The Office of Fair Trading (OFT) has told broadcaster TV Eye to amend certain arrangements governing the sale of advertising airtime, after a complaint by the Institute of Practitioners in Advertising (IPA).
The OFT was concerned that arrangements put in place by TV Eye enabled broadcasters ITV, GMTV, Channel 4 and Channel 5 to agree collectively some of the terms and conditions under which they sold advertising airtime to media agencies.
The OFT were particularly worried that TV Eye’s member broadcasters, acting through TV Eye, made it more difficult for rival media agencies to enter the market by imposing an unduly strict registration policy and that the members collectively set the form of security to be provided by agencies, to cover the risk of them defaulting on their contracts with broadcasters.
The Government owned regulatory body was also concerned that TV Eye’s members agreed and enforced the terms and conditions on which credit would be granted to media agencies, without objective justification.
The fear was that these three practices combined to place media agencies in an unduly weak bargaining position with little room for individual negotiation with the broadcasters, and that this dampened competition between both media agencies and broadcasters.
As a result of the OFT’s investigation, TV Eye has assured the Government body that it will no longer decide whether an agency has the required “creditworthiness” to enter into negotiations with the four broadcasters. It will, however, retain its insurance advisory service, but only for individual broadcasters, while broadcasters will be left to determine their own insurance policies for individual agencies.
Welcoming the proposed commitments, Sir John Vickers, OFT chairman 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 allow a freer, more competitive environment.”
The IPA said in a statement: “The IPA has consistently held the view that TV Eye’s collective imposition of terms and conditions across terrestrial television went far beyond those of a simple vetting body, and in the case of the organisation’s demand for bank guarantees, imposed an unfair financial burden on many IPA members.” They continued: “The IPA is happy with the broad outcome of the OFT investigation and its members look forward to working more closely with the broadcasters to build the business of all advertisers who use this powerful medium.”
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