Global Radio will be allowed to own five radio stations in London after a landmark ruling by the Office of Fair Trading that will allow one company to control half the capital's radio advertising market. The enlarged company, controlled by a consortium of investors fronted by Ashley Tabor, will hold Capital 95.8, Heart 106.2, Xfm, Choice FM and LBC after the OFT provisionally cleared Global's £375 million purchase of GCap Media.

The OFT decided that the benefits to listeners of having a dominant commercial radio company in London outweighed loss of competition. Both Global's existing business and GCap's London stations account for between 20 and 30 per cent of the city's advertising.

Simon Pritchard, senior director of mergers at the OFT, said: “Merger efficiencies benefit customers and put pressure on rivals. In this case, they tipped the balance in favour of clearance in London. This shows that with the right facts, efficiencies can make a difference, even in a horizontal merger with high market shares.”

The OFT has demanded that Global sell a bundle of stations in the Midlands to maintain competition, and will have to approve the buyer. Global's East Midlands Heart station plus a cluster of local stations formerly owned by GCap, including BRMB in Birmingham, are likely to have to be sold.

Mr Tabor said: “Global Radio will be able to lead the industry to the consolidation it needs. We will be able to offer value and quality to advertisers and listeners by operating the Heart and Capital brands alongside one another.”

GCap Media owned Capital 95.8, Choice FM and Xfm, while Global owned Heart and LBC. Its principal commercial rival is Bauer Media, formerly Emap Radio, which owns Kiss and Magic, although the BBC dominates listening nationally.

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