OFT Proposes Ruling Against BSkyB

The Office of Fair Trading (OFT) has announced that it plans to make a ruling the BSkyB has behaved in an anti-competitive way, infringing on UK competition law. The OFT launched its investigation into BSkyB a year ago and now BSkyB has the opportunity to address the charges levied at it.

The main points of the OFT decision were:

• BSkyB’s margin between the wholesale price it charges distributors and the retail price paid by its own subscribers may not be wide enough to allow a normal profit to be made by a third party distributor of its premium channels, even if it is as efficient as BSkyB in distributing

• The discounts BSkyB gives distributors when they take packages of premium channels may be set at a level that prevents rival premium channel providers from entering the market.

• The discounts that BSkyB offers to distributors on one version of its ratecard for its premium sports and film channels (i.e., the ‘Pay-to Basic’ version) may prevent rival premium channel providers from entering the market and may distort distributors’ marketing decisions.

In its initial response to the OFT proposition, BSkyB said: “BSkyB has not infringed the Competition Act and welcomes its first opportunity to put its case to the OFT. The OFT’s announcement is not a final decision and merely indicates that it has moved to the next stage in a process that has lasted nearly two years.”

“BSkyB notes that the OFT is simultaneously alleging that BSkyB’s wholesale prices are both too high and too low. Furthermore the OFT is alleging that the discounts in BSkyB’s rate card are anti-competitive, despite those discounts previously being approved by the OFT. BSkyB will robustly defend itself against all the allegations.”

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