22 December 2005

Competition and IP Interface: Two Old Case Notes and One New

Mr Justice Etherton's judgment in Attheraces Ltd and another v British Horse Racing Board and another [2005] EWHC 3015 (Ch) (21 Dec 2005) appeared on the BAILII website just as I was updating and transposing two older case notes on the Antitrust/IP Interface.

Old Case Notes
The first of those two old case notes was the Commission's decision in the IFPI Simulcasting Exemption. Since the exemption was for a very short period and it was granted under Reg 17 which has now been repealed it is largely of historical importance. The second case note, the Court of Appeal's decision in Intel Corporation v Via Technologies Inc. and others [2002] EWCA Civ 1905 (20 Dec 2002) is very much of current interest. It is an example of a Euro-defence that does work in contrast to Sportswear Company Spa and another v Ghattaura (t/a "Gs3") [2005] EWHC 2087 (Ch) (3 Oct 2005 which did not and which I mentioned here in "Euro Defences: Another one bites the Dust" on 6 Oct 2005.

New Case Note
The new case is Attheraces. This was a claim by a provider of TV footage, sound commentary and other content to broadcasters and website owners against the owner of a massive database of race meetings, runners, times and similar information for an injunction, declaration and other relief to restrain an abuse of a dominant position under art 82 of the Treaty of Rome and s.18 of the Competition Act 1998. The alleged abuse was "excessive, unfair and discriminatory pricing by the defendants.

The judge found for the claimant content providers. The product supplied by the defendants was UK pre-race data, that is to say dates, times, entrants and other pedestrian data and nothing more. He rejected the defendants' contention that it represented
"the ability to create value from the whole show of British racing"
or that it was a bundle comprising both British pre-race data and British racing pictures. The relevant product market was the market for the supply of UK pre-race data to those in the horse racing industry that required such information for the services they provide their customers (in particular bookmakers and producers of TV channels or internet sites relating to horse racing). The geographical extent of that product market, for the purposes of these proceedings, was all countries outside the UK and Ireland.

The defendant horse racing board was dominant in that market. It had abused its market dominance by threatening to terminate the supply of pre-race data to the claimant even though the claimant was an existing customer of the board and pre-race data was an essential facility controlled by the defendant, without which the claimant would be eliminated from the market. There was no objective justification for such conduct. It was irrelevant that the parties were not competitors.

The defendants sought to justify their proposals as to price as being reasonable charges on the claimant's overseas customers who would otherwise be "free riders" but his lordship did not consider that to be a correct description of them as a matter of substance or form. Further the prices proposed prior to the commencement of the proceedings were unfairly excessive, and also discriminated unfairly against the claimant. Further, the defendants continued to insist, until after the commencement of the proceedings, that the claimant enter into an intellectual property licence from the defendants, even though the use by the claimant would not infringe any intellectual property right of the defendants.

The prices specified from time to time were excessive and unfair, and so an abuse of the defendant's dominant position in the market, because they were significantly in excess of the economic value of the pre-race data and not otherwise justified. The economic value of the data is to be measured, on the facts of the case, by the cost of producing the database (about £5m) together with a reasonable return on that cost. The proposed charges were so far in excess of any justifiable allocation of that amount as to be plainly excessive. They were not justified by any application of the economic principle of pricing.

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