The outcome of both regulatory reviews will depend on whether sufficient competition remains post-merger.
New Zealand media agencies and local stakeholders have raised concerns that Omnicom’s proposed US$19.9 billion global acquisition of Interpublic Group (IPG) could significantly reduce competition in the media buying market.
Competition regulator the New Zealand Commerce Commission is due to issue its ruling by Thursday this week and the Australian Competition and Consumer Commission (ACCC) is also reviewing the deal, with a provisional decision expected next month.
Submissions to the New Zealand regulator have focused on the impact of the new entity on principal trading, where holding companies buy media inventory in advance and resell it to their own agencies.
Local players argue that IPG and Omnicom, as a merged entity, are expected to control more than 50% of the revenue of most local media publishers.
Lassoo Media told the NZ regulator local media have avoided the subject of principal, possibly due to “concerns of reprisal” from holding groups such as Omnicom Media Group.
“The industry commentary suggests that the holding groups threaten to move huge amounts of money away from local media if they do not adhere to their desire to trade on their terms,” Lassoo Media said.
“Not because of merit, but because they rely on these deals to be profitable.”
The Independent Media Agencies New Zealand (IMANZ) has not opposed the deal outright but did warn it could lead to the combined entity having control over a majority of the country’s media billings.
“This has potential implications not only for agency competition but, more acutely, for New Zealand media owners, whose commercial viability may be undermined by excessive buyer concentration and global profit repatriation models,” IMANZ said.
“Based on publicly available data and industry understanding, the merger would result in Omnicom dominating over 50% of New Zealand's media buying volume.
“This is based on a 2022 article by then-CEO Peter Horgan, who stated that OMG had a "47.9 percent market share and is now larger than the next three holding groups combined.”
According to research by RECMA, IPG Media Brands commands about 7.5% of New Zealand's media market share, which would result in the combined entity's control reaching about 55% after the merger.
“While the clearance application suggests a fragmented and highly competitive market, the practical reality, particularly for larger advertisers, is one of high consolidation within a small group of global holding companies,” the company stated.
In Australia, the ACCC is assessing whether the merger would substantially lessen competition in media buying, along with PR, brand strategy and events.
Omnicom’s local agencies include OMD, TBWA, DDB and Clemenger Group, while IPG’s operations include UM, Initiative, Mediahub and 303 MullenLowe.
The outcome of both regulatory reviews will depend on whether sufficient competition remains post-merger across media planning, buying and related services.
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