Pay TV phase three document - Stakeholders - Ofcom

Pay TV phase three document – non-confidential version
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� In section 6 we consider Sky’s ability and incentive to act in a manner which is
not consistent with fair and effective competition. We reach the view that Sky’s
approach to the wholesale supply of Core Premium channels creates a position
under which there is not, and is not likely to be, fair and effective competition.
� In section 7 we consider the effects on consumers of that position. We reach the
view that there is an adverse effect on the interests of consumers.
� In light of the above we consider in section 8 whether it would be more
appropriate to proceed under the Competition Act 1998 (“CA98”).
� Having considered that, we then go on in the rest of section 8, and in section 9, to
consider the form of licence condition (if any) it might be appropriate to include
under s316 to ensure fair and effective competition. In section 10 we consider
whether a licence condition in that form is proportionate by reference to the
purpose of s316, and in light of our duties under CA03.
� In section 11 we present for consultation a proposed form of wholesale must-offer
licence condition.
Respondents’ views
2.14 In response to the Second Pay TV Consultation Sky essentially argued that Ofcom’s
power to act under s316 is no wider in its purpose or scope than its ability to act
under CA98. Specifically, it argued that before Ofcom could use its powers under
s316 it should meet the same conditions as those required under a CA98 case. In
addition, Sky argued that we had not set out a test for the use of s316.
2.15 Sky argued that s316 is about protecting competition, not promoting it. It argued that
s316 does not confer on Ofcom the power to “promote” competition, any more than
would Ofcom’s general competition powers under CA98. It said the lack of a
promotion role for s316 is confirmed by looking at the definition of “for a competition
purpose” in s317(9), which is about preventing behaviour and conduct prejudicial to
fair and effective competition. It also argued that there is no greater connection made
in the statute between s316 and s3 than with any of Ofcom’s other duties.
2.16 The Four Parties’ response argued that Ofcom has discretion to use its sectoral
competition powers under s316 both in circumstances where there is no breach of
the Competition Act and in circumstances where, notwithstanding a breach of the
Competition Act, it is more appropriate for Ofcom to use its sectoral powers. It was
argued that Ofcom’s s316 powers must be interpreted in light of Ofcom’s principal
duty, pursuant to s3(1)(b) CA03 to further the interests of consumers where
appropriate by promoting competition, and that this competition promotion function
goes significantly beyond any powers Ofcom has under CA98 to remedy anticompetitive
conduct.
2.17 The Four Parties also argued that the scope of Ofcom’s s316 powers must be
interpreted in light of its duty to establish a single set of regulatory objectives in a
converged communications environment. It was argued that in order to ensure
consistency in a converged communications environment, the scope of Ofcom’s s316
competition promotion role should be interpreted in the light of Ofcom’s powers under
CA03 to impose ex ante SMP conditions on providers of electronic communications
networks and services. The ability to impose ex ante regulation on broadcasters as
well as providers of electronic communications networks and services would enable