From time to time, the BBC may want to change the way its commercial subsidiaries operate or undertake new activities. For example, it may want to launch a new commercial activity in response to market developments.
Under the Agreement the BBC must consider whether any changes it proposes to make to its commercial activities are “material”. A material change to the BBC’s commercial activities is defined as:
where there is a significant risk that the change may, as a result of the relationship of the activity with the BBC Public Service, distort the market or create an unfair competitive advantage.
The BBC must carry out and publish a commercial test on any proposed material change. Through this test the BBC must satisfy itself that the commercial activities will not distort the market or create an unfair competitive advantage. We also expect the BBC to consider whether the relevant activity complies with our trading and separation rules. Ofcom will consider the BBC’s commercial test under a trading and separation assessment on any proposed changes that we had found to be material.
If the BBC concludes that a proposed change is not material, it may proceed with the change. However, following assessment it is open to Ofcom to disagree. If we disagree, we can direct the BBC to carry out a commercial test or to stop carrying out the change in accordance with such directions as we consider appropriate.
The way that Ofcom approaches materiality assessments and the process we follow are set out in section five of our requirements and guidance on the BBC’s commercial and trading activities.