As Ofcom announced an enquiry into alleged pubfootball market abuse by BSKyB. ESTA invited comments on its draft complaint about the 'Satellite and Football TV Cartel' to the Office of Fair Trading.
Ofcom took up the compiant against SKy from BT, Setanta, Top Up TV and Virgin Media. READ the ESTA Complaint about BSkyB, FACT, Media Protection Services and FA Premier League to the OFT..:
COMPLAINT
to the
OFFICE OF FAIR TRADING
The Scheme for Promotion of Restrictive Practices
The companies Federation Against Copyright Theft Limited and Media Protection Services Limited have agreed with BskyB, their client, a scheme to prosecute recipients of FA Premier League television matches in the UK in purported breach of a copyright contract scheme for FAPL football television rights arranged between BSkyB, the FA Premier League and other broadcasters as part of an EU-wide rights scheme, whilst at the same time taking no action against BSkyB for reciprocal breaches of the same contract scheme.
Breach and Circumvention of Previous Undertakings to the Competition Commission
The four companies operate the copyright contract scheme as part of a cartel system which has already been the subject of a Notice of Objection from the Competition Commission. To satisfy the Notice of Objection BSkyB (licensee) and FA Premier League (Licensor) gave specific undertakings to the Commission to do certain things so as to prevent the operations causing future interference with vertical and horizontal markets, and so as to prevent their pre-emption of emerging markets.
In accordance with those undertakings FAPL football matches were divided into packages and some packages have been licensed to a third party Setanta Sports. However, BSkyB has circumvented the anticipated positive effect of that arrangement by putting in place commercial terms which have the effect of rendering null and void the ‘fair and open market’ benefits intended by the Commission. The market for FA Premier League matches in public houses is one which is being particularly abused by commercial terms which mean that Setanta packages are not available unless public houses first subscribe to BSkyB packages.
The Pubs and Clubs Sports TV Market.
There is a clearly emerged Sports TV market in the UK pubs and clubs entertainment sector in the UK. BSkyB Group plc has been able to impose the terms which make it a prerequisite first to subscribe to the BSkyB package. These terms have been imposed using abuse of dominant market position.
BSkyB is abusing its dominant position as sole carrier and operator of the UK DVB S2 platform to impose the system “Sky First and Setanta Only Second.” This is a breach of the undertaking given to the Competition Commission not to abuse vertical and horizontal markets and not to pre-empt emerging markets.
The pubs and clubs sports TV market is being abused in a second way. Pub owners and operators are being prosecuted in the criminal courts under the Copyright Designs and Patents Act 1985 in a scheme which promotes BSkyB’s abusive expansion throughout Europe in breach of a number of statutory provisions of company law and in breach of the copyright scheme it purports to have enforced by its cartel partner the FA Premier League.
Using the copyright contract scheme the cartel has been able to abuse the dominant market position of the FA Premier League and BSkyB at many different levels.
Sky Subscriber Services Limited ( “SSSL”) Scotland.
The agreement between the four parties has the effect that companies within the BSkyB Group plc have been able to operate from Livingstone, Scotland, a scheme to distribute pay-television viewing cards and authorise pay-television reception to take revenues in breach of the EU-wide copyright contracts scheme of the FA Premier League scheme, and in breach of its own FAPL contract, whilst it is held harmless by the private investigating and prosecuting agencies. No action is taken by FACT against the UK based operation Sky Subscriber Services Limited because BSkyB Group plc is a FACT member and a creature company of BSkyB.
The cartel has in contradistinction arranged that the investigating and enforcing arrangements it has put in place are rigorously used against competitors and end users of rival satellite TV equipment and services. BSkyB and the FAPL have caused to be created and financially support and pay for the operations of a small private company Media Protection Services Limited, which is a creature organisation of the cartel posing as an independent investigator and prosecutor in the courts. The enforcement and prosecuting agencies are not impartial or operating in the public interest but have been abusing the criminal law procedure, contrary to the public Cartel Private Prosecutor - FACT Federation Against Copyright Theft Limited
No action is taken by FACT against the UK based operation Sky Subscriber Services Limited because BSkyB Group plc is a FACT member and a creature company of BSkyB.
FACT Ltd is financed in part by BSkyB Group plc and therefore subsists in part on profits made from the illegal cartel activity.
Cartel Private Prosecutor - Media Protection Services Limited.
The complaints to the Director of Public Prosecutions and the Crown Prosecution Service about illegal activities of Media Protection Services Limited can be found at Appendix “A”
No action is taken by MPS against any participant in the cartel’s distribution of out-of copyright-area broadcasts.
MPS Ltd is financed by work undertaken for the cartel arrangement of BSkyB Group plc and FA Premier League and can be considered a part of the cartel and a component part of the illegal scheme to promote cartel activity. MPS is financed by and subsists wholly on profits made from the illegal cartel activity of the FA Premier League and BSkyB Group plc. The company cannot remotely be considered as an independent prosecutor and regularly breaks UK law codes of conduct governing prosecutions in the criminal courts.
