The Competition and Consumer Protection Commission (CCPC), which polices mergers and takeovers, has approved the acquisition of a group of local newspapers by Independent News and Media (INM) .

In a decision issued on Thursday, the CCPC (formerly the Competition Authority), ruled that “the transaction would not lead to a substantial lessening of competition” in the areas of business concerned.

The proposed deal with Celtic Media Group would see INM gain control of seven regional newspapers including the Anglo-Celt in Cavan, the Meath Chronicle and the Connaught Telegraph.

INM already owns a number of local newspapers including the Fingal Independent, the Kerryman, the Sligo Champion, the Wexford People and the Bray People.

‘In-depth assessment’

In a statement, the CCPC said that before it approved the deal it had conducted an “in-depth economic assessment” of the markets affected by the proposed acquisition.

The merger must be approved by Minister for Communications Denis Naughten before it can go ahead. Under legislation governing media takeovers, Mr Naughten must examine whether the deal has implications for media plurality.

The National Union of Journalists (NUJ) opposes the move and has asked the commission to block it. The union says INM should not be allowed to further expand its newspaper stable given its dominant position in the market.

In particular, the union says the authority cannot view the takeover as simply affecting regional newspapers, but must look at the media market as a whole, where INM’s main shareholder, Denis O’Brien, enjoys an even larger market share by virtue of his radio and online interests.

A recent report on media ownership in Ireland, independently researched and written but commissioned by Sinn Féin MEP Lynn Boylan, warned that the extent of Mr O'Brien's media interests constituted an unacceptable concentration of ownership. The report expressed "very grave concerns about the situation in Ireland" and warned of "threats to diversity, plurality and freedom of expression".

Mr O’Brien was highly critical of the report, and rejected its findings.

Restructuring

Meanwhile, INM has proposed a restructuring of its balance sheet through a capital reduction and cancellation of authorised deferred shares. The proposals are subject to two special resolutions to be voted upon by shareholders at an extraordinary general meeting of the company on December 5th.

The capital reduction will eliminate the existing deficit on INM’s profit-and-loss account, strengthening its balance sheet. As a result of impairments on its international assets, INM accumulated what Davy Research called a “legacy deficit” of about €1.1 billion as of June 30th.

When the proposals are approved, INM will apply to the High Court for permission to restructure in January. Davy Research analyst Robert Stokes noted the move would open up the possibility for the company to pay its shareholders a dividend on future profits.