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09Jan14

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EU clears $35 billion Omnicom, Publicis merger

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EU antitrust regulators said on Thursday they had cleared the $35 billion merger of U.S. advertising agency Omnicom (OMC.N) and French peer Publicis (PUBP.PA) without conditions.

The deal creates the world's biggest advertising agency to compete better with the likes of Google (GOOG.O) and Facebook (FB.O) in online ad sales. Omnicom now ranks second behind leader WPP (WPP.L), with Publicis in third place.

Reuters reported on December 17 that the EU antitrust authority would approve the deal.

"The merged entity would be sufficiently constrained by several competitors, including large international advertising groups," the European Commission said in a statement. "Should the merged entity increase its prices or decrease the quality of its services, customers would have the ability to switch."

Analysts had expected the deal to trigger tough antitrust scrutiny because of the combined company's strong market share and possible concerns from major clients.

The Commission did not see risks to damaging competition.

"Changing agencies would be facilitated by the bidding nature of the markets, the relatively short duration of contracts and the relatively limited costs incurred for switching," the Commission said.

The French-U.S. giant will bring the accounts of major competitors in a number of industries such as Apple (AAPL.O) and Samsung (005930.KS), or Coca-Cola (KO.N) and PepsiCo (PEP.N), under one roof. It will also group together Publicis agencies such as Saatchi & Saatchi and Leo Burnett with Omnicom's BBDO Worldwide and DDB Worldwide.

Regulators in the United States, South Korea, Canada, India, Turkey and South Africa have already given the green light to the merger.

[Source: By Foo Yun Chee, Reuters, Brussels, 09Jan14]

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