At the end of May last year, the French outdoor advertising multinational JCDecaux announced the purchase of its competitor’s operation in Spain Clear Channel for 60 million euros. Today it has announced that it will not continue with the acquisition as a result of the assessments carried out by the National Markets and Competition Commission (CNMC).
“After more than 14 months of examination, JCDecaux regrets having to decide not to go ahead with this operation, which was supposed to complete its presence in Spain, but whose economic and strategic interest, as well as its realization, are called into question by the indications provided by the Spanish authority on the nature, schedule and execution of the commitments necessary for approval”JCDecaux said in a statement.
Concentration risk
Last March, CNMC announced the beginning of the analysis of the operation in a second phase. In that communication, the organization already indicated that the operation could involve risks to competition in the outdoor advertising market, since it implied a very notable reinforcement of JCDecaux’s leadership position, especially in the outdoor urban furniture segment.
“Competitors do not have sufficient capacity to exert competitive pressure on the resulting entity”
“The investigation, carried out in the first phase, has shown that it is a market in which competitors do not have sufficient capacity to exert competitive pressure on the entity resulting from the operation. In addition, demand may not have sufficient capacity to offset the effects of the operation on prices and other conditions.”, explained the CNMC.
He also pointed out that in the outdoor advertising market there are high barriers to entry when obtaining contracts for the exploitation of advertising in public spaces. The agency considers that as a result of the operation, competition between operators when opting for the award of public contracts would be affected.
In March the CNMC indicated that in the second phase of analysis It could require more information from the different operators, and that notifiers and interested third parties could present allegations. It also pointed out that in its final resolution, still to be communicated, it could authorize, agree on commitments, subordinate conditions or prohibit the concentration operation between JCDecaux and ClearChannel in Spain.
Clear Channel will continue operating in Spain
For its part, Clear Channel has indicated in a statement that JCDecaux has the agreement was terminated previously announced to acquire the company’s business in Spain after deciding to withdraw its regulatory filing with the CNMC. He has indicated that Clear Channel will continue to operate its business in Spain and maintain its strategic priorities.
“At Clear Channel we respect the regulatory process and have fully complied with the CNMC’s requests, acting in good faith to allow JCDecaux to receive approval and complete the transaction.“commented Scott Wells, CEO of Clear Channel Outdoor. “During the seventeen month period since the deal was announced, our business in Spain has performed well despite the distractions inherent in a sales process.”.
Furthermore, he thanked the work and dedication of the European and Spanish teams, and stressed thatwill continue serving its clients in Spain. He will maintain his focus on sales processes in Northern Europe and Latin America, as well as the objectives of reducing leverage and increasing cash flow organically.
Along with the announcement of the purchase of Clear Channel in Spain, last year JCDecaux also advanced the acquisition of the subsidiary of Clear Channel in Italy for an amount of 15.1 million euros. This operation did not require permission from the authorities so it became effective immediately.
For JCDecaux both operations were part of its external growth strategy; while for Clear Channel it meant a strategy of reducing presence in markets that it does not consider a priority. Clear Channel’s European division has been up for sale for the past few years. What’s more, Goldbach, a unit of Tx Group, bought Clear Channel’s operations in Switzerland at the end of 2022.