Virgin Media Makes Good On Legal Action Threat Against Sky

by Robin Pilgrim, LawAndTax-News.com, London

16 April 2007

It emerged last Thursday that Virgin Media had followed through with its threat to launch legal action against rival broadcaster Sky unless the dispute between the two firms was resolved in a timely fashion.

Virgin Media announced last month that following Sky's withdrawal of its basic channels from the Virgin Media TV service, it would pursue action in the high court if the carriage dispute was not resolved within 30 days.

Historically, Sky and Virgin Media have each retailed the other's channels to their customers: Virgin Media TV channels, such as Living and Bravo, have been retailed by Sky to its customers; and Sky's basics channels have been retailed by Virgin Media to its customers.

However, alleges Virgin, in the past few months, Sky sought to increase the price for its basic channels, whilst cutting the price it paid for Virgin Media TV's channels, a state of affairs which led to the loss by Virgin Media customers of several of the main Sky channels.

According to the group, owned by Richard Branson:

"Virgin Media is challenging the pay TV giant for its abuse of dominance."

"The remedies sought will include supply of Sky's basic channels at a reasonable commercial rate, as well as fair payment for Sky's carriage of Virgin Media TV channels, such as Living and Bravo. Virgin Media will also seek damages if the dispute is not resolved."

As good as its word, Virgin Media last week filed legal proceedings in the High Court aimed at resolving the dispute with Sky.

The proceedings are based on Section 18 of the UK Competition Act 1998 and Article 82 of the EC Treaty, both of which prohibit a company from abusing its dominant position.

According to Virgin, Sky, which accounts for almost 70% of the country's Pay TV subscribers, is dominant in the UK Pay TV market and has engaged in a strategy to stifle competition by using its dominance against Virgin Media.

Commenting last week on the legal proceedings, Virgin Media CEO Steve Burch explained that:

"This dispute is one very specific example of how UK consumers are being denied the benefits of a diverse, dynamic and competitive pay TV market. Litigation is obviously a serious step and a last resort but we are determined to have these issues resolved as quickly and fairly as possible."

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