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As part of the Pay-TV Review Statement of March 2010, Ofcom committed to review the wholesale must-offer remedy it placed on BSkyB. Following the February 2014 decision by the Court of Appeal confirming Ofcom’s power to impose the wholesale must-offer, Ofcom will now undertake a review of the obligation.
The watchdog has a duty under section 316 of the Communications Act 2003 to ensure fair and effective competition in the provision of licensed broadcasting services.
In 2010 Ofcom completed its review of the pay-TV market. In order to ensure fair and effective competition it inserted a wholesale must-offer obligation under section 316 into licences held by Sky requiring it to offer to wholesale Sky Sports 1 and 2 to other retailers. It said at that time it would carry out a review of the wholesale must-offer in 2013. Ofcom notes that since then, there have been a number of sector developments, which would need to be considered as part of such a review.
The wholesale must-offer has however been the subject of appeals to the Competition Appeal Tribunal, and then onto the Court of Appeal, including in relation to the scope of Ofcom’s jurisdiction under section 316. During this litigation, interim relief arrangements have been in place under which the wholesale must-offer has been in partial effect, covering offers by Sky to supply Sky Sports 1 and 2 to BT over digital terrestrial television and to Virgin Media over cable.
In February 2014, the Court of Appeal confirmed Ofcom’s power to impose the wholesale must-offer, as had the Competition Appeal Tribunal in 2012. The Court of Appeal also found that Competition Appeal Tribunal had failed to deal with the appeal “on the merits” and its decision to set aside the wholesale must offer was based on an incomplete set of conclusions. As a result it remitted the case back to the Competition Appeal Tribunal for the Tribunal to revisit its analysis of Ofcom’s original decision to impose the WMO.
On the basis that the Court of Appeal and the Tribunal have confirmed Ofcom’s jurisdiction under section 316, and in light of its ongoing duty to ensure fair and effective competition in this market, Ofcom has decided to review the wholesale must-offer. This review will take account of any changes in the market since 2010. It will provide an update in due course on its next steps.
Ofcom is separately considering a complaint from BT under the Competition Act 1998 which alleges that Sky has abused a dominant position in relation to negotiations over the supply of Sky Sports 1 and 2 for BT’s YouView platform.