Pay TV phase three document - Stakeholders - Ofcom

Pay TV phase three document – non-confidential version
Ofcom to deal effectively with situations where competing operators were providing
services which bundle broadcasting services with other products.
Ofcom’s views
2.18 We set out above our framework for the assessment under s316 in this document.
2.19 We do not agree that s316 is limited in its purpose and scope in the way that Sky
suggest. Specifically, in Sky’s view the scope of s316 is limited to preventing
agreements and behaviour that would constitute breaches of CA98. Section 316
cannot therefore be used to “promote” competition by inserting positive conditions
such as a requirement to offer a channel for wholesale supply. This supposes:
� that the concept of “ensuring fair and effective competition” is no different to the
concept of protecting against competition infringements under CA98; and
� that s316 cannot be used to insert conditions into licences which require positive
action on the part of the licensee (as opposed to preventing agreements or
behaviour from taking place).
2.20 We do not consider that the concept of “ensuring fair and effective competition” is
limited to protecting against the occurrence of agreements and behaviour that would
constitute breaches of CA98, rather it has a different purpose and scope. There are a
number of reasons for this.
2.21 First, the drafting of s316 is not limited in the way suggested. It was open for
Parliament to have drafted these provisions in such a way as to limit the scope of
action to preventing conduct and behaviour that would infringe the prohibitions in the
earlier statute. It did not do this. It decided that the sectoral regime for broadcasting
framed in sections 316 to 318 should be based around the concept of “ensuring fair
and effective competition”. This is a concept which has its separate origins in the
duties of the Independent Television Commission under the Broadcasting Act 1990,
and which, through that, became a part of the regulatory framework for television
broadcasting licences. It was this framework which Parliament preserved by using
the phrase “fair and effective competition” in sections 316 to 318. Aside from being
clear in the drafting, it was also made explicit by the Minister at the Department of
Culture, Media and Sport when this section was discussed in Parliament:
“Those who argue against clause [316] believe that the Competition Act is
sufficient to protect against anti-competitive behaviour in broadcasting. That
is a cause of fundamental disagreement. Under the prohibitions in the
Competition Act—those prohibitions on which Ofcom would largely have to
rely were its sector-specific powers to be removed—intervention would be
allowed only if there was an abuse of a dominant position, or if agreements
existed that appreciably prevented, restricted or distorted competition. We
are concerned about cases in which markets should be opened up to greater
competition but where the legal tests required by the Competition Act are not
met …
The sector-specific powers contained in the Bill can be used to supplement
those contained in the Competition Act. The Competition Act cannot be
applied until the regulator has reason to believe that an enterprise has
harmed the market by acting anti-competitively, or that the market has been
harmed by existing agreements. As such, there are situations in which the
use of sector-specific powers may be more effective, especially where
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