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From 1 April 2014 the Competition Commission is abolished and its functions transferred to the Competition and Markets Authority (CMA). There will be no further updates to this website after 31 March.

The Competition and Markets Authority (CMA) brings together the Competition Commission (CC) and the competition and certain consumer functions of the OFT. The CMA takes on its full powers and responsibilities on 1 April 2014.

CC finds more choice for consumers in pay-TV movies

23 May 2012

In its revised provisional findings published today as part of the Movies on Pay TV investigation, the Competition Commission (CC) finds that Sky Movies no longer provides Sky with a material advantage over its rivals in the pay-TV retail market.

Whereas in the past consumers wanting to watch recent movies on a pay-TV movie service had to subscribe to Sky Movies through a traditional pay-TV platform, the launch of new and improved movie services in the pay-TV market by Netflix and LOVEFiLM means that they now have other alternatives. The CC expects consumer choice to increase further when Sky launches its own Internet-based service in the summer (branded Now TV), which will offer Sky Movies without the need to take any other pay-TV content or subscribe to Sky’s satellite platform.

The CC has also revised its views on the relative importance consumers attach to seeing recent movie content within a pay-TV movie service compared with other service attributes, finding that the range of content offered and the price are as, if not more, important than recency. The revised provisional findings are available here.

This is a reversal of the CC’s original provisional finding published in August 2011 but reflects the evidence now available. In particular, Netflix launched in the UK in January 2012 and, since the original provisional findings, LOVEFiLM has enhanced significantly its Internet-distributed movie offering.

Although Sky currently holds the rights to the movies of all six major Hollywood studios in the first subscription pay-TV window (FSPTW), LOVEFiLM and Netflix have already acquired the FSPTW rights of several other studios (responsible for movies such as the Twilight series and the recently-released The Hunger Games) and rights to movies of many of the major studios in subsequent pay-TV windows. These competitively-priced services, distributed over the Internet to computers, TVs and many other devices, offer a wide range of movies and both the range and recency of the content they offer will increase further as more movies become available under existing licensing agreements. The CC has found that, as rival services increase the number of their subscribers, the barriers to them acquiring further FSPTW rights will continue to fall.

Laura Carstensen, Chairman of the Movies on Pay TV market investigation, said:

'Competition between providers of movie services on pay TV has changed materially and, as a result of these changes, consumers now have much greater choice. LOVEFiLM and Netflix offer services which are attractive to many consumers and they appear sufficiently well resourced to be in a position to improve the range and quality of their content further. Moreover, Sky is about to offer Sky Movies on Now TV, which will make Sky Movies available unbundled from other pay-TV content and not requiring a subscription to a traditional pay-TV platform.

'Despite these developments, which are good for competition and good for consumers, we still believe that competition in the pay-TV retail market overall is ineffective. However, the scope of our investigation is limited by the terms of the reference to us to the impact of FSPTW movies and, in our view, Sky’s position with respect to FSPTW movies does not provide Sky with a material advantage over its rivals in the pay-TV retail market.

'For the purposes of our inquiry, the key effect of the market developments is that, as a result of the new options available to them, consumers’ choice of pay-TV platform can more easily be decoupled from their choice of pay-TV movie service. As a result, Sky Movies no longer provides Sky with the advantage that it used to when competing with other traditional pay-TV platforms, like Virgin Media or BT Vision.

'Given that we no longer find there to be an adverse effect on competition in relation to movies on pay TV, we are not now proposing any remedial action.'

The CC is publishing its revised provisional findings to invite comments, which it will consider before reaching its final views. Interested parties are requested to submit their responses by 13 June 2012.

To submit evidence, please email or write to:

Inquiry Manager
Movies on Pay TV
Competition Commission
Victoria House
Southampton Row
London WC1B 4AD

The deadline for the final report is 3 August 2012.

Notes for editors

1. The CC is an independent public body, which carries out investigations into mergers, markets and the regulated industries.

2. In August 2010, Ofcom announced a decision to refer the supply and acquisition of subscription pay-TV movie rights and the wholesale supply and acquisition of packages including core premium movies channels, to the CC for investigation. This reference followed an investigation by Ofcom into the pay-TV market. Under the Enterprise Act 2002 (the Act), Ofcom can make a market investigation reference to the CC if it has reasonable grounds for suspecting that competition is not working effectively in a market.

3. The members of the Movies on Pay TV market investigation are: Laura Carstensen (Group Chairman), Robin Aaronson, Alexander Johnston, Peter Jones and Stephen Oram.

4. In its investigation, the CC is required to decide whether ‘any feature, or combination of features, of each relevant market prevents, restricts or distorts competition in connection with the supply or acquisition of any goods or services in the United Kingdom or a part of the United Kingdom’. If so, then there is an adverse effect on competition and the CC will also consider whether this is resulting in a detrimental effect on customers such as higher prices, lower quality or less choice of goods or services. The CC will then decide whether it should introduce remedies to tackle the adverse effect on competition or detrimental effect on customers or whether the CC should recommend action be taken by other bodies to remedy the adverse effects on competition and, if so, what actions or remedies should be taken. If the CC finds that there is no adverse effect on competition, the question of remedies will not arise.

5. In August 2011, the CC provisionally found that Sky’s control over FSPTW movie rights in the UK was restricting competition between pay-TV retailers, but stressed that it would monitor developments in the market. The developments in the market since August 2011, and representations received in response to its August 2011 provisional findings, have caused the CC to change its provisional findings.

6. The Act requires the CC to consult on its proposed decisions. The CC also publishes a notice of its provisional findings on its website as required by its rules. Full details on the CC’s guidelines for Market Investigation references are available on the CC website

7. Enquiries should be directed to Rory Taylor or Siobhan Allen or by ringing 020 7271 0242.