Omnicom-IPG merger approved in US and New Zealand
The Omnicom and IPG merger is a couple of steps closer to completion, following regulatory approvals in the US and New Zealand.
The US Federal Trade Commission (FTC) approved the move on Monday (Tuesday, AEST time), on the condition the new company does not enter into agreements to steer ad dollars toward, or away, from publishers based on political content. The companies pledged to uphold this condition.
“In recent years, the advertising industry has been plagued by deliberate, co-ordinated efforts to steer ad revenue away from certain news organisations, media outlets, and social media networks,” FTC chairman Andrew Ferguson said in a statement.
“This type of co-ordination risks America’s largest companies’ economic weight unwittingly being enlisted for the political and ideological aims of certain advertising industry groups and political activists who in turn avoid the costs they would incur if they merely refused to deal on their own.”
Omnicom and IPG had previously expressed confidence that the plan would be approved, with executives calling the Trump administration more ‘business-friendly’, per the WSJ. However in March, uncertainty rose when the FTC requested additional information. This signposted a review of the deal.
Ferguson said this week’s decision eliminates the potential for “costly litigation” while ensuring Omnicom and IPG abide by antitrust laws, post-merger.
New Zealand’s Commerce Commission also approved the deal last week, as it found it is unlikely to substantially lessen competition.
“Our investigation found that, while Omnicom and Interpublic compete to supply marketing and communications services and media buying services to advertiser clients throughout New Zealand, the merged entity is likely to continue to face strong competitive constraint from other large … agencies, as well as local independent agencies supplying these services, following the acquisition,” Anne Callinan, deputy chair, said in a statement.
The UK’s Competition and Markets Authority has also launched a review, with a preliminary decision expected in August.
The combined advertising giant would retain the Omnicom name. If Garrett was in situ at the time of the approval, he would be expected to head up the expanded post-acquisition Omnicom.
The ACCC also opened a review into the proposal. It will release its preliminary findings on July 24.
Locally, Nick Garrett has been tipped to lead a new management structure for Omnicom, encompassing both the Omnicom Advertising Group and Omnicom Media Group. With the addition of IPG agencies, it would make him one of the region’s most powerful people in advertising.
Omnicom’s potential local management structure is conditional, however, on the Clemenger Group negotiations. The holdco is preparing to fully acquire Clemenger Group, which would see it increase ownership from 86.84% to the full 100%.
Omnicom and IPG have said that they expect the merger to close during the second half of this year.
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