IPA threatens commercial TV companies with lawsuit over credit insurance

LONDON - The Institute of Practitioners in Advertising is threatening legal action against the UK's commercial TV companies, which are demanding increased credit insurance from agencies.

ITV Network Limited, a consortium comprising ITV, Channel 4 and Channel 5, has began demanding increased insurance on payments from advertising agencies, which could cost agencies as much as £250,000.

The IPA met with ITVNL last week and claims it was agreed that no action would be taken until a report into the accreditation process was produced by accountancy firm KPMG.

However, this week ITV pulled the ads booked by one agency on the basis that it had not signed up to its new, stricter accreditation process.

It is thought that ITV is demanding extra assurances from advertising agencies because it is trying to win favour in the City ahead of a merger between the two main companies Carlton and Granada.

Hamish Pringle, IPA director general, said: "The latest actions by ITVNL to begin to delist creditworthy IPA members, while we thought we were in the middle of negotiations, lead us to believe that they have no intention of reaching an amicable solution of this issue.

"If ITVNL insists on acting in a way that damages our members' interests then it risks a massive and very public debate about its anti-competitive behaviour, and possible legal actions by individual agencies and the IPA."

IPA member advertising agencies, which account for 80% of UK agencies, have been told to secure bank guarantees or insurance bonds to cover the cost of media spend.

The IPA has sought legal advice and has been advised that even "the discussion of standardised terms and conditions by a cartel requires notification to Oftel, and that the accreditation requirements are a barrier to entry and therefore anti-competitive", according to a statement.

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