This week's announcement that Ofcom is closing its
investigation into Virgin Media's complaint that the Premier
League is restricting the supply of live TV rights to its matches,
in return for the Premier League increasing their number from 168
to 190 and agreeing that no single buyer will scoop the pool next
time the rights are tendered, is not really a surprise. In all
the post-Brexit talk of whether UK industry has any world class
leaders, the Premier League was not mentioned but it is clearly in
that category. Recently, Continental Football Leagues have even
paid the Premier League the ultimate compliment of trying to rejig
the Champions League to put the Premier League in its place.
Of course, Brexit – opposed by the Premier League and the
Club Chairman – does threaten the free movement of players
which benefit Europe's richest league so there are some clouds
on the horizon. However this is perhaps an additional reason
not to cramp the style of a national champion by a dogmatic
application of the competition rules at a time when we are hearing
a lot more about the need for 'industrial policy' –
which usually means that competition takes a back seat.
Dogmatic is the last word that one would use to describe
Ofcom's "intervention" which took almost two years to
bear meagre fruit bearing in mind that it was faced with a fairly
blatant output restriction which can only raise prices. The
latitude originally given to the Premier League by the
European's Commission's Decision in 2006 was exceptional
and the product of vigorous lobbying in Brussels1. In
marked contrast, the Bundesliga model approved by the European
Commission after all allows all matches to be televised live.
There appears to be no reduction in live audiences as a result and
generally speaking spectators in Germany pay much less for their
tickets than the fans in England.
The English opt out in 2006 was never justified on the basis of
the protection of live audiences (which is just as well this time
round since the European Court dismissed it as a justification in
the Pub Landlord case.) Instead, fan preference for the status
quo was the decisive factor and this played its part once more in
Ofcom's finding that it basically had better things to
do. However, fan preferences are very hard to read; much
depends on how the question is put and to whom. It is
therefore an inherently unsatisfactory index of what is or what is
not acceptable and Virgin Media's reaction (that subscriptions
will remain at very high levels) is understandable.
Where does this put Ofcom's competition enforcement
role? It has to be said that it is not in a good place.
It's long standing battle to reduce Sky's market power in
which it invested enormous resources was basically a failure
– other than assisting BT's entry to the fray which would
have probably happened anyway. The case for the sectoral
regulators to retain competition powers inevitably looks weaker as
a result of this decision and it will be no surprise if in a few
years Ofcom's competition enforcement role is assumed by the
Competition and Markets Authority.
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