It is the first time that the Tribunal has overturned an
infringement ruling by the Office of Fair Trading (OFT), the
competition watchdog.
The case relates to attheraces, a joint venture between Arena,
BSkyB and Channel 4 to supply an interactive pay-TV channel
allowing viewers to bet on horse races through their televisions.
Punters accessing the attheraces web site were also able to watch
races live and bet on those races via their PCs.
To supply this service, attheraces bought certain media rights
from 49 British racecourses in 2001. The sale of these rights was
coordinated by trade group, the Racecourse Association (RCA).
However, in November 2001, the OFT was notified of the various
agreements relating to attheraces, and asked to decide whether they
infringed the Competition Act.
In April last year the OFT concluded that, by selling the rights
together, the 49 racecourses restricted competition between them
when supplying attheraces and that, as a result, attheraces had to
pay more for the rights than would have been the case if there had
been effective competition.
The Competition Appeals Tribunal, which was set up to oversee
the infringement rulings of the OFT, has now overturned the
decision.
It found that the OFT had considered the wrong product market
for its assessment of whether competition law had been breached,
and upheld the appeals by both the RCA and the British Horseracing
Board (BHB), the sport’s governing body.
The Tribunal then considered the question of whether the
collective selling or negotiation of the media rights agreement
(MRA) had been anti-competitive.
“The suggestion that the acquisition of the necessary critical
mass by individual negotiation with up to 37 course owners either
could have been done, might have been done, or was ever even
contemplated as something which could or might have been done,
appears to us to represent a triumph of theory over commercial
reality and to ignore the evidence of the events leading up to the
MRA,” said the Tribunal.
“The central negotiation in which the Courses engaged was
necessary for the achievement both by them and by ATR [attheraces]
of the legitimate commercial objective of creating the new product
that ATR proposed to exploit for the benefit of itself, the
punters, the racecourses and racing generally,” it concluded.
There was therefore no infringement of competition law.
According to the RCA, the Tribunal decision will have
significant implications for the future of racing.
Firstly, it will impact on ongoing legal actions between
attheraces, the RCA and others over the withdrawal of attheraces
from the original media rights agreement. Secondly, the judgment
removes one of the key obstacles to the development by Racing of a
robust commercial successor to the Levy, the mechanism by which
horseracing in funded.
According to Stephen Atkin, the RCA's Chief Executive, “It was
always disappointing that Racing was forced to contend this issue
and its resolution is very good news for racecourses and Racing
generally”.
Greg Nichols, Chief Executive of the BHB, added:
“BHB appealed primarily because of the
importance of collective selling for the future long term funding
of a key British Industry. We too are delighted at the Tribunal’s
clear and emphatic ruling that central negotiation was necessary
for the achievement of legitimate commercial objectives.”
