THE COMPETITION regulator has waved a warning flag at the proposed $1.6 billion merger between Australia's two biggest advertising groups APN (ASX: APO) and oOh!media (ASX: OML).
Australian Competition and Consumer Commission (ACCC) chairman Rod Sims says the proposed merger will create a market leader in out-of-home advertising in Australia which will capture more than 50 per cent of the market, and even higher in some segments such as roadside billboards.
"Many industry participants have competition concerns in relation to the merger," Sims says.
"The ACCC's preliminary view is that the merger is likely to substantially lessen competition in the out-of-home advertising market. The loss of competition could result in increased prices for advertisers, or lower levels of service, quality, or innovation," he says.
"Further, the ACCC is concerned the merger may damage the interests of site owners, who rely on competition between APN Outdoor and oOh!media to obtain the maximum rent for their sites.
"Industry participants have also raised concerns that the combined APN Outdoor/oOh!media will be able to squeeze competitors out of the market, by bundling billboards, where it has a dominant position, with other forms of out-of-home advertising."
The two media giants have argued that the ACCC should view the merger proposal in the context of the entire advertising landscape and that their deal would account for 5.5 per cent of the market.
The ACCC says it will take further submissions in relation to the proposed merger until 19 May and a final decision will be made on July 6.
Shares in both APO and OML were down four per cent at around 11am AEST to $5.20 and $4.30 respectively.
Business News Australia
Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support