The €3.8 billion merger of Carlton and Granada to create a single ITV company was yesterday referred to the Competition Commission, setting the scene for months of tortuous deliberations over the UK television advertising market.

Announcing the referral, Ms Patricia Hewitt, the UK trade and industry secretary, said the combined company's dominance of the TV advertising market remained the government's principal concern.

"The merger would greatly increase concentration in TV advertising, leaving one firm with more than half of national TV advertising revenue," she said.

The decision follows the advice of the director general of fair trading.