The Queensberry rules of Sky and BT’s sporting match–upMarc Delehanty
BT Broadband may not be winning over many Arsenal supporters with its website featuring an image of Robin van Persie mid–volley, but surely even Gunners fans would be taken with its headline offering: “BT Sport is FREE with BT Broadband and BT Infinity”.
This bundled package will prove an all the more tempting offer from 2015 when BT Sport begins broadcasting the Champions League football to which it acquired the rights amid much fanfare earlier this month.
Behind the media launch, BT Sport's emergence onto the subscription TV scene throws up a whole host of legal issues. One in particular is of interest: BT's leveraging of its broadband customer base as a platform to 'launch' the BT Sport channel.
Through its bundled offer BT is able to create a ready-made market share for its new sports channel. Consequently, BT Sport poses a threat to Sky Sports in a way that previous competitors like Setanta Sports – which had to get going from a standing start – never could.
The legality of such leveraging by BT of its position in one market (i.e., for broadband services) to boost its share of another separate market (i.e., for subscription sports television channels) is governed by Article 102 of the Treaty on the Functioning of the EU ("TFEU") and its domestic equivalent, Chapter II of the Competition Act 1998. Those provisions prevent BT from abusing any dominant position it may hold in either the broadband or subscription sports TV markets.
In certain circumstances, and when they adversely affect competition, 'tying' and 'bundling' distinct products together can constitute abusive behaviour. High–profile examples have attracted much attention from competition law authorities in the past. For example, Microsoft was found to have breached Article 102 TFEU by providing Windows Media Player for free as part of its Windows Operating System, see Case T-201/04 European Commission v Microsoft  ECR II-03601.
BT's offer would be classified as 'mixed bundling' by the European Commission given that "the products are also made available separately, but the sum of the prices when sold separately is higher than the bundled price", see para.48 of the Commission Guidance on [what is now] Article 102 TFEU (2009/C OJ 45/02).
BT's 'mixed bundling' of its sports channel with broadband (in effect, a pricing policy) might be said to be capable of hindering competition because TV viewers may find that BT Sport's offering sates their desire for football such that they do not consider subscribing to, or continuing their subscription with, Sky Sports. In such circumstances, competition would be adversely affected because Sky Sports might find itself unable to win customers by competing on price or range and quality of programming.
However, there are many factors that militate against any finding that, at present, BT's offer is unlawful:
(a) First, although BT is the largest provider of broadband services in the UK, it does not necessarily follow that it holds a 'dominant' position. The statistics provided by Ofcom (https://media.ofcom.org.uk/facts/) show that, although smaller, the market shares of Sky and Virgin are not all that far behind BT. It is a safe assumption to make that BT is not (yet, at any rate) dominant in the subscription sports TV market.
(b) Second, it is too early to tell whether BT Sport's Premier League and Champions League football offerings would be such that the effect on competition would be so substantial as to constitute a 'foreclosing' effect on competition in the subscription sports TV channel market. This may be unlikely given that Sky and BT will not be showing the same matches. One's sports package will not be a perfect substitute for the other's; so there will always be an incentive to subscribe to Sky Sports.
(c) Third, Sky is in a position to offer a similar bundle itself because it too has a broadband offering. Were Sky to do so, BT's bundle would be competing against Sky's bundle rather than hindering Sky's ability to compete; see, para. 61 of the Commission Guidance.
It will certainly be interesting to see how BT and Sky battle it out for market share in both subscription sports TV channels and broadband while not straying beyond the Queensberry rules for fair fights in the marketplace set down by EU and UK competition law.
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About the Author
Marc is a barrister at Littleton Chambers, called to the Bar following First Class degrees in Mathematics and Law. His practice areas (commercial, employment and administrative law) encompass the broad range of disputes that arise in a sporting context. The Legal 500 2014 directory rates Marc as one of the leading junior barristers in the country for Sports Law, describing him as "highly regarded in this area”.