WPP’s ever-expanding gaggle of media companies – Mediacom, Mindshare, MEC, GroupM and Kinetic – have been on the regulators’ radar somewhere for some time (WPP probably wouldn’t be allowed to buy Aegis for example) but Sir Martin Sorrell’s outfit probably never expected a challenge in the north of England.
Brilliant Media was bought out of administration by MediaCom after losing its two biggest accounts, retailers Asda and DFS. Furniture store chain DFS went to MediaCom. Not-so-Brilliant Media was bought via a pre-pack deal in which the buyer escapes the target company’s debts.
The OFT says: “The Office of Fair Trading is considering whether this acquisition has resulted in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.”
Quite what all this merger stuff means is anyone’s guess but presumably the problem is that WPP now controls too much of the market in the north (although Starcom and Aegis-owned Carat operate there), not England or the UK as a whole. If it’s the latter WPP really will be concerned.
The OFT says it will try to make a decision in February about whether or not to refer the deal to its big brother The Competition Commission.