The company MPS appears to be at the centre of a conspiracy against various individual UK publicans, to pervert the course of justice in Magistrates Courts. See Appendix “A”
Extension of embedded BSkyB NDS Conditional Access System to EU
The detrimental situation of BSkyB being the sole conditional access system operator in the UK DVB S2 platform is being further exacerbated and entrenched in the UK market and is being surreptitiously expanded to the EU market.
This is a further breach of the undertaking given to the Competition Commission not to abuse vertical and horizontal markets and not to pre-empt emerging markets.
Abusive Control of the EU Market for DVB-S2 Conditional Access Systems
Success in the globally converging digital satellite television Pay-TV and Pay-per-view market depends as much upon penetration of proprietary receiver-decoder hardware (set top box and conditional access systems) as it does on growing pay-TV subscriber database and entertainment sell-through.
The BSkyB Group plc uses a delivery system whose penetration it is surreptitiously expanding throughout the EU to the significant detriment of rivals. News Digital Systems (NDS) “VideoGuard” pay-per-view technology is a system that is embedded into BSkyB satellite digital television receivers. The cost of supplying these satellite TV receivers to the subscriber is subsidised. By a system of News Corporation and BSkyB linked companies the NDS receiver-decoders used by BSkyB Group are being put into the market in such a way as to capture revenue from the hardware (set top box) and embedded conditional access system as well as the delivered entertainment content.
Because BSkyB Group plc controls the UK market for DVB-S2 Pay TV with the only viable conditional access system, all other aspirant programmers must come to BSkyB if they wish to have content distributed. In addition to controlling the captive programme distribution of rivals, BSkyB Group plc and its parent News Corp US also benefit from controlling the pricing and profits from the “must-use” NDS VideoGuard set top box hardware.
The greater the manufacturing runs of NDS hardware, the greater advantages to the NDS partner companies manufacturing the receiver decoders. It is thus a critical advantage to have penetration of NDS VideoGuard receiver decoders in mainland Europe as well as the UK, and they are distributed there in large numbers by Sky Subscriber Services Limited (a BSkyB Group plc Company in Scotland. UK), for the reception of Sky television.
This reception outside the area for which BSkyB Group plc has bought broadcast copyright is an abuse of dominant position. The out-of-copyright-area “over-distribution” involves breach of broadcast copyright belonging to those rival and Emerging EU satellite television companies who have purchased the rights to those countries. The over-distribution is also a breach of the copyright subsisting in the works and belonging to the of the content owners.It is clear that the over-distribution is illicit, but calculated, organised and very extensive. Over-distribution takes place even though broadcasting and sale of the sports and filmed entertainment outside the UK and Ireland is in breach of the BSkyB Group’s licences for filmed entertainment with Hollywood movie companies and for football with the FA Premier League.
The hardware advantage gained from the FA Premier League dispute is further manipulated by BSkyB. An additional illicit benefit to News Corp and BSkyB comes from the manner in which they have used the FA Premier League dispute with pubs to choke the legitimate import into the UK of rival conditional access systems and rival receiver decoders of competing programmers. This activity constitutes Abusive Control of the EU Market for DVB-S2 Conditional Access Systems.
This constitutes a further abuse of a dominant position which affects electronics manufacturers, conferring an unfair advantage on News Corporation electronics partners.
This is particularly obvious when viewed in the context of BSkyB’s having organised the prosecution and raiding of users of rival conditional access systems in the UK, using apparently impartial but in fact creature third party investigators to claim that this “foreign” satellite TV equipment is “Illegal”. By means of the claim to be enforcing the exclusive right to distribute FA Premier League matches in the UK, BSkyB has succeeded in having the authorities (such as Trading Standards) declare illegal, rival conditional access systems and receiver-decoderequipment which end users install to receive the alternative programming.
The equipment itself is not illegal, and the only dispute can be about its use for reception of FA Premier League programming. It is against the public interest that BSkyB Group plc has managed to set up “tame” investigating/prosecuting companies to promote to the ill-informed UK authorities the concept that the equipment itself declared illegal, whilst it has up to two million NDS VideoGuard conditional access systems distributing movie and football outside copyright area in 23 other EU countries.
In summary, when the FA Premier League and BSkyB and their private prosecutors, run a constant campaign to keep rival conditional access systems, receiver decoders and viewing cards out of the UK, whilst they themselves have tacit agreement to do nothing about BSkyB expanding its subscriber base all over Europe, they increase the dominance of their market position for hardware as well as for content. They are choking off competitors purportedly for a breach which they are committing themselves in a concealed manner. They are also choking off competitors’ entry to the UK on a pretext, using claims of “illegal” content distribution as a pretext to stifling imports of perfectly legitimate receivers.
The FA Premier League and BSkyB and their private prosecutors constantly issue bold and misleading press and public relations statements that “foreign satellite” TV is “illegal”. Whilst their claim should be limited to their position in the pubs and clubs sports TV dispute over alternative FAPL television from Europe, they have by a huge press and public relations campaign created a market in which it is now asserted by some local government authorities and police led by the cartel’s private prosecutors that all “foreign satellite” television equipment in general is illegal.
This abuse has gone so far that non-Sky satellite television equipment is now being seized by local authorities Trading Standards officers in the UK citing the Copyright Designs and Patents Act. The seizures have been supported by police, although in most cases police have now withdrawn as a result of representation to each of the 43 UK police forces by the European Satellite Television Association.
