29th May 2009 07:00
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63/09 |
29 May 2009 |
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OFT RECOMMENDS THE CC CONSIDERS CHANGES TO ITV's CONTRACT RIGHTS RENEWAL |
The OFT has today advised the Competition Commission (CC) to consider changes to ITV's Contract Rights Renewal (CRR) Undertakings. These were introduced as a condition for the merger of Carlton and Granada in 2003.
The OFT's recommendations follow a review and consultation into CRR, conducted with the assistance of Ofcom.
The OFT found that whilst ITV1's market position has declined, it remains almost the only provider of very large commercial audiences, which are of particular value to some advertisers. Thus, whilst the detrimental effects of the merger on the advertising market appear to have reduced, they may not have been eroded completely.
CRR is, however, not without costs and disadvantages and the OFT recommends that the CC should consider whether any alternatives to the current remedy would now be effective or if CRR should stay as it is.
There have been changes in the way the ITV1 programme schedule is delivered including the development of both a high definition and a potential time shifted (+1) channel. These changes mean that if the CRR remedy remains in place, the CC should consider updating it to take account of new forms of delivering the ITV1 schedule.
John Fingleton, OFT Chief Executive, said:
'Changes in ITV1's market position and programme delivery since CRR was introduced in 2003 mean it is now time to take another look at it.
'We recommend retaining some protection for advertisers and media buyers so that all parties have an equal playing field in what are challenging economic circumstances.'
The Competition Commission will now make the final decision on whether change to CRR is appropriate or not and, if it is, what form it should take.
The executive summary of the OFT's CRR Review is available at
www.oft.gov.uk/advice_and_resources/resource_base/register-orders-undertakings/reviews/CRR-review.
NOTES
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.
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 www.adjudicator-crr.org.uk.
The OFT launched a consultation on CRR in January 2009 and invited media buyers, advertising agencies, ITV and others to submit evidence. The consultation explored a range of possible outcomes. This included at one end of the scale, the removal of CRR in its entirety to retaining CRR largely as it is today, with various easements and modifications in between the two extremes.
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.
The full non-confidential version of the OFT's Review into CRR will be available shortly.
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