Judgment of the Tribunal in relation to the appeals brought by each of British Sky Broadcasting Limited (“Sky”), The Football Association Premier League, Virgin Media, Inc. (“VM”) and British Telecommunications plc against a decision of Ofcom, contained in a document entitled “Pay TV Statement” and published on 31 March 2010 to vary, pursuant to section 316 of the 2003 Act, the conditions in the licences granted to Sky under Part I of the Broadcasting Act 1990 for certain of Sky’s pay television channels, Sky Sports 1, Sky Sports 2, Sky Sports 1 HD2 and Sky Sports 2 HD (the “core premium sports channels” or “CPSCs”). The new licence conditions required Sky to offer to wholesale its CPSCs to retailers on other broadcasting platforms and, in the case of the standard definition versions of the channels, offer them at wholesale prices set by Ofcom (“the WMO obligation”).
The Tribunal dismissed part of Sky’s appeal, finding that Ofcom did have jurisdiction under the sections 316 and 317 of the Communications Act 2003 to impose the WMO obligation on Sky.
The Tribunal concluded, however, that Ofcom’s core competition concern (that Sky had deliberately withheld from other retailers wholesale supply of its premium channels in pursuit of strategic incentives unrelated to normal commercial considerations of revenue/profit-maximisation) was unfounded. Ofcom had misinterpreted the evidence in respect of the commercial negotiations between Sky and other retailers who sought access to Sky’s CPSCs. The Tribunal found that Sky had engaged constructively in negotiations. Moreover, the Tribunal concluded that Ofcom’s other competition concerns, relating specifically to the prices for the existing wholesale supply of the CPSCs to VM, and the non-supply to the cable companies of certain new services, were also unfounded. The Tribunal could find no evidence to justify Ofcom’s finding that Sky had (or had acted upon) an incentive to weaken VM or its corporate predecessors as competitors. It therefore allowed Sky’s appeal against the WMO obligation.
