Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

Football, TV rights and the ‘single buyer rule’: in a world of commitment decisions, bad policy dies hard

with 6 comments

Bundesliga

Many people love to discuss whether competition law is, or should be, about consumer welfare. Not me. I have never understood people’s mystical fascination with this question. In my view, it is essentially a distraction that is – most of the time – boring and irrelevant. The vast majority of cases can be decided without resorting to consumer welfare considerations. And the issues that really matter in EU competition law do not really need raising abstract questions about consumer welfare or, more generally, the goals of EU competition law.

Every now and then, however, there is an extreme case. Sometimes, things go so wrong that it is relevant to discuss the role of consumers – and their interests – in EU competition law. The Commission policy on the sale of football TV rights is my favourite example in this sense. I find it fascinating for two reasons: Premier League is a decision that not only ignores the features of the relevant markets but is expressly designed to harm consumers.

The star commitment in Premier League was to ensure that at least one package of the TV rights to the English football championship would go to an operator other than Sky (this is the so-called ‘single buyer rule’). The Premier League had already accepted to sell the rights to the championship in several packages. However, simply giving the opportunity to more than one player to buy the TV rights was not sufficient. It was necessary to force, through Article 101 TFEU, a competitive outcome in which there would be at least two broadcasters offering simultaneously this content.

The fundamental problem with the ‘single buyer rule’ is that it is an artificial attempt to change the nature of competition in the relevant market, and as such it is bound to fail. It requires all sorts of distortions to be a meaningful remedy. In the UK, Ofcom has done a good job at introducing additional distortions that have allowed BT to challenge Sky’s position in the UK. But we know that regulatory distortions are never for free.

The second problem is that it penalises consumers in an almost comical way. It is essentially a remedy that requires football fans to subscribe to two different television services to have full access to the televised games of the championship.

I have written about this on the blog already. The reason why I do so again is because I understand that the Bundeskartellamt is keen to introduce the ‘single buyer rule’ in relation to the sale of the TV rights to the Bundesliga (I would in fact be grateful for more info about this, as it is not obvious to find!).

What the news about the licensing of the TV rights to the Bundesliga show is that, in spite of all of the above criticisms, the ‘single buyer rule’ has acquired a life of its own. It seems to have emerged as a default remedy in cases concerning the licensing of TV rights, even though it was adopted in a very peculiar context. This is one of the consequences of the rise of commitments decisions. Some remedies become part of the acquis for no compelling reason. They are simply required without ever discussing whether they are necessary and/or proportionate.

Ben Van Rompuy and Alexandre de Streel have accepted my invitation to talk about these matters in a seminar organised in the context of the EU and Spanish Competition Law Course run by Luis Ortiz Blanco and Alfonso in Madrid.It will take place on 4 March I really look forward to that!

Written by Pablo Ibanez Colomo

11 February 2016 at 1:02 pm

Posted in Uncategorized

6 Responses

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  1. from today’s Daily Telegraph (no doubt after Pablo’s article was written): BT Sport’s dismal Champions League viewing figures raise concerns at Uefa – Revealed: Just 200,000 viewers watch English clubs’ games on Showcase free-to-air channel, writes Ben Rumsby

    David

    11 February 2016 at 1:12 pm

    • That’s a great one, David! Thanks!

      Pablo Ibanez Colomo

      11 February 2016 at 1:39 pm

  2. Outside the area of TV rights – but not TV – my personal favourite in this category is the ACM investigation of Nozema and Broadcast Partners, the only parties in the Netherlands which broadcast radio and TV signals on behalf of broadcasting companies. After this sector was privatised, and the old monopolist split up into two companies, there was an allegation that the government was concerned that one of them, Nozema, was winning all the contracts. Therefore, the government allegedly encouraged them to form a market sharing/bid rigging cartel, for which they were then investigated and punished. However, as the appeals progressed, both the fine and the allegations of government involvement gradually disappeared, and so allegations are all they are.

    https://www.acm.nl/en/publications/publication/6060/NMa-Imposes-a-Fine-on-Broadcast-Partners-and-Nozema/

    https://www.acm.nl/en/publications/publication/6187/NMa-revises-fine-imposed-on-Broadcast-and-Nozema/

    Martin Holterman

    12 February 2016 at 1:07 pm

    • Excellent one too! Loving this thread! Martin, yours reminds me of the cartel of newspapers sponsored by the Spanish government to force Google to pay (except that this example is even dumber)

      Pablo Ibanez Colomo

      12 February 2016 at 6:15 pm

  3. As regards the ongoing investigation of the Bundeskartellamt into the selling of Bundesliga broadcast rights no official information is available so far. Indeed, the German media report that there is a certain pressure on the Bundeskartellamt (esp. from clubs like Bayern Munich hoping to earn as much as the English clubs do and potential competitors of Sky) to require the introduction of the so called no-single-buyer-rule from the German Football League (DFL). The Bundeskartellamt already discussed the issue when accepting the commitments offered by the DFL in 2012. In my view, the arguments the Bundeskartellamt provided then in favor of the centralized and against the individual marketing of the media rights also suggest that the possibility for a single buyer to acquire the right (and obligation!) to show all the matches should not be excluded:

    “The main efficiency gain of a joint selling of the rights is that it offers a comprehensive league product to the buyers. How significant this efficiency gain is depends on the preferences of end consumers. These, in turn, determine the preferences of the buyers of the media rights. According to the latter, about 75% of the viewers find coverage of all league matches highly important. This tendency was confirmed by an analysis of viewer numbers achieved with different TV formats (e.g. individual match vs. conference) offered by the pay TV channel “Sky”. The investigations showed that buyers tend to be skeptical that interesting league products, such as live conferences and highlight coverage, would also be offered under an individual marketing model. A comprehensive coverage of league events can raise the quality and range of the coverage and make popular forms of reporting, such as live conferences, possible.”

    (Bundeskartellamt, Case Report “Joint selling of media rights for the games of the 1st and 2nd German football leagues from the 2013/2014 season onwards”, available under http://www.bundeskartellamt.de/SharedDocs/Entscheidung/EN/Fallberichte/Kartellverbot/2012/B6-114-10.pdf?__blob=publicationFile&v=4)

    Florian Bien

    16 February 2016 at 6:21 pm

    • Thanks so much, Florian! You raise the fundamental question: why would joint selling, in and of itself, not fulfill the conditions of Article 101(3) TFEU? And this assuming it is restrictive of competition in the first place!

      Pablo Ibanez Colomo

      17 February 2016 at 8:30 pm


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