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You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> TVDANMARK 1 Ltd, R (on the application of) v Independent Television Commission [2000] EWHC Admin 389 (8 September 2000)
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Cite as: [2000] EWHC Admin 389
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QUEEN v. INDEPENDENT TELEVISION COMMISSION EX PARTE TVDANMARK 1 LIMITED [2000] EWHC Admin 389 (8th September, 2000)
CO 3036/2000
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
CROWN OFFICE LIST
Royal Courts of Justice
Strand
London WC2A 2LL
08 September 2000
Mr JACK BEATSON Q.C.
Sitting as a Deputy High Court Judge
THE QUEEN
v
EX PARTE TVDANMARK 1 LIMITED
- - - - - - - - - -
(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
- - - - - - - - - -
MR P LEAVER QC, MS E GLOSTER QC (For Judgment) and MR A CHOO-CHOY appeared on behalf of the Appellant
MS E APPLEBY QC AND MR J MOFFETT (instructed by Simmons & Simmons, London EC2M) appeared on behalf of the Respondent
Judgment
As Approved by the Court
Crown Copyright ©
MR JACK BEATSON Q.C.
1. The Applicant, TVDanmark 1 ("TVD"), is a television broadcaster established in the United Kingdom, holding a satellite television licence granted to it under Part 1 of the Broadcasting Act 1990 by the Independent Television Commission (the "ITC"). On 5 June this year acquired the exclusive rights to televise the five World Cup 2002 away matches of the Danish national football team live into Denmark from UFA Sports GmbH ("UFA"), a German company for Danish Kroner 3.35 million per match.
2. On 5 July TVD applied, as it was required to by section 101B(1) of the Broadcasting Act 1996, to the ITC for the ITC's consent to TVD's broadcast of these matches exclusively live into Denmark. On 17 August 2000 the ITC refused to give its consent and on 22 August 2000 TVD applied for permission to move for the judicial review of the ITC's decision.
3. The application for permission came before me on Friday 1st September, the day before the first match was to be played. Evidence was filed on behalf of the applicant by Mr Lund, its Managing Director, and on behalf of the ITC, by Mr Johnson, Head of Programme Policy at the ITC, the official responsible for the handling of TVD's application. The ITC did not resist the granting of permission, which was granted and, in view of the urgency, I heard the substantive application.
4. Section 101B(1) of the Broadcasting Act 1996 was inserted into the Act by the Television Broadcast Regulations 2000 S.I. 2000 No. 54 in order to implement the 1997 amendments to the 1989 Television without Frontiers Directive, Council Directive 89/552/EEC, contained in Directive 97/36/EC, and in particular the new Article 3a(3) concerning broadcasts of designated events to another Member State. In certain circumstances, including this case, such broadcasts are prohibited without the consent of the ITC. TVD's request was the first one for consent under section 101B. As will be seen, its provisions differ from those governing consent by the ITC in respect of United Kingdom domestic listed events.
5. TVD's legal challenge stems from the way the Statutory Code on Sports and other Listed Events was revised to incorporate the provisions of the Directive. In the case of consents to United Kingdom domestic listed events the criteria in the Code are concerned with whether broadcasters have had a genuine opportunity to acquire the rights in question on fair and reasonable terms. Although the Directive and section 101B(1) are concerned with the "exercise" of rights by a broadcaster, the new paragraph 26 of the Code dealing with consents in respect of broadcasts to another Member State states that it will take into account similar criteria to those applicable to United Kingdom domestic listed events. At the core of this case is whether the fact that TVD purchased its exclusive rights in the course of an auction in which other broadcasters, including DR and TV2, the Danish public broadcasters, participated meant that consent should have been granted as it probably would in a purely domestic case, or whether, having acquired the rights, TVD should have offered them to the Danish public broadcasters. Mr Leaver Q.C. on behalf of TVD submitted that there is no legal basis in the Directive, the 1996 Act or the Code for the ITC's request that TVD offer the rights they acquired to DR and TV2. TVD also claimed to have a legitimate expectation that the ITC would grant consent in accordance with the criteria stated to be relevant in the Code and, as a minimum, should have been given clear notice that the ITC was minded to apply different criteria.
The legislative and regulatory framework
6. The rules governing the broadcasting of sporting and other events of national interest are laid down in Part IV of the Broadcasting Act 1996 which, as noted, was amended by the Television Broadcast Regulations for the purpose of implementing Article 3a(3) of the Television without Frontiers Directive.
7. Section 101B(1) of the Broadcasting Act 1996 provides that:
"A television programme provider shall not, without the previous consent of the [ITC], exercise rights to televise the whole or part of an event which is a designated event, in relation to an EEA State other than the United Kingdom, for reception in that EEA State or in any area of that EEA State, where a substantial proportion of the public in that EEA State is deprived of the possibility of following that event by live or deferred coverage on free television as determined by that State in accordance with Article 3a(1) of Council Directive 89/552 EEC."
8. Section 101B(1) was introduced for the purpose of ensuring the United Kingdom's compliance with its obligations under the Directive, and therefore must be construed in accordance with the purposes and effect of the Directive. Article 3a of the Directive provides:
"1. Each member State may take measures in accordance with Community law to ensure that broadcasters under its jurisdiction do not broadcast on an exclusive basis events which are regarded by that Member State as being of major importance for society in such a way as to deprive a substantial proportion of the public in that member state of the possibility of following such events via live coverage or deferred coverage on free television. If it does so, the Member State concerned shall draw up a list of designated events, national or non-national, which it considers to be of major importance for society. It shall do so in a clear and transparent manner in due and effective time. In so doing the Member State concerned shall also determine whether these events should be available via whole or partial live coverage, or where necessary or appropriate for objective reasons in the public interest, whole or partial deferred coverage.
2. Member States shall immediately notify to the Commission any measures taken or to be taken pursuant to paragraph 1. Within a period of three months from the notification, the Commission shall verify that such measures are compatible with Community law and communicate them to other Member States. It shall seek the opinion of the Committee established pursuant to Article 23a. It shall forthwith publish the measures taken in the Official Journal of the European Communities and at least once a year the consolidated list of measures taken by Member States.
3. Member States shall ensure, by appropriate means, within the framework of their legislation that broadcasters under their jurisdiction do not exercise the exclusive rights purchased by those broadcasters following the date of publication of this Directive in such a way that a substantial proportion of the public in another Member State is deprived of the possibility of following events which are designated by that other Member State in accordance with the preceding paragraphs via whole or partial live coverage or, where necessary or appropriate for objective reasons in the public interest, whole or partial deferred coverage on free television as determined by that other Member State in accordance with paragraph 1."
