UK: Competition Commission Issues Provisional Decision On ITV´s CRR Undertakings

Last Updated: 15 October 2009
Article by SJ Berwin's EU & Competition Team

This week the Competition Commission (CC) published its provisional decision following the review of ITV's Contract Rights Renewal (CRR) undertakings. The CC has provisionally concluded that the CRR undertakings should remain in place although some variations may be justified. 

In October 2003 Carlton and Granada, the UK's two largest commercial television companies, merged to create ITV.  The CC allowed the merger to proceed but, in order to protect advertisers, imposed the CRR remedy given ITV's strength on the television advertising market.  The CRR caps the amount that ITV can charge advertisers, effectively freezing the terms of the contracts.

In May 2009, at the initiation of ITV, the CC carried out a review of the undertakings to determine whether the competitive environment has changed sufficiently since 2003 to justify the removal of the undertakings.  It was noted that ITV's market share has declined since 2003, with the penetration of digital television having increased significantly and a corresponding increase in the number of channels available (leading to an increased fragmentation of viewers across channels). 

ITV argued that media buyers can now achieve their campaign objectives without using ITV1. The CC however, concluded that although there had been some increase in the substitutability of ITV1 since 2003, ITV1 still retains the key advantage of reaching large audiences within a short amount of time.  Media buyers are generally not able to switch all expenditure away from ITV1 as coverage is reduced for certain key demographics and certain clients may insist on access to ITV1.  For these reasons the CC has provisionally concluded that the CRR should remain. 

Some variation to the terms of the CRR undertakings could however be justified due to certain differences in the broadcasting landscape (and possible unintended effects of the undertakings in practice) - and the CC is now consulting on possible variations.  The CC notes that although there may be a case for change, exactly how that manifests itself is far from clear cut. The CC is particularly wary of any increase in complexity or loss of transparency.

The CC has suggested possibly limiting the scope of the CRR to focus on ITV1's advantage in reaching large audiences.  Another possibility is to remove elements of the CRR but require ITV to offer airtime on fair and reasonable terms.

The CC has asked for views on possible variations by 6 October with a final decision expected by the end of the year.

Ofcom Launches Consultation On Regulation Of Video On Demand Services

As part of the implementation of the EU's Audiovisual Media Services Directive, the UK media regulator, Ofcom, this week launched a consultation into the future regulation of Video on Demand (VoD) services.  As of 19 December 2009, any VoD content available on services such as BBC iPlayer, 4OD, ITV Player, SkyPlayer and Demand Five will be regulated (whether available through the internet or through a service provider).

The EU directive covers all VoD services that are "TV like", with the UK government planning to hand the overall duty to regulate these services to Ofcom.  Ofcom is proposing that the majority of the regulation should be carried out by two bodies on its behalf - the Association for Television on Demand (ATVOD) as regards VoD services, and the Advertising Standards Authority (ASA) as regards VoD advertising.  Ofcom said that it would retain "back-stop powers" to intervene in the event this new regulatory regime did not work.  Ofcom will also retain the power to impose sanctions against service providers.

Under the proposals, VoD programming will not be subject to Ofcom's Broadcasting Code; however it will have to adhere to a number of "minimum standards" specified in the directive with a view to creating a level playing field for emerging audiovideo media services in Europe and to impose some basic content standards.  In particular, VoD content should not contain incitement based on race, sex, religion or nationality; impair the development of minors; it must comply with the sponsorship rules laid down in the directive as well as the conditions set out for product placement. 

Electronic versions of newspapers, private websites and unmoderated user generated material such as YouTube will not fall under the scope of the new regime.  It is proposed that any complaints that viewers have relating to VoD content will be assessed by ATVOD or the ASA.

The government has stated that, as far as possible, industry should be allowed and encouraged to set up and manage its own regulatory arrangements in this area.  Interested parties have until 26 October to make their views on the proposed regulatory regime known to Ofcom.

To read Issue 439 of Community Week in full, please click here.

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