Please provide a brief background to this matter, including: (1) a description of how football rights are currently sold in the UK; and (2) the Premiership’s justification for selling rights collectively.
The Premier League sells its rights on a territory by territory basis across the globe. Specifically, the Premier League has an auction process that has been adapted throughout the last decade to take into account of European Commission intervention and specific Court cases. From the Premier League’s inception in 1992, its broadcasting rights have been sold collectively. Collectivity relates to where a group of clubs (i.e. the Premier League) act together to form a league, play in competitions and negotiate commercial deals as one entity. The question for some time has been whether this collective approach could be deemed anti-competitive. To date, the Court and regulators have not concluded that such a collective deal is anti-competitive. Indeed, the recent Ofcom pay-tv investigation was premised on the powers provided under the Communications Act rather than the Competition Act.
What is the regulator’s view of these arrangements (in particular, on what basis the European Commission provided its blessing in 2006) and do alternative national approaches exist elsewhere in Europe?
A UK regulator has not actually looked into the Premier League’s collective approach since the Office of Fair Trading failed in its challenge against the league at the turn of the millennia. At present, Ofcom has not reached a view as to whether there is sufficient evidence of an infringement of competition law for it to issue a statement of objections. Nonetheless, they have opened an investigation so there is obviously a number of issues to consider. It is worthwhile remembering that the European Commission entered into a number of commitment arrangements with the Premier League and the Bundesliga in relation to collective sales of football matches. The Commission investigations were eventually closed after effectively reaching agreement with the various football authorities on how to auction its lucrative rights.
What are the specifics of Virgin Media’s complaint (including the relief/action requested) and does Virgin Media make any recommendation for an alternative approach for dealing with football rights?
The Ofcom press release explains that Virgin Media’s complaint alleges that the collective selling of live Premier League rights breach competition law. It specifically relates to the number of Premier League matches that are made available each season and that 41% of live matches available is lower than a number of other European leagues, where more live matches are available. Without seeing the full complaint, it is difficult to speculate as to any alternative approaches but one suggestion appears to relate to the ‘deregulation’ of exclusivity so that a number of non-exclusive complete live packages are made available by the Premier League rather than separate, differentiated and exclusively packaged live rights (as is currently marketed).
Besides positioning itself as a consumer champion, what’s in it for Virgin Media?
Their end game may be to challenge the exclusivity provisions in the Premier League auction process. If exclusivity is deemed anti-competitive, then the Premier League would potentially be forced into selling, as explained above, non-exclusive packages of live rights which many speculate would not be as lucrative because a number of broadcasters would then have access to the same content. If that was the case, the exclusivity premium that attached to such packages would be lost, thus making each package potentially more affordable to a number of parties like Virgin Media who perhaps do not have the resources to outbid Sky or BT.
Does this complaint have implications in terms of the timing of the next auction and who, in your view, has the most to lose were Ofcom to side with Virgin Media?
As the Ofcom process, investigation, decision and appeals processes could take several years (just like the current Ofcom pay-TV investigation that is before the Court of Appeal and the Competition Appeal Tribunal at present) the Premier League may well carry on regardless with the next auction process. The auction is likely to start in the coming months with the results announced in the Spring/early summer. Depending on what the outcome of the investigation and ultimate decision is, should Ofcom side with Virgin Media’s views, the Premier League may see its revenues decrease if exclusivity is ‘watered-down’ and the incumbent broadcasters who have the benefit of ‘must-have’ exclusive content may no longer be the only broadcasters of live Premier League matches.
In addition to the assessment of collective selling, could you envisage something as radical or controversial as a Sky/BT joint bid for rights [on the basis that it would conceivably keep prices down, not just for bidders, but for the buying public too, and might ensure customers have access to all broadcast games with one subscription, etc]?
A joint BT/Sky bid could actually bring its own competition law concerns, as competitors would be exchanging strategy, sensitive information and pricing details rather than competing with each other on the merits. In any event, both broadcasters want to acquire content that the other doesn’t have in order to differentiate their offering and provide customers with a unique product. As such, it is likely competition between BT and Sky will be fierce and will probably drive up prices for the live packages even further.