On Nov. 5, 2014, the Competition Appeal Tribunal (CAT), the UK's specialist competition judicial body, varied the scope of an interim relief order to include an additional platform to which BSkyB (Sky)―the holder of exclusive broadcasting rights to several premier sporting events in the UK―must offer to wholesale its core premium sports channels (CPSCs). The interim relief order stems from a 2010 decision of Ofcom, the UK's communications regulator, which amongst other things regulates the pay TV sector. In its 2010 "Pay TV Statement," Ofcom concluded that Sky had market power in the supply of CPSCs and was restricting supply to other pay TV providers in a manner that was prejudicial to fair and effective competition. To remedy the competition concerns, Ofcom decided to impose a term in the broadcasting licences of Sky such that it must offer to wholesale its CPSCs to retailers at a fixed price set by Ofcom. On the basis that Sky would appeal, the interim relief order was made, in 2010, to limit Sky's wholesale must-offer obligation to only certain specified platform operators.
Given the purpose of the regulatory remedy, the CAT held that, in determining whether to vary the order, it could not approach the matter in "blinkers" concerned only with the prejudice of the order on the parties. Rather, the CAT had to look at the position in the round concerned also with the effect on competition in the public interest. Noting that broadcasting markets, like telecommunications markets, are developing rapidly, the CAT held that the technical developments that have occurred over the wholly exceptional time that the appeal has taken have rendered the interim relief order largely ineffective as regards BT, the party applying to vary the order. The CAT stated that it was not realistic to suggest that BT should deprive its customers of the use of improved technology; namely, Internet protocol television. It was noted that BT had itself spent a substantial sum acquiring valuable broadcasting rights, and its use of Internet protocol television reflected changes across its primary broadcasting platform.
As regards Sky's appeal against the "Pay TV Statement," in 2012, the CAT concluded that Ofcom's core competition concern was unfounded, but held that Ofcom did have jurisdiction to impose the wholesale must-offer obligation. The CAT suspended its order on the appeal until an application to the Court of Appeal had been determined. BT appealed to the Court of Appeal on the ground that the CAT had failed to address whether retailers could compete with Sky at the Sky wholesale price. In February 2014, the Court ruled in favour of BT and remitted the case back to the CAT for further review. At the same time, the Court of Appeal also dismissed a cross-appeal by Sky challenging the CAT's finding that Ofcom's powers include the ability to impose licence conditions to regulate the distribution of licensed services. On Oct. 30, 2014, the Supreme Court refused Sky's application to appeal the Court of Appeal's judgment.
The CAT's judgment is available here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
