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BT, football broadcast rights, the telecoms market and competition law

Out-Law Analysis | 04 Dec 2013 | 1:52 pm | 4 min. read

FOCUS: BT's new deal with European football's governing body UEFA to broadcast live matches from its two main Europe-wide football club competitions has the potential to make a significant impact on competition in the UK telecoms and pay-TV markets.

Regulatory concerns about Sky's position in the pay-TV market led to it to being forced to sell some of its sports channels wholesale to rivals. BT's strength currently lies in the internet and landline phone markets and its conduct in these markets may fall subject to scrutiny if regulators feel that the bundling together of football content and telecoms services distorts competition.

The extent that the new deal will impact on competition will depend on how BT makes use of its new rights, including whether it agrees to sub-license them to competitors. This will determine the extent to which the deal itself or BT's use of the rights might be vulnerable to challenge under the competition law rules. However, BT currently appears well placed to defeat any challenge that might be launched.

Earlier this month it was announced that BT had won the exclusive rights to broadcast 350 matches from the UEFA Champions League and Europa League in the UK for three seasons from 2015/16. It has been reported that the near-£900 million contract is more than double what Sky and ITV paid previously under the current deal.

The agreement highlights the seriousness of the company's ambition to depose Sky as the main broadcaster of major sport in the UK, but it also has implications for how the UK market for fixed landline phone and internet services could shape up.

As the largest UK internet service provider already, and with its position in the landline phone market secured from its previous role as the state-owned operator, BT must be mindful of how its growing presence in the market for sports TV rights affects competition in the wider telecoms market. For example, competition law concerns could be triggered because of the current trend to 'bundle' pay-TV, phone and internet services together in a single package for consumers to buy.

For 20 years Sky has been the leading player in the pay-TV market in the UK. Its growth in this market has mirrored the growth in popularity and commercial success of the Premier League in England. Sky currently has the rights to most of the broadcast rights for live games in the Premier League, although BT – with the launch of its fledgling new BT Sport channels earlier this summer – has emerged as a serious rival. BT owns some of the rights to show live Premier League football.

However, stealing the UEFA Champions League football rights under Sky's nose is BT's boldest move yet.

Whilst Premier League broadcast rights and UEFA Champions League broadcast rights are sold separately, a European Commission decision in 2003 suggested that both competitions, together with the FA Cup, would be considered to make up a single market for "premium football events played regularly throughout the season" and that these markets were likely to be national. The Commission's 2003 decision requires that Champions League rights must be sold in packages but it does not preclude one broadcaster from bidding for, and winning, all the packages of rights. However, the Commission made the point that any arrangements would be subject to the competition law rules.

There is nothing to stop third parties from complaining to the Commission, the OFT or Ofcom on the basis that exclusive agreements for these rights could have an anti-competitive effect on the downstream pay-TV and telecoms markets, if they consider that it is in their interests to do so.

However, it is questionable whether an exclusive licence for the Champions League rights could be considered as an anti-competitive agreement, particularly if the licence is for a relatively short period, such as three or four seasons, even if it does have a significant impact on the market. After all, the market could look very different after bidding concludes for the next broadcasting contracts, as evidenced by this new BT deal with UEFA.

A challenge on the basis of abuse of dominance would also be an uphill struggle for a complainant. A dominant position is not prohibited by competition law; it is the abuse of that position which is prohibited, so the way a dominant operator behaves and whether its actions unfairly distort the market are what regulators are interested in. In the context of the BT deal with UEFA, any complainant would need to show that BT is dominant in a particular market and the way it is using the rights means that existing competitors or new entrants are struggling to compete in the downstream pay-TV/broadband markets. 

The extent to which BT bundles UEFA content with its other services and its willingness to sub-license access to matches by rival operators in the pay-TV market, such as Sky and Virgin and any new entrants, would therefore be important considerations for the competition authorities in response to any competition law complaints.

A complainant may also try to persuade Ofcom that it should open a new market investigation into the pay-TV or broadband markets. Market investigations look at how markets function and the authorities can consider whether remedies are required to deal with any features of the market which are hindering effective competition; there is no need to show that there is an anti-competitive agreement or an abuse of dominance which amounts to an infringement of the Competition Act.

As a result of its recent investigation into the pay-TV market, Ofcom decided that Sky should be required to sell some of its premium sports channels, including Sky Sports 1 and 2, on a wholesale basis at a fair price to enable others, like BT and Virgin, to compete effectively.  It is therefore possible now for non-Sky subscription holders to view these premium channels if they subscribe to BT Vision or Virgin Media. 

This requirement on Sky was imposed as a result of Sky's "market power” in relation to the supply of premium sports channels. To open a new investigation, Ofcom would need to be convinced that there is a real competition issue as a result of the exclusive deal with BT, which seems unlikely unless and until BT is considered to have market power in relation to premium sports channels and uses this to leverage its position in the wider telecoms markets.

For consumers, the emergence of BT as a serious challenger to Sky for sports broadcast rights would appear to be good news, likely to increase competition between the operators and others in the market and lower prices for access to content as a result.

This latest deal shows the potential for market dynamics to change quickly and with the battle for sports rights, and Premier League packages in particular, likely to intensify in coming months and years, the competition authorities will be keeping an eye on these arrangements, whether or not they decide to intervene.


Angelique Bret is a competition law expert at Pinsent Masons, the law firm behind Out-Law.com