Joint Committee on The Draft Communications Bill Minutes of Evidence

Note by the Bill Team on Competition Law and the BBC

  The Committee has asked to what extent the BBC is exempt from the Chapter I and II prohibitions under the Competition Act 1998 by virtue of the general exemption. We assume the reference is to the exclusion in paragraph 4 of Schedule 3 to the Act, for undertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly.

  As a general point, the impact of the BBC's activities on competition within the UK fall within the ambit of the Competition Act to the extent that it is acting as an "undertaking". It would be for the relevant competition authority to consider, case by case, whether in carrying out a particular activity the BBC was acting as an undertaking, that is to say, engaged in an economic activity. For all commercial activities it clearly would be. However, there is EC jurisprudence which would support the view that public service broadcasting may also be regarded as an economic activity for these purposes.

  The relevant competition authority is at present the Office of Fair Trading. The Bill would give OFCOM concurrent powers under the Competition Act, in respect of the communications sector. In common with current practice with respect to other sectoral regulators who have such concurrent powers, the general principle would be that OFCOM will deal with cases in the communications sector. The OFT would however retain power to enforce competition law in that sector if it is better placed to do so.

  The effect of the Act is very broadly to prohibit agreements which restrict or distort competition (Chapter I), and to prohibit abuse of a dominant position (Chapter II). OFCOM will have powers in relation to the communications sector to investigate such anti-competitive activities and to take enforcement action where necessary, including the levying of fines where appropriate.

  It is possible that the public service broadcasting functions of the BBC might fall within the scope of the exclusion in Schedule 3, paragraph 4, though this has not been established in any case decided by the OFT to date. Even if the exclusion were found to apply to particular functions of the BBC, however, the general prohibitions of the Act would still apply to the BBC's conduct, except to the extent that enforcement of the Act would obstruct the performance of these functions. It would not therefore be the case that the exclusion would take the performance of these tasks entirely outside the scope of the Act. Rather it provides a safe harbour for cases where there is no way in which a specific task assigned by government to an undertaking could otherwise be performed without infringing the Act. The extent to which the BBC's conduct was covered by the exclusion would have to be investigated by OFCOM (or the OFT if better placed), taking full account of all the facts relevant to the particular case or complaint under investigation.

May 2002


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