Trinity International Holdings plc and Scottish & Universal Newspapers Ltd: A report on the proposed transfer of controlling interests as defined in section 57(4) of the Fair Trading Act 1973

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Summary

On 30 March 1992 the Secretary of State for Trade and Industry asked us to investigate and report on the proposed transfer of Scottish and Universal Newspapers Ltd (SUN) from Lonrho plc (Lonrho) to Trinity International Holdings plc (Trinity). The terms of reference are set out in Appendix 1.1.

SUN is a wholly-owned subsidiary of Lonrho, a London-based multinational conglomerate. It publishes one daily and 22 weekly local newspapers from four centres in south and central Scotland. In 1991 Lonrho decided to sell it, believing it was unlikely to expand further unless it were transferred to the ownership of a newspaper group with appropriate expertise and interests. A number of offers were received from prospective purchasers. The highest bid was for £45 million from Trinity, a long-established publisher of daily newspapers in Liverpool, which has extended its operations more recently to weekly newspapers and to publishing and printing in North Wales, Canada and the United States. In March 1992 Trinity and Lonrho agreed on terms of sale, subject to the Secretary of State's consent under the Fair Trading Act 1973 (the Act).

The Act requires us to have particular regard to the accurate presentation of news and free expression of opinion. Other public interest issues that arose on the proposed transfer were increased concentration of newspaper ownership; possible reduction in competition for readers and advertising; constraints on entry; strain on Trinity's finances; local employment, and employment-related matters; and the Scottish dimension of the proposed change in ownership and control of this group of local newspapers.

We considered these issues carefully. We concluded that there would be no risk to the continued free expression of opinion or accurate presentation of news in the SUN newspapers under Trinity's ownership. The transfer of SUN would increase the concentration of weekly newspaper ownership in the United Kingdom, but there is no overlap with Trinity (the areas of operation of the two firms are over 100 miles apart) and we thought that there would be no adverse effects on the range of opinion expressed. We concluded that there was no risk that the transfer would lead to a reduction in competition for readers, in terms of choice, or for advertisers, in terms of rates. We thought that the competitive potential for new entrants would be unaffected, save that the enlarged group would itself have greater resources to compete with other publishers in its areas. We saw no reason to dispute Trinity's conclusion that it could meet the costs of financing the larger group without too much difficulty following the acquisition of SUN. We concluded that the local employment consequences and employment-related aspects of the transfer were not likely to be adverse to the public interest. We did not think that the change in ownership and control and the proposed management arrangements would significantly reduce the autonomy of the editors of the SUN newspapers to determine their policies, or that there would be any adverse effect on the public interest in consequence.

Accordingly, we found no reasons why the proposed transfer may be expected to operate against the public interest. We recommend that the Secretary of State should give his statutory consent to it.

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