Media rights deal 'breached competition law'
The British Office of Fair Trading has concluded that the collective sale of the media rights for 49 racecourses to attheraces was against competition rules.
Attheraces agreed a £307m (€463.4m) deal in 2001 with the Racecourse Association for the right to show pictures from all but 10 British tracks.
However, after investigating the agreement, the OFT has ruled that the racecourses breached competition laws by negotiating as a group rather than individually, therefore limiting competition among themselves.
Even though the channel is now off-air, the OFT has released its verdict to bring an end to the case.
Announcing the decision, Vincent Smith, director of competition enforcement, said: “Although attheraces is no longer exploiting the rights in question, the OFT has decided to publish a decision in this case following attheraces’ notification.
“We need to make it clear when collective selling may breach competition law. It is important that sporting bodies and others carefully assess whether collective selling agreements may restrict competition before they enter into them.”
The full verdict reads: “Attheraces was set up as a joint-venture between Arena, BSkyB and Channel 4 to supply an interactive pay-TV channel allowing viewers to bet on horse races through their televisions.
“Punters accessing the attheraces website were also able to watch races live, and bet on those races, via their PC. In order to supply this service attheraces bought certain media rights from 49 British racecourses in 2001.
“The sale of these rights was co-ordinated by the Racecourse Association (RCA).
“The OFT was notified of the various agreements relating to attheraces in November 2001 and asked to decide whether they infringed the Competition Act.
“The OFT has concluded that, by selling the rights together, the 49 racecourses restricted competition between them when supplying attheraces and that, as a result, attheraces had to pay more for the rights than would have been the case if there had been effective competition.
“Collective selling may be allowed under the Competition Act where it is essential to achieve certain economic benefits and consumers receive a fair share of those benefits or where there is no appreciable effect on competition - for example if sold in small groups.
"The OFT has found that these conditions were not met in this case.”
Arena Leisure, who run six of the tracks involved in the deal, issued a response to the verdict but they will consider the full report before making any further comment.
A statement said: “On April 8, 2003, the OFT issued a Rule 14 notice to Arena and the other relevant parties setting out its preliminary findings that the 49 racecourses that were party to the agreement had infringed the Chapter One prohibition of the Competition Act 1998 by collectively selling their media rights to attheraces as a single package, rather than by selling their rights individually.
“The OFT’s decision did not raise any concerns about the formation of the attheraces joint venture between BSkyB, Channel 4 and Arena to purchase and exploit media rights to British horseracing.
“As was announced by Arena on March 30, 2004, the media rights agreement has been terminated by attheraces with effect from midnight on March 29, 2004.
“Arena received a copy of the OFT’s decision earlier today and is now closely studying the OFT’s decision and its implications. We will make further announcements in due course.”
