Bookmakers Afternoon Greyhound Services Ltd & Ors v Amalgamated Racing Ltd & Ors

Collective negotiations and exclusive licensing arrangements do not infringe Article 81 merely because they restrict individual negotiations or increase prices. The court must identify the agreement, examine its object or effect in its actual economic and legal context, and assess actual and potential competition. An appreciable adverse effect is required. A restriction may be objectively necessary to facilitate legitimate commercial purposes, including entry by a new competitor, provided the assessment is realistic and proportionate. Where a new entrant competes with an incumbent monopsony purchaser, higher prices may reflect increased competition rather than price fixing. A vertical exclusive agreement infringes only if it makes a significant contribution to foreclosure against a real and concrete potential competitor.

The claimants, major bookmakers and a bookmakers’ organisation, challenged arrangements under Article 81 of the EC Treaty and the Chapter I prohibition in the Competition Act 1998. The arrangements involved 30 racecourses establishing a joint venture, Amalgamated Racing Ltd, and granting it exclusive licences to supply horseracing media services to licensed betting offices.

The claimants alleged price fixing, collective selling, closed selling and foreclosure. The defendants contended that the arrangements introduced competition into a market previously characterised by a monopsony purchaser. The court determined whether the arrangements restricted competition by object or effect.

1. Claim dismissed. The arrangements did not infringe Article 81(1) of the EC Treaty or section 2 of the Competition Act 1998. The contingent counterclaim concerning BAGS and SIS therefore did not arise and was dismissed.
2. The relevant cooperation between racecourses was a concerted practice involving collective negotiations with the joint venture. Its object was not price fixing. Applying the Article 81(3) Guidelines, the court considered the content, objective aims and market context. The cooperation was intended to sponsor the entry of a new purchaser into a market previously occupied by a monopsony. It therefore had real potential to increase upstream competition, rather than the potential inherently to restrict it.
3. The exclusive licences did not produce actionable foreclosure. Although exclusivity theoretically prevented a third distributor from entering during the licence period, the claimants failed to establish a real and concrete possibility of such an entrant. Nor did preventing BAGS or SIS from increasing their market share constitute anti-competitive foreclosure where the arrangements had introduced a second purchaser.
4. Racecourses were capable of competing with one another in selling LBO media rights. However, the claimants did not prove that collective negotiation was likely to increase the total price paid by the joint venture. The collective negotiation consequently had no appreciable adverse effect on competition. In any event, collective negotiation was objectively necessary to establish and operate the racecourse joint venture.
5. The decision by racecourse operators to support their joint venture and not undermine it by selling the relevant rights to the incumbent was not an infringement. The arrangements had to be assessed realistically in their commercial context. A deal with the incumbent would have been incompatible with the objective of introducing a competing purchaser.
6. The combined effect of exclusivity, collective negotiation and closed selling was no different from the effect of each element considered separately. Since Article 81(1) was not infringed, it was unnecessary to determine exemption under Article 81(3).
7. The court also held that Article 81(2) voids the prohibited agreement, not automatically every later vertical supply agreement made by one party to a horizontal price-fixing agreement. A different conclusion could follow where the downstream customer was itself party to the offending agreement.

First-instance decision. The judgment records no earlier decision in the same proceedings.