UK Competition Watchdog Offers Merger Trade-Offs to ITV Duo

20 May 2003

Britain’s Competition Commission dropped its heaviest hint yet that it will not bless the proposed merger between ITV’s controlling duo as it is presently framed.

Many believe that the plan on the table is unacceptable on public interest grounds, given that the merged company would control over fifty per cent of all UK TV advertising

But the Commission revealed Monday it has written both to Carlton Communications and Granada outlining two trade-offs that could lead to approval of the deal. These are:

(1) On the key question of merging the respective Carlton and Granada sales organizations (currently in notional competition), the Commission is still opposed – as are the majority of advertisers and agencies – but it could introduce a mechanism enabling the matter be reviewed after five years either by the Office of Fair Trading or new media regulator Ofcom.

(2) Alternatively, proposed the Commission, the anticompetitive effects of the merger could be assuaged by banning the practice of offering discounts to advertisers (and agencies) that commit a predetermined percentage of their annual ad budget to ITV. This option is unlikely to induce euphoria among any of the parties.

Many observers see these apparent concessions as untenable, suggesting only that the Commission is set to rule against the merger. The regulator, however, took pains to stress on Monday that its new proposals are entirely hypothetical and did not imply it had reached a decision.

Data sourced from: Financial Times; additional content by WARC staff