The Court of Appeal has handed down its keenly anticipated judgment in Attheraces Limited v. The British Horseracing Board Limited  EWCA Civ 38 (judgment of 2 February 2007) which raised an important question which has long been a source of considerable difficulty for competition lawyers: at what point do prices charged by a dominant undertaking cross the threshold of being so excessive as to constitute an abuse?
The question arose in a dispute between the British Horseracing Board Ltd (“the BHB”) (the administrator and governing body of British horseracing) and Attheraces Ltd (“ATR”) (a broadcaster whose output largely consisted of information concerning British races). The BHB had engaged a third party to compile and distribute certain pre-race data on the BHB’s behalf. ATR sought to negotiate with the BHB to be supplied with that data for the purposes of two relatively new broadcasted services which ATR was supplying to bookmakers outside of the UK and Republic of Ireland. The BHB refused to supply the data except in return for a 50 percent share of ATR’s profits from the two services.
ATR then commenced proceedings in the Chancery Division, alleging that the BHB had abused its dominant position in the market for supply of pre-race data in respect of British races by, inter alia, charging excessive prices. The High Court agreed, holding that the prices demanded by BHB for supplying the data to broadcasters were abusive, essentially because they yielded profits for BHB which significantly exceeded the “cost+ formula” (i.e. the BHB’s costs of compiling and distributing the pre-race data, together with a reasonable return on those costs). The BHB appealed.
The Court of Appeal has allowed BHB’s appeal, holding that the High Court had been wrong to regard the “economic value” of the pre-race data as limited to the product of the cost + formula. In a judgment which was firmly rooted in the purposes of competition law (namely, to protect competition and consumers), the CA stated that the High Court should not have found BHB’s prices to have been “excessive” despite there being no evidence that those prices were undermining competition in downstream markets. Further, even if the BHB’s prices had been “excessive”, they were arguably not “unfair”, and therefore arguably not abusive, having regard to the activities undertaken by BHB in administering and funding aspects of British racing, which activities produced benefits to ATR which were not reflected in the costs of compiling and distributing the pre-race data.
Peter Roth QC acted for the successful appellant.