Spend money to make money: Advertising projects under antitrust review

The motto ´higher, further, faster´ applies especially in the world of advertising. Whether it is on the streets, in magazines or newspapers, on TV or the internet, everyone faces advertising in daily life. It is also an essential marketing tool for many businesses, which invest millions in their advertising campaigns. Correspondingly, the demand for advertising space is very high and companies’ team up to offer their customers even more advertisement space. Teaming up is something where antitrust professionals come into play in order to assess whether a joint venture (JV) or a cooperation for the joint marketing of advertising space complies with antitrust law. This post explores cases in which the German Federal Cartel Office (FCO) either approved or prohibited such projects.

Last week, the FCO cleared a joint marketing project between RTL2 and Warner Bros. Discovery. However, this was not RTL2´s firsts attempt to jointly market advertisement space.

A failed attempt: RTL2 and RTL

In summer 2023, RTL and RTL2 contacted the FCO regarding a planned marketing cooperation concerning the advertising space on linear TV, which had so far been marketed by each company itself. For all our non-German readers: RTL and RTL2 are two (more or less) popular TV broadcasters. Although the name might suggest it, RTL2 does not in fact belong to RTL, but is itself a JV between RTL, which holds a 35.9% stake, and other media companies. Interestingly, RTL2’s inhouse marketer is called “El Cartel”.

After extensive discussions and investigations, the FCO informed the parties in December 2024 that the project, even after modifications, raised significant antitrust concerns. As a result, the parties abandoned the plan. The key issues were whether the relevant market should still be limited to TV advertising or whether other video advertising space should also be considered, as well as the current and future market conditions.

According to the FCO, the investigation showed that linear TV (meaning the “traditional” TV) remains dominant in video advertising. Although platforms like Netflix, Amazon Prime and Disney were entering the market, in the FCO’s view their advertising activities were not yet strong enough to challenge the dominance of linear TV. Thus, RTL2 remained a key alternative to the leading broadcasters RTL and ProSiebenSat.1.

Moreover, the FCO classified the planned cooperation as a restriction of competition by object. Due to the parties´ combined market share, which exceeded the 15% safe harbour threshold under the Horizontal Guidelines, their price coordination would harm competition and would not be justified by efficiency gains.

A win in round two: RTL2 and Warner Bros. Discovery

Just last week, the FCO cleared a new joint marketing project between RTL2 and Warner Bros. Discovery. This time, the parties proposed the creation of a JV whose main purpose is to jointly market their TV advertising space. As both parties are smaller players in the market – at least compared to RTL and ProSiebenSat.1 – the FCO found that the JV could even have pro-competitive effects.

With this decision, the FCO broadened its approach to market definition in the TV advertising sector. FCO President Andreas Mundt commented:

“In this context, we no longer consider the market to be limited to TV advertising; we rather see it as a big-screen advertising market that includes TV advertising, but also, and in particular, the offerings provided by Netflix, Amazon Prime, Disney and, to a certain extent, also YouTube.”

Different media, same idea: A JV in print media

In 2020, the FCO reviewed another project for the joint marketing of advertising space – this time in the supra-regional print media sector: The two publishing houses (“Süddeutsche Zeitung” and “Frankfurter Allgemeine Zeitung”) were cleared to establish a JV (if you want to read about another interesting newspaper-related case, see here). The merger control clearance was granted in Phase I after minor modifications to the project.

However, this was not the end of the story. The FCO conducted a separate review under the EU’s cartel prohibition (Art. 101 TFEU) and, after three additional months, declared the JV to be in line with German and EU antitrust law. Notably, § 1 GWB – the German equivalent of Art. 101 TFEU – did not apply due to a statutory exemption aimed at strengthening the economic base of publishing houses. Given the project´s economic importance – meaning possible effects on cross-border trade and the relevant sales generated with EU-customers – the FCO nevertheless applied European antitrust law. Overall, the FCO identified potential anticompetitive effects arising from the JV, as – according to the FCO – it primarily served a coordination function by enabling the bundled sales of advertising inventory and the alignment of commercial terms. However, eventually the FCO found that the legal criteria for an exemption from the cartel prohibition (under Art. 101 (3) TFEU) were satisfied. The FCO highlighted that in line with the European Commission´s practice, market shares below 30% – as was the case here – were generally considered sufficient to meet the exemption criteria. Moreover, the merger control review had already indicated that the JV was unlikely to significantly impede effective competition.

Take aways

When the old Roman playwright Titus Maccius Plautus (allegedly) said, “you have to spend money to make money”, he may have been thinking of the 200 BC era´s equivalent of advertisement – though probably not so much of the costs associated with lengthy antitrust and merger control proceedings, as seen in the RTL2 and RTL case. As the cases above show, advertising cooperations can lead to close scrutiny from competition regulators, including separate antitrust assessments. On the upside, smaller market participants may benefit, as they are more likely to receive clearance for cooperations, especially if their plans enhance competition. It remains to be seen whether the seeming decline in the importance of linear TV will lead to a different assessment of some cooperations in the future.

Photo by the blowup on Unsplash