RTÉ to end advertising discounts system

RTÉ is to stop using its dominant position to effectively force advertisers to give it more business after an investigation into alleged market abuse by the Competition Authority.

The state broadcaster had been demanding advertisers devote a certain portion of their total television advertising budgets to RTÉ programmes if they wanted to avail of cut-price offers.

But the authority was concerned this was tantamount to the station abusing its dominant position and began inquiring into the arrangements two years ago.

The investigation was triggered after a complaint by TV3, which claimed the practice put it at a disadvantage, costing it €30 million in lost revenues.

Under competition law, RTÉ could have tried to keep its business model intact and seek a ruling from a judge.

But it backed down before the authority could take its concerns to court. The authority said that given the broadcaster’s willingness to scrap the so-called share deal pricing plan, it would not take any further action.

TV3 welcomed the decision but chief executive David McRedmond also demanded further measures.

He said it was unfair for RTÉ to enjoy dominance in the advertising market while relying on over €200m from licence fees.

“The state aid of RTÉ has led to a shocking abuse of dominance as the broad-caster has been totally unregulated,” he said.

“Government and the regulators must now step in to rescue the ad market... and now that this market abuse has been uncovered regulators must ensure transparency and fairness in RTÉ’s commercial operations.”

Under the share deal RTÉ pricing structure, introduced in 2003, the amount an advertiser paid for a slot was pegged against how much of their total television spending went to it and how much went to its competitors. The less it gave to RTÉ the more it paid for the space it wanted.

RTÉ rejected the position of Mr McRedmond’s and TV3, claiming the changes had not been forced on it, and that it volunteered to scrap share deal before the Competition Authority ever took it to court.

RTÉ’s commercial director of television sales, Geraldine O’Leary, said it will willingly phase out the share deal scheme by the middle of next year and because of this TV3’s statement was misleading.

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