Europe turns away BSkyB complaints

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The European Commission is to take no action on a formal complaint lodged by three UK cable companies against BSkyB, the satellite broadcaster, according to Commission sources.

The decision will come as a blow to Videotron, General Cable and CableTel, which had complained to the Commission and the Office of Fair Trading about BSkyB's "abuse of dominant position" in its supply of television programming to cable companies.

The Commission last week sent a routine letter to BSkyB, with a copy of the original complaint, requesting a response on the issues raised by the end of July. However, a spokesman for the competition directorate in Brussels said: "It is our view that this is essentially a British matter, to be resolved in Britain. . . there is no risk of any spillover into other European countries."

According to lawyers for the three cable companies, the Commission has been asked "to suspend anti-competitive conditions" set by BSkyB in its supply of programmes for broadcast on cable.

The three are particularly upset about programme supply contracts signed by BSkyB, 40 per cent owned by Rupert Murdoch's ews Corporation, and the two largest cable companies, Telewest and ynex CableComms. Under the terms of the contracts, the satellite broadcaster has agreed to supply programmes at a fixed price over a fixed term, in exchange for an undertaking that the cable companies will not compete with BSkyB in the provision of certain film and sports programming.

The undertaking dashed the cable industry's hopes of developing a new stream of programming to entice customers to sign up for cable.

The OFT last month ordered the signatories to reconsider the "anti-competitive" clauses of their contracts by 19 July. However, the three complaining cable companies have said that watering down the restrictive clauses is not enough, and have called on the OFT to launch a full-scale investigation into BSkyB's "unfair" pricing practices.

They had hoped that pressure from Brussels might help widen the investigation, and eventually force BSkyB to alter its policies.

Gavin Roberts, a lawyer for the three cable companies, criticised BSkyB's practice of pegging the price at which it sells programming for cable to 65 per cent of the price paid by BSkyB's direct-to-home satellite customers. As well, he is concerned about the "penalties" he says are applied when cable companies do not take BSkyB's full package of programming.

BSkyB has rejected the complaints, but is discussing new terms with ynex and Telewest regarding their long-term supply contracts. General Cable and Comcast, which jointly manage some franchises with the two leaders, have been offered similar contract terms by BSkyB.