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Topic # 131079 8-Oct-2013 10:08
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Commerce Commission issues warning to Sky

The Commerce Commission has issued Sky Network Television Ltd (Sky) with a warning that it believes certain provisions in Sky’s contracts with telecommunications retail service providers (RSPs) are likely to have previously breached section 27 of the Commerce Act 1986 (the Commerce Act).

Issued 8 October 2013
Release No. 26

The Commerce Commission has issued Sky Network Television Ltd (Sky) with a warning that it believes certain provisions in Sky’s contracts with telecommunications retail service providers (RSPs) are likely to have previously breached section 27 of the Commerce Act 1986 (the Commerce Act).

The Commission issued Sky with a warning after its investigation found that currently those provisions are unlikely to have the effect of substantially lessening competition and are unlikely to cause harm in the future. However the Commission has put Sky on notice that it will continue to monitor Sky’s contracts and conduct. It will take no further action at this time in relation to the historical breaches.

Commerce Commission Chairman Dr Mark Berry said the Commission had investigated Sky’s contracts with RSPs thoroughly and says this was the most efficient course of action to take.

“We believe that Sky entered into historical agreements with RSPs that had the purpose, effect, or likely effect of substantially lessening competition.”

“However due to market developments, the key commitments Sky has with RSPs are unlikely to continue to have the same effect. For example the new sports pay TV product from Coliseum and the recent exemption granted by Sky to Telecom to market this product. ” Dr Berry said.

“As a consequence, a warning letter and notice that we will continue monitoring Sky’s contracts and conduct was the prudent course of action,” Dr Berry said.

“However, if evidence is brought to the Commission’s attention that competition is, or is likely to be substantially lessened, we will take the necessary enforcement action to remedy the situation and ensure that the long term interests of consumers are protected. In this respect we reserve the right to draw the warning letter that has been sent to Sky, to the attention of a court in any subsequent proceedings against Sky.”

“A case like this could take several years to conclude, costing several million dollars and finish in an era that is likely to be vastly different to the one we lived in when this breach occurred,” said Dr Berry.

As part of the investigation, the Commission also concluded that Sky’s contracts with content providers were not likely to have breached the Commerce Act. There appeared to be sufficient content of all types available outside of Sky’s exclusive contracts to put together an appealing pay TV package. These contracts were similar in nature to other broadcaster contracts with content providers.

A detailed report outlining the Commission’s investigation and findings will be published shortly, once it has discussed confidentiality with relevant parties.

The Commission’s decision does not stop other parties from taking their own private action.

A copy of the warning letter to Sky can be viewed at http://www.comcom.govt.nz/business-competition/competition-enforcement-outcomes/commerce-act-enforcement-actions-register/

Background
Under section 27 of the Commerce Act it is illegal to "enter into a contract or arrangement, or arrive at an understanding, containing a provision that has the purpose, or has or is likely to have the effect, of substantially lessening competition in a market."

Section 27 also prohibits giving effect to such a contract, arrangement or understanding. In other words, both entering into and giving effect to such an agreement is illegal.




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  Reply # 909708 8-Oct-2013 10:15
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"“We believe that Sky entered into historical agreements with RSPs that had the purpose, effect, or likely effect of substantially lessening competition.”

“However due to market developments, the key commitments Sky has with RSPs are unlikely to continue to have the same effect. For example the new sports pay TV product from Coliseum and the recent exemption granted by Sky to Telecom to market this product. ” Dr Berry said."



so because it happened a couple of years ago, Sky gets off scott free?

since when is that an excuse? (especially because the main reason for the time delay is that the comcom have taken so bloody long to do their investigation)

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  Reply # 909709 8-Oct-2013 10:17
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The actual issues at hand are listed in sections 15 and 16 of the PDF.

 
 
 
 


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  Reply # 909727 8-Oct-2013 10:57
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What was 22.2 and why was it redacted? Apparently it's one of the reasons that Sky's key commitment provisions lessened competition, but the Commerce Commission won't say what that reason was to us...?

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  Reply # 909751 8-Oct-2013 11:36
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Didn't agreements with RSPs actually result in a reduction in costs? I know when I moved a few years back and went from phone broadband and SKY on TelstraClear to seperate between Telecom and SKY I had to pay more for same.

The problem I see is that although the commerce commission is all for competition in content and PAYTV those areas don't lend themselves well to competition in small markets. The consumer in a lot of cases will end up paying more.

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  Reply # 910048 8-Oct-2013 19:47
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Sky is a provider of non-essential entertainment services, in competition with every other entertainment provider. I for one object my taxpayer dollars funding an investigation into competition in a market for non-essential services with a large number of competing players.

The inalienable human right to watch the All Blacks play on TV is political pandering to distract us from the real lack of competition and rorts in more critical markets. I'm talking about markets for food (dairy, supermarket fruit and veg), housing (building products and land avaialability) and warmth (electricity)

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  Reply # 911268 9-Oct-2013 11:11
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hashbrown: Sky is a provider of non-essential entertainment services, in competition with every other entertainment provider. I for one object my taxpayer dollars funding an investigation into competition in a market for non-essential services with a large number of competing players.

