BSkyB May Face Legal Claim From ONdigital

by Robin Pilgrim, LawAndTax-News.com, London

19 August 2003

Rupert Murdoch's BSkyB satellite TV group may be facing a legal challenge from its bankrupt former rival, ONdigital over claims that the former company engaged in anti-competitive practices when determining the wholesale prices of its premium channel offerings to other distributors.

Although BSkyB is one of the major creditors of the collapsed ITV venture, and has argued that it is owed some £38 million for the provision of Sky channels, an Independent report at the weekend suggested that ONdigital's liquidators, Grant Thornton, have not ruled out the possibility of legal action against BSkyB over its alleged 'margin squeeze' tactics.

However, a Grant Thornton spokesman told the Sunday newspaper that no action would be taken without the sanction of the creditor's committee, which is meeting with the firm this week to discuss its options.

A recent refusal by the UK's Office of Fair Trading (OFT) to re-evaluate its decision with regard to the allegations of anti-competitive behaviour made by ONdigital and NTL will no doubt have heartened the BSkyB management, however.

In its decision, published earlier this month, the OFT announced that:

'On 17 December 2002, the Director General of Fair Trading, following investigation under the Competition Act 1998, decided that there were insufficient grounds to find that British Sky Broadcasting Limited had abused a dominant position by exercising a margin squeeze on distributors of its premium channels, or by offering those channels in mixed bundles, and that it had not infringed the Chapter II prohibition by offering certain discounts with regards to those premium channels.'

'The Office of Fair Trading, which succeeded the Director General of Fair Trading on 1 April 2003, now rejects two applications to vary that decision.'

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