Fair Trading Bulletin March 2006 – May 2006
Following publication of the Governors’ conclusions on a revised Fair Trading complaints and appeals process (further details are available at http://www.bbcgovernors.co.uk/docs/fairtrading.html) the BBC has introduced a new process (http://www.bbc.co.uk/info/contactus/fair_trading.shtml) for dealing with Fair Trading complaints. The new process introduces clear separation between BBC Management (who deal with complaints) and BBC Governors (who deal with appeals).
The complaints detailed below reflect the outcome of investigation by BBC Management. Where complainants are dissatisfied with Management’s findings they have the right of appeal to the Governors.
SUMMARY OF COMPLAINTS
This is a summary of complaints made against the BBC on fair trading grounds between 1 March and 30 May 2006 including complaints that have been made directly to the BBC, to the Office of Fair Trading (OFT), to Ofcom and to the European
Commission.
Updates are provided regarding complaints recorded in previous Fair Trading Bulletins. Where complaints have been rejected by external competition authorities this will also be reported.
Fair Trading Complaints made to the Office of Fair Trading, Ofcom or the European Commission
The BBC is aware of one formal investigation into the BBC’s activities by Ofcom during this period and one ongoing investigation by the European Commission.
- Complaint about Red Bee’s (formerly BBC Broadcast) supply of media access services to Channel 4 and BBC.
It has been reported in previous Bulletins that IMS (a supplier of media access services) had submitted a formal complaint to Ofcom relating to an agreement for Red Bee to provide media access services to Channel 4.
Media access services are services, including subtitling, audio-description and signing, designed to meet the needs of individuals who are deaf or hard of hearing or blind or partially sighted. IMS alleges that the agreement between
Red Bee and Channel 4:
Ofcom opened a formal investigation into the allegations made and the BBC has responded to various information requests from Ofcom.
IMS's original complaint also containedan allegation related to the acquisition of Red Bee by Creative Broadcast Services Limited ("CBSL" - a subsidiary of the Macquarie Bank Group), namely that Red Bee’s exclusive contract to provide the BBC with media access services (the "BBC contract") is a breach of Chapter I of the Competition Act because it prevents, restricts or distorts competition.
Ofcom excluded this allegation from the scope of its original investigation, because the Office of Fair Trading ("OFT") was considering whether the broader Framework Agreement, of which the BBC contract is a part, was an ancillary restraint directly related and necessary to implement the merger, as part of its decision on whether to refer the merger to the Competition Commission. On 11 November 2005, the OFT published its decision, clearing the acquisition and declaring that the Framework Agreement was not an ancillary restraint.
In December 2005 Ofcom added the consideration of whether the BBC contract infringes Chapter I of the Act and/or Article 81 of the EC Treaty into the scope of its investigation and extended the timescale of its investigation of the Channel 4 contract. The investigation continues.
- Complaint to European Commission re Digital Curriculum
The BBC’s proposal to launch its Digital Curriculum service was cleared by the European Commission under the state aid rules, subject to conditions, on 1 October 2003.
In previous Bulletins it was reported that on 15 July 2005, the European
Commission wrote to the UK Government stating that a complaint had been made to the Commission alleging that the proposed Digital Curriculum service did not comply, in certain respects, with the conditions previously imposed by the Commission. The letter also alleged that the scheme for the provision of electronic learning credits (eLCs) by the UK Government might be subject to abuse.
The matter remains under consideration by the EC.
Fair Trading Complaints to the BBC
The BBC has received no new complaints during the period. One potential complaint remains outstanding.
- PACT’s complaint re the BBC’s acquisition of ‘Trollz’ – Ongoing
On 19 December 2005, the BBC Chairman received a letter from PACT (the representative organisation of Independent Production Companies) that raised fair trading issues. This followed previous correspondence between PACT, Michael Grade and Mark Thompson on the same issue. The letter questioned whether the acquisition by the BBC of the broadcast rights to Trollz was consistent with the BBC’s Editorial Guidelines given that PACT alleged that the programme was based on pre-existing toys. The letter also alleged that broadcasting Trollz would amount to a breach of the Fair Trading Guidelines’ prohibition on the public service promoting the BBC’s commercial activities given that BBC Worldwide had distribution rights in the UK for products related to Trollz.
The Chairman responded to PACT on 10 February 2006 to advise that as
‘ Trollz’ had been broadcast and as BBC management had previously responded on the editorial issues, PACT should raise its editorial concerns direct with the Governors’ Programme Complaints Committee. The letter also noted that the editorial and fair trading questions were linked - a breach of fair trading would arise only if the programme was acquired and broadcast with the intention of promoting commercial products released by BBC Worldwide, i.e. if the BBC’s Editorial Guidelines had been breached. PACT has been advised of the deadlines for complaining under the editorial processes and has indicated that it is still considering its position.
The Fair Trading investigation will therefore be deferred until the editorial complaints process is completed.