ACCC clears WPP bid for TNS subject to divestiture

The Australian Competition and Consumer Commission will not intervene in the proposed acquisition of Taylor Nelson Sofres plc. by WPP Group plc., after accepting court-enforceable undertakings from WPP, ACCC Chairman, Mr Graeme Samuel, said today.

WPP and TNS both provide a broad range of market research and information services in Australia and overseas. The key area of competition concern identified by market participants during the ACCC's market inquiries was Television Audience Measurement (TAM) services. WPP provides TAM services in Australia via its AGB Nielsen joint venture with The Nielsen Company. TNS provides TAM services in a number of countries; importantly, while TNS does not currently have a contract to supply TAM services in Australia, market participants consider the threat of TNS supplying these services in Australia is a key competitive constraint on AGB Nielsen*.

"Without the divestiture undertaking, the ACCC considered that the proposed acquisition raised serious competition concerns in the market for TAM services in Australia because it would result in the loss of the closest competitor for future TAM contracts in Australia. The ACCC's inquiries indicated that there were no other TAM providers able to impose a strong competitive constraint on the merged firm in Australia, particularly in the short to medium term.

"However, the undertaking adequately addresses the ACCC's concerns by ensuring that there will continue to be a second, long-term viable competitor for TAM contracts in Australia." Mr Samuel said.

The divestiture undertakings

The European Commission has accepted an undertaking from WPP that it will divest either its 50 per cent AGB Nielsen Shareholding (to Nielsen), or the TAM services business currently owned and operated by TNS in the European Economic Area (the TNS divestment business). Although they are located in Europe, the assets in the TNS divestment business are crucial to TNS's ability to bid for Australian TAM contracts.

The ACCC has accepted additional court-enforceable undertakings under section 87B of the Trade Practices Act 1974. These require that WPP must either divest the AGB Nielsen Australian Business, or divest the TNS divestment business. The ACCC considers that either divestiture would ensure the acquisition will not substantially lessen competition, since there will continue to be two strong competitors capable of competing for TAM services in Australia, as there are pre-acquisition.

Other markets

The ACCC also considers that the proposed acquisition is unlikely to substantially lessen competition in any of the other areas of competitive overlap between the two firms, such as market research and the provision of online panels. The parties face stronger competition in these markets, and barriers to entry are generally much lower.

The undertakings will be available on the ACCC's website, www.accc.gov.au, today, and a Public Competition Assessment will be issued on the ACCC's website in due course.