Commission says no decision made on ITV sales houses

LONDON - The UK Competition Commission has denied it has made any decision on the ITV merger deal, after reports suggested it was set to sensationally reject compromises put forward on the issue of merging Carlton and Granada's TV sales houses.

In a statement issued this morning, a commission spokesman said: "The Competition Commission have not decided anything yet. The investigation is ongoing and we will report to the Secretary of State by the 26th of August."

He was responding to questions raised by at the weekend by The Observer newspaper, which said the commission had rejected two suggested remedies put forward by Carlton and Granada designed to overcome industry concerns about the merger of the two ITV sales houses as part of the £2.6bn merger.

According to a report in The Observer newspaper, the Competition Commission is set to reject the two proposals put forward by the ITV companies in late June. If that is so, it is likely to kill off the merger and end the idea of creating a single ITV company.

One of the proposals would allow advertisers to renew share deals, but based on the same terms as previously agreed. Advertisers would also be allowed to reduce the number of ads shown if ITV's share of viewers decreased, without losing their discounts. Share deals give advertisers discounts over a period of time if they agree to spend a certain amount of money.

The other proposal allowed for a minimum amount of ITV's airtime to be auctioned off each year to a third party, which would then be sold to a secondary market.

The proposals had already been greeted with scepticism by key advertisers, including Procter & Gamble, and media agencies. ISBA, the voice of British advertisers, said the new remedies put forward did not solve any of the problems.

"There is some doubt as to whether specific technical remedies would solve the fundamental problem of the dominance in the airtime market that a single ITV would have," ISBA said.

It is opinions like this that have led the commission to formally reject the proposals, putting the whole merger deal at risk. If Carlton and Granada can not merge their sales houses then it is thought likely that the merger will be killed off.

Michael Green, the Carlton chairman, has already said he will walk away from the deal if this happens.

ISBA is not alone in its opposition. Advertising agency body the IPA has also said it does not believe that the new remedies work, while Procter & Gamble has said the remedies failed to address the key issue of the 50%-plus control of the airtime sales market.

The core fear of advertisers is that they might have to pay more if Carlton and Granada are allowed to go ahead and merge their respective sales houses and control more than 50% of the TV airtime sales market.

The hostility displayed by advertisers and media buyers could help persuade the commission that the ITV companies must sell off the sales houses if they want the merger to go ahead.

The new remedies put forward by ITV came at the same time as the commission announced that it would delay its decision on the merger by a further two months, allowing it to consult the TV and advertising industry about additional remedies suggested to allow the merger to go through.

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