The inalienable human right to watch the All Blacks play on TV is political pandering to distract us from the real lack of competition and rorts in more critical markets. I'm talking about markets for food (dairy, supermarket fruit and veg), housing (building products and land avaialability) and warmth (electricity)


Except that there is not a large number of competing players in the, as you say, "non-essential entertainment market".  In fact, there is zero competition - which is a sign that the market is broken.

And you've made the mistake of assuming you are the only taxpayer in New Zealand.  There are millions of taxpayers, many of whom are Sky subscribers who would love to jump ship to competition - if there were any.  And let's not forget that any competition that were established as a result of action against Sky would also be taxpayers.  And to top it all off - the Commerce Commission's job is to shatter monopolies in any market - not just "markets that hashbrown considers worthy of his or her taxpayer dollars being spent on".

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  Reply # 911271 9-Oct-2013 11:20
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Kyanar: 
Except that there is not a large number of competing players in the, as you say, "non-essential entertainment market".  In fact, there is zero competition - which is a sign that the market is broken.

And you've made the mistake of assuming you are the only taxpayer in New Zealand.  There are millions of taxpayers, many of whom are Sky subscribers who would love to jump ship to competition - if there were any.  And let's not forget that any competition that were established as a result of action against Sky would also be taxpayers.  And to top it all off - the Commerce Commission's job is to shatter monopolies in any market - not just "markets that hashbrown considers worthy of his or her taxpayer dollars being spent on".


I'd argue that there is a large number of competing players in the "non-essential entertainment market" - they may just not all offer identical types of entertainment. No, there is not a significant level of competition in NZ for subscription TV for specific types of programme (like specific sport events), but there are options for TV - Sky, Freeview, Igloo etc. There are also plenty of streaming-based services (although some may not be NZ-based), plus the likes of iTunes, Fatso etc. So there certainly is not zero competition for audio-visual entertainment.

If you were to say there's zero competition for providers of live All Blacks games or something, perhaps. But then, it's not necessarily the service providers fault if, for example, the content rights holder sells exclusive rights.

That said, I agree that the comcom need to investigate any sort of market monopoly to ensure it is not a breach of any regulations or laws etc.

And as for the original topic, it seems to me from reading the linked document, the issue is more around Sky not permitting it's retail partners to sell or promote it's competition. But I think you'll find this is fairly common in a number of industries - supply agreements based on not selling competition products (for example, how many restaurants serve both Pepsi and Coke?).

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  Reply # 911280 9-Oct-2013 11:32
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Kyanar: Except that there is not a large number of competing players in the, as you say, "non-essential entertainment market".  In fact, there is zero competition - which is a sign that the market is broken.


I'd argue Sky compete for a general entertainment dollar.  Their competitors, are Microsoft, Sony, Apple, Milton Bradley, Penguin, Video Ezy, your local theatre company, your local touch rugby team, or buying a tennis racket. But the bottom line is, if you don't like what is on TV TURN IT OFF.  Your health, wealth education and comfort levels won't change, and may actually get better.

Kyanar: And you've made the mistake of assuming you are the only taxpayer in New Zealand.  There are millions of taxpayers, many of whom are Sky subscribers who would love to jump ship to competition - if there were any.  And let's not forget that any competition that were established as a result of action against Sky would also be taxpayers.  And to top it all off - the Commerce Commission's job is to shatter monopolies in any market - not just "markets that hashbrown considers worthy of his or her taxpayer dollars being spent on".


I appreciate my views are my own, but they are views I am not seeing expressed, so I am sharing them.  I just find it frustrating that their are far more important issues out there that are being overlooked for something I consider a triviality.  My argument again is that Sky is in a competitive entertainment market.  TV is but one option in that market.

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  Reply # 911311 9-Oct-2013 12:31
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hashbrown: 

I appreciate my views are my own, but they are views I am not seeing expressed, so I am sharing them.  I just find it frustrating that their are far more important issues out there that are being overlooked for something I consider a triviality.  My argument again is that Sky is in a competitive entertainment market.  TV is but one option in that market.


I disagree.  There have been many post in this NG over the past year about Sky preventing other providers  from providing the likes of HBO content here and other TV programs  or try to watch the Breakers basketball on the ANBL site and  your told to go away as Sky has the rights..

No one else I suspect will not be able to provide competitive product in NZ without some form of Gov regulation..




Regards,

Old3eyes


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  Reply # 911324 9-Oct-2013 12:51
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old3eyes:
hashbrown: 

I appreciate my views are my own, but they are views I am not seeing expressed, so I am sharing them.  I just find it frustrating that their are far more important issues out there that are being overlooked for something I consider a triviality.  My argument again is that Sky is in a competitive entertainment market.  TV is but one option in that market.


I disagree.  There have been many post in this NG over the past year about Sky preventing other providers  from providing the likes of HBO content here and other TV programs  or try to watch the Breakers basketball on the ANBL site and  your told to go away as Sky has the rights..

