Google set to face European hurdle in DoubleClick deal

Google's controversial purchase of DoubleClick is set to face further scrutiny after the European Commission announced it was taking the rare step of instigating a more extensive, second-phase review of the $3.1bn deal.

The European Commission's Competition Unit will investigate in greater detail whether a merger between Google and online ad company DoubleClick would harm competition.

The regulators will determine whether to let the deal go through as it is, let it pass with modifications, or veto the merger. A final decision is expected by April 2.

Eric Schmidt, chairman and chief executive of Google, said the company was "obviously disappointed" by the European Commission's decision to extend its review of the acquisition of DoubleClick.

He said: "We will continue to work with the commission to demonstrate how our proposed acquisition will benefit publishers, advertisers and consumers.

"We seek to avoid further delays that might put us at a disadvantage in competing fully against Microsoft, Yahoo, AOL and others whose acquisitions in the highly competitive online advertising market have already been approved."

Over the past 10 years, the commission has pushed only about 3% of its cases into a second-phase review.

Of that group, the vast majority were allowed to go through either as the merger plans were originally stated or with some modifications, such as a divestiture of a division or subsidiary.

The European Commission said in a statement: "The commission's initial market investigation indicated that the proposed merger would raise competition concerns in the markets for intermediation and ad serving in online advertising."

It added that the decision to extend the review process "does not prejudge the final result of the investigation."

Google announced its merger agreement with DoubleClick in April as part of a plan to drive its display-ad business by offering a centralised system that gives advertisers and media agencies the ability to manage their search and display-ad campaigns.

One of Google's main competitors, Microsoft, has already gone before Congress in the US to testify against the deal, claiming the deal raises antitrust concerns. Regulators with the US Federal Trade Commission are also reviewing the deal, although their timetable is less clear.

Earlier this month, Jon Leibowitz, a commissioner at the agency, said the Commission was focusing its investigation on the deal's competition, as opposed to privacy issues, despite a barrage of strong criticism in the US and Europe about user privacy.

Critics argue that combining the two companies will consolidate too much personal information, such as individuals' search histories, in one company's hands.

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