ITV welcomes OFT call for relaxation of CRR

Nearly one year after opening a probe into CRR, the OFT today concluded that it will advise the Competition Commission to relax ITV's CRR undertakings.

Its consultation document explores a range of possible solutions ranging from the removal of CRR in its entirety to retaining CRR largely as it is today, to various "easements and modifications" in between the two extremes.

CRR was introduced at the time of the merger between Carlton and Granada to create ITV plc to compensate advertisers when ITV1's audience share dips.

The OFT today (Thursday) said that "the detrimental effects of the merger on the advertising market appear to have reduced, but may not have been eroded completely".

The OFT's preliminary assessment is that it may be appropriate to ease CRR if there is an effective remedy which addresses "any remaining detriments arising from the merger between Carlton and Granada".

It said one such change could be to remove the requirement that ITV1 rolls over ad contracts, while retaining safeguards to prevent discrimination against those advertisers that still rely heavily on ITV1.

Safeguards proposed include obliging ITV to retain its so-called station average price trading mechanism, allowing media buyers to continue to buy airtime under 'umbrella deals' which are not advertiser-specific, and prohibiting the extension of the list of programming traded as 'specials' for which different pricing rules apply).

Following the consultation the OFT said it may pass the matter to the Competition Commission, which makes the final decision on whether change to CRR is appropriate or not.

John Fingleton, OFT 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. However we are keen to hear any new evidence or data during consultation before formally advising the commission."

ITV said it "welcomes the OFT's recognition of the case for change and the easing or removal of the CRR mechanism following its consideration of legal, economic and market-based evidence. We will now be studying the detail of the recommendations and will work constructively with the OFT during the public consultation as it formulates its final recommendations to the Competition Commission".