Since 17 May 2021 the Bouygues and Bertelsmann groups have been trying to finalise their agreement to sell M6 group to TF1. The merger, which concerns two main actors of the French Media, was closely watched. However, the French Competition Authority ("Authority") informed the parties that it was considering prohibiting the merger because of the competitive risk due to the parties' market power in relation to the television advertising market (unless the TF1 or M6 channel was sold). For Bouygues, this was inconceivable and consisted of selling what they wanted to buy.
On 16 September 2022, the Authority published a press release to take note of Bouygues' decision to withdraw its proposed acquisition.
The competitive risk identified by the Authority due to the parties' combined market power in relation to the television advertising market
According to press release, the transaction could have given rise to major competitive risks, particularly in the television advertising and television service distribution markets.
The market power of the TF1 and M6 groups combined would have given rise to a strong risk of an increase in the price of advertising space sold by the parties to the detriment of advertisers and consumers. In addition, since the channels of the TF1 and M6 groups are together unavoidable, the new entity would have gained an increased bargaining power vis-à-vis its distributors, such as Internet access providers, which would have led to a risk of a price increase.
The question of the definition of the television advertising market and the parties' market power was the central issue. In particular, according to the Authority, television and online advertising are not sufficiently substitutable from the advertisers' point of view.
The proposed commitments included the separation of the advertising departments of the TF1 and M6 channels. This was deemed insufficient because whatever the rules of governance of the two advertising agencies, the economic incentives of the two agencies, placed under the control of Bouygues, would have been identical.
The future of the French audiovisual sector and the cultural exception in question
The parties find it difficult to understand this decision because, in the meantime, Netflix has announced its intention to offer an advertising-financed service (reduced-rate subscriptions with advertising breaks) from November 2022 in France. The advertising revenues could reach hundreds of millions of euros by 2024, which would make it a major competitor to TV channels and could threaten the French cultural exception.
The press release of the French Competition Authority is available here (in French).
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