TV Eye to revise advertising arrangements on competition concern

TV Eye has provisionally agreed to amend certain arrangements governing the sale of advertising airtime after the OFT raised concerns over competition.
Owned by ITV, GMTV, Channel 4 and Channel 5, TV Eye provides services to the four broadcasters and a number of smaller broadcasters. The OFT was concerned that arrangements put in place by TV Eye could enable a "collective" approach to terms and conditions. The watchdog was particularly concerned that the member broadcasters, acting through TV Eye:

• Made it more difficult for new media agencies to enter the market by imposing an unduly strict registration policy;
• Collectively agreed and enforced the terms and conditions on which credit would be granted to media agencies (known as credit listing), without objective justification;
• Collectively set the form of security to be provided by agencies to cover the risk of them defaulting on their contracts with broadcasters.

The OFT was concerned that, taken together, these practices placed media agencies in an "unduly weak bargaining position" dampening competition between both media agencies and broadcasters.
TV Eye has proposed to address the concerns raised by the OFT by giving a number of commitments that include: verifying only that media agencies are bona fide; no longer deciding on behalf of its member broadcasters whether an advertising agency meets creditworthiness criteria; and reducing the information collected and shared with member broadcasters.
The broadcasters will now choose what type of security they wish to use to cover the risk that an agency defaults, furthermore no sales directors of any of the member broadcasters will sit on the board of TV Eye.
Sir John Vickers, OFT Chairman, welcomed the commitments. He said: "The OFT was concerned that, by allowing broadcasters collectively to agree certain terms and conditions for the sale of advertising airtime, TV Eye restricted competition between the UK's main terrestrial commercial TV stations. Media agencies seemed to have little choice but to accept those terms in order to secure TV advertising for their clients. These revisions will allow a freer, more competitive environment."
The OFT will shortly be consulting third parties through publication of a formal commitments notice, which will set out in more detail how the proposed changes meet the OFT's competition concerns. If the consultation process confirms the watchdog's stance, a binding commitment will be entered into and the file will be closed.
(SP)