Commercial broadcasters TF1 and M6, owned by Bouygues and RTL Group respectively, abandoned their merger plans in September 2022, given the significant remedy requirements needed to obtain clearance for the deal. Compass Lexecon provided economic support to Iliad, a major player in the European telecom sector active in France through the commercial brand Free and one of the main third-party intervenors regarding the TF1/M6 review.
TF1 and M6 are the two main broadcasters of free-to-air channels in France. They first announced their merger plans in May 2021, aiming to create a major new French media group.
The transaction was under investigation by the French competition authority (“FCA”) as well as by the French media regulator. Their in-depth Phase II investigation revealed that the contemplated merger could have significant anti-competitive effects, mainly in the markets for TV advertising and for TV distribution services. The various remedies proposed by the Parties did not sufficiently overcome the authority’s concerns. Shortly after a hearing before the FCA in September 2022, the Parties stated that the set of remedies to approve the contemplated merger would be too substantial to justify the strategic rationale of the deal.
Compass Lexecon submitted several expert reports and notes to the FCA (in Phase I and Phase II) and sectoral regulators, concerning the impact of the contemplated transaction on the advertising and distribution markets, as well as on the first remedy package submitted by the merging parties.
A significant part of our work revolved around the delineation of the relevant product market for advertising services and the extent to which its scope would extend beyond traditional TV advertising to include e.g. certain digital formats. In particular, we undertook a detailed analysis of a large sample of main advertisers’ actual advertising campaigns on social medias to assess their specificity, contrast them with TV advertising and thereby assess the importance of the competitive constraint this format could exert on TV advertising. Our analyses confirmed that TV advertising and these digital advertising formats were not sufficiently substitutable from the point of view of TV advertisers to represent competitive constraints comparable to those exerted by the merging parties onto each other, which has been the view endorsed by the FCA.
We also characterized the risks of unilateral effects on both the advertising and distribution market, in relation to how closely the parties were competing on the viewer side. We last commented on the evident limits of the remedy package proposed by the parties in view of how closely they were competing.
The Compass Lexecon team comprised David Sevy, Antoine Gracia Victoria, Marion Chabrost, Adrien Damade and Corentin Lemaire, as well as Ethan Soo and Wiktor Owczarz from Compass Lexecon data science team. We worked closely with Olivier Fréget and Liliana Eskenazi at Fréget-Glaser & Associés.