Competition Commission Delays Verdict On ITV Merger
The Competition Commission has been given an extra two months to investigate the proposed £2.6 billion merger of Carlton and Granada and will now report back to Trade and Industry Secretary Patricia Hewitt on 26 August.
The Commission, which was due to have completed its inquiry by the end of this month, says it needs more time to consider its verdict in light of new proposals designed to limit the effects of the merger.
Advertisers and rival broadcasters are concerned that the creation of a single ITV, controlling more than 50% of the TV advertising market, would lead to reduced competition in the market for airtime sales, with increased prices for advertisers and media agencies (see ITV Merger Must Clear Regulatory Hurdles).
Earlier this year the Competition Commission proposed a number of hypothetical remedies that could come about if the merger is found to be against the public interest. These included plans for Carlton and Granada to sell their sales houses to be run as independent entities and a ban on share deals, which see advertisers agreeing to commit a proportion of their budget to ITV in return for air-time discounts (see Carlton And Granada May Have To Sell Sales Houses).
However, following a period of consultation with interested parties, two additional remedies have been proposed and the Commission is seeking more time to investigate their likely effectiveness, costs and practicability.
The first of these is the requirement that a minimum proportion of ITV’s airtime budget would have to be auctioned off each year, separately from the annual deal round, in the form of standardised contracts that could be traded in a secondary market.
The second suggests a mechanism for rolling forward share deal agreements so that existing customers can renew their contract on the same overall terms. Advertisers would be then able to reduce their share of airtime in line with any year on year fall in ITV’s share of commercial impacts, without reducing the level of discount they receive. This would also include a commitment on the part of Carlton and Granada to maintain the key features of the current arrangements for selling airtime.
However, advertisers have warned that ‘behavioural’ remedies such as these do not go far enough to address their competition concerns and argue that nothing short of the structural divestment of both sales houses would be satisfactory (see Advertisers Wary Of Revised ITV Merger Plans).
Competition Commission: 0207 271 010 www.competition-commission.org.uk ITV: 020 7843 8000 www.itv.co.uk
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