Bauer Media’s acquisition of several radio stations, including some owned by News UK's Wireless Group, has raised "competition concerns", the Competition & Markets Authority has warned.
The CMA’s findings follow a phase one investigation, which began in May, to examine Bauer's purchases of certain assets of Celador Entertainment, Lincs FM Group, Wireless Group and UKRD Group.
The body said its main concern is how these transactions could affect the future viability of First Radio Sales. It outlined how FRS currently sells radio advertising on behalf of more than 100 independent local stations across the UK and is the only body providing these stations with access to national advertisers.
Phase one of the CMA's assessment into how the deals could affect competition has highlighted that FRS may not be able to stay in business after Bauer buys up a large number of the stations that currently make up its customer base.
A CMA statement said: "Without FRS, independent local radio stations could lose access to revenues from national radio advertising sales, which could, in turn, make it more difficult for them to compete at the local level. As a result, customers for radio advertising could face higher prices and a lower-quality service."
Competition concerns have also been raised with regard to Bauer acquiring some of the key rivals to their existing local stations in the west of England, West Midlands and Yorkshire regions.
Colin Raftery, senior director of mergers at the CMA, said: "About 90% of adults listen to the radio every week and local radio remains an important way for advertisers to reach potential customers.
"FRS is particularly important for independent local radio stations because it’s currently the only realistic way for them to reach national advertisers. That’s why we’re concerned that Bauer’s buy-ups, which could lead to FRS exiting the market and local stations losing access to national advertisers, could damage competition."
Dee Ford, group managing director at Bauer Media, said: "We will work with the CMA over the coming days to propose solutions to the challenges that they have raised."
If the merging businesses are unable to address the CMA’s concerns, the body said the deal will be referred for an in-depth phase two investigation.