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ACM definitively blocks acquisition of media company Talpa by rival company RTL

The Netherlands Authority for Consumers and Markets (ACM) has blocked the acquisition of media company Talpa by rival company RTL, because it would have created too powerful a company in the media sector. If the acquisition had gone through, it would have led to higher prices for television ads and for the distribution of television channels through telecom companies. Such higher prices would have eventually been passed on to consumers. RTL and Talpa in December did put forward proposals for taking away the anticompetitive concerns. ACM has deemed those proposals to be inadequate.

Too much market power on the market for television ads

If RTL and Talpa were to merge, advertisers would have few other alternatives for advertising on television channels. That would mean that RTL/Talpa could raise prices. In that context, advertising organization Ster, which offers advertising space on the channels of Netherlands Public Broadcasting (NPO), would not be able to exert sufficient countervailing power. Higher advertising prices ultimately lead to higher prices for consumers.

Advertisers and media agencies have indicated that they still see significant differences between online ads and television ads. They also indicate that advertising on television is crucial for marketing products to consumers. That means that, if prices of television ads go up, advertisers will not be able to switch to online ads. Therefore, the prices of online ads do not keep the prices of television ads in check, at least right now as well as in the next few years. A combined RTL/Talpa would thus be able to raise prices for television ads without any repercussions.

ACM also sees that businesses spend more and more on online ads. However, those increased expenditures usually do not come at the expense of their advertising budgets for radio or television. ACM expects that, over the next few years too, television advertising will continue to remain an important and independent market in the Netherlands.

Too dominant a company on the market for the distribution of television channels

Telecom companies such as KPN or VodafoneZiggo include commercial television channels in their television packages. After the acquisition, they would not be able to ignore a combined RTL/Talpa. In fact, that is difficult already today, since not including either RTL or Talpa in their packages would mean that consumers switch to a different telecom company. If the acquisition were to go through, the bargaining position of telecom companies would deteriorate. After the acquisition, a combined RTL/Talpa would also be able to charge higher prices. That means that consumers would pay more for their television plans.

ACM’s concentration control: mergers, acquisitions, and joint ventures

With any merger, acquisition, or joint venture, there is a question of whether sufficient competition will remain on that market, right after the concentration as well as in the subsequent years. Competition ensures that products are of high quality, and that they are offered on the market at competitive prices. Competition also promotes innovation. That is why ACM decides in advance whether or not companies are allowed to join forces. ACM assesses whether the markets involved will continue to work well for people and businesses, now and in the future.

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