Attheraces Ltd & Anor v British Horse Racing Board & Anor

A dominant undertaking may abuse its position by refusing, or constructively refusing, to supply an existing customer unless the refusal is objectively justified. The same principle applies where access to an essential facility is withheld, whether or not the parties compete.

For excessive pricing, the relevant comparison is between price and the economic value of the product. Cost of production plus a reasonable return is a proper starting point, while wider expenditure by other bodies or unexplained external benefits cannot simply be loaded into the competitive price. Discriminatory conditions imposed on equivalent transactions may also infringe Article 82 and section 18 of the Competition Act 1998.

ATR supplied British horse-racing websites, television services and overseas bookmaker services. BHB controlled a database containing essential UK pre-race racing data and supplied that data through intermediaries.

After earlier contractual arrangements ended, BHB demanded substantial payments from ATR as a condition of continuing data supply and threatened to instruct its suppliers to stop supplying ATR. ATR alleged abuse of a dominant position under Article 82 of the EC Treaty and section 18 of the Competition Act 1998, including unreasonable refusal to supply, excessive pricing and discriminatory pricing.

The trial concerned charges for the ATRi and SIS FACTS services.

1. Market and dominance. The relevant product was UK pre-race data, not a composite product comprising data, pictures and the general ability to generate value from British racing. Data and pictures were complementary but not substitutes, and the factual relationship between their prices did not justify treating them as one product. The relevant market was the supply of UK pre-race data to bookmakers and media producers requiring it for services supplied to customers. Its geographical scope was all countries outside the UK and Ireland, although the result would be unchanged if the market were worldwide.
2. SSNIP test and competitive price. The competitive price was the cost of producing BHB’s database, about £5 million, together with a reasonable return and, in principle, any specifically identified expenditure benefiting the relevant customers. The Levy and expenditure by other bodies could not be treated as BHB’s production costs. The downstream market did not constrain BHB sufficiently to prevent a profitable 5–10 per cent increase above the competitive price. BHB was dominant.
3. Refusal to supply. Refusing to supply an existing customer, or supplying only on objectively unreasonable terms, may constitute abuse even where the supplier is not a competitor. The same applies to refusal of access to an essential facility. BHB’s pre-race data was essential because no practical substitute existed and duplication would be prohibitively difficult. ATR remained, in substance, an existing customer. BHB’s threat to withdraw supply unless substantial charges were accepted was a constructive refusal to supply and was not objectively justified.
4. Pricing. BHB was entitled in principle to charge for the data irrespective of intellectual-property rights. However, its proposed charges were excessive because they bore no reasonable relation to the economic value of the data and were far above production cost plus a reasonable return. The charges were also unfairly discriminatory when compared with the nominal charges imposed on broadcasters and the materially different arrangement agreed with Phumelela.
5. Disposition. BHB had abused its dominant position contrary to Article 82 and section 18. The court reserved further argument on appropriate relief.