Carlton and Granada merger set to be referred

LONDON - The £2.6bn merger of ITV broadcasters Carlton Communications and Granada is set to be referred to the Competition Commission later this week.

The merger is being referred to the government body by the Office of Fair Trading, largely on the back of concerns about the control of the television advertising market.

The decision is likely to be welcomed by industry bodies. In December, the IPA called for the merger to be referred to the Competition Commission because of its concerns over the creation of a possible single sales house.

It is understood that the competition inquiry will take more than three months, with an announcement due shortly afterwards. However, despite the commission having previously barred the merger of Carlton and what is now United Business Media, it is not thought that this merger will be blocked.

Some advertisers and ITV competitors have expressed grave concerns about the merger of the two companies' sales houses, which would create a monopoly with over 50% of UK advertising revenues. However, recently it was reported that ITV's share of TV advertising was set to slip under 50%.

In their submission to the OFT, the two have argued that apart from London they do not overlap or compete for advertising. In addition, the two say that they already compete as a single entity against the BBC, BSkyB, Channel 4 and Five.

The two are arguing that they should be allowed to act as one company in relation to television advertising. If the green light is given, it is likely to see the creation of a rival sales house out of the sales operations of Channel 4 and Five and possibly BSkyB also. The three have been holding talks for some time.

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