The seizures have taken place in a manner calculated to disrupt the market for foreign satellite television reception in general, and in civil cases are being accompanied by a legal demand that the equipment be delivered up and destroyed. This demand is made despite the fact that the equipment can be used for receiving content from the mainland EU that has no connection with the FA Premier league content in dispute.
UNDERSTANDING THE SKY-FAPL MARKET-FIXING OPERATIONS
The essence of the FAPL-Sky market-fixing agreement is that Sky pays an artificially high price to the FAPL for football rights for the UK and Ireland. The contract sum is so high that it is viable only if Sky does two things:-
Firstly, Sky it must take in large revenues from selling FAPL football in breach of the FAPL contract scheme in mainland Europe outside its broadcast copyright licence area of UK and Ireland. Naturally this arrangement must be covered by the FAPL turning a blind eye and holding Sky harmless for taking in this source of revenue. BSkyB Group plc has also for the last several years concealed this massive “offshore” sale in its misleading Annual Report and Accounts.
Secondly, Sky must charge a artificially high price in the UK market. Naturally, Sky charges the maximum possible in the domestic market, where it also controls what is available on cable, and controls other broadcasters on its sole UK pay-TV programme platform.
But crucially, Sky extorts excessively high prices from pubs and clubs in a “commercial” contract.. The price is so high that it is not viable for a large number of pubs and interferes with pub economics even of more wealthy pubs who do pay. Natural free market forces drive pubs to seek a reasonable priced alternative in the EU Single Market. To deter them, Sky and the FAPL have set up a scheme whereby pubs seeking an alternative source of satellite football are vigorously prosecuted and litigated against in the criminal and civil courts by three agents, MPS, FACT and DLA Piper.
This is an agreement between the FA Premier League and Sky, but it is disguised to a large extent by the use of three enforcement agents whose operations have been set up in such a way as to distance them from the cartel operators, their masters.. The result has been to represent MPS and FACT as independent and impartial when they are not. DLA Piper actions are separated from MPS and FACT actions in the criminal courts, attacking pubs in the High Courts
The “enforcement agents” are used by the FAPL and Sky. FACT and MPS operate in the criminal courts using Section 297 of the Copyright Designs and Patents Act 1988 in Magistrates Courts. DLA Piper operates in the civil courts appointed by FAPL. When pubs cannot afford to defend threatened High Court action to assert their rights, DLA Piper but demands on behalf of the FA Premier League that the non-Sky receiving equipment for European programmers is delivered up and destroyed.
This demand by DLA Piper for delivery up and destruction of equipment has been made even of publicans who are paying the BSkyB commercial contract but supplement their viewing by also paying a European broadcaster. Such a demand clearly exposes the fact that the FAPL through DLA Piper is here acting completely illegally to deter the circulation of rival broadcast receiving equipment to Sky’s NDS integrated receiver decoder, and to deter distribution of rival non-football sports and entertainment programming to Sky.
The three investigating and policing agents “enforcing” the UK pubs commercial pricing for Sky and the FA Premier League are not independent at all. They take legal action act in concert, and are all under the control of Sky and the FAPL. The Federation Against Copyright Theft has denied this in correspondence with the European Satellite Television Association, but has failed to explain why it takes no action against Sky Subscriber Services Limited in Scotland. Sky is its largest FACT member and contributor to its finances, and prosecutions by FACT result in a large BSkyB prosecuting teams appearing alongside FACT solicitors in Court. So-called investigating agents work across the board on the different prosecutions and civil actions.
When the nature of the prosecuting and investigating agents’ operations and relationship with Sky and the FAPL is understood, it is possible to take the prosecuting agents out of the picture and to understand that the whole policing enforcing structure is an elaborate campaign of smoke and mirrors. MPS, for example, is a private company which was developed out of FACT. Key personnel left FACT and were set up to act as a second enforcing agency for Sky and the FA Premier League. The MPS agency has conducted illegal activities breaking the criminal law in making prosecutions for BSkyB and the Premier League. The principals are responsible for the activities of their contractor MPS.
The arrangement to “police” the UK pubs and enforce observance of the BSkyB commercial contract is an agreement to enforce artificially high prices in the UK. But more importantly it is a camouflage to present Sky and the FA Premier League as “upright corporations” on whose behalf prosecutors are acting. In fact the prosecutors are creature companies of the cartel. Their activities and the publicity they generate about copyright theft being prosecuted, diverts attention from the fact that Sky and the FAPL are operating illegally in concert so that both the FAPL and Sky benefit from an identical Sky breach of copyright by Sky in mainland Europe.
Sky Subscriber Services Limited distributes its viewing cards all over Europe and especially to sports pubs and bars, in for example, Spain. The giant deception has been going on for a number of years and the Murdoch family are primarily responsible for misleading statements in the BSkyB Group and News Corp annual report and accounts about this liability.
