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a. the names of the merger parties;
(a) Omnicom Group Inc. (“Omnicom”); and
(b) Interpublic Group of Companies (“IPG”).
(collectively, the “Parties”)
b. a description of the transaction;
The notification relates to the proposed acquisition by Omnicom of IPG in a stock-for-stock transaction (the “Proposed Transaction”).
c. a description of the business activities of the merger parties worldwide and in Singapore;
Omnicom
Omnicom is a New York based provider of marketing and sales solutions. Omnicom comprises an inter-connected global network of leading marketing communications companies offering a diverse, comprehensive range of marketing solutions spanning brand advertising, customer relationship management (“CRM”), media planning and buying services, public relations and numerous specialty communications services globally, including to customers in Singapore.
IPG
IPG is a Delaware based company that provides its customers with media planning and buying services, data and engagement solutions, integrated advertising and creativity solutions, public relations, specialised communications and experiential solutions. IPG offers all solutions globally, including to customers in Singapore.
d. a description of the overlapping goods or services, including brand names;
The Parties overlap in the provision of advertising, marketing and communications (“AMC”) services globally and in Singapore, specifically marketing communications services (“MCS”) and media buying services (“MBS”).
e. a description of substitute goods or services from demand-side and supply-side considerations;
For the supply of MCS and MBS, consultancy services and similar services offered by competitors of the Parties are considered to be close substitutes from a demand-side perspective.
Similar services offered by competitors of the Parties are considered to be close supply-side substitutes, while consultancy services and new media giants are emerging to be supply-side substitutes.
f. the applicant’s views on:
i. definition of the relevant market(s);
The Parties considered that the relevant markets for the purposes of this notification are (i) the supply of MCS; (ii) the sale of MBS; and (iii) the procurement of MBS, respectively in Singapore (the “Relevant Markets”).
ii. the way in which competition functions in this market;
For the supply of MCS, pricing is negotiated on an individual customer basis, with customers using bidding processes to select an MCS provider for a particular advertising contract. The bidding process pits MCS providers against each another, with customers leveraging the competitive bidding process to obtain the best quality and price.
For the sale and procurement of MBS, almost all MBS contracts are awarded through detailed bidding processes. Price is the primary decider of contract awards in the markets for sale and procurement of MBS.
iii. barriers to entry and countervailing buyer power; and
No significant barriers to entry or expansion
The Parties submitted that the barriers to entry in the Relevant Markets are low. There are a significant number of potential entrants who could enter the Relevant Markets in Singapore relatively quickly on a material scale.
The Parties are of the view that there are no applicable constraints on the ability of their competitors to expand or utilise their existing productive capacity.
Strong countervailing buyer power
The Parties submitted that customers of the Parties have strong countervailing buyer power, given that the customer base of both Parties are highly sophisticated.
Ease of switching
The Parties submitted that switching costs are low across the Relevant Markets. Customers are not tied contractually to any given agency and often use the services of various agencies, including smaller independent local firms, across different brands or product lines simultaneously.
iv. the competitive effects of the merger (non-coordinated, coordinated and/or vertical effects, as relevant).
Coordinated effects
The Parties submitted that the Proposed Transaction will not give rise to any coordinated effects for the supply of MCS, the sale of MBS and the procurement of MBS in Singapore in view of the following: (a) the presence of numerous existing and potential competitors; (b) the ease of switching by customers; and (c) the low barriers to entry.
Non-coordinated effects
The Parties submitted that the Proposed Transaction would not give rise to any non-coordinated effects for the supply of MCS, the sale of MBS and the procurement of MBS in Singapore due to the following:
a. the multitude of existing and potential competitors that can easily expand or enter to exert significant competitive pressure on the combined business of the Parties;
b. the absence of material barriers to entry or expansion; and
c. the ability of customers to switch easily between different suppliers and the presence of large and sophisticated customers with substantial countervailing buyer power.
Vertical effects and conglomerate effects
The Parties submitted that the Proposed Transaction would not give rise to any vertical effects, as Omnicom and IPG do not supply or procure any products or services from each other.
To the extent any non-horizontal relationship exists for a subset of common customers, the market dynamics as outlined above would preclude any potential conglomerate concern.
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