9. As to the purpose of the Directive, I was referred to a number of the recitals to it. Recitals 18 and 20 to the 1997 amendments are of particular relevance to Article 3a(3), but Recitals 7, 15 and 44 are also worthy of note. Recital 7 states that the primary objective of the Directive is to create the legal framework for the free movement of services. Recital 15 states that any measure aimed at restricting the reception of broadcasts must be compatible with the rights guaranteed by the European Convention on Human Rights. Recital 44 refers to the need to safeguard pluralism in the media and the protection of competition with a view to avoiding the abuse of dominant positions and/or the establishment or strengthening of dominant positions by inter alia agreements. One of the recitals to the 1989 Directive states that it is essential for Member States to ensure the prevention of acts which may promote the creation of dominant positions which would lead to restrictions on pluralism. Recital 18 to the 1997 amendments states that:
"... it is essential that Member States should be able to take measures to protect the right to information and to ensure wide access by the public to television coverage of national or non-national events of major importance for society, such as the Olympic games, the football World Cup and European football championship; ... to this end Member States retain the right to take measures compatible with Community Law aimed at regulating the exercise by broadcasters under their jurisdiction of exclusive broadcasting rights to such events.
Recital 20 states:
"... in particular it is appropriate to law down in this Directive provisions concerning the exercise by broadcasters of exclusive broadcasting rights that they may have purchased to events considered to be of major importance for society in a Member State other than that having jurisdiction over the broadcasters, and .... in order to avoid speculative rights purchases with a view to the circumvention of national measures, it is necessary to apply these provisions to contracts entered into after the publication of this Directive and concerning events which take place after the date of implementation ...."
10. In conclusion, under the Directive, where a Member State designates an event as of major importance for society and notifies the European Commission, other Member States are under an obligation to ensure by appropriate means, within the framework of their legislation that broadcasters under its jurisdiction do not broadcast it on an exclusive basis in such a way as to deprive a substantial proportion of the public in that member state of the possibility of following such events via live coverage or deferred coverage on free television. It was also accepted that the Member State designating the event also decides what constitutes a substantial proportion of the public and may determine how the event is to be televised; i.e. via whole or partial live coverage, or whole or partial deferred coverage.
11. It is useful to summarise the position in respect of the exercise of rights to televise designated events exclusively live for reception in the United Kingdom. Prior to the recent additions to the Broadcasting Act 1996, the 1996 Act did not contain provisions dealing with the exercise of rights to televise designated events exclusively live for reception in an EEA State other than the United Kingdom. Sections 97- 105 of the 1996 Act dealt solely with rights to televise a "listed event" (defined as "a sporting or other event of national importance") for reception in the United Kingdom.
12. Section 99 of the 1996 Act prevents the acquisition of exclusive rights for listed events for reception in the United Kingdom by making any contract to this effect by a television programme provider void. By section 101(1) the broadcasting on a exclusive basis of such coverage is, in the circumstances described below, prohibited without the previous consent of the ITC. Section 98 distinguishes two categories of television service. The first consists of what are (disregarding the television licence fee) free television services which are received by at least 95% of the United Kingdom population. The second consists of television services, such as satellite services, which do not meet these conditions. By section 101(1) a broadcaster is required to obtain the consent of the ITC for live coverage of the whole or part of a listed event unless another broadcaster providing a service falling in the other category of service "has acquired the right to include in the second service live coverage of the whole of the [listed] event or of [the same] part of the event".
13. By section 104 of the 1996 Act, the ITC is required to draw up a code inter alia (section 104(1)(b)) "giving guidance as to the matters which they will take into account in determining" whether to give or revoke consent under the Act. Section 104(2) provides that "in exercising their powers under [Part IV], the Commission shall have regard to the provisions of the code". . The guidance in the Code as to the matters the ITC will take into account in determining whether to grant its consent under section 101 is set out in paragraphs 12-16. Paragraph 13 states that "the ITC will wish to be satisfied that broadcasters have had a genuine opportunity to acquire rights on fair and reasonable terms and, in reaching a view will take account of some or all of" a list of criteria set out. The criteria concern the circumstances surrounding the acquisition of the rights.
14. In the light of the prohibition in section 99 on the acquisition of exclusive rights to listed events for reception in the United Kingdom, the fact that the criteria in the Code are concerned with the circumstances in which the rights were acquired and whether other broadcasters have had a genuine opportunity to acquire the rights on fair and reasonable terms is understandable. The rights holder cannot because of section 99, sell exclusive rights, and the programme provider wishing to broadcast exclusively cannot, own the right to broadcast exclusively. Examining the circumstances surrounding the acquisition of the rights and whether other broadcasters had a reasonable opportunity to acquire them is thus a reasonable way of testing (see Code paragraph 9) whether there has been an opportunity for live coverage to be made available in both categories of television service as defined in section 98.
15. The Code was revised in January to take account of the requirements of the Directive which, as has been seen, is concerned with the "exercise of rights" rather than their acquisition. Paragraph 24 refers to the new circumstances in which the ITC's consent is required under section 101B and paragraph 26 states that "the criteria and matters which the ITC will take into account in deciding whether to give consent are similar to those set out in paragraphs 12-16" (emphasis added). In paragraph 8 of his witness statement Mr Johnson states that in using the word "similar" the ITC recognised that "slightly different criteria might apply or that the criteria might need to be applied in a slightly different way" and "was also conscious of the fact that [it was] applying a new piece of legislation and that new issues might come to light in the course of obtaining practical experience. As will be seen, the fact that the Directive is concerned with the exercise of the rights acquired has led to what TVD saw as a fundamental change of approach from that in the Code.
The need for the ITC's consent in the present case
16. There is no dispute that TVD required the ITC's consent pursuant to section 101B of the 1996 Act. First, it is a television programme provider within section 99(2) of the Act..
17. Secondly, the matches were designated events in relation to Denmark. The Danish Ministry for Cultural Affairs designated a number of events including Denmark's world championship qualifying matches in men's football as events of major importance for society pursuant to Article 3a(1) in an Order which came into force on 1 December 1998 and published in the Official Journal on 19 January 1999.
18. Thirdly, the exercise of the rights to televise the matches by TVD would result in a substantial proportion of the public in Denmark as determined by the Danish authorities being deprived of the possibility of following the matches by live or deferred coverage on free television. Section 4 of the Danish Order provides that a substantial proportion of the population is regarded as being prevented from following an event on free television save in cases where (1) the event is broadcast on a channel or channels which can be received by at least 90% of the population without any extra cost for acquiring technical installations, and (2) the receiving of the event does not cost the viewer more than Danish Kroner 25 per month apart from the TV licence and the subscription towards communal aerial installation. The second of these conditions is met by TVD, which charges Danish Kroner 8.75 plus VAT per month. But the first is not since the channel which TVD broadcasts into Denmark can only be reached by approximately 60% of the population.