The agencies appointed by BSkyB and FA Premier to enforce the UK element of the FAPL’s broadcast copyright licensing, takes any action about Sky’s European breach. Taking the agents FACT, DLA Piper and MPS out of the picture it can be seen that this is a cartel agreement between the principals, Sky and the FA Premier League to turn a blind eye to the massive Sky infringement, whilst choking off the alternative satellite market in the UK. For the past several years the FAPL has done nothing whatsoever about Sky’s obvious and massive breach of contract in Europe. This is because the FA Premier League receives this money from Sky in each round of bidding, where Sky pays and excessive price.
The excessive price paid by Sky for its packages increases price that for example, Setanta and rival bidders for the mandatory two separate packages that must be sod to parties other than Sky. However, Setanta is not viable, as it must be carried by the Sky conditional access system into pubs. Sky has which has decreed that a publican must first buy Sky before subscribing to the Setanta package. Both subscriptions are managed in Livingstone, Scotland. Although Setanta is also available on DVB-T in the Freeview multiplex as a pay-TV channel, it is contractually available to public houses only on the Sky multiplex.
By these arrangements BSkyB Group plc and the FA Premier League have rendered null and void any competitive benefit which was envisaged when the Competition Commission insisted on splitting up the packages to be sold to broadcast distributors. They have effectively circumvented the purpose of the undertakings given to the Commission.
This choking off in the UK of satellite TV broadcast products of all kinds from mainland Europe, is based on enforcement of the FAPL copyright contract scheme so as to prevent more reasonably priced football from the FA Premier Leagues mainland European licensees being seen in UK pubs. The seizure of equipment to watch these broadcasters not only stops alternative EU competitive pricing, it stops alternative satellite conditional access systems, alternative satellite non-football programme services and alternative receiver decoders
Coincidentally, as it emerged that ESTA will report this matter to the Securities and Exchange Commission in New York and the Financial Services Agency in London, Rupert and James Murdoch resigned from leadership of the BSkyB Group. The eventual publicity about Sky’s liability in this area will cause Sky and perhaps even News Corporation take on an “Enron” characteristic
PARTIES WHO HAVE SUFFERED DETRIMENT ACTIVITIES CONTRARY TO THE PUBLIC INTEREST
Examples of Parties who have suffered detriment, and activities which are contrary to the public interest include, but are not limited to, the following:
- Owners and operators of public houses whom the cartel has prosecuted obtaining criminal convictions fines and loss of liquor licences by processes including abuses of the criminal law procedure, lawbreaking and breaches of Criminal Procedures and Investigations Act by Prosecutors
These persons have been denied the right to a fair trial by the use of private prosecutors who are creature companies of BSkyB and the FA Premier League, who are participants in the cartel’s illegal profits, and who have broken the UK statutory codes of conduct for fair and impartial prosecutions and disclosures.
- Owners and operators of public houses where the cartel has arranged that the private prosecutors and others misled by them have seized “foreign satellite” television equipment receiving content broadcast from EU countries outside the UK.
- Owners and operators of public houses whom the cartel has threatened using the deterrents of the examples of criminal convictions fines, and therefore prevented from using a wide range of equipment and services in free circulation within the Single Market. The range of equipment and services includes satellite television conditional access equipment and services where the subsisting copyright of programme services provided from a place within the EU and unconnected with the rights contract scheme of cartel participant FA Premier League, is being illegally constrained for the benefit of cartel participant BSkyB dominant in the satellite pay-TV market
- Satellite television equipment and television services dealers whom the cartel has threatened using the deterrents of threatened criminal convictions fines, and prevented from using a wide range of equipment and services. These traders rights to distribute foreign programming and channels have been constrained and their market has been interfered with.
- End users whose rights to purchase TV in a free fair and open “Television Without Frontiers” satellite TV market have been interfered with and brought into question as allegedly illegal “foreign satellite”.
- Shareholders in BSkyB Group plc where contingent liabilities have been concealed concerning out-of area distribution in mainland Europe and where misleading BSkyB annual reports and accounts have concealed subscriber operations and revenues taken in breach of the FA Premier League contract scheme. The multiple contingent liabilities may be more than the entire capitalisation of the BSkyB Group plc.
- Shareholders in rival European broadcasting organisations whose customers have been misappropriated in breach of their respective FAPL contracts and whose broadcast copyright has been infringed.
- Shareholders in FA Premier League Clubs whose TV markets and developing TV business with overseas rights holders outside the UK have been pre-empted by BSkyB’s penetration of content subscriptions and NDS VideoGuard set top boxes.
- Emerging and developing broadcasters and markets evolving in accordance with technological advances and EU policies, such as IPTV operators.
ACTION REQUESTED
The European Satellite Television Association is respectfully requesting the Office of Fair Trading to work with the Director of Public Prosecutions and the European Competition Commission urgently to investigate and address the very serious contraventions of EU norms and the rights of ordinary citizens, publicans, traders and competitors to the cartel, who are suffering detriment from these extensive, sophisticated and illegal cartel activities.
