The competition watchdog has raised concerns over a deal that, if completed, will create an outdoor advertising giant with a market capitalisation of $1.6 billion.

OoH! Media and APN Outdoor announced their intention to merge in December 2016. On completion of the all-scrip scheme, APN shareholders will control 55 per cent of the company and Ooh Media shareholders 45 per cent.

But industry participants aren’t happy about the idea of more than half of the outdoor advertising market being controlled by one company.

“Many industry participants have competition concerns in relation to the merger. It will combine the two largest providers of out-of-home advertising in Australia, creating a market leader with over 50 per cent of all out-of-home advertising, and an even higher share in some segments, such as roadside billboards,” ACCC Chairman Rod Sims said.

The ACCC said the merged firm would be the only out-of-home provider with a presence in all categories of out-of-home advertising. Other out-of-home providers have significantly smaller market shares and tend to focus on particular categories of out-of-home advertising.

“The ACCC’s preliminary view is that the merger is likely to substantially lessen competition in the out-of-home advertising market. The loss of competition could result in increased prices for advertisers, or lower levels of service, quality, or innovation.”

“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,” Sims said.

“Industry participants have also raised concerns that the combined APN Outdoor/oOh!media will be able to squeeze competitors out of the market, by bundling billboards, where it has a dominant position, with other forms of out-of-home advertising.”

The ACCC invites further submissions from interested parties in response to the Statement of Issues by 19 May 2017. The ACCC’s final decision is due on 6 July 2017.

UPDATE: Ooh! Media and APN Outdoor have released an ASX statement acknowledging the concerns, saying both companies will continue working with the ACCC to address the concerns raised today. “We are currently considering next steps, including impacts on the proposed transaction timeline,” the statement reads.

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