OFT Recommends Change in ITV Ad Rules

LONDON, January 15: The U.K.’s Office of Fair Trading (OFT) is supporting a relaxation in ITV’s contracts rights renewal (CRR) obligations, first implemented following the Carlton and Granada merger in 2003.

The CRR clause was put into place to address concerns about ITV’s dominant position in the TV ad market. It allowed for advertisers from prior to the merger to roll over their contracts, subject to annual adjustments reflecting ITV’s share of the ad pie.

John Fingleton, OFT’s 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."

Following a review initiated in January 2008, OFT has found 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."

OFT maintains that CRR can be eased if there is an "effective remedy which addresses any remaining detriments arising from the merger between Carlton and Granada." One proposal is to remove the requirement that ITV1 roll over contracts, "while retaining effective safeguards to prevent discrimination against those advertisers which still rely heavily on ITV1."

OFT has launched a consultation on the issue, and may relay the matter to the Competition Commission, which will determine CRR’s fate.

Fingleton noted: "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."

—By Mansha Daswani