End to dysfunction?

7 October 2003 By Fiona Maharg-Bravo

But they must now deliver their promise to end a "dysfunctional" network. Otherwise, the new ITV will be prey. The UK TV groups, Carlton and Granada, are jumping for joy that their £4bn merger has emerged from the regulatory wringer almost unscathed.

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The UK government approved the planned merger between Carlton Communications and Granada without requiring any disposals.

Instead, the UK's Department of Trade and Industry said the two television companies would have to implement a series of socalled behavioural undertakings.

The DTI accepted the conclusions of an investigation by the Competition Commission that the newly merged group would have market power visàvis both advertisers and other companies in the ITV network. It said this should be dealt with by two main measures:

 Advertisers would have the right to renew their contracts on the same terms that they currently have for the next three years. An independent adjudicator would be appointed to oversee the fair application of this mechanism.

 Other companies in the ITV network would have the right to continue with the arrangements they currently have for selling their airtime through Carlton and Granada.

A majority of the Competition Commission panel decided against recommending that Carlton and Granada divest their advertising sales houses. One of the five members argued in favour of this remedy.

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