BBC Trust

Fair trading rules are working well, but can be made more transparent and put under greater independent oversight, the BBC Trust has found.

Following the final review of fair trading under the current Charter, the Trust has made four immediate changes to its oversight of fair trading compliance, and made further recommendations to the government on powers to be granted to the BBC’s regulator under a new Charter.

The fair trading arrangements are in place to safeguard the wider broadcasting industry from unfair commercial arrangements between the BBC and its subsidiaries, and from negative market impact of its activities.

The Trust has already acted to:

• Require the BBC Executive to notify it of all fair trading complaints received, helping it to identify areas for further investigation.
• Include feedback from the industry in any new assessments of the significance of proposals for new services, with any views submitted referred to Ofcom to inform its formal advice to the BBC Trust.
• Improve transparency by publishing more information about fair trading oversight and the annual independent audit in the Annual Report later this year.
• Undertake a full independent review of current transfer pricing arrangements, by which payments between the public service and commercial parts of the BBC are agreed, with consultants EY commissioned to advise the Trust.

In the review, the Trust found that there was no evidence of failure in the existing system, but more could be done to boost transparency and the ability of the industry to raise concerns, and to strengthen future independent oversight.

BBC Trustee Suzanna Taverne said:

"The BBC’s commercial activities generate vital income to support public service broadcasting, but as a publicly funded body it has a special responsibility to make sure that it trades fairly and is mindful of the impact it may have on the wider market.

"We are already taking action to strengthen the fair trading rules the BBC must follow, and have put forward options for the Government to consider as part of Charter Review.

"While we found no evidence of failure in the existing system we believe these measures will give the industry greater confidence in the BBC’s positive contribution to a strong and diverse UK broadcasting sector."

The Trust has put a series of recommendations to the Department for Culture, Media & Sport (DCMS) to further strengthen the fair trading regime under the new Charter, beyond the requirements of existing regulation and competition law.

These recommendations are designed to make sure impacts on the market are fully evaluated both before and after proposals are implemented, including by:

• Giving companies and organisations the right to complain directly to the BBC’s regulator, rather than first having to raise concerns with the BBC Executive before appealing to the Trust.
• Authorising the BBC’s regulator to conduct audits of fair trading compliance itself, rather than for them to be commissioned by the BBC Executive.
• Requiring the regulator to conduct more regular testing, including of transfer pricing, to make sure the BBC’s commercial subsidiaries do not gain an unfair advantage over private companies in the sector.

The BBC Trust’s review of fair trading arrangements followed a public consultation in 2015 and an independent report from Fingleton Associates to assess the operation of the existing policy and framework.

The BBC Trust Review of Fair Trading Policy can be found here:

2016 Review of Fair Trading Policy

Notes to Editors

1. The BBC’s current fair trading arrangements were introduced in 2007 following public consultation, and amended to make them easier for complainants to navigate in 2011, following the publication of the Trust’s first review.

2. Since 2007, the Trust has received 10 fair trading appeal cases, of which seven have been partially upheld and three have not been upheld.

3. The full BBC Trust fair trading policy and framework can be found here.