Media News: OFT vetoes 'bank guarantee' calls

The Office of Fair Trading has ruled in favour of media agencies in their long-running dispute with broadcasters over the imposition of stringent credit guarantees for advertising payments.

The credit arrangements were introduced two years ago by TV Eye, a consortium of ITV, GMTV, Channel 4 and Five.

They demanded that media agencies provide bank guarantees and letters of credit as security against their TV advertising bills.

The Institute of Practitioners in Advertising, representing the agencies, argued that the guarantees were unnecessary, as media agencies already had insurance to cover any default in paying the bills.

It said these guarantees placed an unfair financial burden on agencies, made it difficult for new agencies to enter the market, and that TV Eye was acting as a cartel.