BBC Broadcast access services

No. 5/06/2007

Provision of television access services by BBC Broadcast (now named Red Bee Media)

Services to Channel 4

The Office of Communications ('Ofcom') has concluded that BBC Broadcast Limited ('BBC Broadcast') has not infringed section 2 (the 'Chapter I prohibition') of the Competition Act 1998 (the 'Act') or Article 81(1) of the EC Treaty in relation to its exclusive agreement with the Channel 4 Television Corporation ('Channel 4') to provide television access services (the 'Channel 4 contract'). Ofcom has further concluded that BBC Broadcast has not infringed section 18 (the 'Chapter II prohibition') of the Act or Article 82 of the EC Treaty in relation to the pricing of access services supplied to Channel 4 nor as a result of its length and exclusive nature.

Ofcom's decision is made following an investigation which was opened on 13 July 2005 following the submission of a complaint by Independent Media Support Group plc ('IMS') alleging that the agreement between BBC Broadcast and Channel 4 prevents, restricts or distorts competition by virtue of its duration and exclusive nature, and is an abuse of BBC Broadcast's allegedly dominant position as the prices offered under the contract are predatory and by virtue of its duration and exclusive nature.

During its investigation Ofcom considered the available evidence and concluded that the relevant market is the market for the supply of access services to television broadcasters in the United Kingdom, although it also considered that there may be a credible case for adopting a wider market definition. Ofcom finds that BBC Broadcast is not dominant in the narrower market and notes that this conclusion would also hold with a broader market definition. Consequently, BBC Broadcast's conduct in relation to the pricing of the Channel 4 contract and the allegation of foreclosure as a result of the length and exclusive nature of the Channel 4 contract is not caught by the Chapter II prohibition nor Article 82 EC Treaty and, therefore, there are no grounds for action.

Further, Ofcom considered whether BBC Broadcast's agreement with Channel 4 infringed the Chapter I and Article 81 prohibitions. At the time BBC Broadcast entered into the Channel 4 contract, Ofcom considered that the contract benefited from the Vertical Agreements Block Exemption ('Block Exemption') due to the market share of BBC Broadcast at that time, and similarly this conclusion is also likely to apply with a broader market definition. The market share of BBC Broadcast rose following the acquisition of BBC Broadcast by Creative Broadcast Services Limited ('CBSL'). The Channel 4 agreement retained the benefit of the Block Exemption until 31 December 2006. For the remaining term of the non-compete obligation, in the circumstances of this case and applying the principles set out in the Block Exemption and the Block Exemption Guidelines, Ofcom has concluded that the non-compete obligation would be unlikely to have the effect of appreciably restricting competition in the relevant market and so does not infringe the Chapter I prohibition or Article 81 of the EC Treaty.

Download the full text of this decision (pdf 323 kb).

Services to the BBC

When submitting its complaint IMS also alleged an infringement of the Chapter I prohibition and/or Article 81(1) of the EC Treaty in relation to the duration and exclusive nature of BBC Broadcast's contract to supply television access services to the British Broadcasting Corporation (the 'BBC') (the 'BBC contract'). Ofcom initially excluded from the scope of its investigation the allegations regarding the BBC contract whilst the Office of Fair Trading ('OFT') was considering the merger of BBC Broadcast and CBSL, and in particular, whether the Framework Agreement (of which the BBC contract is a part) was an ancillary restraint to the merger. Following the OFT's conclusion that the Framework Agreement was not an ancillary restraint to the merger, on 15 December 2005 Ofcom began its investigation into the terms of the BBC contract.

Ofcom's decision not to take forward the related investigation of the BBC contract is contained in a separate document which adopts the reasoning set out in this document in particular in relation to market structure and market shares (Complaint from Independent Media Support Limited about BBC Broadcast's provision of television access services to the BBC: case closure).

Download the case closure summary (pdf 57 kb).

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