UOKiK blocks acquisition of media group

Parties to the blocked acquisition

Both Eurozet and Agora are present in the radio broadcasting and related markets (national-wide and local). Eurozet owns one national radio station (Radio Zet), one supra-regional radio station (Antyradio), and several local radio stations. Agora owns a group of 32 local radio stations operating under two brands, and one supra-regional radio station operating in 23 urban areas (TOK FM).

• In the national radio broadcasting market, Eurozet has around 16.8% market share, whereas Agora approx. 6.4% (combined market shares of both media groups amounts to approx. 23.4%). The biggest national radio broadcaster is RMF, having almost 34% market share.
• In the local national radio broadcasting markets, combined shares of Eurozet and Agora vary from 21% to 51%.

Proceedings and competitive assessment

Agora filed the merger control notification on 28 October 2019. In November 2019, UOKiK opened phase II of the proceedings and carried out a market survey among Agora and Eurozet competitors, who are active in the radio broadcasting markets and radio advertising market, and among companies specialised in brokerage in the purchase of airtime.

Based on the market survey, UOKiK concluded that the creation of a strong radio group would cause irreversible market distortions leading to a restriction of competition. One of the most important grounds, based on which UOKiK blocked the acquisition, is its view that the concentration would create a “quasi-duopoly” of Agora and RMF. UOKiK states that the combined shares of Agora, Eurozet, and RMF (the parties’ largest competitor) could reach 70% in some local markets.

Pursuant to duopoly theories, the market power of both entrepreneurs should be comparable and the power of other competitors marginal. However, after the transaction Agora will have a 23.4% market share, whereas RMF at least 34%. There are also other significant market participants such as TIME (14.5%) and Public Radio (16.5%). Considering the market share figures, a duopoly does not seem a likely outcome of this planned acquisition, and this is probably why UOKiK refers to this situation as a “quasi-duopoly”.

Nevertheless, UOKiK decided that as there is a quasi-duopoly (which is arguable), the post-transactional market structure would lead to market distortions. UOKiK suggests that the concentration would result in coordinated effects between Agora and RMF, which could lead to marginalisation of other entrepreneurs, especially those active in the radio advertising markets. UOKiK further argues that Agora and RMF could abandon intense competition, which could result in higher prices than in the absence of concentration. However, no supporting evidence was raised.

Agora appeals the prohibition decision

Agora strongly disagrees with UOKiK’s decision and has appealed to the Consumer and Competition Court.

Agora states that the market structure will not be significantly changed due to the concentration, and that after the concentration Agora will still have approx. 10% lower market share than RMF.

Furthermore, Agora states that even if hypothetically there is a duopoly (or quasi-duopoly) in the market, it should have been proven during the proceedings that based on the economic analysis conducted, the concentration would lead to substantial limitation of competition in the market.

Finally, Agora argues that UOKiK’s decision was based on hypothesises and assumptions, and not on any solid evidence (such as deep economic market analysis).

The full text of UOKiK decision No. DKK-1/2021 (in Polish) can be accessed at this link.

For more information please contact Piotr Dynowski or Marcin Alberski.