TVD's application to the ITC and the negotiations
19. The order of events set out in the enclosure to Ashurst Morris Crisp's letter of 14 July indicates that TVD held its first meeting with UFA on 8 November 1999, and that UFA asked TVD for its initial bid on 12 November, although it only indicated the price level it was looking for at a meeting on 2 January 2000. There were further negotiations in April, on 9 May TVD made its offer of DM 4,000,000, and following further negotiations the final agreement was signed on 5 June.
20. Not surprisingly there had been contact between TVD and the ITC before the application was submitted on 5 July. Mr Lund states that he obtained a copy of the ITC Code on 9 May. On 24 May TVD's solicitors contacted the ITC to ascertain the extent to which the ITC would take account of the Danish regulations and liaise with the Danish Competition Council in assessing whether TVD would be permitted to broadcast the events exclusively. They were informed that the ITC was likely to liaise with the Danish Competition Council although the final decision would be the ITC's under its regulations. There was further contact on 1 June. In paragraph 14 of his witness statement Mr Johnson states that he then said that the ITC would have regard to the Code and, where it believed it necessary, would consult with the Danish authorities and other interested parties.
21. On 15 June, after TVD had signed the contract with UFA, there was a meeting attended by Mr Lund together with Mr Ghee and Ms Bertelli of Ashurst Morris Crisp and, on behalf of the ITC, Mr Johnson and Mr Buckland. Mr Lund states that from TVD's point of view the main purpose of this meeting was to ascertain what information the ITC would require in connection with an application for consent. TVD's representatives informed the ITC that they had won the rights in a competitive tender auction. In his statement Mr Johnson states that MR Lund said that while TVD was not willing to broadcast on a non-exclusive basis with the two Danish public broadcasters, it was still open to them to acquire exclusive rights, subject to price. Mr Lund, however, does not believe he made such a statement.
22. On 3 July the ITC received a fax from UFA Sports setting out the bidding process. It stated that all broadcasters had a genuine opportunity to acquire the rights at the market rate on fair and reasonable terms, and that the Danish public broadcasters made a joint bid which was only 60% of the estimated market value UFA had previously communicated to them, which had been increased slightly after UFA had indicated that without an increased bid it would not be able to sell them the rights. UFA also stated that the rights had been on offer from January, and the various broadcasters had been negotiating with UFA since February, and that it would have preferred to sell the rights to be viewed by the largest possible audience but it was not offered the market value by the public broadcasters. TVD's bid was closest to its estimate of the market value of the rights. In fact, as noted above TVD held its first meeting with UFA on 8 November 1999, and UFA asked TVD for its initial bid on 12 November. On 3 July Mr Johnson emailed Mr Searle of Ashurst Morris Crisp asking him to confirm whether a further opportunity was being given to the Danish public broadcasters to acquire the rights, subject to an agreement on terms.
23. TVD's formal request for consent was received on 5 July. The application letter noted that the criteria and matters which the ITC would take into account in deciding whether to give consent under section 101B are similar to the matters set out in section [sic]12-16 of the Code and stated that, in its view the bidding process set out in UFA's fax constituted a genuine opportunity for all Danish public broadcasters and in particular DV and TV2 to acquire the rights on fair and reasonable terms. The letter also stated that the rights had not been sold as part of a larger package. On 6 July Mr Johnson wrote seeking clarification on a number of matters regarding the bidding process, and stating that the ITC was preparing an assessment taking account of the information TVD provided and would be consulting the Danish authorities. He also stated that he was awaiting a response to his email to Mr Searle, adding "I really do believe it will greatly strengthen TVD's case for consent if this further opportunity is provided".
24. On 12 July the ITC received a fax from UFA responding to some of the questions in Mr Johnson's letter of 6 July. On 14 July Mr Ghee of Ashurst Morris Crisp wrote stating that while TVD were considering the possibility of offering DR and TV2 some rights "but at this stage no decision had been made as our view is that the relevant criteria under the [Code] have been satisfied and [TVD] should obtain the ITC's consent to an exclusive broadcast". The Danish public broadcasters had expressed interest in obtaining an offer for the matches. TV2 wrote to TVD expressing its interest in two of the matches on 15 June, and DR wrote to TVD expressing its interest in the other three on 20 June. No offer has been made by TVD.
25. On 12 and 13 July the ITC wrote to the Danish authorities and the public broadasters inviting their comments on TVD's request for consent to broadcast exclusively. It sent the Danish Ministry of Culture a paper summarising the information it had received and its initial assessment, although it emphasised that the paper was very much work in progress and that it was waiting for further information from TVD on a number of points. In the assessment section of the paper it is stated
"12. The process of selling the rights appears to meet the criteria set out in paragraphs 13-14 of the ITC Code. In particular DR and TV2 were given a full and fair opportunity to acquire the rights between January when they were offered for sale and May when [TVD's] bid was accepted....
"13 ... the amount which [TVD] have agreed to pay represents in our view a fair and reasonable price ad is consistent with the Danish Competition Council's investigation into the price of TV rights for European Championship play off away match between Denmark and Israel which took place on 13 November 1999."
After stating that the introduction of new channels and more competition had led to an increase in the price for away matches, the paper concluded that "...on the information currently available TVS's bid of DKK 3.35 for each game appears to reflect a fair and reasonable price which is in accordance with the finding of the Danish Competiton Council's recent investigation".
26. The response from the Danish Ministry of Culture pointed to the fact that the Directive is concerned with what occurs after a broadcaster has purchased exclusive rights. It stated that it followed from this that the process of the trading of the rights prior to and including their purchase is not relevant in relation to the Member State's obligation. The Ministry considered that DR and/or TV2 should be offered the rights to the matches by TVD. The Ministry of Trade and Industry considered that TVD was under an obligation to follow the Danish rules and consequently that DR and/or TV2 should be offered the rights to the matches to make certain that the requisite proportion of the Danish population is offered the possibility of following the match on free television. This would appear to be a reference to section 5 of the Danish Order. By section 5(1), broadcasters unable to broadcast to a substantial proportion of the population may exercise exclusive rights only if they are able to ensure that a substantial proportion of the population is not prevented from following the event, unless, in accordance with section 5(2), they can demonstrate that no broadcaster or group of broadcasters able to meet the requirement is prepared to enter into an arrangement on reasonable market terms.
