Pay TV phase three document - Stakeholders - Ofcom

Pay TV phase three document – non-confidential version
2.32 The purpose of the sectoral competition regime provided under s316 is to give Ofcom
the power to impose licence conditions to make certain of providing for fair and
effective competition. In doing so it must take into account its other relevant sectoral
duties, including its principal duty to protect the interests of consumers, where
appropriate by promoting competition. In contrast, Ofcom’s role as a concurrent
competition authority under the Chapter II prohibition of CA98 provides it with the
power to prosecute, on an ex post basis, an undertaking that has acted unlawfully by
abusing a dominant position. As discussed above, this was clearly set out in the
parliamentary debate on the purpose of s316.
2.33 The test under s317 is concerned with what power it is more appropriate to proceed
under. It does not require Ofcom to establish that it is not possible to use CA98
powers to address the issues concerned.
2.34 We also do not agree with the suggestion that Ofcom must, before deciding to
proceed under s316, conduct a detailed examination under a CA98 framework. Even
in cases where Ofcom was considering using s316 as an ex ante measure to prevent
a CA98 breach (as Sky suggests), a requirement, in essence, to first conduct a CA98
case to determine the lack of a breach, would defeat the purpose of having the ex
ante power.
2.35 Further, it would not serve any purpose to conduct a detailed CA98 case if s316 was
being considered explicitly on the basis that the competition concerns envisaged
might not result in CA98 breaches. This brings us back to the differences discussed
above over the scope of s316, and the difference between “ensuring fair and
effective competition” and preventing breaches of CA98 from occurring.
The duties relevant to our assessment under s316
Our position in September
2.36 In the Second Pay TV Consultation we described the duties which we considered to
be relevant to the market investigation 14 .
2.37 We highlighted that Ofcom has a principal duty under s3(1)(b) CA03 to further the
interests of consumers in relevant markets, where appropriate by promoting
competition. We said that this duty to promote competition means that we are
required, where appropriate, to take a dynamic and forward-looking view of the
effectiveness with which competition is expected to deliver benefits to consumers.
We explained that we would carry out that assessment by reference to our statutory
duties, the statutory framework and the criteria we have developed for the
assessment of the industry.
Respondents’ views
2.38 Sky argued that we placed an inappropriate level of emphasis on the second part of
the s3(1)(b) duty, i.e. “where appropriate by promoting competition”. In its view the
promotion of competition does not constitute the duty – the focus of the duty is to
further the interests of consumers. Sky thought that we had not properly taken into
account our other duties under the Act – in particular sections 3(3), 6 and 7 – and
that we should also have considered the desirability of encouraging investment and
innovation.
14 See paragraphs 2.19 to 2.23
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