Omnicom and IPG themselves came up with a proposed “remedy” for anticompetitive effects of their merging to create the world’s biggest advertising group, according to the US competition regulator, the Federal Trade Commission (FTC).
They were told by the FTC the advertising industry has been “plagued by deliberate, coordinated efforts” to steer ads away from certain news organisations, media outlets and social media networks.
This is seen as a reference to efforts by president Donald Trump's administration to root out political bias against conservative voices and causes.
“This type of coordination 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,” said FTC chairman Andrew N. Ferguson
To get approval from the regulator, the two companies promised not to create exclusion lists, which previously had cut some publishers out of advertising placements on “political or ideological” grounds.
“The parties have proposed a remedy in the form of conduct restrictions that will mitigate this merger’s anticompetitive effects,” said Ferguson.
“The history of collusion in the market for media-buying services, and the increased potential for collusion post merger, make this a rare instance where the imposition of a behavioural remedy is appropriate.
“The proposed decision and order prohibits Omnicom and IPG from entering into or maintaining any agreement or practice that would steer advertising dollars away from publishers based on their political or ideological viewpoints.
“To be sure, coordinated action by advertising agencies against politically disfavoured publishers is tantamount to an agreement not to compete on quality, but obtaining such a ruling in litigation could take years.
“Today’s decision and order eliminates the potential for costly litigation while ensuring that Omnicom and IPG abide by the antitrust laws post-merger.”
The FTC argues that Omnicom’s proposed acquisition of IPG would consolidate the media-buying services market further.
“It would bring together the third- and fourth-largest companies in this market to form a new number one, while reducing the number of significant competitors from six to five,” said Ferguson. “As a result, concentration in this market would increase.
“One of the great dangers of mergers such as this one is that they increase the risk of collusion among the remaining firms, which can lead to higher prices, reduced output, and other actions that harm consumers such as degraded quality.
“This risk is what is often referred to as ‘coordinated effects’ a merger leads to reduced competition not because of a single firm’s unilateral actions, but because a group of firms coordinate their behaviour in anticompetitive ways. “
The FTC says advertising agencies’ decisions on media buying are critical to the success and failure of publishers. Most would not be economically viable without sufficient advertising revenue.
“This impact is not limited to behemoth publishers like television networks, social-media platforms and major websites,,” said Ferguson.
“It also includes thousands of small, independent publishers who serve important, unique consumer needs, and are vital to the free exchange of ideas.
The FTC said a Congressional investigation found that the World Federation of Advertisers’ Global Alliance for Responsible Media (GARM) banded together the most powerful firms in their industry to “choke off” the advertising revenue of those who disagreed with them, disseminated information they believed to be untrue or refused to de-platform those who did.
The World Federation of Advertisers’ members, which include Omnicom and IPG, account for roughly 90% of global advertising spending.
GARM has disbanded under a cloud of litigation and congressional investigation.
“Omnicom and IPG have committed themselves to help stop that sort of coordination in their industry,” said Ferguson.
“This consent agreement will help mitigate the dangers inherent in a consolidated national advertising market.
“I hope the conditions imposed on this merger will encourage all advertising firms to adopt similar practices and thereby reduce the temptation to collude to the detriment of their customers, independent journalists, small and independent media companies, consumers, and the American public square.”
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