27. The responses of the public broadcasters made similar points. They also disputed UFA's version of how the rights were packaged, alleged that they had written to TVD requesting that the rights be offered to them but that no offer had been forthcoming, and contended that TVD had paid more than the "true" market price for the rights. They made comparisons with similar matches and suggested that the fact that none of the teams Denmark is playing in the qualifying matches is a heavyweight except perhaps the Czech Republic and that uncertainty over match times affected their value. On 26 July the ITC put a summary of the main points arising from the consultation to TVD.
28. On 1 August the ITC had a further meeting with TVD and its advisers in which it informed them that as matters stood ITC staff did not feel able to recommend to Commission members that consent should be granted. A number possible ways forward were discussed including that TVD should combine with its sister channel TVD2 so that it might be able to reach the required proportion of the population. In fact (see para 9 of Mr Lund's second statement) combining with TVD2 would not achieve this because the combined maximum coverage was only 85% of the population. At the end of the meeting it was suggested that it might be helpful to TVD's request for consent if it were to re-offer the rights to the Danish public broadcasters. It was agreed that no decision would be taken until TVD's Board had decided how it wished to proceed. On 11 August Ashurst Morris Crisp wrote stating that TVD wished to proceed with its request, reiterating its position, in particular the absence of a legal basis for the ITC's request for TVD to re-offer the rights to DR and TV2 and TVD's legitimate expectation that the requirements regulating the grant of consent were as set out in the Code. The letter also responded to the summary of points raised in consultation.
29. The ITC considered that this renewed request did not indicate any change in circumstances since the meeting on 1 August and on 17 August the Chairman and one other member of the ITC acting pursuant to a formal delegation of authority from the Commission refused the request for consent.
The Decision letter
30. The material parts of the ITC's decision letter dated 17 August are set out below:-
"On 17 August 2000 the Commission, acting by way of delegation to the Chairman and another Member, considered TVD's request for consent to broadcast certain Danish designated events exclusively live, as set out in your letter dated 5 July 2000 and subsequent correspondence. After due consideration, the Commission has determined that to grant consent to such a broadcast would be contrary to the terms of s101B Broadcasting Act 1996 ("the Act") and the Television Without Frontiers Directive (89/552/EC as amended) the "Directive"). Therefore the request for TVD is refused.
In reaching this determination the Commission has taken account of the considerations set out in this letter. It has had sight of correspondence including the following:
1. UFA's letter to us (under cover dated 3 July 2000)
2. Your letter to us dated 5 July 2000
3. Your fax to us dated 5 July 2000 containing the agreement between UFA and TV Denmark
4. UFA's letter to us dated 11 July 2000
5. Your letter to us dated 14 July 2000
6. Your letter to us dated 11 August 2000
It took account also of the representations made at the meeting on 1 August 2000.
The Commission has also consulted with various interested parties, including the Danish Competition Council and Ministry of Culture, the Danish public broadcasters, DR and TV2 and has kept the UK Department of Culture Media and Sport informed. The Commission has provided TVD with a summary of points arising from that consultation by fax dated 26 July 2000. Having carefully considered the responses to its consultation and TVD's responses to the summary of points raised, the Commission has reached the following conclusions."
"The events in question have been designated by the Danish government as being of major importance to society and have been notified to the European Commission in accordance with Article 3a(1) of the Directive (OJ 1999/C 14/05 and 2000/C 209/03). The Commission is clear that to the extent of the public policy matters listed in s104B(1) and Article 3a(3) (i.e., which events are designated and the definitions of substantial proportion of the public, whole or partial live or deferred coverage and free television) the Commission should apply the notified Danish provisions when assessing whether or not consent is required for an exclusive live broadcast. The Commission understands that currently TVD is not available to at least 90% of the population of Denmark without any extra cost as specified by the Danish rules. On that basis the Commission is satisfied that consent will be needed under s101B before the events may be broadcast on an exclusive basis.
The commission has confirmed that when exercising its discretion under s101B of the Broadcasting Act 1996 the Commission will not act in a manner which would be contrary to the provisions of the Directive. The Directive clearly states that Member States must ensure by appropriate means that broadcasters should not be permitted to exercise exclusive rights in such a way that a substantial proportion of the public in another Member State is deprived of the possibility of following events which are designated by that other Member State. The Commission does not accept that TVD can have had a legitimate expectation that the Commission would act in such a way as to allow them to achieve this.
As you point out in your letter of 11 August, s104(1)(b) of the Act required the Commission to prepare a code "giving guidance as to the matters which they will take into account in determining ... whether to give or revoke their consent under s101(1) or s101B(1)". Section 104(2) requires that the ITC must "have regard to the provisions in the code". This requirement is reflected in paragraph 2 of the Code itself, which states that "the ITC will have regard to the provisions of the Code in exercising [its] powers". However, as s104 of the Act and paragraph 2 of the Code make clear, although the Commission must "have regard" to the provisions of the Code, it is not required to follow it in cases where to do so would involve illegality. The Code is designed to provide information and guidance to licensees but cannot fetter the Commission's discretion to act in accordance with its powers and the law.
It remains the case that the ITC wishes to be satisfied that broadcasters have had a genuine opportunity to acquire rights on fair and reasonable terms. In the present case the Commission does not accept that it was sufficient that the rights were originally awarded in a tender process as described in your letters."
The grounds upon which relief is sought
31. TVD seek relief on the following grounds:-
(a) The ITC misdirected itself in law in determining that to grant consent to the exclusive live broadcasts as requested by TVD would be contrary to the terms of the Directive and section 101B(1) of the 1996 Act,
(b) the ITC misdirected itself in law in determining that to follow the provisions of the ITC Code on Sports and other Listed Events would involve illegality,
(c) the ITC acted irrationally and abused its discretion in holding that it was not sufficient for consent to be given that interested broadcasters had had a genuine opportunity to acquire the rights on fair and reasonable terms, and
(d) the ITC abused its discretion in unfairly acting in breach of TVD's legitimate expectation that the ITC would grant consent to the extent that the criteria stated to be material in the Code had been satisfied.
