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

An agreement which coordinates suppliers' dealings may fall outside Article 81(1) where, assessed objectively in its legal and economic context, its purpose is to enable a viable new competitor to enter a market previously served by a single operator. The existence of common financial terms and temporary closed dealing does not of itself give the arrangement an anti-competitive object.

For restrictive effect, the comparison must be with the position absent the impugned coordination. Restrictions directly related, objectively necessary and proportionate to establishing the new entrant may be ancillary to that pro-competitive operation. Suppliers whose products are not substitutable, because buyers need each product, are not competitors in relation to their sale.

Major bookmakers and a company representing off-course bookmakers challenged arrangements under which 30 racecourses granted exclusive licensed betting office media rights to AMRAC, the provider of the new Turf TV service. The arrangements included collective and closed negotiations, common licence terms and an agreed payment structure.

They alleged that the arrangements infringed Article 81(1) of the EU Treaty by object or effect, and that the licences would consequently be void under Article 81(2). Morgan J dismissed the claim in the Chancery Division: [2008] EWHC 1978 (Ch).

The central issue on appeal was whether arrangements needed to establish a second broadcaster in markets previously dominated by SIS/BAGS restricted competition, either by object or effect.

1. Appeal dismissed unanimously. Lord Justice Lloyd gave the leading judgment, with which Lord Justice Moore-Bick and Lord Justice Mummery agreed. The arrangements did not infringe Article 81(1) of the EU Treaty.

2. The object of an agreement is determined objectively from its provisions, nature and legal and economic context. It is not determined by the parties' subjective motives. Unlike the arrangements in Competition Authority v Beef Industry Development Society Ltd, Case C-209/07, the arrangements here were directed to establishing a second broadcaster in markets previously occupied by one operator. A new entrant required a critical mass of exclusive rights and initial protection from the incumbent. The arrangements therefore did not have the object of restricting competition.

3. The racecourses were not competitors in the sale of LBO media rights. Their rights were not substitutable: LBOs wished to show as many races as possible and required coverage of each course. That conclusion defeated the allegation that collective negotiation restricted competition by effect. In any event, the claimants had not shown, by the required counterfactual comparison, that collective dealing caused an actual or likely price increase.

4. The temporary closed negotiation with AMRAC was essential to the launch of the joint venture. Selling the required rights to the incumbent, or exposing AMRAC to a bid for them before it had entered the market, would have prevented the venture from obtaining the rights necessary to operate.

5. Applying the ancillary-restriction analysis in Métropole télévision (M6) v Commission, Case T-112/99, collective negotiation, common financial terms and closed dealing were directly related to, objectively necessary for, and proportionate to the establishment of the new broadcaster. They were therefore outside Article 81(1). The court observed that the analysis could differ when the licences expired and the entrant was established.

6. The court did not decide whether Article 81(2) would have rendered the AMRAC licences void if Article 81(1) had been infringed. That question was hypothetical and could require a first-instance determination under Article 81(3).

• Court of Appeal (Civil Division): Appeal dismissed; the arrangements did not infringe Article 81(1) of the EU Treaty.
• High Court, Chancery Division (Morgan J): Judgment for the defendants on the issues relevant to the appeal and claim dismissed: [2008] EWHC 1978 (Ch).