New Delhi: Fair trade regulator Competition Commission of India (CCI) has approved the proposed merger of advertising firms Publicis Groupe SA and Omnicom Group Inc into a single entity, saying the deal will not adversely impact competition in India.

Both Publicis and Omnicom are international communications and advertising groups, headquartered in Paris and New York, respectively. The companies through their network of agencies, provide advertising and marketing services around the world including in India.

As per the proposed deal, the shareholders of Publicis and Omnicom would hold about 50.64% and 49.36% stake, respectively, in the newly created holding company Publicis Omnicom Group.

In its order dated 23 October, CCI said that “the proposed combination is not likely to have appreciable adverse effect on competition in India and therefore, the commission .. approves the proposed combination."

CCI said Publicis and Omnicom both provide “marketing and communication services" as well as “media buying services" in India.

The fair trade regulator noted that in these businesses not only does the human talent moves easily among the competing companies, but the clients may also frequently switch from one agency to another without much difficulty.

According to CCI that both Publicis and Omnicom compete against a large number of global, local and independent suppliers in India.

“...due to the presence of numerous suppliers of media communication services, the advertising clients also enjoy sufficient countervailing power in the provision of such services," CCI noted.

“...with respect to procuring media time or space by the media buying services agencies, it is observed that the media owners have sufficient countervailing power to constrain the media buyer," it added.

The proposed merger would entail Publicis to merge with a newly created holding company, Publicis Omnicom Group.

Further, Omnicom would merge with a newly created wholly-owned subsidiary of the holding company, with Omnicom continuing as the surviving corporation.

The entities had approached CCI for the approval after entering the agreement on 27 July 2013.