BSKYB RESPOND TO OFT’S PROPOSED INFRINGEMENT DECISION

THE OFT has announced that it proposes to make a decision that BSkyB have behaved anti-competitively, infringing UK competition law.
BSkyB now has the opportunity, for the first time, to make written and oral representations on the OFT’s proposed decision which will be taken into account before any final decision is made. The OFT does not anticipate being in a position to make a final decision before Summer next year.
A BSkyB spokesman said: “BSkyB have not infringed the Competition Act and welcomes their first opportunity to put their case to the OFT. The OFT's announcement is not a final decision and merely indicates that they have moved to the next stage in a process that has lasted nearly two years. BSkyB notes that the OFT are simultaneously alleging that BSkyB's wholesale prices are both too high and too low. Furthermore the OFT are alleging that the discounts in BSkyB's rate card are anti-competitive, despite those discounts previously being approved by the OFT. BSkyB will robustly defend themselves against all the allegations.”
The OFT have written to BSkyB setting out why they propose to make a decision that the company has a dominant position on the wholesale market for the provision of pay premium sports and film channels. The OFT also proposes to make a decision that BSkyB have abused their dominant position both in that market and in the market for the distribution of pay TV channels.
The OFT’s proposed decision is that certain conduct by BSkyB infringes Chapter II of the Competition Act 1998, in particular: BSkyB’s margin between the wholesale price it charges distributors and the retail price paid by its own subscribers may not be wide enough to allow a normal profit to be made by a third party distributor of its premium channels, even if it is as efficient as BSkyB in distributing; the discounts BSkyB gives distributors when they take packages of premium channels may be set at a level that prevents rival premium channel providers from entering the market and the discounts that BSkyB offers to distributors on one version of their ratecard for their premium sports and film channels (i.e. the ‘Pay-to Basic’ version) may prevent rival premium channel providers from entering the market and may distort distributors’ marketing decisions. (CD)