VNU N.V.; Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 991-0319]

VNU N.V.; Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

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ACTION: Proposed consent agreement.

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SUMMARY: The consent agreement in this matter settles alleged

violations of federal law prohibiting unfair or deceptive acts or

practices or unfair methods of competition. The attached Analysis to

Aid Public Comment describes both the allegations in the draft

complaint that accompanies the consent agreement and the terms of the

consent order--embodied in the consent agreement--that would settle

these allegations.

DATES: Comments must be received on or before November 23, 1999.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,

Room 159, 600 Pennsylvania Ave., NW, Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT: Richard Parker or Ann Malester, FTC/S-

2308, 600 Pennsylvania Ave., NW, Washington, D.C. 20580, (202) 326-2574

or 326-2682.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal

Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 2.34 of

the Commission's Rules of Practice (16 CFR 2.34), notice is hereby

given that the above-captioned consent agreement containing a consent

order to cease and desist, having been filed with and accepted, subject

to final approval, by the Commission, has been placed on the public

record for a period of thirty (30) days. The following Analysis to Aid

Public Comment describes the terms of the consent agreement, and the

allegations in the complaint. An electronic copy of the full text of

the consent agreement package can be obtained from the FTC Home Page

(for October 22, 1999), on the World Wide Web, at ``http://www.ftc.gov/

os/actions97.htm.'' A paper copy can be obtained from the FTC Public

Reference Room, Room H-130, 600 Pennsylvania Avenue, NW, Washington,

D.C. 20580, either in person or by calling (202) 326-3627.

Public comment is invited. Comments should be directed to: FTC/

Office of the Secretary, Room 159, 600 Pennsylvania Ave., NW,

Washington, D.C. 20580. Two paper copies of each comment should be

filed, and should be accompanied, if possible, by a 3\1/2\ inch

diskette containing an electronic copy of the comment. Such comments or

views will be considered by the Commission and will be available for

inspection and inspection and copying at its principal office in

accordance with Section 4.9(b)(6)(ii) of the Commission's Rules of

Practice (16 CFR 4.9(b)(6)(ii)).

Analysis of Agreement Containing Consent Orders To Aid Public

Comment

The Federal Trade Commission (``Commission'') has accepted, subject

to final approval, an Agreement Containing Consent Orders (``Consent

Agreement'') from VNU N.V. (``VNU''), which is designed to remedy the

anticompetitive effects resulting from VNU's acquisition of Nielsen

Media Research, Inc. (``Nielsen''). Under the terms of the agreement,

VNU will be required to divest its division, Competitive Media

Reporting (``CMR''), which supplies advertising expenditure measurement

services, to a Commission-approved buyer no later than six (6) months

from the date VNU signed the Consent Agreement. If the sale of CMR is

not made within six (6) months, the Commission may appoint a trustee to

divest CMR.

The proposed Consent Agreement has been placed on the public record

for thirty (30) days for reception of comments by interested persons.

Comments received during this period will become part of the public

record. After thirty (3) days, the Commission will again review the

proposed Consent Agreement and the comments received, and will decide

whether it should withdraw from the proposed Consent Agreement or make

final the Decision & Order.

Pursuant to an August 16, 1999 cash tender offer, VNU agreed to

acquire 100 percent of the issued and outstanding voting securities of

Nielsen for approximately $2.5 billion. The Commission's Complaint

alleges that the acquisition, if consummated, would violate Section 7

of the Clayton Act, as amended, 15 U.S.C. Sec. 18, and Section 5 of the

Federal Trade Commission Act, as amended, 15 U.S.C. Sec. 45, in the

market for advertising expenditure measurement services.

