After the Premier League file closure: is this the new ‘industrial policy’ in action or time to strip Ofcom of its competition enforcement powers?

This week’s announcement that Ofcom is closing its investigation into Virgin Media’s complaint that the Premier League is restricting the supply of live TV rights to its matches, in return for the Premier League increasing their number from 168 to 190 and agreeing that no single buyer will scoop the pool next time the rights are tendered, is not really a surprise.  In all the post-Brexit talk of whether UK industry has any world class leaders, the Premier League was not mentioned but it is clearly in that category.  Recently, Continental Football Leagues have even paid the Premier League the ultimate compliment of trying to rejig the Champions League to put the Premier League in its place.

Of course, Brexit – opposed by the Premier League and the Club Chairman – does threaten the free movement of players which benefit Europe’s richest league so there are some clouds on the horizon.  However this is perhaps an additional reason not to cramp the style of a national champion by a dogmatic application of the competition rules at a time when we are hearing a lot more about the need for ‘industrial policy’ – which usually means that competition takes a back seat.

Dogmatic is the last word that one would use to describe Ofcom’s “intervention” which took almost two years to bear meagre fruit bearing in mind that it was faced with a fairly blatant output restriction which can only raise prices. The latitude originally given to the Premier League by the European’s Commission’s Decision in 2006 was exceptional and the product of vigorous lobbying in Brussels[1].  In marked contrast, the Bundesliga model approved by the European Commission after all allows all matches to be televised live.  There appears to be no reduction in live audiences as a result and generally speaking spectators in Germany pay much less for their tickets than the fans in England.

The English opt out in 2006 was never justified on the basis of the protection of live audiences (which is just as well this time round since the European Court dismissed it as a justification in the Pub Landlord case.)  Instead, fan preference for the status quo was the decisive factor and this played its part once more in Ofcom’s finding that it basically had better things to do.  However, fan preferences are very hard to read; much depends on how the question is put and to whom.  It is therefore an inherently unsatisfactory index of what is or what is not acceptable and Virgin Media’s reaction (that subscriptions will remain at very high levels) is understandable.

Where does this put Ofcom’s competition enforcement role?  It has to be said that it is not in a good place.  It’s long standing battle to reduce Sky’s market power in which it invested enormous resources was basically a failure – other than assisting BT’s entry to the fray which would have probably happened anyway.  The case for the sectoral regulators to retain competition powers inevitably looks weaker as a result of this decision and it will be no surprise if in a few years Ofcom’s competition enforcement role is assumed by the Competition and Markets Authority.

[1] For further details see Virgin Media’s Ofcom complaint Goodman Derrick January 2015.

This guide is for general information and interest only and should not be relied upon as providing specific legal advice.  If you require any further information about the issues raised in this article please contact the author or call 0207 404 0606 and ask to speak to your usual Goodman Derrick contact.