UK Developments In Competition Law
Competition Commission Issues Provisional Decision On ITV's CRR Undertakings 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...
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