British Telecommunicatons Plc v Office of Communications & Ors

Section 316 of the Communications Act 2003 gives Ofcom power to impose licence conditions securing fair and effective competition in the provision of licensed television services to the public. That jurisdiction extends to wholesale supply to other retailers as well as retail supply to consumers. The Audiovisual Media Services Directive and the statutory definition of the content provider do not narrow it.

On a merits appeal, the CAT must address every material competition concern and assess whether each affects the remedy. Its failure to consider the independent effects of rate-card pricing and penetration discounts made its decision incomplete and was an error of law. The matter was remitted.

Ofcom’s Pay TV Statement found that Sky’s practices concerning wholesale access to core premium sports channels and their pricing prejudiced fair and effective competition. Ofcom imposed a wholesale must-offer condition under section 316 of the Communications Act 2003.

Sky appealed to the Competition Appeal Tribunal, which in [2012] CAT 20 allowed Sky’s appeal on the merits and ordered withdrawal of the decision and removal of the licence condition, but rejected Sky’s jurisdiction challenge. BT appealed on the rate-card issue, with Ofcom’s support. Sky and the Football Association Premier League cross-appealed on jurisdiction. The central questions were whether section 316 covered wholesale supply to retailers and whether the CAT could dispose of the appeal without addressing Ofcom’s pricing and discount concerns.

Disposition. The Court of Appeal unanimously allowed BT and Ofcom’s appeal, dismissed Sky and the Football Association Premier League’s cross-appeal, set aside the CAT’s order and remitted the matter to the CAT.

1. Jurisdiction. Section 316 of the Communications Act 2003 was construed in its statutory context. The expression provision of licensed services means provision of the relevant service to the public. It therefore includes wholesale supply of television licensable content services to other retailers and retail supply to consumers.
2. Statutory context. The Audiovisual Media Services Directive concerned the regulation of media service providers and content. The distinction between content production and transmission did not determine the domestic scope of section 316. Case C-518/11 gave no assistance on that construction. Section 362 identified the person responsible for selecting the content, but did not regulate downstream distribution or restrict Ofcom’s competition jurisdiction. Arden LJ additionally observed that, if necessary, wholesaler-to-wholesaler services could fall within connected services.
3. CAT’s merits jurisdiction. Under sections 317(6) and 195(2), the CAT had to decide the appeal on its merits and by reference to the grounds of appeal. It could assess the facts and had to decide whether Ofcom’s determination was wrong. It nevertheless had to give appropriate weight to Ofcom’s specialist judgment and avoid simply substituting its own view. The CAT also had to understand Ofcom’s complete findings, the challenge made, and the effect of any different factual findings on every material conclusion and on the remedy.
4. Rate-card issue. Ofcom had identified both the rate-card price and penetration-based discounts as competition concerns. They were not merely aspects of the central concern about withholding wholesale supply. The CAT’s finding that Sky was willing to negotiate discounts, and its observation that the outcome of unregulated negotiations was uncertain, did not address whether those arrangements would impede fair and effective competition. The CAT’s failure to analyse those issues meant that its conclusion setting aside the wholesale must-offer remedy was incomplete and constituted errors of law.
5. Remittal. The CAT’s order of 6 March 2013 was set aside. The matter was remitted for further findings and conclusions in light of the judgment.

• Court of Appeal (Civil Division): In [2014] EWCA Civ 133, allowed BT and Ofcom’s appeal on the rate-card issue, dismissed Sky and FAPL’s jurisdiction cross-appeal, set aside the CAT’s order and remitted the matter.
• Competition Appeal Tribunal: In [2012] CAT 20, allowed Sky’s appeal on the merits, ordered withdrawal of Ofcom’s Pay TV decision and removal of the wholesale must-offer condition, but rejected Sky’s jurisdiction challenge.