GMTV hit with biggest-ever fine over competition deception

GMTV will have to pay the fine and broadcast the regulator's findings on three separate occasions. Ofcom said that the penalty would have been higher had GMTV managing director Paul Corley not resigned and the company revised its processes.

GMTV has the licence to broadcast on ITV in the mornings, and had hired Opera Telecom to operate phone-in competitions between 2003 and 2007.

BBC investigations programme Panorama exposed flaws in the competitions earlier this year and yesterday premium phone line regulator ICSTIS fined Opera £250,000. Ofcom's fine covers the same competitions.

Ofcom said that the operation of the competitions represented 'gross negligence'. It said that the company breached its Broadcasting Code and that of the Independent Television Commission, which ceased to exist in 2003. Rule 2.11 of the Ofcom code says that "competitions should be conducted fairly, prizes should be described accurately, and rules should be clear and appropriately made known".

Ofcom identified three flaws in the operation of the competitions. It said that competitors were chosen to be finalists up to three hours before phone lines closed, meaning that many entrants had no chance to win the competition.

It said that the organisers also used a '15/5' selection process, meaning that 15 finalists were chosen between 6am and 8.30, and five between 8.30 and 9am. "Viewers calling between 08:30 and 09:00 therefore had significantly less chance of being selected as a finalist than those who entered before 08:30," said the judgment.

The third flaw was the 'final five' method, whereby the last five finalists were selected in the final minutes before 9am, leaving subsequent callers with no chance to win the competition.

Ofcom said that 62 million people called the competition lines in the time covered by its investigation, and that 25 million of them may be eligible for refunds.

GMTV said that fewer than that number were probably directly affected, but Ofcom said that the company could not provide substantiating figures for that claim.

"The [Ofcom Content Sanctions] Committee viewed these breaches as extremely serious, involving as they did longstanding and systematic failures in the conduct of broadcast competitions," said the ruling.

"The Committee took the view that the breaches constituted a substantial breakdown in the fundamental relationship of trust between a public service broadcaster and its viewers, millions of whom ‘purchased’ the right to enter GMTV’s competitions in the belief that they would have a fair and equal chance of winning," it said.

Ofcom pointed out how important the competitions were to GMTV. It said that despite the competitions providing the company with 35 to 40% of its profits, it had never audited Opera's processes.

"Over a period of nearly four years, GMTV made profits running into millions of pounds from its competitions, but had no adequate oversight of this operation," said the ruling. "Given the fundamental role that competitions played in its programming and the clear significance of the resulting revenue to its profitability, GMTV’s disregard for the need to operate any reasonable compliance procedure, verification, oversight or management of the arrangements for the conduct of these competitions over such a long period of time could not, in the Committee’s view, be described as anything other than gross negligence."

"This resulted in the widespread and systematic deception of millions of viewers who paid to enter the competitions in the belief that they had a fair chance of winning when in fact their chances were diminished or nonexistent," it said.

OUT-LAW is running a series of free breakfast seminars across the UK in October that explain the legal regime for free draws and prize competitions.