The competition watchdog fears the proposed $1.6 billion merger between billboard advertising giants APN Outdoor and oOH!Media could lessen competition resulting in increased prices and lower service.
The Australian Competition and Consumer Commission (ACCC) says its preliminary view is that combining the two largest providers of out-of-home advertising in Australia would create a market leader with more than 50 per cent of the sector.
Out-of-home advertising includes advertising on billboards on road sides, bus shelters, train stations, trains, taxis and buses, at leisure centres, public toilets, shopping malls and supermarkets.
"The loss of competition could result in increased prices for advertisers, or lower levels of service, quality, or innovation," ACCC chairman Rod Sims said in a written statement on Thursday.
"Further, the ACCC is concerned the merger may damage the interests of site owners, who rely on competition between APN Outdoor and oOh!media to obtain the maximum rent for their sites."
He said industry stakeholders were also worried the merged company could squeeze competitors out of the market.
The deal, announced in December, involves APN Outdoor taking over oOh!media with shareholders being offered 0.83 APN shares for each oOh!Media security.
The merged group would create the fifth biggest media company in Australia by market capitalisation; behind REA Group, Seek, Carsales.com and Fairfax Media.
Interested parties have until May 19 to make submissions to the ACCC before it makes its final decision, due on July 6.
Shares in APN Outdoor were down 24 cents, or 4.41 per cent, to $5.20 while oOh!media shares were down 24 cents, or 5.35 per cent, to $4.25 by 1022 AEST.
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