. Signed………………………………… London, 10 December 2007
Colin McGhee Chairman ESTA European Satellite Television Association Founded 1985 www.esta.ie
Submitted to: The Director General of the UK Office of Fair Trading
By:
TPNA The People’s Network Advocates 243 Temple Chambers London EC4Y 0DT www.tpna.co.uk
For and on behalf of Members of ESTA European Satellite Television Association
Ofcom took up the compiant against SKy from BT, Setanta, Top Up TV and Virgin Media. READ the ESTA Complaint about BSkyB, FACT, Media Protection Services and FA Premier League to the OFT..:
COMPLAINT
to the
OFFICE OF FAIR TRADING
The Scheme for Promotion of Restrictive Practices
The companies Federation Against Copyright Theft Limited and Media Protection Services Limited have agreed with BskyB, their client, a scheme to prosecute recipients of FA Premier League television matches in the UK in purported breach of a copyright contract scheme for FAPL football television rights arranged between BSkyB, the FA Premier League and other broadcasters as part of an EU-wide rights scheme, whilst at the same time taking no action against BSkyB for reciprocal breaches of the same contract scheme.
Breach and Circumvention of Previous Undertakings to the Competition Commission
The four companies operate the copyright contract scheme as part of a cartel system which has already been the subject of a Notice of Objection from the Competition Commission. To satisfy the Notice of Objection BSkyB (licensee) and FA Premier League (Licensor) gave specific undertakings to the Commission to do certain things so as to prevent the operations causing future interference with vertical and horizontal markets, and so as to prevent their pre-emption of emerging markets.
In accordance with those undertakings FAPL football matches were divided into packages and some packages have been licensed to a third party Setanta Sports. However, BSkyB has circumvented the anticipated positive effect of that arrangement by putting in place commercial terms which have the effect of rendering null and void the ‘fair and open market’ benefits intended by the Commission. The market for FA Premier League matches in public houses is one which is being particularly abused by commercial terms which mean that Setanta packages are not available unless public houses first subscribe to BSkyB packages.
The Pubs and Clubs Sports TV Market.
There is a clearly emerged Sports TV market in the UK pubs and clubs entertainment sector in the UK. BSkyB Group plc has been able to impose the terms which make it a prerequisite first to subscribe to the BSkyB package. These terms have been imposed using abuse of dominant market position.
BSkyB is abusing its dominant position as sole carrier and operator of the UK DVB S2 platform to impose the system “Sky First and Setanta Only Second.” This is a breach of the undertaking given to the Competition Commission not to abuse vertical and horizontal markets and not to pre-empt emerging markets.
The pubs and clubs sports TV market is being abused in a second way. Pub owners and operators are being prosecuted in the criminal courts under the Copyright Designs and Patents Act 1985 in a scheme which promotes BSkyB’s abusive expansion throughout Europe in breach of a number of statutory provisions of company law and in breach of the copyright scheme it purports to have enforced by its cartel partner the FA Premier League.
Using the copyright contract scheme the cartel has been able to abuse the dominant market position of the FA Premier League and BSkyB at many different levels.
Sky Subscriber Services Limited ( “SSSL”) Scotland.
The agreement between the four parties has the effect that companies within the BSkyB Group plc have been able to operate from Livingstone, Scotland, a scheme to distribute pay-television viewing cards and authorise pay-television reception to take revenues in breach of the EU-wide copyright contracts scheme of the FA Premier League scheme, and in breach of its own FAPL contract, whilst it is held harmless by the private investigating and prosecuting agencies. No action is taken by FACT against the UK based operation Sky Subscriber Services Limited because BSkyB Group plc is a FACT member and a creature company of BSkyB.
The cartel has in contradistinction arranged that the investigating and enforcing arrangements it has put in place are rigorously used against competitors and end users of rival satellite TV equipment and services. BSkyB and the FAPL have caused to be created and financially support and pay for the operations of a small private company Media Protection Services Limited, which is a creature organisation of the cartel posing as an independent investigator and prosecutor in the courts. The enforcement and prosecuting agencies are not impartial or operating in the public interest but have been abusing the criminal law procedure, contrary to the public Cartel Private Prosecutor - FACT Federation Against Copyright Theft Limited
No action is taken by FACT against the UK based operation Sky Subscriber Services Limited because BSkyB Group plc is a FACT member and a creature company of BSkyB.
FACT Ltd is financed in part by BSkyB Group plc and therefore subsists in part on profits made from the illegal cartel activity.
Cartel Private Prosecutor - Media Protection Services Limited.
The complaints to the Director of Public Prosecutions and the Crown Prosecution Service about illegal activities of Media Protection Services Limited can be found at Appendix “A”
No action is taken by MPS against any participant in the cartel’s distribution of out-of copyright-area broadcasts.
MPS Ltd is financed by work undertaken for the cartel arrangement of BSkyB Group plc and FA Premier League and can be considered a part of the cartel and a component part of the illegal scheme to promote cartel activity. MPS is financed by and subsists wholly on profits made from the illegal cartel activity of the FA Premier League and BSkyB Group plc. The company cannot remotely be considered as an independent prosecutor and regularly breaks UK law codes of conduct governing prosecutions in the criminal courts.
The company MPS appears to be at the centre of a conspiracy against various individual UK publicans, to pervert the course of justice in Magistrates Courts. See Appendix “A”
Extension of embedded BSkyB NDS Conditional Access System to EU
The detrimental situation of BSkyB being the sole conditional access system operator in the UK DVB S2 platform is being further exacerbated and entrenched in the UK market and is being surreptitiously expanded to the EU market.
