Competition warning for Sky NZ

New Zealand pay-TV operator Sky TV has been issued with a warning that its contracts with telcos were likely to have previously harmed competition, following an investigation by the country’s Commerce Commission.

The Commission found that market developments now mean that relevant parts of the contracts are unlikely to have that effect now or cause harm in the future. Accordingly, it issued Sky a warning and said the pay-tv provider was on notice that the regulator would continue to monitor its contracts. The Commission said it will take no further action right now over what it called “historical breaches”.

“We believe that Sky entered into historical agreements with RSPs [retail services providers] that had the purpose, effect, or likely effect of substantially lessening competition,” wrote Commission Chairman Dr Mark Berry in a letter to John Fellet, Sky’s CEO.

“However due to market developments, the key commitments Sky has with RSPs are unlikely to continue to have the same effect. For example the new sports pay-TV product from Coliseum and the recent exemption granted by Sky to Telecom to market this product,” he noted.

Berry said that as a consequence, a warning letter and notice that it would continue monitoring Sky’s contracts and conduct was the prudent course of action, while reserving the right to draw the warning letter that has been sent to Sky, to the attention of a court in any subsequent proceedings against Sky. Berry added that such a case could take several years to conclude, costing several million dollars and finish in an era that is likely to be vastly different to the one when this breach occurred.

As part of the investigation, the Commission also concluded that Sky’s contracts with content providers were not likely to have breached the Commerce Act. There appeared to be sufficient content of all types available outside of Sky’s exclusive contracts to put together an appealing pay-TV package. These contracts were similar in nature to other broadcaster contracts with content providers.

A detailed report outlining the Commission’s investigation and findings will be published shortly, once it has discussed confidentiality with relevant parties.

Fellet said he welcomed the end of the investigation and looked forward to reading the full final report. “The investigation has been a long and detailed exercise but we’re glad a robust decision making process has taken place. We will take into account anything in the report when we have had the opportunity to review it.”

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