The Federal Trade Commission has accepted a proposed consent agreement settling charges that VNU N.V.'s acquisition of Nielsen Media Research, Inc. would violate antitrust laws. The agency alleged that the merger would restrict competition in the market for advertising expenditure measurement services in the United States. In order to remedy the anticompetitive effects of the VNU's acquisition of Nielsen, the proposed consent agreement would require VNU to divest its Competitive Media Reporting (CMR) division, the nation's largest supplier of advertising expenditure measurement services.
Richard G. Parker, the FTC's Bureau of Competition Director said, "This consent agreement is essential to maintain competition within this specialized marketplace. VNU and Nielsen are the only major U.S. companies involved in providing these services, and this agreement will ensure that competition in this market remains."
According to the FTC's complaint, Nielsen, through its Monitor Plus division, and VNU, through its CMR division, are the only companies in the United States that provide advertising expenditure measurement services. Both companies track when and where advertisements run in national and local media, such as television and radio. This information is then integrated with other data -- such as advertising cost and television ratings -- to create reports on overall advertising expenditures. Customers, including advertising agencies, television stations, and national and local businesses buy these reports to monitor competitive advertising and develop strategies for the purchase and placement of future advertisements.
As Monitor Plus and CMR are the only U.S. suppliers of advertising expenditure measurement services across multiple markets, the complaint alleges that the acquisition of Nielsen by VNU-their parent companies-would allow VNU to exercise unilateral market power, not only decreasing competition, but increasing the likelihood that the customers of these services would be forced to pay higher prices. In addition, according to the complaint, innovation within the industry would decrease and entrants into the marketplace would face significant barriers to entry, making it unlikely that a new competitor could deter or counteract the anticompetitive effects resulting from the transaction.
Under the terms of the proposed consent agreement, these anticompetitive effects would be remedied through VNU's divestiture of its CMR division within six months of when the agreement was signed. This is a significant divestiture as, according to the FTC's complaint, CMR currently has approximately a 72 percent share of the market for advertising expenditure measurement services. If VNU fails to divest CMR within the six-month time frame, the Commission may appoint a trustee to ensure the sale occurs. In addition, the proposed consent agreement would ensure that the acquirer of CMR would continue to have access to Nielsen's television ratings data by extending CMR's current contract with Nielsen to supply this information.
In addition, the proposed consent agreement would ensure that CMR remain a viable, independent competitor in the marketplace through the issuance of an Order to Hold Separate. Under the order, the Commission may appoint an independent auditor to monitor VNU's compliance with its obligation to hold CMR separate and independent. In addition, to ensure that the buyer of CMR has access to key CMR employees, the order would also require that VNU provide financial incentives for these workers to accept jobs with the acquirer. Finally, the order would require VNU to provide the Commission with a compliance report within 30 days after the consent agreement is finalized, and every 30 days thereafter until the divestiture has been completed.
A summary of the proposed consent agreement will be published in the Federal Register shortly. The agreement will be subject to public comment for 30 days, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.
The Commission vote to accept the proposed consent agreement was 4-0.
NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.
Copies of the complaint, proposed consent agreement, and an analysis of the proposed consent order to aid public comment, are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
(FTC File No. 991-0319)