The media regulator is to launch a probe into the "complex" and "opaque" fashion in which TV advertising is bought and sold, which could prompt fundamental change to the way that commercial broadcasters do business.
The investigation by Ofcom will be the first to explore how the UK’s airtime trading system operates between media buying agencies and broadcasters and is the result of "perennial anxiety" over whether it is being abused.
The £3 billion TV advertising market is concentrated in the hands of only a few large media agencies such as WPP’s MediaCom and Publicis’ ZenithOptimedia and broadcasters such as Channel 4 and ITV.
Ofcom’s chief executive Ed Richards told delegates at the annual conference of UK advertisers’ body Ibsa: "The time is now right to consider whether there are reasonable grounds for suspecting that the trading mechanism prevents, restricts or distorts competition in the sale of TV advertising airtime."
In its advertising sales review last year, the watchdog indicated that it believed the model was "complex and the pricing is opaque" while some areas of the market "may interact with market power in such a way that restricts competition in the sector," he added.
If the probe finds "cause for concern", Ofcom will refer the issue to the Competition Commission to carry out a formal review as part of a full market investigation.
Last year, the Commission ruled that the Contract Rights Renewal, which was put in place to prevent ITV from abusing its dominant market position, should remain in place for the time being, although a full market review of the TV advertising sector was required.
Bob Wootton, Ibsa’s media and advertising director, said: "This is a very complex and difficult challenge for Ofcom. No one expects this to be easy for the reviewers or indeed for our industry if the Competition Commission picks this up. There is a fundamental dichotomy here: an effective review needs to look at one point in time, but the complexity of the issue means this will take much longer than that to complete."