Attheraces was set up as a joint venture between Arena, BSkyB and Channel 4 - a gamble that cost £307 million - to supply an interactive pay-TV channel allowing viewers to bet on horse races through their televisions. Punters accessing the attheraces web site were also able to watch races live and bet on those races via their PCs.
To supply this service, attheraces bought certain media rights from 49 British racecourses in 2001. The sale of these rights was coordinated by the Racecourse Association.
However, in November 2001 the OFT was notified of the various agreements relating to attheraces, and asked to decide whether they infringed the Competition Act. The Act prohibits:
According to the OFT, an agreement will generally have no appreciable effect on competition, and will not infringe the first prohibition, if the parties' combined market share does not exceed 25% (although there are some exceptions).
On this occasion the OFT concluded that, by selling the rights together, the 49 racecourses restricted competition between them when supplying attheraces and that, as a result, attheraces had to pay more for the rights than would have been the case if there had been effective competition.
Collective selling such as this may be allowed under the Competition Act where it is essential to achieve certain economic benefits and consumers receive a fair share of those benefits or where there is no appreciable effect on competition – for example if sold in small groups. The OFT has found that these conditions were not met in this case.
Announcing the decision, Vincent Smith, Director of Competition Enforcement, said:
"Although attheraces is no longer exploiting the rights in question, the OFT has decided to publish a decision in this case following attheraces' notification. We need to make it clear when collective selling may breach competition law."
Commenting on the verdict, Arena Leisure highlighted the fact that the decision did not raise any concern about the formation of the attheraces consortium, and that the Media Rights Agreement that was the subject of the OFT complaint "has been terminated by attheraces with effect from midnight on 29 March 2004."
While attheraces.co.uk continues as a web site, the interactive TV channel has been terminated, in part due to the competition from increasingly popular betting exchanges.