laluna, Raduga, and the company Reklamos ekspertai, which sells advertising on them. All Media Radijas, a company linked to All Media Lithuania, broadcasts Power Hit Radio on radio frequencies and Power Gold radio programmes on the internet and sells advertising, while All Media Digital owns tv3.lt and other websites, where it also sells advertising.
The Competition Council sought to determine whether the transaction would have any negative effects on competition in the radio and television advertising sales markets, given that All Media Lithuania, which currently has a significant share in the television advertising market, would significantly increase its share in the radio advertising market by adding the largest group of radio stations in Lithuania after the merger.
The Authority carried out a detailed economic analysis, assessing the market shares and competitive closeness of the parties to the transaction, the volume of advertising sold by the market participants, their and competitors' growth potential, the likelihood of new players entering the radio broadcasting market, etc. The experts sought and received information not only from the merging parties and their competitors, but also from advertising agencies, as well as from Lithuanian companies buying advertising on various television and radio channels.
Having analysed the responses received and the data collected, the Competition Council has found that the radio stations M-1 and Power Hit Radio owned by the parties to the transaction are close competitors in the market for the sale of radio advertising, and that the competition between them is significant. After the transaction, this competition would be eliminated, the merging parties would have the largest share of the radio advertising market in terms of revenues, would own the stations with the largest share of listening time and would further increase their gap with other competitors. The emergence of such a large market player would, in the Competition Council's assessment, make it more difficult for other radio stations to compete effectively and would reduce the choice for radio advertising customers.
Another negative consequence identified by the institution is related to the ability of All Media Lithuania to apply the practice of linking (bundling and/or tying) advertising sales, where discounts would be offered to advertisers purchasing both television and radio advertising packages from media outlets under its control.
It is not prohibited per se to link the sale of television and radio advertising, but in a highly concentrated market, such a practice would be detrimental if applied by a company holding a significant market share. Since, after the transaction, All Media Lithuania could apply the practice of linking television and radio advertising in relation to the M-1 group as well, the Competition Council sees the risk that advertisers would be encouraged to purchase advertising more actively from television and radio stations owned by All Media Lithuania, thereby reducing the volume of advertising ordered from competitors.
"Competitors who cannot offer similar bundled advertising packages would lose a portion of their income, reducing their ability to invest in program content and maintain their audience. Both their growth and the entry of new participants into the market would be hindered. With insufficient competitive pressure and weakened competitors, over time, the participants in the concentration could increase the prices of advertising services," said the Chairwoman of the Competition Council Jolanta Ivanauskienė.
The parties to the transaction, after becoming familiar with the findings regarding the potential negative impact on competition, provided responses and additional arguments to the Competition Council. However, the institution did not change its assessment.
All Media Lithuania proposed commitments – to sell the company All Media Radijas, which controls Power Hit Radio, and refrain from applying the practice of linking television and radio advertising. Nevertheless, the Competition Council acknowledged that these commitments would not eliminate the identified negative consequences on competition. The commitment not to apply the practice of linking television and radio advertising would not be effective, as it would require constant and highly complex monitoring, which would be impossible to ensure due to the specific nature of advertising sales.
After evaluating all the information and circumstances, the Competition Council has decided not to grant permission to the company All Media Lithuania to carry out the concentration by acquiring 100% of the shares of the companies that control the radio stations M-1, M-1 plius, Lietus, Laluna, and Raduga, as well as the shares of the company Reklamos ekspertai. This decision was made because the transaction would create or strengthen a dominant position or severely restrict competition in the radio and television advertising sales markets.
The non-confidential version of the Competition Council's decision will be published on the institution's website soon.
The decision can be appealed to the Vilnius Regional Administrative Court within one month from the date of its delivery or publication on the institution's website.