This is a further breach of the undertaking given to the Competition Commission not to abuse vertical and horizontal markets and not to pre-empt emerging markets.
Abusive Control of the EU Market for DVB-S2 Conditional Access Systems
Success in the globally converging digital satellite television Pay-TV and Pay-per-view market depends as much upon penetration of proprietary receiver-decoder hardware (set top box and conditional access systems) as it does on growing pay-TV subscriber database and entertainment sell-through.
The BSkyB Group plc uses a delivery system whose penetration it is surreptitiously expanding throughout the EU to the significant detriment of rivals. News Digital Systems (NDS) “VideoGuard” pay-per-view technology is a system that is embedded into BSkyB satellite digital television receivers. The cost of supplying these satellite TV receivers to the subscriber is subsidised. By a system of News Corporation and BSkyB linked companies the NDS receiver-decoders used by BSkyB Group are being put into the market in such a way as to capture revenue from the hardware (set top box) and embedded conditional access system as well as the delivered entertainment content.
Because BSkyB Group plc controls the UK market for DVB-S2 Pay TV with the only viable conditional access system, all other aspirant programmers must come to BSkyB if they wish to have content distributed. In addition to controlling the captive programme distribution of rivals, BSkyB Group plc and its parent News Corp US also benefit from controlling the pricing and profits from the “must-use” NDS VideoGuard set top box hardware.
The greater the manufacturing runs of NDS hardware, the greater advantages to the NDS partner companies manufacturing the receiver decoders. It is thus a critical advantage to have penetration of NDS VideoGuard receiver decoders in mainland Europe as well as the UK, and they are distributed there in large numbers by Sky Subscriber Services Limited (a BSkyB Group plc Company in Scotland. UK), for the reception of Sky television.
This reception outside the area for which BSkyB Group plc has bought broadcast copyright is an abuse of dominant position. The out-of-copyright-area “over-distribution” involves breach of broadcast copyright belonging to those rival and Emerging EU satellite television companies who have purchased the rights to those countries. The over-distribution is also a breach of the copyright subsisting in the works and belonging to the of the content owners.It is clear that the over-distribution is illicit, but calculated, organised and very extensive. Over-distribution takes place even though broadcasting and sale of the sports and filmed entertainment outside the UK and Ireland is in breach of the BSkyB Group’s licences for filmed entertainment with Hollywood movie companies and for football with the FA Premier League.
The hardware advantage gained from the FA Premier League dispute is further manipulated by BSkyB. An additional illicit benefit to News Corp and BSkyB comes from the manner in which they have used the FA Premier League dispute with pubs to choke the legitimate import into the UK of rival conditional access systems and rival receiver decoders of competing programmers. This activity constitutes Abusive Control of the EU Market for DVB-S2 Conditional Access Systems.
This constitutes a further abuse of a dominant position which affects electronics manufacturers, conferring an unfair advantage on News Corporation electronics partners.
This is particularly obvious when viewed in the context of BSkyB’s having organised the prosecution and raiding of users of rival conditional access systems in the UK, using apparently impartial but in fact creature third party investigators to claim that this “foreign” satellite TV equipment is “Illegal”. By means of the claim to be enforcing the exclusive right to distribute FA Premier League matches in the UK, BSkyB has succeeded in having the authorities (such as Trading Standards) declare illegal, rival conditional access systems and receiver-decoderequipment which end users install to receive the alternative programming.
The equipment itself is not illegal, and the only dispute can be about its use for reception of FA Premier League programming. It is against the public interest that BSkyB Group plc has managed to set up “tame” investigating/prosecuting companies to promote to the ill-informed UK authorities the concept that the equipment itself declared illegal, whilst it has up to two million NDS VideoGuard conditional access systems distributing movie and football outside copyright area in 23 other EU countries.
In summary, when the FA Premier League and BSkyB and their private prosecutors, run a constant campaign to keep rival conditional access systems, receiver decoders and viewing cards out of the UK, whilst they themselves have tacit agreement to do nothing about BSkyB expanding its subscriber base all over Europe, they increase the dominance of their market position for hardware as well as for content. They are choking off competitors purportedly for a breach which they are committing themselves in a concealed manner. They are also choking off competitors’ entry to the UK on a pretext, using claims of “illegal” content distribution as a pretext to stifling imports of perfectly legitimate receivers.
The FA Premier League and BSkyB and their private prosecutors constantly issue bold and misleading press and public relations statements that “foreign satellite” TV is “illegal”. Whilst their claim should be limited to their position in the pubs and clubs sports TV dispute over alternative FAPL television from Europe, they have by a huge press and public relations campaign created a market in which it is now asserted by some local government authorities and police led by the cartel’s private prosecutors that all “foreign satellite” television equipment in general is illegal.
This abuse has gone so far that non-Sky satellite television equipment is now being seized by local authorities Trading Standards officers in the UK citing the Copyright Designs and Patents Act. The seizures have been supported by police, although in most cases police have now withdrawn as a result of representation to each of the 43 UK police forces by the European Satellite Television Association.
