OFT consults on its
preliminary view on ITV's contract rights renewal obligations
OFFICE OF FAIR
TRADING News Release (02/09) issued by COI News Distribution
Service. 15 January 2009
The OFT has
reached a preliminary view to recommend to the Competition
Commission that it relaxes ITV's Contract Rights Renewal
(CRR) Undertakings. These were introduced following the merger of
Carlton and Granada in 2003.
The consultation document, published today, follows the
OFT's in-depth review into CRR, conducted with the assistance
of Ofcom. The OFT highlights that since CRR was introduced in
2003, ITV1's market position has declined but the channel
remains almost the only provider of very large commercial
audiences, which are of particular value to some advertisers. The
OFT provisionally concludes that the detrimental effects of the
merger on the advertising market appear to have reduced but may
not have been eroded completely.
The OFT's consultation document explores a range of possible
outcomes from, at one end of the scale, the removal of CRR in its
entirety to retaining CRR largely as it is today, and various
easements and modifications in between the two extremes.
On the basis of the evidence collected so far, the OFT's
preliminary assessment is that:
* It may be appropriate to ease CRR if there is an effective
remedy which addresses any remaining detriments arising from the
merger between Carlton and Granada.
* One such easement could be to remove the requirement that ITV1
rolls over contracts, while retaining effective safeguards to
prevent discrimination against those advertisers which still rely
heavily on ITV1. Following the consultation the OFT may remit the
matter to the Competition Commission, which makes the final
decision on whether change to CRR is appropriate or not and, if it
is, what form it should take.
John Fingleton, OFT Chief Executive, said: "Since the remedy
was introduced in 2003, ITV's position has changed and so has
the wider market. This means it is now the right time to ask
whether the remedy remains proportionate, or could be eased or removed.
"Our provisional view is that we should recommend to the
Competition Commission relaxation of the CRR Undertakings, whilst
retaining safeguards for advertisers and media buyers. However we
are keen to hear any new evidence or data during consultation
before formally advising the Commission."
Interested parties can submit their views or evidence, by 27 Feb
2009, to: CRR@oft.gsi.gov.uk
The consultation document is available at: http://www.oft.gov.uk/advice_and_resources/resource_base/consultations/contract
NOTES
1 The CRR Undertakings are a part (Clauses 5 to 11 and associated
clauses) of a larger set of undertakings given by Carlton and
Granada in 2003 following a report by the Competition Commission
on the proposed merger of those two businesses to form ITV plc.
The CRR Undertakings address concerns the Competition Commission
had about the effect the enhanced market position ITV plc would
have on competition in the sale of advertising airtime.
2 Among other things, the CRR Undertakings allow buyers of
advertising airtime to roll forward their pre-merger contracts,
subject to annual adjustments which reflect the change in
ITV1's share of advertising (measured in the form of its
share of commercial impacts). The Undertakings created the Office
of the Adjudicator which is responsible for determining certain
disputes arising under the Undertakings and which reports on
compliance. For a full text of the undertakings and more
information on CRR and the Office of the Adjudicator go to http://www.adjudicator-crr.org.uk.
3 The OFT and Ofcom formally launched a review of CRR in January
2008. This review was undertaken in light of possible changes of
circumstances in the sale of UK television advertising since the
Undertakings were accepted in 2003.
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