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Omnicom expands,
ACCC gives the nod,
Rivals still compete.
ACCC greenlights US$13bn Omnicom-IPG merger, finds 'remaining' holdcos and indies will 'continue to effectively compete'
The landmark US$13bn merger of two of the world's largest advertising groups has been given the green light by the Australian Competition and Consumer Commission (ACCC), with the competition watchdog today announcing it would not oppose Omnicom's proposed acquisition of The Interpublic Group of Companies (IPG).
It follows the ACCC's probe into the potential local impacts of the global deal, with a submission from advertising watchdog Check My Ads urging the regulator to put principal media models as the heart of its investigation. Similar points were raised by the Independent Media Association of New Zealand in the industry body's submission to the New Zealand Commerce Commission.
However, the ACCC's determination found the acquisition was unlikely to substantially lessen competition in the local advertising supply chain, noting that the "remaining advertising, media, and communications conglomerates, including WPP, Publicis, and Dentsu" would continue to compete with the soon-to-be formed behemoth, alongside smaller independent suppliers and providers.
The ACCC applies the legal test set out in section 50 of the Competition and Consumer Act when considering proposed acquisitions. This section prohibits acquisitions that would have the effect, or be likely to have the effect, of substantially lessening competition in any market.
"Our investigation found that while the proposed acquisition would result in an increase in the parties’ combined market share, other suppliers of media buying and marketing and communications services would continue to effectively compete with Omnicom after the acquisition," stated ACCC Commissioner Dr Philip Williams.
The deal, which first came to light in December of last year, is expected to be completed by the year's end, pending approval in other markets.
In Australia, Omnicom's portfolio includes well known brands such as DDB, TBWA, Clemenger Group, OMD Worldwide, PHD Media, and Hearts & Science, while IPG's key brands in the region include IPG Mediabrands, Universal McCann (UM), Initiative, 303 MullenLowe, and Octagon. UM currently holds a contract for the exclusive supply of media buying services for all Australian Government departments, including the ACCC.