No one else I suspect will not be able to provide competitive product in NZ without some form of Gov regulation..


Missing the point entirely.  So you can't watch Game of Thrones or a sports game. Why is that a matter of national importance?  Read the books or go watch your local team play for your basketball fix.  TV competes for an entertainment dollar.  That is why it has seasons, as providers know at certain times of the year, people are more likely to chose other forms of entertainment.

I'm asking you to consider "Is TV really that important that you can't just take your entertainment dollar elsewhere?" 

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  Reply # 911328 9-Oct-2013 12:57
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hashbrown:
old3eyes:
hashbrown: 

I appreciate my views are my own, but they are views I am not seeing expressed, so I am sharing them.  I just find it frustrating that their are far more important issues out there that are being overlooked for something I consider a triviality.  My argument again is that Sky is in a competitive entertainment market.  TV is but one option in that market.


I disagree.  There have been many post in this NG over the past year about Sky preventing other providers  from providing the likes of HBO content here and other TV programs  or try to watch the Breakers basketball on the ANBL site and  your told to go away as Sky has the rights..

No one else I suspect will not be able to provide competitive product in NZ without some form of Gov regulation..


Missing the point entirely.  So you can't watch Game of Thrones or a sports game. Why is that a matter of national importance?  Read the books or go watch your local team play for your basketball fix.  TV competes for an entertainment dollar.  That is why it has seasons, as providers know at certain times of the year, people are more likely to chose other forms of entertainment.

I'm asking you to consider "Is TV really that important that you can't just take your entertainment dollar elsewhere?" 


"Is milk really that important you can't take your grocery dollar elsewhere?"

Nobody needs to drink cows milk or eat cheese.   


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  Reply # 911337 9-Oct-2013 13:08
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old3eyes,

How can the government regulate the selling of overseas content such as a TV programme made by HBO?

I could understand if they said that an event that is in the national interest had to be on FTA or mutliple platforms but a 'fanatasy TV programme' such as GoT?

Them telling HBO that they couldn't sell that product to whomever they wanted wouldn't go down very well. It may be better for HBO's income if they sold it only to SKY as gauranteed income.

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  Reply # 911378 9-Oct-2013 14:05
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hashbrown:
old3eyes:
hashbrown: 

I appreciate my views are my own, but they are views I am not seeing expressed, so I am sharing them.  I just find it frustrating that their are far more important issues out there that are being overlooked for something I consider a triviality.  My argument again is that Sky is in a competitive entertainment market.  TV is but one option in that market.


I disagree.  There have been many post in this NG over the past year about Sky preventing other providers  from providing the likes of HBO content here and other TV programs  or try to watch the Breakers basketball on the ANBL site and  your told to go away as Sky has the rights..

No one else I suspect will not be able to provide competitive product in NZ without some form of Gov regulation..


Missing the point entirely.  So you can't watch Game of Thrones or a sports game. Why is that a matter of national importance?  Read the books or go watch your local team play for your basketball fix.  TV competes for an entertainment dollar.  That is why it has seasons, as providers know at certain times of the year, people are more likely to chose other forms of entertainment.

I'm asking you to consider "Is TV really that important that you can't just take your entertainment dollar elsewhere?" 


It's a matter of national importance to the Commerce Commission to investigate all monopolies, not just the ones you think are important.  Sky is objectively speaking a monopoly in the Pay TV market.  Not because the market has a high barrier to entry, but because everyone who has ever attempted to compete with them has given up - often after a shiny new wholesale agreement with Sky has been inked (cough, TelstraClear).  That's pretty much the definition of a monopoly.  Hence, they get investigated.

Much though you dislike the price of milk, there is no monopoly.  If you don't want to pay $3 for a 2 litre of milk, go to Nosh and pay $5 for two 2 litre bottles.   There is nothing for the Commerce Commission to investigate there.

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  Reply # 911407 9-Oct-2013 14:53
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Kyanar: It's a matter of national importance to the Commerce Commission to investigate all monopolies, not just the ones you think are important.  Sky is objectively speaking a monopoly in the Pay TV market.  Not because the market has a high barrier to entry, but because everyone who has ever attempted to compete with them has given up - often after a shiny new wholesale agreement with Sky has been inked (cough, TelstraClear).  That's pretty much the definition of a monopoly.  Hence, they get investigated.


All government departments prioritise the usage of their finite resources, as provided to them by the NZ taxpayer. The ComCom doesn't investigate all monopolies, and I am guessing their criteria is largely based on the economic size of the market involved.  Although I admit to being a cynical and beleiving in this case, punching Sky on the nose, wins quick political points.

Based on that Sky would be in scope, but I'm suggesting the ComCom's criteria for investigation should be different.  Given that criteria is set by their political masters, who we all vote for, why am I not allowed to suggest that it be changed?



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  Reply # 911415 9-Oct-2013 15:05
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NonprayingMantis: "Is milk really that important you can't take your grocery dollar elsewhere?"

Nobody needs to drink cows milk or eat cheese.   



Your comparing a source of nutritional protien with TV.

It's about priorities.

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