The Competition Authority is investigating Mr Denis O'Brien's controlling stake in Dublin radio station NewsTalk 106.

Mr O'Brien now has 53 per cent of the equity in the group and the Competition Authority's mergers division has invited submissions from interested parties on whether the stake will "substantially lessen competition in the markets for good and services".

There are now two Competition Authority investigations into the radio industry, the NewsTalk review and an examination of the proposed takeover of FM 104 by Scottish Radio Holdings. Both investigations are likely to look at the potential impact of the deals on the advertising market.

Several weeks ago the authority wrote to Mr O'Brien's Communicorp Group asking it to provide details of its involvement in NewsTalk. Since then Mr O'Brien's legal representatives have been handling the matter.

According to the Competition Authority, notice of the controlling stake reached it this Tuesday, even though the acquisition of the shares in News 106 Ltd took place some months ago.

All media mergers have to be notified to the Competition Authority. If the authority is concerned about the deal it can move it into a "phase two" investigation which can take anything up to three months.

Radio Two Thousand Ltd, a subsidiary of Mr O'Brien's Communicorp Group, is the largest shareholder in NewsTalk. Mr O'Brien has invested heavily in the station since it went on air in April 2002. The station's initial listenership figures were extremely low, but since then its position has improved and a new chief executive, Mr Dan Healy, formerly of 98 FM, is in place.

The other shareholders include Setanta Media and Capital Radio Productions, owners of FM 104. If Scottish Radio Holdings purchases FM 104 it will inherit this share in NewsTalk.

Mr O'Brien has assured the board he is committed to the station in the long term. Mr O'Brien has extensive radio interests, mainly in Dublin. He controls 98 FM, has a 25 per cent share of Spin FM and 27 per cent stake in East Coast Radio in Co Wicklow.

Mr O'Brien's team are likely to point to the strong presence in the radio market of other media companies, most notably UTV, owner of Lite FM and Scottish Radio Holdings, owner of Today FM. His legal team is likely to argue that many observers regard advertising rates in the radio sector as too low and competition between stations is intense.

Losses at NewsTalk 106 and Spin FM contributed to pre-tax losses of €1.2 million for 2002 at Communicorp Ltd. In a poor year for advertising, the company managed to boost turnover from €15.2 million to €16.8 million, but pre-tax losses still crept up to €1.2 million from €502,000 the year before.

The investments in NewsTalk and Spin prevented the firm from trimming back its 2001 losses.