The Competition Authority has decided that the acquisition of a majority stake in NewsTalk 106 by Mr Denis O'Brien's Radio 2000, which trades as 98 FM, involved a breach of competition law.

The increase in Radio 2000's stake, which has been cleared by the authority, was not notified to the authority in time, the authority found. It further found that the transaction was put into effect before the authority was notified.

"Under the Act, any merger or acquisition which is put into effect prematurely is void," the competition authority said. However, it added that once the transaction was cleared by the authority, it was authenticated.

A spokesman explained that this meant the period between the putting into effect of the transaction and its full approval by the authority yesterday was a legal "grey area".

The proposal that Communicorp Group would acquire indirect control of 53.12 per cent of News 106 Ltd (by way of Radio 2000), was notified to the authority on January 13th, 2004. The rights issue that brought Radio 2000's shareholding in NewsTalk to 53.12 per cent closed on October 1st, 2003, and should have been notified to the authority prior to that date, it said.

"The authority, having fully considered the matter, found insufficient evidence to seek a criminal penalty, as it was not apparent that any officer of NewsTalk 106, Radio 2000 or Communicorp, knowingly and wilfully authorised or permitted the breach of the law."

The spokesman said that there were a number of issues involved in the transaction. The first was that the authority has decided the transaction does not lessen competition and so can be cleared.

The second was that the transaction, because it involved media companies, should have been notified to the authority earlier than it was. The third was that it was put into effect before it was cleared, an event that created a "grey area" for the period between the transaction and its clearance.

Mr O'Brien's Communicorp holds a 75.18 per cent of Radio 2000 by way of European Radio Corp.