Telefónica hit with €10m football rights fine
July 27, 2015
By Colin Mann
Spain’s Comisión Nacional de los Mercados y la Competencia (National Commission of Markets and Competition) has fined Telefónica and pay-TV operator DTS a total of €15.5 million for anti-competitive behaviour in relation to agreements and concerted action in the acquisition, resale and exploitation of football broadcast rights for the seasons 2012/2013 to 2014/2015. According to the CNMC, the agreements infringed of Article 1 of the Law on Competition and Article 101 of the Treaty on the Functioning of the European Union.
The sanctions amounted to €10 million in the case of Telefónica and €5.5 million in the case of DTS, which Telefónica took full control of in April 2015. The level of the fines reflected the size of the relevant markets and the effect it had in them, the duration and extent of the infringing activities and the benefits obtained. In both cases, the penalties are significantly less than 1 per cent of total turnover of these companies in 2014.
In August 2012, Telefónica and DTS reached two agreements for the commercialisation of Canal+ Champions League and the Canal+ Liga. According to the CNMC, both agreements were part of an over-arching concerted action to act in a coordinated manner in the acquisition, resale and secondary rights exploitation of football media rights , favouring Telefónica over other pay-TV operators.
As regards the Champions League, the CNMC says that Telefónica knew DTS’s telco market rights strategy before other operators and had more time than other potential buyers to evaluate the acquisition of costly strategic assets and plan its business strategy, as well as insider information to assess likely profitability and attendant risk.
In addition, the CNMC says that DTS drew up Champions League auction conditions favouring Telefonica and limiting competition between pay-TV operators at the time of bidding.
With regard to La Liga, the CNMC says that DTS fashioned its wholesale supply such that, as with the Champions League, Telefónica knew its strategy and prices, putting it at a competitive advantage over other operators, enabling it to develop its commercial exploitation strategy and promotion prior to the start of the season.
Accordingly, the CNMC found that DTS favoured Telefónica over other pay-TV operators in the acquisition of football media rights, which, in turn, would have indirectly strengthened its position in the field of telecommunications.
In April 2015, Telefónica acquired sole control of DTS, via the purchase of 56 per cent of the share capital it did not already own. CNMC approved the consolidation with conditions, including the provision to competitors of the entirety of its premium channels, such as Primera Liga football or the Champions League.
No appeal is possible via administrative channels, although a judicial review can be sought in Spain’s Audiencia Nacional (High Court), within two months from the day after the decision.