OFT recommends relaxation of CRR

The Office of Fair Trading (OFT) today published its consultation document, recommending that the Competition Commission relax ITV’s Contract Rights Renewal (CRR).

ITV’s CRR, the mechanism that protects advertisers from ITV1 abusing its dominant position in the UK TV ad market, was introduced in 2003 during the merger of Carlton and Granada.

The OFT said it has a “duty to review the [CRR] Undertakings to consider whether there has been a change of circumstances by reason of which the Undertakings might no longer be appropriate in their current form, or at all”.

The OFT has conducted an in-depth review into CRR with the support of Ofcom, which has explored a range of possible outcomes including retaining CRR largely as it is today to the complete removal of CRR and its entirety, as well as various “easements and modifications in between”.

John Fingleton, the OFT’s chief executive, said: “”Since the remedy was introduced in 2003, ITV’s position has changed and so has the wider market.

“This means it is now the right time to ask whether the remedy remains proportionate, or could be eased, or removed. Our provisional view is that we should recommend to the Competition Commission relaxation of the CRR undertakings, whilst retaining safeguards for advertisers and media buyers,” he added.

The review found that ITV1’s market position has declined since the introduction of CRR but the channel remains almost the only provider of very large commercial audiences.

“Detrimental effects of the merger [of Carlton and Granada] on the advertising market appear to have reduced but may not have been eroded completely,” the report said. “It may be appropriate to ease CRR if there is an effective remedy which addresses any remaining detriments arising from the merger.”

The OFT’s recommendation is thought to have pleased many senior executives at ITV, who have lobbied against the current CRR system – in 2007, ITV’s chairman Michael Grade said that CRR was a “straightjacket” that impeded his plans for a programming-led revival.

However, outsiders are expected to respond to the OFT as some of the industry fear that an unfettered ITV sales force could easily abuse its position.

Fingleton said: “We are keen to hear any new evidence or data during consultation before formally advising the commission.”

The closing date for comments is February 27.

OFT: www.oft.gov.uk Ofcom: 020 7981 3040 www.ofcom.org.uk