32. The parties concluded their submissions late in the afternoon of Friday 1 September. I indicated that I would reserve my judgement. In the anticipation of this, and in view of the fact that the first of the matches was to take place the following day, TVD had applied for interim declaratory relief, which Miss Appleby, on behalf of the ITC, strongly resisted. Mr Leaver submitted that the risk of injustice equation favoured such relief since if no order was granted TVD would suffer damage and a large proportion of the Danish population would be deprived of following the match, whereas if an order was made the ITC and the United Kingdom would suffer no damage (on the application of the principles in judicial review, see R v Kensington and Chelsea Royal London Borough Council, ex parte Hammell [1989] QB 518). I considered that, on the evidence before me, there was a prima facie case that the ITC in refusing its consent had misdirected itself in law or otherwise committed a reviewable error. In view of the fact that even if the application succeeded the matter would be sent back to the Commission for reconsideration, and it might properly decide to refuse its consent, there was no question of an order to the Commission to grant consent for the broadcast on the 2 September, and indeed TVD did not seek such an order. In view of the prejudice to TVD I made an interim declaration pending judgment that on the evidence before me there was a strong prima facie case that to grant consent to TVD's application would not breach the requirements of Article 3a(3) of Council Directive 89/552/EEC as amended by Directive 97/36/EC. I have in mind the need to afford some comfort to TV D from action against them by the ITC in respect of the broadcast of the first match and declaration in to account in considering any disciplinary proceedings against TV D. As will be seen, I have concluded that the prima facie case in fact has been answered by the ITC.
(a) The ITC misdirected itself in law in determining that to grant consent to the exclusive live broadcasts as requested by TVD would be contrary to the terms of the Directive and section 101B(1) of the 1996 Act
33. This is founded on the ITC's statement in the Refusal letter that "to grant consent to ... [the broadcast of the matches by TVD exclusively live] ... would be contrary to the terms of s. 101B Broadcasting Act 1996 ... and ... the Directive". At this stage I leave out of consideration the effect of the provisions of the statutory Code.
34. Before turning to the submissions, I set out the material sections of Mr Johnson's witness statement. He states:
"47. It is accepted by the ITC that TVD purchased its exclusive rights in the course of an auction in which other broadcasters (including the Danish public broadcasters) participated. It is also accepted by the ITC that the matches were available as a discrete package and not solely as part of a larger package of rights. However, as indicated in [the Decision letter], the ITC did not consider that this alone meant that TVD was not exercising the exclusive rights purchased by it in such a way that the relevant proportion of the Danish public would be deprived of the possibility of following the matches on free television.
48. The ITC adopted this position because of the wording of the Directive. The Directive requires States to ensure that broadcasters do not "exercise" rights which have been "purchased" by them in such a way that a substantial proportion of the public is deprived of the possibility of following that event. The ITC took the view that the focus should be on the manner in which the rights have been "exercised" after their purchase, and not solely on the purchase itself.
49. There was no evidence presented to the ITC that, subsequesnt to the date of the purchase of the rights, TVD had sought to offer them to any other broadcaster who might have been able to broadcast to the relevant proportion of the Danish public, despite the fact that two other Danish broadcasters have expressed interest in them, nor that TVD had seriously considered any other alternatives. TVD's "exercise" of its rights had effectively been to keep them to itself. In the ITC's view, this meant that it was exercising those rights in such a way that the relevant proportion of the Danish public would be deprived of the possibility of following the matches on free television.
50. In reaching this view, and as can be seen from [the Decision letter], the ITC did take into account the manner in which TVD had purchased the rights. It nevertheless considered that after the date of purchase TVD had exercised its rights in such a way that the relevant proportion of the Danish public would be deprived of the possibility of following the matches on free television.
51 It is not the ITC's position that a broadcaster should never be permitted to broadcast exclusively a designated event where it will not be available to the relevant proportion of the public, but it is the position of the ITC that it should not grant consent where to do so would result in an unlawful exercise of its statutory discretion. The ITC considered that this would be the position in TVD's case."
35. It is thus clear that it is not contested that it is not contrary to the Directive to give consent when the requisite proportion of the public - here 90% - will be unable to follow the designated event. One example is where there is only one broadcaster is interested in acquiring the rights. Another is where other broadcasters who can reach the requisite proportion of the public are interested in acquiring the rights but are not prepared to pay the rights holder a reasonable market price. This is the case covered by paragraph 5(2) of the Danish Order, which has been approved by the European Commission. TVD's outline argument states that this reflects the fact that the Directive was not intended to promote the creation of dominant positions which would lead to restrictions on pluralism. Moreover, section 101B(1) necessarily envisages that consent may be given when the requisite proportion of the public will be unable to follow the designated event in its provision for the ITC to consent to the exclusive televising of a designated event in such a case.
36. TVD's outline argument submits that the statement in the Decision letter that in the present case the ITC "does not accept that it was sufficient that the rights were originally acquired in a tender process as described in [the letters sent to the ITC by or on behalf of TVD]" implicitly accepted that the correspondence referred to showed that broadcasters have had a genuine opportunity to acquire rights on fair and reasonable terms". Mr Leaver QC submitted that, on the evidence before the ITC in this case, it could lawfully give consent. It had evidence of the bidding process, the value put on the rights by the Danish public broadcasters then and since, and the prices of other broadcasts of away matches of the Danish national team. These enabled the ITC to conclude that the requisite proportion of the public was unable to follow the matches because the public broadcasters were unwilling to pay the market price for the rights rather than because of the exercise by TVD of its exclusive rights. There was no requirement in the Directive or in the 1996 Act that, after their acquisition, rights had to be offered to those broadcasters who were able to broadcast to the requisite proportion of the public.
37. Mr Leaver's argument also relied upon the fact that the ITC Code focussed on the acquisition of the rights. He submitted that it was permissible for the United Kingdom to implement Article 3a(3) by reference to the manner in which exclusive rights had been acquired, to adopt the approach that, if rights had originally been acquired by the broadcaster seeking consent in circumstances where all interested broadcasters had had a genuine opportunity to acquire them in accordance with the criteria set out in paragraph 13 of the Code a substantial proportion of the relevant public had not in reality been deprived of the possibility of following the event and the subsequent exercise of the rights by the broadcaster who had acquired the rights could not properly be regarded as an exercise " ... in such a way that a substantial proportion of the public in another Member State is deprived of the possibility of following the designated event". This had been done because paragraph 26 of the Code stated that the criteria and matters the ITC would take into account in deciding whether to give consent under section 101B(1) "are similar" to those set out in paragraphs 12-16, in particular to those set out in paragraph 13.
38. My assessment at the conclusion of the hearing that a strong prima facie case had been established that to grant TVD's application would not breach Article 3a(3) of the Directive was based on the force of these submissions.
39. Miss Appleby QC submitted that the ITC was only empowered to give consent if it concluded that TVD was not exercising its rights so as to deprive the requisite proportion of the Danish public of the possibility of following the events. The determination of this prior question was, in her submission, one for the ITC so that when it determined that TVD in the present case was exercising its rights so as to deprive the requisite proportion of the Danish public of the possibility of following the events it had no power to grant consent. A lawful decision by the ITC on this prior question thus, in her submission, determined the bounds of the ITC's discretion under section 101B(1).
