LONDON -- U.K. watchdog the Office of Fair Trading announced Tuesday that it has referred the proposed £2.6 billion ($4 billion) merger of two major ITV shareholders, Granada and Carlton, to the Competition Commission.
Trade and industry secretary Patricia Hewitt said there were concerns that their combined advertising sales department would unfairly dominate the market.
Blighty's advertisers have been calling for a probe into the deal because the merged commercial network could end up controlling 50% of commercial TV viewing and 54% of national television ad coin.
They fear combining Carlton and Granada's airtime sales houses may lead to further consolidation at broadcasters Channel 4, Five and ITV breakfast TV franchise GMTV in a bid to compete for a greater slice of the ad pie.
Granada and Carlton are expected to lobby hard for the creation of a combined sales house, but could compromise by spinning off one sales company as a separate entity, run independently of ITV.
Channel 4 deputy chief exec David Scott welcomed the decision. "Channel 4 is convinced that allowing a single company to control more than half of the television advertising market in the U.K., through one sales house or two, is fundamentally anticompetitive," he said.
Carlton chairman Michael Green and Granada chairman Charles Allen remain confident the union will be approved.
"This merger will not affect the competition for viewers. ITV is already one network and advertisers follow viewers and viewers follow programs. We look forward to working with the Competition Commission over the coming months," Green said.
Allen added, "The timing of the Competition Commission report is in line with the original timetable the two media giants envisaged at the time the merger was announced."
The competish watchdog is expected to take up to seven months to investigate the deal, which would see Granada owning 68% of a merged company, leaving Carlton 32%.
Carlton shares fell 6% to $1.16 and Granada's dipped 4% to 81¢ on the London Stock Exchange after news of the referral Tuesday.
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