RTÉ has won a significant victory against commercial rival TV3 after the Competition Authority failed to support TV3's claim that the State-owned broadcaster engaged in "predatory pricing".

In a letter sent to TV3 and RTÉ yesterday, a senior official from the authority's monopolies division said it was not taking action on foot of a TV3 complaint.

This follows a long-running investigation into what the authority called alleged "predatory pricing practices by RTÉ in the alleged market for television advertising on Irish terrestrial television channels".

Dr Paul Gorecki, director of the monopolies division, said: "The authority has considered the information at its disposal and proposes taking no further action with respect to the issues raised in that correspondence at this time."

The authority added that its decision was without prejudice to complaints it might receive in the future.

The authority recognised that in January 2002, RTÉ installed a new advertising sales system and this may have had an impact on prices for a time.

However, it said there was no "intent" behind this.

In addition, it said there would be no point in RTÉ discounting its rates because this would simply have exacerbated its precarious financial position at that time.

TV3 expressed disappointment with the decision. Mr David McMunn, director of government, regulatory and legal affairs at the station, said: "We believe that this decision does not take into account the fact that RTÉ is dominant in the TV advertising marketplace in Ireland and that unlike a normal profit-driven company has a licence fee income that is not affected by commercial activities and as such it is arguable that a depressed advertising market pressurises the Government to increase the licence fee.

"TV3 will be contacting the authority in relation to this matter," he added.

The decision comes as the Minister for Communications, Mr Ahern, is also planning to investigate RTÉ's pricing policy in the advertising market. He announced this investigation shortly before Christmas. It is not clear whether his investigation will rely on documentation or findings assembled by the Competition Authority team.

The authority's decision represents a major boost to new RTÉ director-general Mr Cathal Goan, who is trying to put RTÉ on a more secure financial footing going into 2004. The station recently managed to hammer out an agreement with Proctor & Gamble (P&G) which clears the way for P&G adverts to return to RTÉ 1 and Network 2. The dispute was over the issue of advertising rates.

TV3 has, since its first broadcast in September 1998, complained about RTÉ's pricing policy in the television advertising market.

In its submission to the Forum on Broadcasting, the station, which is owned by CanWest, Granada and a group of private investors, trenchantly criticised RTÉ's approach. The station said television advertising rates in Ireland were among the lowest in the developed world and, consequently, the advertising pool available to broadcasters was unusually small for the population.

"RTÉ is the dominant provider of television advertising and up until a few years ago was in a monopoly position. In that time RTÉ has depressed advertising rates, in our view, because it was in their interest to maintain a high dependence on State aid," TV3 claimed in its submission. It appears this view has been rejected by the authority.

The chief executive of TV3, Mr Rick Hetherington, has long claimed that RTÉ is able to transfer much of the benefit of licence fee increases directly into the pockets of advertisers by way of increased discounts. RTÉ's advertising department has denied this vehemently.