The Competition Authority has ruled that Mr Denis O'Brien's stake in radio station NewsTalk 106 does not undermine competition in the advertising market.

The decision will come as a relief to staff and management at NewsTalk, who were concerned that the Competition Authority might force Mr O'Brien to reduce his stake.

Mr O'Brien's company, Radio 2000, is believed to own 59.6 per cent of the equity in News 106 Ltd, the company which owns the radio station.

A fund-raising was completed in recent weeks at the station.

The Competition Authority under the Competition Act 2002 must investigate all media mergers.

If they "substantially lessen competition in the markets for good and services", a more complex phase two investigation is set up.

In this case, Radio 2000's shareholding was not found to substantially lessen competition.

The stake did not give rise to competition concerns, a spokesman for the authority confirmed.

In line with legislation, the authority has passed the case on to the Minister for Enterprise, Trade and Employment, Ms Harney, for final consideration.

She has several options at that stage, including the power to refer it back to the Competition Authority for a phase two investigation.

The Competition Authority investigation examined how the investment in NewsTalk by Radio 2000 might impact on advertising rates in the Dublin radio market.

The investigation was set up because one of Mr O'Brien's other companies, Communicorp Ltd, has interests in other Dublin stations Spin FM and 98 FM, and in Wicklow station East Coast Radio.

It is believed the Competition Authority investigation found that Newstalk was sufficiently distant from Spin and 98 FM to ensure that advertisers got a fair deal.

The radio station has burned through a large cash pile since its establishment two years ago. Some observers estimate that about €8 million has been spent since its inception.

Despite this, Mr O'Brien has remained committed to the project and, under chief executive Mr Dan Healy, listenership gains have been made, particularly in the competitive evening drive-time slot.

It is understood a fund-raising was agreed recently at the station leaving Mr O'Brien with a 59.67 per cent stake, Setanta Media with 16.9 per cent, Hypertrust (a Carlow-based radio group) with 18.1 per cent and Capital Radio Productions with 2.9 per cent.

Capital Radio Productions owns FM 104 and its chief executive, Mr Dermot Hanrahan, previously criticised the station's output and direction.

He has since left the board of News 106 Ltd, while public relations executive and former journalist Mr James Morrissey has joined.