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Publicis, Omnicom merger gets CCI clearance

By afaqs! news bureau , afaqs!, Mumbai | In Advertising | October 30, 2013
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The Competition Commission of India stated that the proposed combination is not likely to have appreciable adverse effect on competition in India and therefore, the commission approves the combination.

The much talked about merger between Omnicom and Publicis has got clearance of the Competition Commission of India (CCI).

CCI

Publicis groupe

Omnicom

The companies had announced their merger in June this year, thereby launching a new holding company which will be jointly led by Omnicom CEO John Wren and Publicis Groupe CEO Maurice Lévy. As per the statement from the company, they will work as 'co-CEOs' for 30 months, after which Lévy will become non-executive chairman and Wren will continue as CEO.

As a result of the proposed combination, the shareholders of Publicis and Omnicom will hold approximately 50.64 per cent and 49.36 per cent of the equity share capital of the holding company, respectively.

According to the commission, the proposed combination falls under Section 5 of the Act. Publicis is an international communications and advertising group, headquartered in Paris, France. Omnicom is also an international communications and advertising group, headquartered in New York, USA. Publicis and Omnicon, through their network of agencies, provide advertising and marketing services globally, including India. The proposed combination, therefore, relates to the provision of advertising and marketing services in India. Generally, the advertising and marketing agencies create campaigns and engage in media buying and planning, amongst other advertising services, for their clients.

CCI observed that the advertising and marketing services may be broadly classified into Marketing and Communications Services (hereinafter referred to as "MCS") and Media Buying Services (hereinafter referred to as "MBS"). With respect to MBS in India, CCI observed that the parties to the combination compete against a large number of global, local and independent suppliers of MBS. This makes it relatively easy for the advertising clients to switch between the alternate suppliers of MBS. It is also observed that the advertising clients have the option to procure media time directly from the media owners. Some of the advertisers also have their in-house agencies for procuring media time, thus bypassing the advertising agencies. Further, with respect to procuring media time or space by the MBS agencies, it is observed that the media owners have sufficient countervailing power to constrain the media buyer.

The Competition Commission of India stated that the proposed combination is not likely to have appreciable adverse effect on competition in India and therefore, the commission thereby approved the combination under sub-section (1) of Section 31 of the Act.

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