The seizures have taken place in a manner calculated to disrupt the market for foreign satellite television reception in general, and in civil cases are being accompanied by a legal demand that the equipment be delivered up and destroyed. This demand is made despite the fact that the equipment can be used for receiving content from the mainland EU that has no connection with the FA Premier league content in dispute.
UNDERSTANDING THE SKY-FAPL MARKET-FIXING OPERATIONS
The essence of the FAPL-Sky market-fixing agreement is that Sky pays an artificially high price to the FAPL for football rights for the UK and Ireland. The contract sum is so high that it is viable only if Sky does two things:-
Firstly, Sky it must take in large revenues from selling FAPL football in breach of the FAPL contract scheme in mainland Europe outside its broadcast copyright licence area of UK and Ireland. Naturally this arrangement must be covered by the FAPL turning a blind eye and holding Sky harmless for taking in this source of revenue. BSkyB Group plc has also for the last several years concealed this massive “offshore” sale in its misleading Annual Report and Accounts.
Secondly, Sky must charge a artificially high price in the UK market. Naturally, Sky charges the maximum possible in the domestic market, where it also controls what is available on cable, and controls other broadcasters on its sole UK pay-TV programme platform.
But crucially, Sky extorts excessively high prices from pubs and clubs in a “commercial” contract.. The price is so high that it is not viable for a large number of pubs and interferes with pub economics even of more wealthy pubs who do pay. Natural free market forces drive pubs to seek a reasonable priced alternative in the EU Single Market. To deter them, Sky and the FAPL have set up a scheme whereby pubs seeking an alternative source of satellite football are vigorously prosecuted and litigated against in the criminal and civil courts by three agents, MPS, FACT and DLA Piper.
This is an agreement between the FA Premier League and Sky, but it is disguised to a large extent by the use of three enforcement agents whose operations have been set up in such a way as to distance them from the cartel operators, their masters.. The result has been to represent MPS and FACT as independent and impartial when they are not. DLA Piper actions are separated from MPS and FACT actions in the criminal courts, attacking pubs in the High Courts
The “enforcement agents” are used by the FAPL and Sky. FACT and MPS operate in the criminal courts using Section 297 of the Copyright Designs and Patents Act 1988 in Magistrates Courts. DLA Piper operates in the civil courts appointed by FAPL. When pubs cannot afford to defend threatened High Court action to assert their rights, DLA Piper but demands on behalf of the FA Premier League that the non-Sky receiving equipment for European programmers is delivered up and destroyed.
This demand by DLA Piper for delivery up and destruction of equipment has been made even of publicans who are paying the BSkyB commercial contract but supplement their viewing by also paying a European broadcaster. Such a demand clearly exposes the fact that the FAPL through DLA Piper is here acting completely illegally to deter the circulation of rival broadcast receiving equipment to Sky’s NDS integrated receiver decoder, and to deter distribution of rival non-football sports and entertainment programming to Sky.
The three investigating and policing agents “enforcing” the UK pubs commercial pricing for Sky and the FA Premier League are not independent at all. They take legal action act in concert, and are all under the control of Sky and the FAPL. The Federation Against Copyright Theft has denied this in correspondence with the European Satellite Television Association, but has failed to explain why it takes no action against Sky Subscriber Services Limited in Scotland. Sky is its largest FACT member and contributor to its finances, and prosecutions by FACT result in a large BSkyB prosecuting teams appearing alongside FACT solicitors in Court. So-called investigating agents work across the board on the different prosecutions and civil actions.
When the nature of the prosecuting and investigating agents’ operations and relationship with Sky and the FAPL is understood, it is possible to take the prosecuting agents out of the picture and to understand that the whole policing enforcing structure is an elaborate campaign of smoke and mirrors. MPS, for example, is a private company which was developed out of FACT. Key personnel left FACT and were set up to act as a second enforcing agency for Sky and the FA Premier League. The MPS agency has conducted illegal activities breaking the criminal law in making prosecutions for BSkyB and the Premier League. The principals are responsible for the activities of their contractor MPS.
The arrangement to “police” the UK pubs and enforce observance of the BSkyB commercial contract is an agreement to enforce artificially high prices in the UK. But more importantly it is a camouflage to present Sky and the FA Premier League as “upright corporations” on whose behalf prosecutors are acting. In fact the prosecutors are creature companies of the cartel. Their activities and the publicity they generate about copyright theft being prosecuted, diverts attention from the fact that Sky and the FAPL are operating illegally in concert so that both the FAPL and Sky benefit from an identical Sky breach of copyright by Sky in mainland Europe.
Sky Subscriber Services Limited distributes its viewing cards all over Europe and especially to sports pubs and bars, in for example, Spain. The giant deception has been going on for a number of years and the Murdoch family are primarily responsible for misleading statements in the BSkyB Group and News Corp annual report and accounts about this liability.
