On 17 February 2014, the English Court of Appeal ordered the Competition Appeal Tribunal (“CAT”) to reconsider its earlier decision which struck down Ofcom’s (the UK telecom regulator) decision to make Sky provide Sky Sports channels on a wholesale basis to BT, their leading competitor in the pay-TV market.
The case goes back to a 2010 ruling when Sky was ordered by Ofcom to supply Sky Sports to other pay-TV providers under its powers derived from the Communications Act 2003. Ofcom believed that Sky had arbitrarily refused to entertain requests to give wholesale supply to other providers of pay-TV and was therefore exploiting its powerful market power in this area.
The Sky Sports channels are of course well known to any sports follower as the dominant supply of subscription content for high demand sports such as top-division football. Other pay-TV providers including BT argue that providing these channels on a wholesale basis would help inject much needed competition into the UK pay-TV market.
Sky appealed Ofcom’s decision to the CAT which examined the case. The CAT overturned Ofcom’s ruling on the basis that some of Ofcom’s findings were not supported by evidence and that they had misunderstood aspects of the market including the negotiations between Sky and others.
Both Ofcom and BT then appealed the CAT’s decision to the English Court of Appeal. The Court of Appeal decided that the CAT had made errors in its judgment and that it’s striking out of the original Ofcom decision could not be upheld. The Court of Appeal rejected claims by Sky that Ofcom did not have jurisdiction under section 316 to impose conditions on the pay-TV market and held that the wholesale price issue did raise serious competition concerns which the CAT had failed to address in its review of the original Ofcom decision.
It ordered that the case be remitted back to the CAT for reconsideration. This further consideration will have to be decided within the confines of the Communication Act 2003 since Ofcom did not bring this case against Sky under general competition laws.
A lot has happened since the original ruling. BT has recently launched its own Sports channels to rival the Sky products as it was so desperate to purchase and supply premium live sports coverage outbidding Sky in a highly expensive bidding war. BT still contend that if they are offered the opportunity to buy the Sky channels wholesale and supply them through their new Youview set-top boxes, they will create more competition in the market and lower prices for consumers in the long-term.
However, the pay-TV and subscription sports channel market remains very much in a state of flux and its fast moving nature make determining what is the best outcome for the market and the consumer that much harder. Should Sky be made to supply and or are they entitled to solely retain a brand that they have expensively built and maintained? This rather complex case rolls-on.