Further submission following the undertakings given in relation to the proposed merger of Carlton Communications plc and Granada plc

No. ME/1645/02

A report under section 125(4) of the Fair Trading Act 1973 of the Chairman's advice dated 30 December 2003, to the Secretary of State for Trade and Industry under section88(2) of the Act

In this submission the Office of Fair Trading advises under section 88(2) of the Fair Trading Act 1973 (the Act) on the outcome of the negotiations with Granada plc (Granada) and Carlton Communications plc (Carlton) on a minor variation in the text of the undertakings accepted from them by you on 14 November 2003.

BACKGROUND

On 14 November you accepted undertakings offered by Carlton and Granada.  Clause 7 of those undertakings sets out how, for any protected contract for the sale of airtime containing share of broadcast provisions, such shares will be revised annually if the contract is rolled forward. The revision will be in direct proportion to changes in the regional Channel 3 broadcasters' share of commercial impacts, calculated against the base level of the average share of commercial impacts achieved by all regional Channel 3 broadcasters in 2002 or the relevant base year. 

Annexe 1 of the undertakings sets out the methodology for the calculation of the revised share of broadcast in algebraic form. It appears there was a typographical error in the final draft of the undertakings, in the following formula: download formula (70 kb).

To accurately reflect the principles in Clause 7 of the undertakings – comparing the regional Channel 3 broadcasters' share of commercial impacts against all other broadcasters' share of commercial impacts – in the text of the denominator in the above formula 'Current Year' should read 'Year y'.

Although the basis of the comparison is clear in Clause 7, to ensure clarity in Annexe 1 this minor variation in the text was sought from and accepted by the parties.

CONCLUSION

The commitment to a minor variation of the text of the undertakings that you asked the OFT to seek has therefore been obtained. The OFT recommends that, if you accept the variation, the varied text be published in accordance with s88(2A) of the Act in due course.

Download complete copy of Annexe 1 (159 kb).

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