The letter included what the Commission called "hypothetical remedies" that would come into play should it find the merger went against the public interest. One of its "remedies" is a complete ban on any merger going ahead.
As an alternative to an outright ban on the two ITV companies merging, it suggests that Carlton Communications and Granada may have to sell off their advertising sales houses, which would then be run as independent entities.
The issue of the advertising sales house has, since the merger was first announced last year, been the most troublesome. It is the issue that has had advertising and advertising agencies up in arms.
They worry that, if allowed to merge, Carlton and Granada, which combined would control more than 50% of the ITV airtime sales market, would effectively extinguish competition.
The Competition Commission's third "hypothetical remedy" deals with the smaller ITV licencees and independent production companies, and it suggests an "adherence to a code of conduct designed to protect the position" of these companies.
The Competition Commission said its letters are always sent before the commission reaches any conclusions and are designed to highlight matters that have been identified for further consideration.
The statement has been made public to give interested parties the opportunity to bring to the commission's attention, within the next two weeks, any further points.
However, the commission said it had as yet reached no conclusions and that the "hypothetical remedies" were just that.
"The commission has reached no conclusions about whether any matters operate or may be expected to operate against the public interest and will not do so until after it has discussed these issues with the parties concerned," it said in its statement.
The Competition Commission is considering four main areas. These are the appropriate definition of the economic markets affected by the proposed merger; and whether the proposed merger is likely to affect competition in any of the markets identified, which is the area of most concern to advertisers.
It said it was also looking at whether any potentially unwelcome consequences of the proposed merger might be curtailed to avoid detriment to public interest and, lastly, whether there are expected to be benefits from the proposed merger.
With regard to "the appropriate definition of the economic markets" the commission posed the question whether TV advertising -- as opposed to ITV advertising or all display advertising -- is the relevant market, and whether its geographic extent is the UK or England and Wales?
The second point concerning competition is the one of most concern to the advertising industry, in particular, and the commission said it was considering whether Carlton and Granada currently compete for advertising revenue or share in London and in the regions; and, if so, whether the proposed merger can be expected substantially to lessen that competition.
As a consequence, the commission is asking whether it is likely to lead ultimately to a significant rise in prices, or reduction in quality or levels of service, for all or some advertisers and/or media buying agencies.
The commission is also looking at whether any practices (such as price discrimination, bundling airtime sold to media buying agencies or predatory pricing) may be expected to arise or be exacerbated by the merger.
In this area of investigating, it included whether the merged entity will be able to manipulate station average prices -- and/or the discounts offered from them -- to its own advantage; or whether the merged entity will end the station average price system and impose new arrangements.
View the Competition Commission letter to Carlton and Granada in full .
If you have an opinion on this or any other issue raised on Brand Republic, join the debate in the .
.jpg)
.jpg)