Competition Commission gives options for ITV merger

The Competition Commission has outlined two possible outcomes to its investigation into the proposed Carlton/Granada merger, should it find the existing proposal is against the public interest.

In letters issued to Carlton and Granada, the Commission says a complete ban on the merger taking place or the sale of both sales houses to be run independently would be the options.

The letters - a standard measure distributed in all cases by the Commission before it reaches its conclusions - also provide a clear outline of the factors that it will consider in reaching its findings.

It will consider the definition of economic markets affected by the proposed merger to determine whether or not total television advertising - rather than total display advertising - is the relevant market within which to view a merged ITV.

Second, it will study how the proposed merger is likely to affect competition.

Within this, it will focus on whether Carlton and Granada currently compete against each other for advertising revenue and share, and if so, whether the merger would lessen this competition.

It will consider in detail the likely impact on the current airtime trading system, and whether or not a merged ITV could manipulate station average prices or introduce predatory pricing practices.

The Commission will then weigh up any factors that may work in Carlton and Granada's favour, such as the ability of advertisers and agencies to use alternative TV channels, and whether the current system for pricing TV advertising would prevent it from increasing prices. Finally, it will look at the potential benefits of the merger.

A date of 25 June has been set for the Commission to deliver its final report. The Trade and Industry Secretary, Patricia Hewitt, will then make a decision on the merger. The Commission's letters to Carlton and Granada follow recent reports that the City has doubts over proposals that a merged ITV would be led by the Carlton chief executive, Michael Green, and the Granada chairman, Charles Allen.