Thursday, April 02

UOHS. Not fit for purpose. (Part 1)


How often do you think about UOHS? In most cases the answer is probably "not often". If however you are one of our readers who work for McCann-Erickson, or for Vodafone, you will be aware that UOHS have made decisions (or failed to make decisions) which have negatively affected your business. One commentator recently remarked that the value of business "frozen" under review by UOHS was so great that it represented the difference between positive and negative GDP for the country.

Therefore UOHS is incredibly important for the economic wellbeing of the country. But what do we know about the people who make those decisions? How are they selected? What business experience do they bring which allows them to quickly understand the dynamics of each market they need to study in order to make a decision? This series of blogposts stems from my attempt to answer that question in relation to one relatively small case. I failed to get that answer. Even under the Freedom of Information Law, UOHS refused to provide the most basic information about the professional qualifications and experience of their senior staff.

Today, in part1, I will describe the farcical decision in the case of Klasa. In part 2, I will describe what happened when I tried to find out about the professional experience and qualifications of those who made such a decision. In part 3, I will examine the remit of UOHS and ask whether that is where the underlying problem lies. With reference to the UK I will demonstrate that UOHS has been given extraordinarily wide powers, yet with insufficient discussion about how and why it uses these powers for the benefit of this country's citizens.

It was an old favourite topic which got me interested again in UOHS. I say 'again' because I have actually been part of a UOHS investigation. Back in 2002-3 UOHS got involved in AKA's decision to agree a mandatory 25,000CZK pitch fee to clients who asked for speculative creative work in pitches. UOHS claimed this was a 'cartel' situation. Registr reklamnich agentur received a letter from UOHS containing various questions. After they received my 9 page reply pointing out how idiotic the entire issue was ( The accused agencies were simply trying to stop clients getting professional services without  paying for them; how can that be a cartel practice?), they obviously decided that I was a troublesome foreigner and left me alone. Unlike Jirka Mikeš of AKA and various agency leaders, I was not dragged down to Brno and treated like a common criminal. Their deliberations lasted seven months. Heaven knows how much it cost. I calculated at the time that the total amount of money involved in the actual issue (pitch fees to be levied) was a maximum 2mCZK per year. How on earth could UOHS justify spending so much time on such a matter?

So when I read that UOHS had got involved in my favourite waste of taxpayers' money - Klasa - I feared the worst. Finally there had been a tender where a sensible choice of agency had been made. McCann-Erickson, an international agency with pedigree, specialists in several divisions, and the resources to handle such a large budget, was chosen. Lo and behold, the losing agency, our old friends Comunica, made a complaint to UOHS. And after spending months (at taxpayers' expense) deliberating, UOHS upheld the complaint, and cancelled the tender. McCann had hired new people specifically to work on this campaign. McCann had to pay them for several months before the decision was made, and then had to make them redundant. And in another difficult year for Czech farmers, there was no marketing support.

And what was the terrible transgression in the tender process that required UOHS to make such a destructive decision? Well certainly in the previous tender - won by Comunica - there was plenty to be concerned about. A previously unknown agency was entrusted to manage one of the biggest marketing campaigns in the country. Could Comunica really have the most talented people available? If so, why did no one else in the industry know of them? Did they really have the best ideas? How did SZIF evaluate the ideas? And was it a good idea to allow the creative agency to hire its own media agency as a sub-contractor, when 80% of the budget would be allocated to the media agency? But that was the previous tender, which UOHS did not concern itself with. Nor did it uncover any similar concerns about this tender. No; in this case everything hinged on Table A3.....

If you can bear it you can read the UOHS judgement here. It is a classic example of the kind of bureaucratic resolution of a non-existent "problem", which has made the Czech Republic internationally notorious. Table A3 is part of a schedule showing the budget broken down by media channel. TV, radio, print, internet. Each had its own table. Table A3 was for "other" channels ( Další jednotkové položky.) It was missing from that page of McCann's submission (although the agency told me it was included on another page).UOHS claim that the missing table was sent in "late". For this reason UOHS concluded that the entire decision to choose McCann was dangerously faulty, and that the entire campaign should be cancelled, even if it meant farmers would have no marketing support.

Now back in the real world, imagine you have just held a tender for a big creative campaign for your brand. One agency has a campaign idea which is easily better than all the others. The agency has a good reputation, and has a good team available to work on your campaign. But deep inside the tender document you discover that in the budget breakdown it forgot to include a table marked "other channels". Would you disqualify the agency and cancel the tender because of this? I would suggest that if you did, your boss might fire you and suggest a change of career direction, perhaps as a low level tax inspector. I have no doubt that if if a similar decision were made by the UK anti-monopoly office it would be all over the national newspapers and the director would be forced to resign within 24 hours. Certainly if I was a suspicious person, I would conclude that someone told UOHS to "find something wrong" with the tender process, and this was the "best" its army of lawyers and clerks could find. But I try to be fair; while I would not trust anything Comunica does, I cannot see how that agency benefitted from the UOHS decision, since the campaign was completely stopped. Maybe it was just the case that Comunica's goat had died, so Comunica wanted McCann's goat to die too. UOHS just helped them by making an absurd decision.

In this case UOHS got involved and made a decision, and it is doubtful whether they should ever have got involved, and certainly doubtful that their decision is in the public interest. On the other hand when Vodafone complained that O2 and T-Mobile were planning to share their technical networks and to exclude Vodafone, -a big problem, of concern to every customer of the telcos, which means almost every adult citizen -  UOHS did nothing. Vodafone had to threaten to go to the European Commission to get UOHS to review the complaint. Eventually UOHS made a "partial conclusion" that this "could have a negative impact on Vodafone's customers in the long run". Really? Brilliant. And how long would it have taken a team of high school students to make the same conclusion?

Google "UOHS" and you will find a huge number of stories, many resulting in decisions which look surprising. So I asked myself, who are the people who make these decisions? Admittedly it must be challenging to have to become acquainted quickly with so many different markets and businesses. How do they do it? Do they have people who previously worked in various business sectors? Do they have specialist advisors? In part 2, find out what happened when I attempted to get answers to these straightforward questions.




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