The Canadian Internet Policy & Public Interest Clinic (CIPPIC) has applied to the commissioner of competition for an inquiry into the proposed merger of Google Inc. and DoubleClick Inc. on the grounds that it is likely to prevent or lessen competition substantially in the targeted online advertising industry.
On April 13, Google agreement to acquire DoubleClick for $3.1 billion and, since then, many organizations have expressed concerns about the deal.
Calls to CIPPIC were not immediately returned.
Google dominates the market for online text-based search advertising and DoubleClick dominates the market for online display advertising.
“[We] are of the opinion that grounds exist for the making of an order under Part VIII and accordingly request that the commissioner establish an inquiry into the matters detailed in this letter,” the application says.
“The Google-DoubleClick merger combines Google’s text-based search advertising platform with DoubleClick’s display advertising agency to help publishers better monetize unsold inventory, helping fuel the creation of even more rich and diverse content on the Internet,” the filing reads. “There can be little question that it would turn Google into a dominant player in the business of serving text and graphical advertisements that appear on Web sites.”
Section 92 of the Canadian Competition Act allows the commissioner of competition to apply to the competition tribunal to find that a merger or proposed merger prevents or lessens, or is likely to prevent or lessen, competition substantially in an industry.
The tribunal has the power to make orders with respect to completed and proposed mergers.
The application continues: “The market power that Google acquires will further weaken its incentives to compete on non-price aspects of services, including quality factors such as privacy policies and diversity of content available online. This merger reduces consumer choice in these non-price aspects of service.”
CIPPIC is worried that the merger also lessens competition substantially by creating barriers to market entry and is likely to result in the removal of vigorous and effective competitors such as Yahoo and Microsoft.
The organization is also concerned that buyers are not likely to have a countervailing ability to constrain the exercise of Google and DoubleClick’s market power.
“For all the above reasons, we submit that Google’s proposed acquisition of DoubleClick is likely to prevent or lessen competition substantially in the targeted online advertising industry,” the application says. “While the companies in question are based in the US, the industry is global and affects Canadians.”
