Out-Law News 1 min. read
22 Dec 2016, 5:44 pm
In November 2015, Ofcom lifted a 'wholesale must-offer' obligation (WMO) it had imposed on Sky in 2010 in respect of its Sky Sports 1 and Sky Sports 2 channels. Under the obligation, Sky was required to offer other pay-TV providers the opportunity to carry the two sports channels via their own service, under prices and terms set by Ofcom.
The WMO was imposed on Sky after Ofcom concluded a review of the pay-TV market in 2010. However, Ofcom looked again into the issue in 2014 and 2015 and, after assessing market conditions, decided to lift the licensing condition from Sky. At the time, it said "regulation of providers of key sports channels" was not "appropriate".
BT appealed Ofcom's decision to the CAT. It claimed that, by adopting a "wait and see" approach to regulating the market, Ofcom had acted in breach of its duties under the Communications Act and that Ofcom did not analyse the market for the distribution of sport content properly.
BT also said that Ofcom erred by failing to spot "a significant risk" that Sky could engage in "wholesale distribution practices" detrimental to competition if the WMO obligation was removed, and in finding that there was insufficient evidence that Sky might set wholesale prices at levels that would stifle competition.
Ofcom also should have identified the risk that Sky would require reciprocal access to rival pay-TV providers' content in return for wholesale supply of Sky Sports 1 and Sky Sports 2 and imposed a licensing condition to account for that potential practice, BT claimed, according to the CAT ruling (95-page / 486KB PDF).
Each of BT's grounds of appeal was rejected by the CAT.
"We find that Ofcom did not act in breach of its legal powers and did not exercise its discretion wrongly," the Tribunal said in its ruling. "We find that it was justified in deciding to remove the WMO and instead rely on a policy of monitoring behaviour and intervening swiftly should this become necessary."
"We do not see how it can be said as a matter of theory that reciprocal supply of Sky’s sports channels would necessarily damage competition; it depends on the circumstances, which must be assessed, as Ofcom says it will do as required," it said.