Competition Authority investigations have stalled the €7 million takeover of Donegal's Highland Radio by Emap, formerly Scottish Radio Holdings (SRH).

It was announced at the end of May that SRH would acquire the company and this was notified to the Competition Authority on June 1st. But despite several other media mergers getting approval, the authority has continued to investigate the takeover.

During the summer SRH was itself acquired by British media group Emap, which is now active in the Irish market. Emap has continued with the Highland deal, but the Competition Authority appears to have some concerns about the transaction.

The date for making a decision on the deal has been extended until August 27th and the authority has sought additional information in recent weeks. By the end of August, the authority will effectively have three options: to clear the deal in full, to block the deal entirely or request the parties to meet conditions.

This is what happened when SRH purchased FM 104 from its shareholders for about €26 million, plus debt. In that case SRH was forced to sell their small stake in NewsTalk 106, among other conditions.

The Competition Authority, when it examines media deals, tends to concentrate on what the impact will be on the sale of advertising.

The authority essentially looks upon the radio market as consisting of three or four main blocs: Emap, Denis O'Brien, RTÉ and UTV. Emap, as the owner of Today FM, a national service, and Dublin station FM 104, may have to accept some extra conditions.

Valuations in the radio sector have been declining in the last few years as major players have reduced their buying. The Broadcasting Commission of Ireland (BCI), which regulates the sector, has also imposed a cap on the number of stations any one group can own. This has effectively removed several buyers from the market, although the BCI is prepared to review the cap.

UTV has effectively stopped purchasing stations in the Republic. Its last major deal was in the UK when it bought Wireless Group for €142 million. The sector is now waiting to see if Emap is interested in buying any further assets, although this seems unlikely. When Emap purchased its Irish assets from SRH, it decided not to retain the newspapers and sold them to UK regional publisher Johnson Press.