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The following is issued on behalf of the Broadcasting Authority:
The Broadcasting Authority (BA) today (September 23) announced the findings of the investigation into three competition complaints on sports broadcasting rights received in 2002 and 2003.
Having carefully considered the submissions made by the contending parties and the views of competition consultants, the BA decided that the three complaints were unsubstantiated.
Details of the three complaints are as follows:
Case 1: Hong Kong Cable Television Limited (HKCTV)'s complaint against the joint acquisition of sports rights by Asia Television Limited (ATV) and Television Broadcasts Limited (TVB)
In July 2002, HKCTV lodged a complaint about two agreements between ATV and TVB for the joint acquisition of free terrestrial television broadcast rights for the FIFA World Cup from 2002 to 2010 and the Olympic Games from 2004 to 2012 (the ATV-TVB Agreements).
HKCTV exclusively acquired, under a licence agreement, the rights to broadcast the 2002 FIFA World Cup matches from the rights holder. Pursuant to the obligations under the licence agreement, HKCTV was required to sub-license the rights to four core matches and highlights (the Core Rights) to a free-to-air broadcaster in Hong Kong. When HKCTV attempted to negotiate with ATV and TVB to on-sell the Core Rights to the higher bidder, it was confronted with a joint bid as the result of the ATV-TVB Agreements.
HKCTV alleged that the conduct of ATV and TVB in entering into the ATV-TVB Agreements had the purpose and effect of preventing, distorting and substantially restricting competition in the television programme service market in Hong Kong and was therefore in breach of section 13 of the Broadcasting Ordinance (Cap.562) (BO).
In accordance with the procedures laid down in the Competition Investigation Procedures published in 2001, and after taking into account the representations by the parties, the BA considered that:
(a) HKCTV's principal complaint, namely, that competition in the licensing of the broadcasting rights for both events (the World Cup and the Olympic Games) was impaired and that HKCTV was financially disadvantaged (for having received a significantly reduced sub-licence fee from ATV and TVB) cannot be accepted. The markets for the licensing of the broadcast rights for the two aforesaid events do not fall within the legal meaning of "television programme service market" as used in section 13(1) of the BO which is the downstream market.
(b) The ATV-TVB Agreements do not have the purpose of preventing, distorting or substantially restricting competition as there is only limited effect on competition between ATV and TVB in the television programme service market through coordination of programming output. The Agreements concerned only affect programming shown over approximately four weeks every two years for both events - the World Cup and the Olympic Games.
(c) There is no evidence of any general facilitation of collusion beyond the terms of the ATV-TVB Agreements, and the actual implementation thereof.
The BA therefore concluded that ATV and TVB had not breached section 13 of the BO by entering into the Agreements. An executive summary detailing the reasons for the conclusions reached is enclosed.
Case 2: TVB's cross complaint against HKCTV's acquisition of exclusive right to 2002 FIFA World Cup
TVB wrote to the BA in May 2003 alleging that HKCTV had acquired the exclusive broadcast rights (covering both pay and free terrestrial television) for matches of the 2002 FIFA World Cup and the conduct was anti-competitive, contrary to section 13 of the BO.
The BA has completed its preliminary inquiry and has concluded that there is no ground to find HKCTV's conduct to be anti-competitive. In coming to this conclusion, the BA has taken into consideration the following important factors:¡V
(a) Exclusivity is a commonly accepted commercial practice in the broadcasting sector. For pay television broadcasters, exclusivity of broadcasting certain programmes could enable them to compete with and differentiate from free-to-air broadcasters.
(b) The scope of the broadcast rights is limited. It affects only less than a month's worth of television programming over a four-year period.
(c) As HKCTV is under a sub-licensing obligation to sub-license the core matches and highlight programmes to free-to-air broadcasters, its bargaining power with ATV and TVB is not strong.
Case 3: TVB's complaint against HKCTV's acquisition of free television broadcasting right to Spanish League
The BA received a complaint lodged by TVB in September 2003 alleging that the conduct of HKCTV in acquiring free terrestrial television broadcasting rights in Hong Kong for the matches of Spanish League from 2003/04 to 2005/06 was anti-competitive, detrimental to the mass audience who were interested in watching the matches, and in breach of section 13 of the BO.
The BA has completed its preliminary inquiry and has concluded that HKCTV had not breached section 13 of the BO in acquiring exclusive rights to the Spanish League. In coming to this conclusion, the BA has taken into consideration the following important factors:¡V
(a) Exclusivity is a commonly accepted commercial practice in the broadcasting sector.
(b) The scope of the broadcast rights is limited. Free-to-air broadcasters are only interested to secure the rights to key matches of the Spanish League (i.e. no more than 10 matches per season) and in the end, the rights in question were sub-licensed to ATV.
A spokesman for the BA said, "Since the competition provisions in the BO came into effect in February 2001, the BA has received four competition complaints in 2002/2003 and considered that only one complaint, lodged by HKCTV on the joint acquisition of sports rights by ATV and TVB, contained sufficient grounds for the BA to proceed with full investigation."
"In all its investigations, the BA has proceeded with circumspection and, where necessary, worked with competition consultants from comparable overseas jurisdictions in the cases. The BA has now completed the investigations. Given the similarity of the nature of the three competition complaints relating to the sports broadcasting rights, the BA decided to announce the outcomes of the complaints in one go," the spokesman added.
The investigation reports on the three competition complaints, less any confidential material, are available on BA's website: http://www.hkba.org.hk/hkba/en/tv/competition/complaint_cases.html.
Ends/Thursday, September 23, 2004
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