Action without plot The investigation of coordination in the media To insert other ready-formatted pages: go to the insert menu/slides from files/ select ‘on-screen inserts.ppt’ Click the display button, then click the button on the right (marked with red below). Click on the slide(s) to insert then insert and close. Action without plot The investigation of coordination in the media David Aitman BIICL Competition Law Forum, 6 December 2006

The test of a decent competition decision Plot – what plot? The test of a decent competition decision Clear infringement Customer / consumer detriment Remedies that are: fair and proportionate targeted Effective No reason these tests shouldn’t apply to media decisions Several decisions in the media sector seem to have lost the plot

An overview of some recent horizontal media decisions Losing the plot? Spanish films – theatrical distribution terms Pay tv licensing – most favoured nations clauses Merger remedies – Sky Italia Where to from here? Sony/BMG

Minimal analysis of consumer detriment Spanish films No clear infringement Coordination implied from parallel use of rational provisions Failure to take account of lack of parallelism Focus on similarities between insignificant provisions Minimal analysis of consumer detriment No real testing of comparative rates No testing at all of causal effect of alleged coordination and rates No practical remedy – fines don’t address “the issue” Verdict – a poor decision on any measure

Pay tv – most favoured nations clauses No clear infringement “White-listed” in old-style block-exemptions Arguably a proportionate response to dominant purchaser No clear consumer detriment No proof that provisions led to price increases Real possibility that provisions led to lower prices Inappropriate remedy Commission adopted a “who blinks first” settlement Verdict Commission ignored the real issue – BSkyB’s market power Commission reached a poor, inequitable settlement

Sky Italia and – looking ahead - music Approval of monopoly of Italian pay broadcasters At cost of regulating and coordinating terms of content licences Verdict – again an irrational attack on terms of licensors Sony/BMG Is the sector – or is it not – subject to tacit collusion? If it is – what will be impact on manner in which majors do business? Verdict - open

Conclusion Why is there Is there Has the agenda moved on? a “lack of plot” a history of some poor decision taking Is there a special focus on the media a belief – mistaken or otherwise – about an MPA conspiracy Has the agenda moved on? Would this slide be more aptly titled “Lack of Conclusion”…

© Freshfields Bruckhaus Deringer 2006 This material is for general information only and is not intended to provide legal advice. 1168243v1