The agencies appointed by BSkyB and FA Premier to enforce the UK element of the FAPL’s broadcast copyright licensing, takes any action about Sky’s European breach. Taking the agents FACT, DLA Piper and MPS out of the picture it can be seen that this is a cartel agreement between the principals, Sky and the FA Premier League to turn a blind eye to the massive Sky infringement, whilst choking off the alternative satellite market in the UK. For the past several years the FAPL has done nothing whatsoever about Sky’s obvious and massive breach of contract in Europe. This is because the FA Premier League receives this money from Sky in each round of bidding, where Sky pays and excessive price.
The excessive price paid by Sky for its packages increases price that for example, Setanta and rival bidders for the mandatory two separate packages that must be sod to parties other than Sky. However, Setanta is not viable, as it must be carried by the Sky conditional access system into pubs. Sky has which has decreed that a publican must first buy Sky before subscribing to the Setanta package. Both subscriptions are managed in Livingstone, Scotland. Although Setanta is also available on DVB-T in the Freeview multiplex as a pay-TV channel, it is contractually available to public houses only on the Sky multiplex.
By these arrangements BSkyB Group plc and the FA Premier League have rendered null and void any competitive benefit which was envisaged when the Competition Commission insisted on splitting up the packages to be sold to broadcast distributors. They have effectively circumvented the purpose of the undertakings given to the Commission.
This choking off in the UK of satellite TV broadcast products of all kinds from mainland Europe, is based on enforcement of the FAPL copyright contract scheme so as to prevent more reasonably priced football from the FA Premier Leagues mainland European licensees being seen in UK pubs. The seizure of equipment to watch these broadcasters not only stops alternative EU competitive pricing, it stops alternative satellite conditional access systems, alternative satellite non-football programme services and alternative receiver decoders
Coincidentally, as it emerged that ESTA will report this matter to the Securities and Exchange Commission in New York and the Financial Services Agency in London, Rupert and James Murdoch resigned from leadership of the BSkyB Group. The eventual publicity about Sky’s liability in this area will cause Sky and perhaps even News Corporation take on an “Enron” characteristic
PARTIES WHO HAVE SUFFERED DETRIMENT ACTIVITIES CONTRARY TO THE PUBLIC INTEREST
Examples of Parties who have suffered detriment, and activities which are contrary to the public interest include, but are not limited to, the following:
- Owners and operators of public houses whom the cartel has prosecuted obtaining criminal convictions fines and loss of liquor licences by processes including abuses of the criminal law procedure, lawbreaking and breaches of Criminal Procedures and Investigations Act by Prosecutors
These persons have been denied the right to a fair trial by the use of private prosecutors who are creature companies of BSkyB and the FA Premier League, who are participants in the cartel’s illegal profits, and who have broken the UK statutory codes of conduct for fair and impartial prosecutions and disclosures.
- Owners and operators of public houses where the cartel has arranged that the private prosecutors and others misled by them have seized “foreign satellite” television equipment receiving content broadcast from EU countries outside the UK.
- Owners and operators of public houses whom the cartel has threatened using the deterrents of the examples of criminal convictions fines, and therefore prevented from using a wide range of equipment and services in free circulation within the Single Market. The range of equipment and services includes satellite television conditional access equipment and services where the subsisting copyright of programme services provided from a place within the EU and unconnected with the rights contract scheme of cartel participant FA Premier League, is being illegally constrained for the benefit of cartel participant BSkyB dominant in the satellite pay-TV market
- Satellite television equipment and television services dealers whom the cartel has threatened using the deterrents of threatened criminal convictions fines, and prevented from using a wide range of equipment and services. These traders rights to distribute foreign programming and channels have been constrained and their market has been interfered with.
- End users whose rights to purchase TV in a free fair and open “Television Without Frontiers” satellite TV market have been interfered with and brought into question as allegedly illegal “foreign satellite”.
- Shareholders in BSkyB Group plc where contingent liabilities have been concealed concerning out-of area distribution in mainland Europe and where misleading BSkyB annual reports and accounts have concealed subscriber operations and revenues taken in breach of the FA Premier League contract scheme. The multiple contingent liabilities may be more than the entire capitalisation of the BSkyB Group plc.
- Shareholders in rival European broadcasting organisations whose customers have been misappropriated in breach of their respective FAPL contracts and whose broadcast copyright has been infringed.
- Shareholders in FA Premier League Clubs whose TV markets and developing TV business with overseas rights holders outside the UK have been pre-empted by BSkyB’s penetration of content subscriptions and NDS VideoGuard set top boxes.
- Emerging and developing broadcasters and markets evolving in accordance with technological advances and EU policies, such as IPTV operators.
ACTION REQUESTED
The European Satellite Television Association is respectfully requesting the Office of Fair Trading to work with the Director of Public Prosecutions and the European Competition Commission urgently to investigate and address the very serious contraventions of EU norms and the rights of ordinary citizens, publicans, traders and competitors to the cartel, who are suffering detriment from these extensive, sophisticated and illegal cartel activities.
. Signed………………………………… London, 10 December 2007
Colin McGhee Chairman ESTA European Satellite Television Association Founded 1985 www.esta.ie
Submitted to: The Director General of the UK Office of Fair Trading
By:
TPNA The People’s Network Advocates 243 Temple Chambers London EC4Y 0DT www.tpna.co.uk
For and on behalf of Members of ESTA European Satellite Television Association
