The Office of Fair Trading has concluded that large-scale reform of the rules governing mergers in local media is unnecessary.
Following a review of the rules governing the regional sector, timed to coincide with publication of the Digital Britain report today, the OFT found the current system was sufficiently "robust and flexible" and no legislative change was necessary.
The ruling comes despite intense lobbying from the regional newspaper companies, which saw the UK's leading publishers form the Local Media Alliance to submit its case for change to the OFT.
The OFT said that the existing regime was sufficiently flexible and evidence-based to respond to changing market conditions.
However, the OFT proposed that it would formally seek Ofcom's view in future newspaper merger cases, given its specific sector knowledge in the UK.
A further fillip to the regional press came as the government revealed in today's Digital Britain report that it would ask the National Audit Office to assess the impact of council run publications on regional newspapers and make recommendations for best practice and if restraints should be placed on local authorities in this field.
"Competition between publishers is important, not just for providing quality, cost-effective content to readers, but also to ensure that the most efficient, customer-focused, dynamic players take advantage of the structural and cyclical challenges that lie ahead," said John Fingleton, the OFT chief executive.
"The current merger regime came into force in 2003, and we are confident that it is fit for the needs of the media sector in the 21st century.
"If there are significant transactions that publishers or others are keen to pursue, we will review them on their merits, taking into account the impact on customers and the realities of the marketplace."
The OFT review of media ownership rules was launched at the behest of the communications minister, Lord Carter, following the publication of his interim Digital Britain report earlier this year.
The Local Media Alliance, a body made up of the chief executives of Trinity Mirror, Johnston Press, Newsquest, Northcliffe Media, Guardian Media Group – which publishes MediaGuardian.co.uk – Archant and DC Thomson, submitted its own ideas to the OFT review.
It had advocated a "modernisation" of the current system of ownership rules, arguing that the creation of publishing organisations with greater local scale would be the most effective way to protect the viability of local newspapers and maintain plurality of editorial voice without damaging local advertising markets.
This led to the National Union of Journalists warning that the UK's regional press will go into a "spiral of decline" if the government scrapped rules restricting mergers among the large newspaper groups.
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