ACCC approves Omnicom-IPG merger
The ACCC has approved Omnicom’s proposed acquisition of IPG, marking a major progression in the deal due to close later this year.
On Thursday, the watchdog confirmed it would not oppose the proposal, as it would be “unlikely to substantially lessen competition in the supply of media buying services and marketing and communications services”.
It found that other holdcos including WPP, Publicis, and Dentsu, as well as independents, “will continue to compete” with a combined Omnicom-IPG conglomerate.
Globally, the merged entity will have net revenues over US$20 billion, which will make it the biggest holdco.
ACCC commissioner, Dr Philip Williams, said in a release: “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.”
Dr Philip Williams
Locally, Omnicom agencies include DDB, TBWA, OMD, PHD, Clemenger Group, and Hearts & Science. IPG’s Australian brands include IPG Mediabrands, Initiative, 303 Mullenlowe, Octagon, and Universal McCann — which services the Australian Government, including the ACCC.
Last month, the deal was also approved in the US.
The US Federal Trade Commission (FTC) approved the move on the condition the new company does not enter into agreements to steer ad dollars toward, or away, from publishers based on political content. The companies pledged to uphold this condition.
“In recent years, the advertising industry has been plagued by deliberate, co-ordinated efforts to steer ad revenue away from certain news organisations, media outlets, and social media networks,” FTC chairman, Andrew Ferguson, said in a statement.
“This type of co-ordination risks America’s largest companies’ economic weight unwittingly being enlisted for the political and ideological aims of certain advertising industry groups and political activists who in turn avoid the costs they would incur if they merely refused to deal on their own.”
New Zealand’s Commerce Commission also found it unlikely to substantially lessen competition, and last month it too approved the deal.
“Our investigation found that, while Omnicom and Interpublic compete to supply marketing and communications services and media buying services to advertiser clients throughout New Zealand, the merged entity is likely to continue to face strong competitive constraint from other large … agencies, as well as local independent agencies supplying these services, following the acquisition,” Anne Callinan, deputy chair, said in a statement.
The UK’s Competition and Markets Authority has also launched a review, with a preliminary decision expected in August.
The combined advertising giant would retain the Omnicom name.
Locally, Nick Garrett has been tipped to lead a new management structure for Omnicom, encompassing both the Omnicom Advertising Group and Omnicom Media Group. If Garrett is in situ at the time the acquisition goes through, he is expected to head up the expanded post-acquisition Omnicom. With the addition of the IPG agencies, it would make him one of the region’s most powerful figures in advertising.
Omnicom’s potential local management structure is conditional, however, on current Clemenger Group negotiations. The holdco is preparing to fully acquire Clemenger Group, which would see it increase ownership from 86.84% to the full 100%.
Omnicom and IPG have said that they expect the merger to close during the second half of this year.
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