Nielsen, through its Monitor Plus division, and VNU, through its

CMR division, are the only providers of advertising expenditure

measurement services in the United States. Both companies track the

occurrence of commercial advertisements across numerous media,

including: national and local broadcast television; national and local

syndication; national and local cable; national and local radio;

national, local, trade and Sunday magazines; national and local

newspapers; outdoor advertising; and the Internet. This information is

typically integrated with other data, such as estimated advertising

costs and television ratings, in order to create advertising

expenditure measurement reports. Customers, such as advertising

agencies, use these reports to create advertising strategies for their

clients, to study the advertising strategies of their clients'

competitors, and to monitor what their clients' competitors are

spending on advertising. Monitor Plus and CMR are the only providers of

advertising expenditure measurement services across multiple media in

the United States.

The United States advertising expenditure measurement services

market is highly concentrated, and the proposed acquisition would

combine the only providers of these services. For many years, CMR was

the only supplier of advertising expenditure measurement services.

Monitor Plus's entry into this market in the mid-1990's and its

subsequent head-to-head competition with CMR has provided customers

with significant price savings and innovations, including better

methods of tracking the occurrence of advertisements. By eliminating

competition between the only two competitors in this highly

concentrated market, the proposed acquisition would allow VNU to

exercise market power unilaterally, thereby increasing the likelihood

that purchasers of advertising expenditure measurement services would

be forced to pay higher prices and that innovation in the advertising

expenditure measurement services market would decrease.

Substantial barriers to new entry exist in the advertising

expenditure measurement services market. A new entrant into this market

would need to undertake the difficult, expensive, and time-consuming

process of obtaining access to the technology required for television,

cable, and radio advertising monitoring; developing or acquiring at

least two years of historical advertising expenditure data; hiring

employees to manually track advertising in print and outdoor media;

establishing a track record for data quality, depth, and accuracy;

developing software that would permit customers to access and

manipulate data; creating a knowledgeable sales force; and forming a

service and support network. In addition, entry into the advertising

expenditure measurement market is made more unlikely because of long-

term contracts that may reduce the amount of sales opportunities

available to new entrants. Because of the difficulty of accomplishing

these tasks, new entry into the advertising expenditure measurement

services market could not be accomplished in a timely manner and is

therefore unlikely to deter or counteract the

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anticompetitive effects resulting from the transaction.

The Consent Agreement effectively remedies the acquisition's

anticompetitive effects in the advertising expenditure measurement

services market by requiring VNU to divest its CMR Division. CMR is the

dominant firm in the market, with an approximate market share of 70

percent. Pursuant to the Consent Agreement, VNU is required to divest

CMR no later than six (6) months from the date VNU signed the Consent

Agreement. In the event that VNU fails to divest CMR within this six-

month time frame, the commission may appoint a trustee to divest CMR.

The Consent Agreement also ensures that the acquirer of CMR will

continue to have access to Nielsen's television ratings data by

extending the duration of CMR's contract with Nielsen for the supply of

television ratings information.

In order to ensure that CMR remains a viable, independent

competitor pending its divestiture, the Commission has issued an Order

to Hold Separate. Under the Order to Hold Separate, the Commission may

appoint an Independent Auditor to monitor VNU's compliance with its

obligation to hold CMR separate and independent. In addition, in order

to ensure that the acquirer of the divested assets has access to key

employees currently involved in CMR's advertising expenditure

measurement services business, the Order to Hold Separate requires VNU

to provide financial incentives for these individuals to accept

employment with the acquirer. The Order to Hold Separate also requires

VNU to provide to the Commission a report of compliance with the

divestiture provisions of the Order to Hold Separate within thirty (30)

days following the date the Consent Agreement becomes final, and every

thirty (30) days thereafter until VNU has completed the required

divestiture.

The purpose of this analysis is to facilitate public comment on the

Consent Agreement, and it is not intended to constitute an official

interpretation of the Consent Agreement or to modify in any way its

terms.

By direction of the Commission.

Donald S. Clark,

Secretary.

[FR Doc. 99-28357 Filed 10-28-99; 8:45 am]

BILLING CODE 6750-01-M