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OFT's ITV merger inquiry overruns as decision awaited

LONDON - The complexity of the merger between Granada and Carlton has been highlighted after the Office of Fair Trading failed to conclude its investigation into the merger within its usual 45-day period, leaving the delay convincing most that the deal will be referred to the Competition Commission.

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The OFT does not operate under a strict timetable, but it usually takes 45 days to evaluate a case and advise the government on what to do. Once the OFT has made its case, the government usually takes a week to decide whether to refer a deal to the Competition Commission.

Carlton Communications and Granada announced their intention to merge in October and the 45-day period would have been up at the end of January. A formal decision had been expected earlier this month.

The deal is expected to be referred to the Competition Commission because a combined Carlton and Granada would have an advertising share of more than 50%.

The industry is largely in favour of the merger because it will enable ITV to invest more in programming, which will in turn benefit advertisers because it will attract more viewers.

Carlton and Granada are lobbying hard to be allowed to merge their sales houses because they say combining the operations would save as much as £20m. However, they are also aware that they may have to separate the two sales houses to ensure competition in the airtime sales market is maintained.

In October, when they announced the merger, the companies said: "Carlton and Granada will be discussing with the regulators the appropriate arrangements for the sale of airtime by the merged group, which to the extent necessary may extend to a separate sales organisation."

Despite the prospect of two sales houses being maintained, there are still fears that the two could collude on price because they would ultimately be working for the same company.

The delay in the OFT's report only highlights the complicated nature of the ITV merger, which will be allowed when the communications bill is made law later this year.

Granada is being advised on the merger by former OFT director general John Bridgeman, it emerged this week.

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