40. Miss Appleby submitted that the approach of the ITC in the present case to this prior question was lawful because the ITC was entitled (a) to conclude that the process pursuant to which TVD purchased its rights was not conclusive of the issue of the way TVD was exercising its rights, (b) to have regard to the period after the acquisition of the rights in determining the way in which TVD was exercising them, (c) to conclude that the broadcasting of the matches was one way of "exercising" those rights, but that another was, as permitted by TVD's agreement with UFA, to assign or sublicense them to third parties, (d) to conclude that in failing to offer to assign or sublicense its rights TVD was engaged in "exercising" its rights, and (e) to take into account the responses from the Danish authorities and broadcasters to its consultation.
41. I do not accept Mr Leaver's submission that it was open to the United Kingdom to implement Article 3a(3) by reference to the manner in which exclusive rights had been acquired. Despite the reference in the Directive to the existing legislative framework, a provision which excludes all post acquisition circumstances does not in my view conform to the requirements of the Directive because it would test the "exercise" of rights exclusively by reference to events prior to their acquisition by the rights holder. At that stage the person does not have any "rights" to exercise. Moreover Recital 20 to the Directive contemplates that the exercise is to be tested after the acquisition by its reference to "the exercise by broadcasters of [exclusive rights] that they may have purchased" (emphasis added).
42. One can have sympathy with the position of a broadcaster which acquires rights in a fair tendering or auction system and is then required to give the unsuccessful bidders a second opportunity. The argument that requiring this provides no safeguard against the promotion of dominant positions by public service broadcasters who normally reach virtually all the viewing public and that it may encourage the abuse of the dominant positions of such broadcasters has force. But the safeguard lies in the ability of the regulator, here the ITC, to give consent where such abuse has been established. To exclude consideration of all that happens after the acquisition of the rights might deprive the requisite proportion of the public the opportunity to follow a designated event where there has been no such abuse. It would thus frustrate the object of the Directive that (see Recital 18) it is "essential" that Member States should be able to take measures .... to ensure wide access by the public to television coverage of ... events of major importance for society...". Section 101B(1) does not in fact indicate any decision to implement the Directive in this way. In the light of the decisions on the interpretation of legislation implementing Directives (for example Pickstone v Freemans plc [1989] 1 AC 66 and Litster v Forth Dry Dock Co. Ltd. [1990] 1 AC 546) section 101B(1) should not be interpreted to authorise such an approach. Accordingly, even if it was clear on the face of the Code that it was its intention to do this, it would not be lawful.
43. Mr Leaver's submission that, on the evidence before the ITC in this case, it could lawfully give consent has force. It is in accordance with the initial assessment by ITC staff. Ultimately, however, it fails to take into account that, just as it was open to the ITC on the evidence before it to conclude that because of the process in which the rights were acquired and the information the ITC had about prices of away matches and DR and TV2's view as to the market price, that TVD was not exercising its right so as to deprive the requisite proportion of the Danish public of the possibility of following the events, so it was also open for it to conclude in the light of the evidence including the responses to consultation that TVD was so exercising its right. For example, while the ITC may not have been required to take into account the fact that TVD had not given DR and TV2 a further opportunity to acquire the rights if it was satisfied on the evidence before it that TVD was not exercising its rights so as to deprive the requisite proportion of the Danish public of the possibility of following the events, (leaving aside the question of the Code for the present) it was in my judgment clearly entitled to take this factor into account.
44. It was suggested that, in requiring the rights to be offered to the Danish public broadcasters, the ITC was applying paragraph 5(2) of the Danish Order and thus fell into error because this was not a matter upon which either under the Directive or section 101B(1) provided was to be governed by the Danish rules. I do not accept this. While the ITC consulted the Danish authorities, as it stated it would, from the outset it considered that the final decision would be its decision under the United Kingdom regulations: see the internal ITC email from Carla Gleeson to Mr Johnson dated 24 May.
45. I accept Miss Appleby's submission that the ITC was entitled to take account of the matters it took into account in considering what I have termed the prior question, i.e. whether TVD was exercising its rights so as to deprive the requisite proportion of the Danish public of the possibility of following the events. Its approach to this prior question was accordingly lawful. I also accept the submission that a lawful decision on the prior question determines the bounds of the ITC's discretion under section 101B(1) so that it would not have been lawful for it to consent to TVD's request. For these reasons I conclude that, notwithstanding the force of Mr Leaver's submissions, the ITC did not misdirect itself in law in determining that to grant consent to the exclusive live broadcasts as requested by TVD would be contrary to the terms of the Directive and section 101B(1) of the 1996 Act.
(b) The ITC misdirected itself in law in determining that to follow the provisions of the ITC Code on Sports and other Listed Events would involve illegality
46. I can deal with this ground more briefly. The ITC accepted that it must have regard to the Code but stated that it is not required to follow it where to do so would involve illegality. Its decision letter stated, correctly, that the Code cannot fetter its discretion to act in accordance with its powers and with the law. If, as I have concluded, the ITC lawfully determined that TVD in this case was exercising its rights so as to deprive the requisite proportion of the Danish public of the possibility of following the events, it would not have been lawful for it to consent to TVD's request because of the provisions of the Code. Moreover, it follows from my conclusion that it was not open to the United Kingdom to implement Article 3a(3) solely by reference to the manner in which exclusive rights had been acquired, that this could not lawfully be achieved by the Code. Accordingly, to the extent that the Code requires this, to follow it would involve illegality. This ground of challenge also fails.
(c) The ITC acted irrationally and abused its discretion in holding that it was not sufficient for consent to be given that interested broadcasters had had a genuine opportunity to acquire the rights on fair and reasonable terms
47. I also conclude that this ground of challenge has not been established. It is based on the proposition that there is nothing in the Code that is either contrary to the terms of section 101B(1) and the Directive, or otherwise illegal, from which it follows that, in reaching the view that it was not sufficient for consent to be given that interested broadcasters had had a genuine opportunity to acquire the rights on fair and reasonable terms, the ITC unreasonably failed to take into account or have regard to the provisions of the Code. But, for the reasons I have given, I do not consider that it was open to the United Kingdom, either in the 1996 Act or in the Code, to implement Article 3a(3) by reference to the manner in which exclusive rights had been acquired to the exclusion of all post acquisition circumstances. In such circumstances it cannot be unreasonable or irrational for the ITC to decide that compliance with the relevant part of the Code, namely paragraph 13, was not, without more, sufficient to satisfy it that TVD was not exercising its rights so as to deprive the requisite proportion of the Danish public of the possibility of following the events and broadcasters have had a genuine opportunity to acquire rights on fair and reasonable terms. I have concluded that the ITC was entitled to take account of the matters it took into account in considering the matter and the evidence before it was such as to allow it to reach the decision it did.
