Brussels, 9 January 2014
Mergers: Commission approves merger of Publicis and Omnicom in the advertising, marketing and communication sectors
The European Commission has authorised, under the EU Merger Regulation, the proposed merger of Publicis, an international advertising and communication group based in France, and Omnicom, a global advertising, marketing and corporate communication company headquartered in the US. The bidding nature of the markets, the presence of other large competitors, the relatively low barriers to entry, and the significant countervailing power of media vendors will ensure a level playing field in all the affected markets after the merger.
The parties are both active through their subsidiaries in advertising, marketing and communication services, including so-called marketing communication services ("MCS") – that is to say the "creative" side of advertising, involving the developments of advertising campaigns – and media buying services ("MBS") – which include purchasing advertising space in the media on a client's behalf – in many European countries and worldwide. The Commission examined the effects of the merger on competition in 20 European Economic Area (EEA) countries regarding MCS and in 22 EEA countries regarding MBS.
In both MBS and MCS, the merged entity would be sufficiently constrained by several competitors, including large international advertising groups – such as WPP, Dentsu-Aegis, IPG and Havas – capable of meeting the more complex requirements of large advertisers with global reach. Should the merged entity increase its prices or decrease the quality of its services, customers would have the ability to switch to one of the several competing agencies that would remain active in the market after the transaction. Changing agencies would be facilitated by the bidding nature of the markets, the relatively short duration of contracts and the relatively limited costs incurred for switching. In particular, should the merged entity try to use its position on the market for MBS, where advertising agencies buy advertising space from media vendors, to increase its negotiation power with media owners, the latter would have sufficient countervailing power, as a consequence of the significant degree of concentration of media owners in the relevant European countries.
The Commission therefore concluded that the transaction would not raise any competition concerns.
The transaction was notified to the Commission on 25 November 2013.
Companies and products
Publicis is active through its subsidiaries in advertising, marketing and communication services including marketing communication services and media buying services at EEA and worldwide level. Publicis is also active in the sale of advertising space in France and in the Netherlands.
Omnicom is active through its subsidiaries in advertising, marketing and communication services including marketing communication services and media buying services at EEA and worldwide level.
Merger control rules and procedures
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).