IPA hits back at OFT’s CRR recommendation
The Institute of Practitioners in Advertising has expressed concern at the Office of Fair Trading’s decision to provisionally recommend the relaxation of ITV’s contracts rights renewal.
The IPA has said it is “disappointed” with the recommendations made by the OFT in it’s provisional report (see OFT recommends relaxation of CRR), which is due to be presented to the Competition Commission.
Speaking about the report, which was published yesterday, the OFT’s chief executive John Fingleton 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.”
However, the IPA disagrees with the reports claim that “detrimental effects of the merger [of Carlton and Granada] on the advertising market appear to have reduced”.
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.
It gives advertisers and media buyers the right to renew their contracts on a rolling annual basis, adjusted for changes in ITV’s audiences, with no reduction in the discounts they receive.
The IPA said that a significant proportion of clients continue to rely on ITV’s flagship channel ITV1, which is home to programmes such as Coronation Street and the X Factor and so, under these circumstances, any relaxation of the CRR holds dangers for advertisers.
However, 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.
The OFT is now going through a consultation period and welcomes “any new evidence or data before formally advising the commission” – the IPA has stressed that it will be pressing for retaining CRR largely as it is today in order to keep safeguards in place.
IPA: 020 7235 7020 www.ipa.co.uk