IPA reacts cautiously to merger news

LONDON - The advertising agency body the IPA has reacted cautiously to the news of a Carlton and Granada merger saying that while not opposed to the merger itself it is fundamentally opposed to the merger of the sales houses.

IPA reacts cautiously to merger news

The IPA said it was opposed to any arrangement that would result in a merger of Carlton and Granada's sales activities –on the grounds that this would dramatically reduce competition in the media market and could potentially lead to the manipulation of advertising rates.

Jim Marshall, the chairman of the media policy group, says all merger discussions between Carlton and Granada are predicated on the scrapping of the current rules barring one company from controlling 15% or more of the national audience - or owning both London franchises.

Assuming these rules are dropped as a result of the Communications Bill becoming law next year - while the companies still hold 50%+ of airtime sales - they would still need to persuade the Competition Authorities that a consolidation should go ahead.

According to Marshall: "From our point of view unless we are convinced that satisfactory arrangements are in place to prevent the creation of a single sales operation - and thus to maintain competition - we would immediately refer the matter to the relevant authorities."

He added: "Charles Allen has suggested this might be achieved if the companies keep their advertising sales separate, creating one or two independent operations. While we should, ideally, like to see two wholly independent set-ups rather than one - this is a route with which the IPA has some sympathy - and indeed has been suggesting for some time as a way of possibly solving the dilemma of preserving competition in a consolidating marketplace."

The support of the IPA, Marshall said, comes down to the detail: how do the companies propose to handle the London franchises? How would the arrangement be regulated and policed to ensure no collusion? And how would it be accountable to advertisers and the ad agency industry?

"Until we see answers to these sorts of question - we remain to be convinced," Marshall said.

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