ITV Merger To Be Investigated By Competition Commission
Carlton and Granada’s proposed £2.6 billion merger has been referred to the Competition Commission on the grounds that it could potentially lead to a “substantial lessening of competition” in the market for TV airtime sales.
Trade and Industry Secretary, Patricia Hewitt, today confirmed the decision, which will end hopes that a lengthy investigation in to the intricacies of the deal to form a single ITV could be avoided (see Full Scrutiny Of ITV Merger Looks Inevitable).
The main area of concern centres around the fact that a single ITV company would control around 54% of the television advertising market. Carlton and Granada have vowed to create a separate advertising sales house in an attempt to side-step the problem, but this has failed to calm fears that the deal could potentially distort competition in the market for airtime sales (see ITV Merger Must Clear Regulatory Hurdles).
Commenting on the referral, which has been taken in accordance with the advice of the Director General of Fair Trading, Hewitt said: “The proposed merger of Carlton and Granada raises competition concerns principally relating to the sale of TV advertising. The merger would greatly increase concentration in TV advertising, leaving one firm with more than half of national TV advertising revenue.”
She added: “The case requires further examination by the Competition Commission to assess whether this increase in concentration is likely to lead to a substantial lessening of competition.”
The Director General of Fair Trading also concluded that the merger raises secondary competition questions in relation to potential competition for ITV licences in Northern England.
The news will come as a blow to Carlton and Granada, which claim that the merger is vital if they are to compete against an increasingly commercial BBC and the growing number of cable and satellite channels (see Carlton And Granada Move Closer To £2.6bn Single ITV Company).
However, the decision will be welcomed by advertising groups, which despite being keen to see a strong ITV capable of delivering mass market audiences, have expressed deep concern over the potential effects of the deal.
ISBA’s director of public affairs, Ian Twinn, told NewsLine: “We strongly welcome the referral. Our major concerns are about competition in the market for airtime sales and this is the issue that we will focus on over the coming weeks. However, it is not for us to decide if there should be a single ITV company and we will keep an open mind on the issue.”
The Competition Commission will now consider the views of those affected by the proposed merger, before announcing its findings on 25 June this year.
Carlton: 020 7663 6363 www.carlton.com DTI: 020 7215 5000 www.dti.gov.uk Granada: 020 7620 1620 www.granadamedia.com
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