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Competition watchdog looks into Friends Reunited sale

ITV's £25m sale of Friends Reunited is to be investigated by competition regulators over fears that new owner DC Thomson will dominate the UK online genealogy market.

DC Thomson acquired Friends Reunited for £25m in August, snapping up the social networking website to ramp up its genealogy business Find My Past by merging it with Genes Reunited to create the largest online subscription service in the UK.

Brightsolid, the DC Thomson subsidiary that runs Find My Past, referred the deal to the Office of Fair Trading - recognising it would give the company more than a 50% market share.

However, the deal was expected to be cleared because the paid-for genealogy website sector is part of a larger market as far as free competition is concerned.

The OFT said that the acquisition would see a merger of two of the three biggest contenders in the UK online genealogy market, the third being market leader

"On the basis of the evidence it received, the OFT does not believe that the current competition in this market or the potential for future entry is sufficiently strong to prevent the merged firm from reducing the quality or range of its services, or possibly raising prices," said the OFT.

"The proposed acquisition would see the three main providers of online genealogy services reduced to two, and we are concerned this could lead to a reduction in choice or service for consumers," added Amelia Fletcher, senior director of mergers at the OFT. "We are therefore referring the merger to the Competition Commission for a fuller inquiry."

For ITV, which today said it was "disappointed" at the referral to competition regulators, the news is another setback in its ill-starred relationship with Friends Reunited, which it acquired in a £175m deal in 2005.

"ITV is disappointed by this outcome, but will work closely with the Competition Commission and Brightsolid to seek to resolve this process satisfactorily," said the company in a statement.

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