The Office of Fair Trading announced yesterday that it is to investigate the British Horseracing Board's supply of pre-race data to internet betting sites, which is also the subject of a legal dispute between the BHB and William Hill, the bookmaker. Should the OFT decide that the BHB has abused its position as the sole supplier of information on runners and riders, the implications both for the Board itself and racing as a whole could be considerable.
The imminent deal with the Go Racing syndicate over the sale of racing's media rights, as well as plans to replace the current system of funding the sport via the Levy, could both be affected by the investigation. The BHB, meanwhile, could face substantial fines if it is found to have misused its monopoly on pre-race data.
The investigation is the result of a complaint by William Hill, which is preparing to appeal against a ruling by Mr Justice Laddie in the High Court in February, which allowed the BHB to levy a charge of one per cent of turnover on the bookmaker for the use of pre-race data on the its internet site. Hills argues that the BHB is abusing its position as sole supplier of information to extract an excessively high price for its product. Following preliminary enquiries into the complaint, the OFT said yesterday that it had reasonable grounds to suspect that the BHB had infringed Chapter II of the Competition Act, 1998. Chapter II prohibits the "abuse by one or more undertakings of a dominant position in a market which may affect trade within the UK." The maximum fine for a breach of the Act is 10 per cent of annual UK turnover.
The BHB's plan to raise money from the sale of its pre-race data now faces two obstacles. The appeal against the ruling by Mr Justice Laddie, which will be heard in the week beginning 16 July, will decide whether the BHB has any rights to sell (although the case could yet proceed still further, to the European Court of Justice). Even if the BHB wins there, however, the OFT may rule that its charge of one per cent of turnover is excessive.
The great worry for the BHB beyond the possibility of a financial penalty is that the sale of pre-race data rights is a pivotal part of its plans to replace the Levy system. Any decision which significantly reduced the value of those rights could mean that the BHB's work over the last two years to find a new system would have been wasted. Indeed, a continuation of the Levy system might suddenly appear to be an attractive who knows, perhaps even the only alternative.
William Hill, to no-one's surprise, were delighted by yesterday's announcement. "All we want to put on our internet site is a list of runners and riders," David Harding, Hill's chief executive, said yesterday. "We don't put that information on the site until it's already been in the public domain for several hours, it's the tiniest part of what's in the BHB's database, and yet what they're seeking to charge us represents a very substantial part of our profits.
"We were forced to sign their licence, because if we hadn't and we'd lost the case, we'd have had to take our website down. One per cent of turnover relates to between 10 and 15 per cent of our profit before expenses, which is an awful lot for low-grade information which is already in the public domain, and which they sell to newspapers for a fraction of that."
The BHB held a board meeting yesterday in preparation for its annual general meeting in London tomorrow. A replacement for the Levy scheme and the Go Racing contract which includes a licence payment to the BHB the eventual level of which may now be decided by the OFT were among the items on the agenda.
While yesterday's announcement was not unexpected, its timing could certainly have been better. The BHB issued a statement in which Tristram Ricketts, its general secretary, noted that "the OFT press release emphasises that no assumption should be made at this stage that there has been an infringement."
The statement also said that since the BHB "has not seen the precise terms of the complaints, we cannot comment in detail," adding that the Board "will of course co-operate fully with the OFT in their investigation, and remains confident that we will be able to satisfy them that we are acting within the provisions of the Competition Act."
The investigation will take several months to complete. Those involved, however, will await the result as eagerly as a punter with one leg still to come in a life-changing Yankee.Reuse content