Sky wins appeal against Ofcom

MUMBAI: UK pay TV service provider Sky has won its appeal against UK media watchdog Ofcom‘s decision to force the company to reduce the amount it charges companies like BT and Virgin Media for carrying Sky Sports channels.

The Competition Appeal Tribunal (Cat) heard the case. In the judgment, Justice Barling said: "The tribunal has concluded that Ofcom‘s core competition concern is unfounded. That concern is based on the finding to which we have referred, namely that Sky has deliberately withheld from other retailers wholesale supply of its premium channels, preferring to be entirely absent from those retailers‘ platforms rather than to give them wholesale access, and that in doing so Sky has been acting on strategic incentives unrelated to normal commercial considerations of revenue/profit maximisation."

The tribunal came to the view that Ofcom has, to a significant extent, misinterpreted the evidence of these negotiations, which does not support its conclusion. "We have found a significant number of Ofcom‘s pivotal findings of fact in the statement to be inconsistent with the evidence," it stated.

The Cat was deciding on the various appeals of Ofcom’s decision to impose a Wholesale Must Offer
obligation in respect of Sky Sports 1 and Sky Sports 2.

BSkyB said in a statement: "We welcome the Cat‘s confirmation that Ofcom’s competition concerns in relation to the wholesale supply of Sky Sports are unfounded and that, contrary to Ofcom’s analysis, the evidence shows that Sky has engaged constructively with other distributors over the supply of its premium channels. This finding supports the argument that Sky has been making consistently over the last five years.

We also welcome the Cat’s conclusion that the existing commercial terms of supply, particularly in relation to Sky’s wholesale rate card, do not obstruct fair and effective competition in the retailing of Sky Sports across platforms."

The ruling is a setback for Ofcom. The Cat ruling contradicts Ofcom work dating back to 2007 relating to BSkyB‘s power in the UK pay-TV market.

Earlier Ofcom and the Competition Commission had decided that the pay TV market was not serving consumers, ordering Sky to wholesale its premium sports channels to arch rivals Virgin Media and BT, and giving Ofcom the power to set the wholesale price. Sky appealed a 2010 Ofcom pricing decision. The Cat disagreed with this.

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