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Court of Appeal Sends Ofcom and Sky Sports TV Competition Case Back to CAT

Monday, February 17th, 2014 (2:24 pm) - Score 829
law

The tennis match over wholesale access and prices for Sky TV’s (Sky Broadband) premium sports channels (Sky Sports 1 / 2 etc.) looks set to erupt again. The UK Court of Appeal has today ruled that the Competition Appeal Tribunal (CAT) needs to look again at its rejection of Ofcom’s pay TV measures.

The case originally kicked off in 2010 after Ofcom imposed an obligation upon BSkyB that required the TV operator to offer wholesale access to its Sky Sports 1 and Sky Sports 2 channels (aka – ‘Wholesale Must Offer’) and at prices set by the regulator.

At the time Ofcom ruled that Sky had market power in the wholesale provision of premium channels, although last year the Competition Appeal Tribunal (CAT) overruled this and suggested that Sky’s prices were fair, which meant that Ofcom’s obligation was not required.

However Ofcom disagreed and argued that the CAT’s ruling had failed to correctly consider the regulators findings concerning competition in the market, which was enough for the case to go back to the Court of Appeal.. until today.

Ofcoms Statement

Ofcom welcomes the Court of Appeal’s decision that the judgment of the Competition Appeal Tribunal failed properly to consider Ofcom’s findings that there was ineffective competition in the market.

Ensuring fair and effective competition in the pay TV market has always been Ofcom’s objective. Ofcom’s 2010 decision that Sky must offer premium sports channels to other providers was designed to deliver choice and innovation to consumers through greater competition.

The ruling doesn’t alter CAT’s findings but it does mean that the case will have to be given a second look, with Ofcom clearly hoping for a favourable change in position and Sky opposing it. On the other hand a lot has changed since 2010, with BT in particular winning a substantial quantity of premium sports content for its BTSport channels (these are offered for free to their broadband subscribers).

Separately the Government is mulling over new measures that would stop big telecoms and broadband providers from harming pro-consumer measures by tying the regulator up with long and costly legal challenges (here). But others argue that such cases are necessary to help stop bad regulation.

Leave a Comment
3 Responses
  1. DTMark says:

    That’s surely the way to create and encourage innovation.

    Take a successful company which built its own infrastructure, interfere, force price controls on it and generally destroy the concepts of price discovery and infra investment.

    😉

  2. Rich says:

    How about Ofcom look at the FA and cap the crazy amounts their TV rights go for… Then these companies (Sky, BT) wouldn’t be paying out so much and charging us so much.

    P.s.. Charing a decent amount for your ‘offnet’ OTT content is a tricky balance…. It’s nice to use someone elses network while providing just the OTT content (think cost savings on overheads like netflix does Netflix) but at the same time you want customers with brand loyalty and a higher revenue. I think it’s better to let them compete against each other to bring the cost down. The UK has become one of the most competitive markets in the world for this sort of content so I’m just happy its wholesaled at all! This case isn’t really required anymore..

    1. DTMark says:

      How about OFCOM butt out completely, leave a private operator with control of their own assets and allow the customers to set the prices which is how it works in just about any other non-utility, non-essential business?

      On that theme, nobody is “ripped off” here, because the customer need not buy the service. If customers feel it is too expensive then they cancel or just don’t subscribe, and the concept of price discovery means that one of two things happens:

      1. The prices come down.
      2. Football clubs have to find alternative funding sources other than selling TV rights/season tickets etc.

      What’s not to like.

      I want an iPhone but they’re horrendously expensive. Should OFCOM or any other government body intervene because Apple have the iPhone market sewn up? Because the prices are “unfair”?

      Well, no. They’re expensive because that’s the market price that people will pay. Alternatives are available and the iPhone is not an essential human need.

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