(d) The ITC abused its discretion in unfairly acting in breach of TVD's legitimate expectation that the ITC would grant consent to the extent that the criteria stated to be material in the Code had been satisfied.
48. The Code should not be construed as one would legislation. Section 104 requires only that it give "guidance" as to the matters which the ITC will "take into account" and that the ITC shall "have regard" to the Code when exercising its discretion. Similarly, the Code makes it clear that it only gives guidance and paragraph 26 only states that the criteria and matters to be taken into account are "similar" to those set out in the earlier paragraphs, including paragraph 13. Mr Johnson's evidence is that it was recognised in revising the Code that "slightly different criteria" might apply, that the criteria might need to be applied in "a slightly different way" and that "new issues might come to light in the course of obtaining practical experience" of the new legislation.
49. The Code does, however, give the clear impression that consent under section 101B(1) will be tested by reference to the circumstances in which the rights were acquired. Notwithstanding the statutory requirement in section 104(1)(b) that the ITC gives guidance as to "the matters" which it will take into account, the Code gives no "guidance" as to matters other than the circumstances in which the rights were acquired that it will take into account. The result is that the only guidance as to what constitutes the "exercise" of rights by a broadcaster for the purposes of section 101B(1) refers to the circumstances in which the rights were acquired, albeit qualified by the word "similar". The use of the word "similar" does not draw attention to the fact that the ITC will take into account the way in which a person exercises rights previously acquired, whether by offering to assign or license them, or by refusing to do so. In these circumstances, while consent was a matter for the discretion of the ITC, the impression was given that it would be exercised if the ITC was satisfied that the rights were acquired in circumstances in which other broadcasters had a reasonable opportunity to acquire them on fair terms. I conclude that notwithstanding the use of the words "similar" and "guidance" the Code is clear enough to found an expectation in TVD that in determining consent under section 101B(1) the criteria in the Code would be applied. Although, since this was a new regime, it is perhaps understandable that any guidance would be less specific, there was no indication that the fact that the Directive refers to the "exercise" of rights meant, as the ITC ultimately found, that it had to concentrate on post-acquisition conduct.
50. R v Secretary of State for the Home Department, ex parte Asif Mahmood Khan [1984] 1 WLR 1337 shows that guidance about the criteria to be used in making a discretionary decision can found a legitimate expectation. In that case a Home Office letter stated that the Secretary of State "may exercise his discretion and exceptionally allow a child to be brought here for adoption" where he is satisfied of four matters set out. The Secretary of State refused and application for entry clearance on the ground that he was not satisfied that the natural parents were incapable of looking after the prospective adoptee, a ground not included in any of the specified criteria. It was held by Parker and Dunn LJJ (Watkins LJ dissenting) that in doing this the Secretary of State had acted in disregard of the applicant's legitimate expectation. Parker LJ, after setting out the ground upon which the decision was made, stated (at p 1343):
"if this was the policy, the "guidance" given in the Home Office letter is grossly misleading.... There is not a word to suggest that in exercising his discretion the Secretary of State requires to be satisfied that the natural parents are incapable of looking after the prospective adoptee, or even that their ability to do so was considered relevant".
His Lordship considered (1344) that the Secretary of State ought not to have departed from the criteria without affording interested parties a hearing and then only if the overriding public interest requires it.
51. I have stated that the Code is clear enough to found an expectation in TVD that in determining consent under section 101B(1) the criteria in the Code would be applied, but there remains the question whether it can found a "legitimate" expectation that this will occur in the sense of generating public law rights. As a general rule, a person can have no legitimate expectation that a public body will exercise its discretion in a manner which would be contrary to law. In R v Inland Revenue Commissioners, ex parte MFK Underwriting Ltd. [1990] 1 WLR 1545, at 1568 Bingham LJ stated that "the taxpayer's only legitimate expectation is, prima facie, that he will be taxed according to statute, not concession or a wrong view of the law." Since I have concluded that to decide the matter solely by reference to the criteria in paragraph 13 of the Code would be contrary to the Directive, TVD could not have a "legitimate" expectation that the criteria in the Code would be applied to the exclusion of other factors.
52. Nevertheless, in view of the provisions in the Code, the statutory requirement that "guidance" be given, and the way the application was handled by meetings and exchanges of correspondence, I consider that, once the ITC had formed the view that, in Mr Johnson's words, "the focus should be on the manner in which the rights have been 'exercised' after their purchase, and not solely on the purchase itself", fairness required that TVD be given an opportunity to comment on the criteria the ITC was minded to apply and, if appropriate, an opportunity to satisfy those criteria. At that time it became clear that the provisions in the Code were not to be applied and other criteria would be applied in the determination of TVD's application. The interest in some ultimate benefit which a person hopes to attain or to retain, here consent to the broadcast, constitutes one of the categories of "legitimate expectation" identified by Simon Brown LJ in R v Devon CC, ex parte Baker [1995] 1 All ER 73, 88, a passage cited by the Court of Appeal in R v North and East Devon Health Authority, ex parte Coughlan [2000] 2 WLR 622, 651.
53. TVD states that it placed specific reliance on the application of the criteria in the Code and that unless consent is given it is likely to suffer considerable financial loss. On behalf of the ITC it is submitted that TVD had been negotiating with UFA before it had seen the Code and that there is no evidence that it obtained a copy of the Code before making its initial offer on 9 May. Mr Lund's evidence is that he obtained a copy of the Code on 9 May and relied on the guidance set out in it prior to acquiring the rights. In fact negotiations continued during May, a deal was reached at a meeting on 1 June, and the agreement was signed on 5 June. In these circumstances, it does appear that reliance was placed on the provisions in the Code by TVD.
54. Turning to the opportunity given to TVD to comment on the criteria the ITC was minded to apply, this case differs from R v Secretary of State for the Home Department, ex parte Asif Mahmood Khan where there was absolutely no indication to the prospective adopters of the criteria that the Secretary of State used in making his decision. From the outset the ITC had indicated it considered that if TVD offered its rights to the public broadcasters it would strengthen its case for consent: see for example Mr Johnson's email of 3 July and his letter dated 6 July. The summary of the main points arising from Consultation included the fact that the Directive was concerned with the exercise of the rights and post acquisition conduct although the way the point was put reflected the Danish authorities' view that the provisions of paragraph 5 of the Danish Order applied to the present case rather than a position taken by the ITC. The suggestion that it would be helpful to offer the rights to the public broadcasters was reiterated at the meeting on 1 August, when ITC staff informed TVD that they were not able to recommend to the ITC members that consent be granted to TVD's application. The letter dated 11 August exhibited to Mr Lund's first statement, states that ITC staff "suggested at the end of the meeting that it might be helpful to TVD's request for consent if [TVD] were to re-offer the rights to the Danish public broadcasters". Mr Leaver submits this was not clear enough and that the ITC should have clearly indicated that in order to secure consent to its application TVD would have to offer the rights to the public broadcasters. The statement in the letter as to how the matter was raised, which is not denied in Mr Johnson's witness statement, was in no stronger terms than the earlier suggestions.
