Ofcom Competition Law Victory in TV Subtitles Case Confirms Time for Assessing Dominance in a Predatory Bidding Case

22 May 2008

The Competition Appeal Tribunal has dismissed an appeal by Independent Media Support (IMS) against Ofcom’s decision that Red Bee Media had not infringed the Chapter I or Chapter II prohibitions in the Competition Act 1998.  Both IMS and Red Bee are providers to UK broadcasters of TV ‘access services’ (such as subtitling, signing and audio description).  IMS had complained to Ofcom that Red Bee had, in 2004, tendered a below cost price for a long-term exclusive contract to supply such services to Channel 4 and that this was a breach of the Chapter II prohibition.  IMS also alleged that the length and exclusive nature of the contract infringed Chapter I. In a decision issued in 2007, Ofcom rejected these complaints on the basis that: (a) the proper time for assessing the alleged infringement of the Chapter II prohibition was limited to 2004 (the time when Red Bee bid for, and won, the Channel 4 contract), and Red Bee was not dominant at that time, with the consequence that no infringement of Chapter II could be established; and (b) given that there remained at least three credible bidders able to bid for contracts to provide such services to UK broadcasters whenever bids were called for, the duration of the exclusive agreement was not such as to infringe the Chapter I prohibition either. IMS appealed to the Tribunal.

In dismissing the appeal, the Tribunal upheld Ofcom’s reasoning, and confirmed that the proper time for assessing whether Red Bee was dominant for the purposes of investigating the Chapter II complaint was 2004.  Thus, even if Red Bee had become dominant after 2004, that would not have given rise to an infringement of Chapter II as, once the Channel 4 contract had been signed, Red Bee had no choice as to the prices which it could charge Channel 4.  Accordingly, even if those prices were below cost, the contract could continue to operate according to its terms and did not have to be re-tendered. A source quoted in Global Competition Review described the Tribunal’s judgment as a “full tick” for Ofcom which was represented by Rupert Anderson QC and Alan Bates.

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Alan Bates