Television Drama Over Advertising Deals

Author:Mr John Kettle, Anthony Burke and Niall Collins
Profession:Mason Hayes & Curran
 
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In March 2009, TV3, a private television broadcaster in Ireland, complained to the Irish Competition Authority (the "Authority") that RTÉ, the State-owned television and radio broadcaster in Ireland, was engaging in anticompetitive behaviour. The complaint related to RTÉ's "share deal" agreement, a scheme under which discounts granted to individual advertisers depended upon, among other factors, the percentage of each advertiser's total television advertising budget committed to RTÉ. Ultimately, the Authority did not reach a conclusion on the competition law implications, as RTÉ offered undertakings which sufficiently addressed the Authority's concerns.

The majority of television advertising in Ireland is sold through advertising agencies. RTÉ negotiates specific terms for each individual advertiser, both with advertising agencies, and also directly with advertisers. The Authority's investigation found that the higher the share of total television advertising budget that an advertiser committed to RTÉ, the larger the discount RTÉ would apply to that advertiser. Typically, RTÉ required an advertiser to commit approximately 65 per cent of the advertiser's total advertising revenue to it in order to obtain a discount.

Dominance

Section 5 of the Irish Competition Act 2002 and Article 102 of the Treaty on the Functioning of the European Union prohibit the abuse by one or more undertakings of a dominant position. Following TV3's complaint, the Authority initiated an investigation focusing, amongst other things, on whether RTÉ's share deal could amount to a conditional rebate likely to have loyalty-inducing effects in breach of the competition rules.

In relation to dominance, the Authority stated that RTÉ was capable, to an appreciable extent, of acting independently of its competitors and that it had a substantial share of the relevant market. RTÉ enjoys an "unavoidable trading partner" status in the Authority's view and this, together with a lack of countervailing buyer power and additional funding from licence fee revenues, could create barriers to entry and expansion.

The share deal

The Authority considered that RTÉ's share deal was likely to create loyalty-inducing effects, as the discounts available were conditional on committing a certain share of an advertiser's total advertising budget with RTÉ. Such rebates, in the Authority's view, could be capable of foreclosing the market.

RTÉ submitted that the share deal was required to sell...

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