Tribunal to re-examine Sky’s wholesale pricing

UK telecommunications company BT has secured a victory in the Court of Appeal that will force the Competition Appeal Tribunal (CAT) to re-examine its decision to stop pay-television broadcaster BSkyB being forced to offer its main sports channels to rivals at a discount.

BT had challenged the summer 2012 decision by the tribunal that the basis of media regulator Ofcom’s decision to force Sky to cut its wholesale charges to show Sky Sports 1 and 2 was “unfounded.” However, Lord Justice Aikens said that the tribunal had failed to properly investigate the issue.

“There remain significant, independent, competition concerns based on the rate-card price and penetration discount, as found by Ofcom,” Aikens said. “The reasons that the CAT gave for not considering that matter further were inadequate. I would propose that the matter be remitted to the CAT for further consideration in order that further findings and conclusions may be made in the light of this judgment.”

Ofcom proposed a new pricing structure in March 2010 to make Sky Sports 1 and 2 up to 23 per cent cheaper than the previous wholesale price after deciding that Sky was abusing its dominant market position.

“Ofcom was correct to impose the wholesale must offer ('WMO') on Sky and this remains essential to address the significant competition concerns with Sky's supply of its channels,” a BT spokesperson told the Guardian newspaper. “Sky's refusal to offer access to these channels on reasonable terms causes serious harm to consumers and must be resolved urgently.”

Sky added: “This does not alter in any way the CAT's fundamental findings… that Sky engaged constructively with other distributors over the supply of its premium sports channels, and that Virgin Media is able to compete effectively with Sky on the basis of Sky's rate card prices. Sky continues to believe that Ofcom's 2010 decision is flawed and that the WMO obligation ought properly to be removed, and will continue to pursue all available options to achieve this aim.”