Just when he thought he was home and dry, WPP's chief executive, Sir Martin Sorrell, last week met a new obstacle to his efforts to purchase Grey Global.
The European Commission is delaying the deal while it subjects it to further scrutiny, stating that the files Sorrell submitted for clearance under EC merger regulations are incomplete.
While the EC's decision may prove only a minor hindrance to WPP, it raises serious questions for all the major holding companies.
For years, agency networks have displayed an insatiable thirst for growth.
In the past five years, Omnicom, WPP, Interpublic Group and Publicis Groupe have made seven significant purchases, worth billions collectively. But, in their pursuit of growth, are advertising holding companies risking falling foul of anti-trust laws?
Growth has always been crucial to the ad industry. The demise of Bates highlighted how an agency can be ruined in a matter of months if it's hit by a run of client departures: rapid growth is the only way to safeguard against this inherent vulnerability. "The only protection against getting smaller is to keep growing," Mark Lund, the chief executive of Delaney Lund Knox Warren & Partners, explains. "And because it's a dynamic industry and clients are attracted to the vibrancy of agencies that are doing well, the cycles of growth and decline are accelerated."
But when one considers the amount of choice clients have, it's hard to argue that, in their pursuit of growth, agencies are moving towards market dominance.
The creative industry has extremely low barriers to entry, reflected by the fact that none of the seven fastest-growing agencies this year is wholly owned by a holding company. For many, the industry's main problem is over-supply, not a lack of competition.
However, the situation in media buying and planning is more complicated.
Media agencies can leverage scale to create efficiencies for their clients.
But if one holding company acquires too great a share of the market, its rivals may not be able to compete. Client choice would be limited, and the media buying sector's high barriers to entry would mean there'd be no start-ups to improve the situation.
This issue is central to the EC's review of the WPP/Grey deal. The EC is believed to be particularly concerned about the German market, where, if the deal were allowed, WPP would own three of the country's five highest-billing media agencies, representing 37 per cent of the market (Recma, January to December 2003).
If the EC sees this as a serious obstacle, WPP could offer to keep MediaCom out of its GroupM umbrella company. If this solution were deemed insufficient, WPP would have to take a more serious course of action. It certainly wouldn't consider off-loading an entire media network, but selling a specific office seems an equally unworkable solution.
For many, it seems inappropriate that the EC is even reviewing the situation.
"Clients are more promiscuous than ever; they move their business more often and each time they do it they want a cheaper deal," one source says.
"We've consolidated to meet their needs. How can a situation be uncompetitive when it's one that's been dictated by the customer?"
WPP will be hoping the EC sees things the same way.
- Got a view? E-mail us at firstname.lastname@example.org
INVESTMENT BANKER - Anthony Fry, head of UK investment banking, Lehman Brothers
"I'm not persuaded that it's appropriate for competition authorities to be getting involved in this. The only audience that matters is the client.
"Since advertising is full of creative people who work in big shops and little shops, unhappy clients can move their business.
"If a client moves the business, it means, by definition, the model doesn't work. But until the clients move the business, there's no evidence that the model isn't working and there's no evidence that advertising is an industry where you can create market dominance."
MEDIA AGENCY CEO - Mark Cramner, chief executive, Starcom MediaVest, EMEA
"Market forces prevent anything anti-competitive happening in the marketplace, so I don't see the need for legislation.
"An agent is just a gateway between the client and the media owner - we don't own any franchises - and if agencies ever got too big then the media owners would come up with another way of trading with clients.
"The only reason that an agent exists is to add value to the process and at the moment there's enough evidence that consolidation has brought about increased benefits for customers."
CONSULTANT - Jim Surguy, UK managing director, Results Business Consulting
"The creative ad market has a complete over-supply so concerns over an abuse of monopoly power are inapplicable.
"However, from the point of view of media, there may be a case. In media, there are genuine advantages in scale, which don't apply on the creative side.
"If it looks as though any one company is acquiring a truly dominant position, then the EC may feel there is a case to be looked at. It's conceivable that if the EC believes a holding company's media operations to be too dominant in one market, that company may be asked to unbundle. But I wouldn't have thought we've reached that stage yet."
AD AGENCY CEO - Mark Lund, chief executive, Delaney Lund Knox Warren & Partners
"In the London market, you've got 300 advertising agencies, of whom, at any given time, probably 30 are pretty good and capable of satisfying most briefs for most clients. What other industry has that level of supply?
"There is possibly a case building regarding media purchasing points, but that only reflects the way the media owner landscape is evolving.
"Ultimately, I think the idea that there is too much power in one set of hands is ludicrous for advertising and highly questionable for media."