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Judgments - Regina v. Independent Television Commission, Ex Parte TV Danmark 1 Ltd

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    37. It is true that paragraph 13 of the code contemplates a process of bidding for de facto exclusive rights and lays down criteria for the fairness of the bidding process. But the ITC also makes it clear that it will have to be satisfied that the public broadcasters had the opportunity to acquire the rights on "fair and reasonable terms." It can be said that the market price for the rights is what they will fetch on the open market and prima facie an opportunity to buy at the market price is an opportunity to buy at fair and reasonable terms. But this principle, if generally applied, would, as I have said, make the whole regulatory machinery in Part IV fairly pointless. The code makes it clear that the ITC will form a view of the value of the rights "to the broadcasters," in other words, what that category of broadcasters could reasonably be expected to pay for them. Of course the ITC may consider that the answer should be the same for both categories; the public broadcasters are not without resources and market power and the ITC may take the view that the rights in question should simply be left to fair and open competition. But the clear purpose of Part IV is, if necessary, to protect the public interest in free access to important sporting events against market forces. The ITC is engaged in a delicate balance of the interests of broadcasters, sports organisers and the general public.

    38. The code has to be read in the context of the regulatory scheme created by Part IV and in my opinion it does not necessarily require the ITC to give consent to a broadcaster who has bid highest in a free and open competition. Nor does it give rise to a legitimate expectation that in such circumstances consent will be given.

    Exercise and acquistion

    39. The Court of Appeal (adopting Mr Carr's terminology) contrasted regulation of sports television rights at the "point of acquisition" with regulation at the "point of exercise". The former was said to be the UK system and the latter the European system for which the ITC was contending. But the contrast between the two systems seems to me to have been greatly exaggerated. Both Part IV and the Directive are concerned with the exercise of exclusive rights to designated events. Section 101 provides that a broadcaster in one category shall not "include in [its] service live coverage of the whole or any part of a listed event" on a de facto exclusive basis without the consent of the ITC. Section 101B, echoing the Directive, provides that a broadcaster shall not "exercise rights to televise the whole or part of an event which is a designated event" without the consent of the ITC. So the statutory result to be achieved is the same. It is true that the code says that the ITC will ordinarily make its decision under section 101 by reference to the terms on which the rights were acquired. But once it is recognised that this does not necessarily require the ITC to accept the outcome of an auction as a fair price, there seem to me no hard and fast line which limits the matters which the ITC can take into account in deciding whether the price offered to the public broadcasters was fair or not.

    40. Likewise, it seems to me that the Court of Appeal overstated the uncertainties of "regulation at the point of exercise". Kennedy LJ, for example, said that it would mean that a public broadcaster could require to be given a second (or third) chance to acquire the rights at any time before the broadcast: [2001] 1 WLR 74, 83. The holder of the right would not know whether he could spent money on advertising, would be uncertain as to whether he could recover the price he had paid and so on. All this seems to suppose that unless one altogether excludes from consideration anything which happens after the rights have been acquired, the system is bound to operate in a thoroughly unreasonable way. But this is not the case. The Danish system, for example, enables a pay-TV broadcaster who has acquired exclusive rights to obtain within 14 days an answer as to whether the public broadcasters are interested or not. And one suspects that in practice broadcasters "design around" these formal steps in order to achieve certainty at an even earlier stage. It may be, as the Court of Appeal suggested, that a regulatory system in which a pay-TV broadcaster has to offer to share the rights with a public broadcaster means that any event which the latter wishes to broadcast will be unattractive to the pay-TV broadcaster and that the value of the rights will be depressed. But that is a consequence which inevitably follows from the protection which the Directive was intended to confer upon the public right of access to such events.

    The Danish factor

    41. The decision as to whether article 3a(3) requires that a UK broadcaster should not be allowed to exercise exclusive rights to broadcast an event designated by another member state is, by virtue of section 101B, a matter for the ITC. It is not bound by the decision which the regulator in the other member state would have made. The words "as determined by that other member state in accordance with paragraph 1" at the end of article 3a(3) refer only to the matters which paragraph 1 says are for the determination of the member state, namely designated events and the question of whether the events should be available via whole or partial live coverage or whole or partial deferred coverage.

    42. The ITC's view was that it would accept the Danish law on these matters and also on the question of what amounted to a substantial proportion of the public. Otherwise the decision was a matter for them. That seems to me correct.

    43. The ITC also rejected the suggestion of the Danish Ministry of Culture in a letter of 20 July 2000 that it should have no regard to the terms upon which TVD had acquired its rights. In my view that too was correct. It is true that article 3a(3) speaks of exclusive rights "purchased...following the date of publication of this Directive" by the broadcasters and it was suggested that the article only operates once the rights have been purchased. Of course they have to be purchased in order to be exercised. But that does not mean that the circumstances in which they were purchased are irrelevant to whether they are being exercised "in such a way" as to deprive the public of the possibility of watching the event.

    44. On the other hand, the ITC obviously paid considerable regard to the fact that under the Danish system of regulation, a non-qualifying broadcaster is required to offer to share the rights with public broadcasters who can offer sufficient coverage. Again, this seems to me to be right. The system of reciprocal enforcement created by article 3a requires that regulation should as far as possible be harmonised, so that the rights of the public to watch an event of national importance in a member state should not be affected by whether the broadcaster is in that or another member state. I say "as far as possible" because the ITC also has to have regard to the interests of UK broadcasters. But the regulatory system of each member state has to be approved by the Commission under article 3a(2) and one would therefore not expect its application to be an unreasonable restriction on the rights of broadcasters in other member states.

    45. Any broadcaster in any member state who is considering the purchase of exclusive rights to broadcast in Denmark an event designated under Danish law must, as it seems to me, take into account the Danish system of regulation. That system of regulation will influence the market for such rights in Denmark and prima facie it seems to me right that broadcasters in other member states should have to play by the same rules. That was in my opinion the object which article 3a(3) was intended to achieve. The ITC and Mr Jack Beatson QC correctly interpreted it in that way. In addition, the ITC is entitled to consider that the foreign regulator or arbitral body, such as the Danish Competition Council, acquainted as it is with its national market in television rights, will be best placed to form a view on whether its public broadcasters have refused a reasonable offer at a reasonable price. I would therefore allow the appeal and dismiss TVD's application for judicial review.

LORD HUTTON

My Lords,

    46. I have had the advantage of reading in draft the speech of my noble and learned friend Lord Hoffmann. For the reasons which he gives I also would allow the appeal and dismiss the application for judicial review.

LORD HOBHOUSE OF WOODBOROUGH

My Lords,

    

 
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