Pay TV phase three document - Stakeholders - Ofcom

Pay TV phase three document – non-confidential version
account the study of international examples of wholesale must-offer remedies that we
commissioned from Value Partners, which is attached at Annex 11. It is important to
understand, however, that there are limits on the extent of inferences that can be
drawn from this due to contextual differences from the UK.
Whether it is more appropriate to proceed under CA098 – s317(2)
8.11 We consider in this section whether a more appropriate way to proceed in order to
address some or all of the concerns identified in this document would be under
CA98. The approach to this assessment is discussed above at Section 2.
8.12 In our Second Pay TV Consultation we considered that it might not be more
appropriate to proceed under CA98 because:
� We would still see a competition problem even absent a finding of anticompetitive
behaviour under CA98.
� Some types of remedy would not be available under CA98.
� Even if anti-competitive behaviour were taking place, under a CA98 process it
might take a considerable amount of time for this to become apparent.
8.13 Our current view is that it would not be more appropriate to proceed in relation to
some or all of the matters in question under CA98. We welcome comments on this
view.
8.14 In sections 6 and 7 we explain how specific competition concerns affect competition
and consumers. These are concerns which we think affect all of the actual and
potential retailers of pay TV, operators of pay TV platforms, and consumers of pay
TV. We discuss below how a wholesale must-offer remedy might tackle the effects
on choice and innovation. The issue of how to tackle these effects is essentially one
of how and whether an intervention in the market would best achieve a situation in
which competition across all the relevant markets protects the interests of pay TV
consumers over the coming years. We think it is more appropriate to do that by
considering how we might act to ensure fair and effective competition across those
markets in the context of s316. Under s316 we look across the sector, taking into
account the duties that have been put in place for us to consider as a sectoral
regulator, rather than by looking only at any specific cases of past conduct that might
be taken forward under CA98, where those duties may not apply.
8.15 Any decisions under CA98 would target particular instances of anti-competitive
behaviour by Sky in respect of the wholesale supply (or non-supply) of Core
Premium Channels to particular companies. If we are correct that Sky is acting on an
underlying incentive to restrict wholesale supply, this could be manifested in any
number of different behaviours towards any number of companies. It might be
possible to tackle that situation by bringing multiple CA98 cases. However, we
consider it is unlikely that this approach would be as successful in tackling Sky’s
underlying incentives as a wholesale must-offer remedy.
8.16 One type of case that it might be appropriate to bring against Sky under CA98, given
the competition concerns identified, would be to consider whether Sky was engaged
in a margin squeeze abuse. That would involve revisiting many of the same issues
addressed by the OFT in its 2002 decision. Under CA98 the test for a margin
squeeze abuse would focus on whether a purchaser that was as efficient as Sky
would be able to retail Core Premium channels on a profitable basis at the current
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