Airtime Sales Rules Review Statement

28 July 2010

Executive Summary

1.1 On 29 March 2010, we published a consultation document proposing removal of the Airtime Sales Rules. These are two distinct rules relating to how broadcasters sell TV airtime. The 'withholding rule' means that all airtime available on ITV1, C4 and Five must be sold. The 'conditional selling rule' applies to all broadcasters, prohibiting them from forcing advertisers and media buyers, who want to buy airtime on one channel, to purchase airtime on additional channels.

1.2 The Rules were intended to ensure fair and effective competition in relation to broadcasting and connected services and we have an obligation to review them periodically, to check whether they are still appropriate and fit for purpose. Where possible Ofcom believes it is important to remove regulation which is no longer required; removing unnecessary regulation enables sectors to develop and gives industry players more flexibility to run their businesses. This is likely to have positive impacts on innovation and investment which could deliver benefits for consumers.

1.3 In the consultation document, we outlined our view that there are few incentives to withhold airtime. We also noted that it may be more appropriate to treat possible conditional selling by broadcasters on a case by case basis.

1.4 Consultation responses were mixed. Some supported the view that there are limited incentives for broadcasters to withhold airtime in current trading conditions. In addition, a number of respondents believed it would be appropriate to consider possible anti-competitive bundling behaviour individually in order to take account of efficient, positive bundling effects as well as any negative effects.

1.5 However, respondents raised two key reasons about why it would be inappropriate to remove the Rules. Firstly, some felt broadcasters would engage in the behaviour currently prohibited by the Rules, either now or in the future, if they were lifted. Secondly, some stakeholders suggested we postpone our review and undertake either a competition-based market study or a broader review examining the Rules together with other rules on the amount and distribution of minutage.

1.6 Having reviewed the consultation responses, our view is that no new evidence has been presented to change our conclusions that it is appropriate to remove the Rules. In addition, we believe we should complete our review now in order to ensure that unnecessary regulation does not prevent the sector from evolving. We conclude that we cannot justify launching a broader review of the market at this time given the lack of clarity about the nature and scale of possible competition problems and consumer harm, and the extended period of uncertainty that the sector would face.

1.7 Therefore Ofcom will remove the Airtime Sales Rules on 1 September 2010. This should provide regulatory certainty ahead of the next deal season for TV advertising airtime which will take place in the autumn.

1.8 We will continue to monitor the TV advertising sector and any effects of the removal. Should broadcasters engage in anti-competitive conduct following removal of the Rules, this may be subject to enforcement action by Ofcom under the Competition Act. Continuing engagement with industry stakeholders will form an integral part of our role to enable us to take account of the impact of any sector developments on the way airtime is traded.