Legal advice: Sky high

Related tags Contract Abuse Public house

Are the days of watching your team play at the local numbered?By James Nguyen of thePublican.com's team of legal experts from London solicitors...

Are the days of watching your team play at the local numbered?

By James Nguyen of thePublican.com's team of legal experts from London solicitors Joelson Wilson.

With BSkyB's recent annual price hike of an average 20 per cent for pubs and clubs, many a publican has expressed his or her concern, if not downright disgust, at the impact it will have on their ability to show sporting events such as football to customers. This recent increase amounts to a staggering 239 per cent since 1996, according to Vince Healey of the Association of Licensed Multiple Retailers (ALMR).

So will the price increases result in people not being able to watch their team play at the local pub? If you ask Mark Hastings of the British Beer & Pub Association (BBPA), in the weeks preceding mid-August, approximately 140 pubs cancelled their subscription to BSkyB. According to the BBPA, there has been no increase in what BSkyB pays to broadcast the football, nor is there any provision in the future contract for any material increase. One wonders, then, about the reasons behind the price hike.

BSkyB remains unapologetic about the price rise. It says that the decision to continue screening sporting events such as football is purely commercial. There can be no doubt that the screening of football matches often brings more patrons into pubs.

With two competing arguments, as is often the case, a third party's ruling was sought. The BBPA in conjunction with the Federation of Licensed Victuallers Associations sent a combined letter to the Office of Fair Trading (OFT), requesting an investigation into BSkyB's monopoly over live football.

This is nothing new. The OFT was called in back in July 2003 when the ALMR complained about BSkyB's pricing of its premium channels for showing in pubs and clubs, citing a breach of Chapter II of the Corporations Act 1998. On 30 March 2004, the OFT closed the case against BSkyB, refusing to conduct a formal investigation. This decision was made after the OFT conducted a two-stage test in which an assessment is made as to whether an undertaking is dominant in a relevant market and then whether it has abused that dominant position. The OFT could not establish that BSkyB's actions amounted to abuse, stating that, while the prices may be consistent with situations of excessive pricing, it did not suggest an unlawful abuse on its own. The OFT then examined BSkyB's contract terms and concluded that there was no attempt to tie in customers and therefore the contract was unlikely to be abusive within the meaning of Chapter II.

An examination of the terms and conditions of BSkyB's contract for pubs and clubs reveals that any increase in the price is to be preceded by 30 days' notice from BSkyB.

Should a price increase be announced by BSkyB, the publican has the right to terminate the contract immediately or up to 29 days after the announcement. As such, there is no direct coercion from BSkyB to accept the new price; it is a commercial decision dependent upon viability.

So does this price increase spell the end of Sunday afternoon football at the local? It really depends on the size of the pub (as the price for live football is size-dependent) and whether the licensee believes that the business it creates justifies the increase in price.

Related topics Legislation

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