The president of Poland's central antitrust authority, Tomasz Chróstny, has blocked the merger between the radio broadcaster Eurozet and the media group Agora. - Concentrating nearly 70% of the market share in the hands of only two leading radio groups would not have left much room for other, often much smaller entities, so the damage to the market and competition might have been extremely serious - he argued.
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Agora, the media group owning, among other titles, „Gazeta Wyborcza”, began the acquisition process of Eurozet already in February 2019. In October of the same year, both companies filed their concentration application at the Office of Competition and Consumer Protection (UOKiK). After that, the antitrust authority referred the case to the so-called second phase of proceedings, conducting market research to determine whether the acquisition would significantly reduce competition. A year later, UOKiK’s president Tomasz Chróstny expressed his objection to the transaction - he was concerned about Agora potentially gaining "competitive advantage on the local and national radio advertising market, as well as in the distribution of radio programs".

UOKiK: outsized market position and a possible duopoly

Recently, Mr. Chróstny issued a decision prohibiting the merger. In it, he claims that “the concentration would result in the emergence of an overly strong radio group and cause irreversible distortions in the functioning of competition on the local and national radio advertising markets, as well as the broadcasting of radio programs”.

- A concentration ban is issued whenever there is a risk that the merger will have a seriously negative impact on the market, and when it is not possible to agree on conditions that would fully and satisfactorily eliminate the resulting distortions in competition. This was the procedure we undertook in the case of the merger between Eurozet and Agora- said the president of UOKiK.

The regulator claims that the concentration would allow Agora to control over 40% of radio frequencies in Poznań, Opole, and the Silesian urban area. What’s more, the company would hold an outsized share of some of the local radio advertising markets. Agora could potentially adjust advertisement to its target audiences, which would give it a competitive advantage over other local broadcasters, ultimately allowing the media group to strengthen its position on the local radio advertising markets.

On the domestic advertising market, the merger would create an entity with only one other strong competitor: RMF FM.

-The situation would resemble a duopoly and consequently marginalize the remaining radio broadcasters and independent stations. Two large radio groups could effectively drive out the remaining players holding a much smaller market share, and a more limited offer for advertisers. Concentrating nearly 70% of the market share in the hands of two companies would not have left much room for other, often much smaller entities, so the damage to the market and competition might have been extremely serious – Mr. Chróstny said.

Agora: UOKiK protects our competitors, not competition

Commenting on UOKiK’s decision, Agora stated that "using the argument of protecting the market from a ‘situation resembling a duopoly’, the regulator is, in fact, protecting a market situation resembling a monopoly. UOKiK’s president completely ignores the arguments of advertisers who are pointing to the beneficial effects of Agora's new offer which would only increase the pressure on the market’s dominant player ".

The company’s representatives claim that the decision "protects Agora's competitors, not competition".

In an interview with the business news website Business Insider Polska, Agora’s CEO, Bartosz Hojka, admitted that the company never expected the regulator to make the transaction particularly easy. - After the controversy following Agora's purchase of a 40% stock in Eurozet and the ensuing comments from prominent government officials, we expected that this would not be a standard proceeding and prepared ourselves for it in the best way possible. However, we did not expect the antitrust authority to violate the law- he said.

Mr. Hojka explained that UOKiK’s decision to ban the merger and prohibit market concentration is the first one of this kind in nine years. - Despite our readiness to present and accept potential conditions and obligations in a meeting scheduled for January 8, UOKiK’s president did not even consider the possibility of issuing a conditional decision. Moreover, his decision also included many statements that are not backed up by evidence – he said.

- Agora intends to merge with Eurozet, not with RMF FM. After the merger, we would have less than a 26% share in the national radio advertising market. Mr. Chróstny’s allegations that Agora would give up on competing with the major player on the market and implicitly cooperate with RMF FM, is pure speculation without any support in economic evidence. UOKiK’s president simply ignores the activity of other significant competitors like the Time Group and Polskie Radio, and underestimates the great strength of domestic media houses – Mr. Hojka said.

-We are determined to obtain approval for the acquisition of the remaining shares in Eurozet and will use all available legal means to do so. We strongly disagree with the decision of the President of the Office of Competition and Consumer Protection because it is not justified by facts or economic analyses and, what’s more, it violates legal regulations and administrative proceedings- the CEO concluded.

Media expert: a blatant display of UOKiK’s regulatory double standards

Stanisław Jędrzejewski, a media expert and professor at the Leon Koźmiński University in Warsaw, says that the decision of Poland’s antitrust authority does not really surprise him. – Mr. Chróstny, UOKiK’s president, refused to investigate the state oil giant’s takeover of Polska Press. Back then, he argued that he was not in a position to evaluate the impact of press concentration on freedom and media pluralism. Now, however, he is blocking Agora's acquisition of Eurozet, warning of the emergence of a potential duopoly on the radio market. This kind of reasoning is contradictory and logically inconsistent. It is a thoroughly political decision- he told us.

Prof. Jędrzejewski adds that there’s strong evidence indicating that the government wants to abandon the so-called media repolonization law, and intends to employ 'salami tactics' to take over individual independent media instead. He claims that Eurozet could ultimately also end up in the hands of a state-owned company. – Be it the oil giant Orlen or another company. The ruling camp has already started its campaign to take over private media- he says.

Agora announced it would appeal UOKiK’s decision in court.


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