55. The factors indicating that the ITC had not done enough in the present case and should have put the matter more clearly are; (a) the realisation by the ITC dealing with its first application under section 101B(1), apparently after making an initial assessment by reference to the criteria in the Code, that it was necessary to take into account post-acquisition conduct, (b) the absence of guidance to this effect in the Code notwithstanding the statutory requirement in section 104(1)(b) that the ITC gives guidance as to "the matters" which it "will take into account" in determining whether to give consent under section 101B(1), (c) the fact that, as was known to the ITC, TVD knew of the Code and relied on the it when negotiating the acquisition of the rights, and (d) unless consent is given TVD is likely to suffer considerable financial loss. Although TVD was aware that the ITC considered that offering its rights to the public broadcasters it would strengthen TVD's case for consent, it was not aware that in the ITC's view it was necessary for such consent (even if not sufficient) that such an offer be made.
56. Against this there are factors indicating that the ITC had done enough in the present case. These are; (a) TVD was aware of the ITC's view that offering the rights to the public broadcasters would strengthen TVD's case for consent, and had made representations as to why it considered there was no legal basis for the request, and (b) TVD also made representations on the argument put to it that the Directive was concerned with the exercise of the rights and post acquisition conduct and knew that the ITC was concerned with this. Although the effect of the way the Code was revised to take account of the provisions of the Directive was singularly unhelpful as to the criteria that would be used in suggesting similarity with those used in broadcasts in the United Kingdom of domestic listed events, by the time the ITC made its decision on 17 August, TVD knew that the Commission was considering post-acquisition conduct in determining how the rights acquired wee being "exercised". In the circumstances of this case, although it would have been desirable for the ITC to put the matter more clearly, I do not accept Mr Leaver's submission that it was required to do so as a matter of fairness.
57. Accordingly, I dismiss the application. Notwithstanding the outcome of this application, it is clear, as I understand the ITC recognise, that the paragraphs of in the Code concerning the criteria that will be taken into account in determining applications under section 101B(1) need to be revised.
MR BEATSON QC: For the reasons given in the judgment, I dismiss the
application to review the decision of the Commission.
MS GLOSTER: My Lord, first of all I should explain why I am here. Mr
Leaver unfortunately is unable to be here.
MR BEATSON QC: I understand that. I saw that you were originally
supposed to be here, but unfortunately, due to the timetable.
MS GLOSTER: My Lord, I have some prior knowledge of the case. There are
a number of points, but in relation to your Lordship's judgment, there is one
point I would invite you to clarify, either by amending paragraph 32 or,
alternatively, by simply recording, at this stage, what the purpose was. It is
paragraph 32, where your Lordship refers to the fact that you granted interim
relief. It is the sentence starting:
"Mr Leaver submitted that the risk of injustice equation favoured such relief since if no order were granted TVD would suffer damage..."
The point, as I understand it, that was made by Mr Leaver was this: there
was a need for interim relief so as to afford protection to TV Danmark against
the possibility of sanctions if it were to broadcast the first match, and it
was for that reason, as he submitted to your Lordship, that interim relief was
sought.
I would invite your Lordship either to amendment the judgment by inserting a
sentence to the effect that the application for interim relief was so as to
afford protection to TV Danmark against the possibility of sanctions, or to
make that clear on the record.
MR BEATSON QC: I must take it that the first match was broadcast.
MS GLOSTER: Indeed. My Lord, I would then wish to make some submissions
about costs and also about the question of permission to appeal.
MR BEATSON QC: Ms Appleby, the word "protection" -- certainly, in my
mind, there was the problem in the way the case came forward. As you said,
there could not be an order giving permission.
MS APPLEBY: My Lord, we looked, to a degree, at this question. I do not
know whether we used the word "protection".
MR BEATSON QC: "Comfort" was the word used in court. I am not sure there
is any real difference.
MS APPLEBY: We submitted that in no way could we desist in relation to
comfort on a sanction, and also submitted that in no way could your Lordship
take away the decision of the ITC who was the only body who could decide, at
the end of the day, to give a sanction. I think, in the light of the
submissions that were made, the submissions led to the form of declaration that
was then granted. The need for interim relief so as to afford protection for
TVD, re sanctions, we respectfully submit, that is going too far because, as I
say, ITC is the only body who can decide what to do. No doubt they will take
into account the judgment and the interim relief granted when they consider the
question of sanction.
MR BEATSON QC: I am minded -- and I will obviously hear what Miss
Gloster has to say -- to amend paragraph 32 by adding, just before the last
sentence which is on page 15, I had in mind that the fact that such relief was
given would give TV Danmark some comfort in relation to any sanctions, and that
ITC would take it that the fact that it been made and the fact that it had been
given into account in considering this matter. I think that is it.
MS GLOSTER: My Lord, we would be content with that.
MR BEATSON QC: I have written a note, and I will transcribe it and I
hope I will transcribe it exactly as it is.
MS GLOSTER: I am obliged.
MR BEATSON QC: Ms Gloster, you said you had some other submissions?
MS GLOSTER: Would your Lordship like to deal with the issue of costs
first or the issue of permission?
MR BEATSON QC: I think I would like to deal with the issue of costs
first.
MS APPLEBY: My Lord, I would submit that costs follow the event and that
the application is dismissed with costs.
MR BEATSON QC: Yes.
MS GLOSTER: My Lord, my submission to your Lordship is that the
appropriate order here is that there should be no order as to costs. It is
clear from your Lordship's judgment and the recognition by the ITC, which your
Lordship refers to at paragraph 57 of your judgment, that the code will need to
be revised, an that the ITC are in breach of their statutory obligations under
section 104 of the Broadcasting Act in this respect: that section 104 obliges
the ITC to draw up and, from time to time, review a code, giving guidance as to
the matters which they will take into account in determining whether to give
or revoke their consent under section 101(b), and requiring them to have regard
to the provisions of the code.
In our submission, in circumstances where, as your Lordship has decided, there
were other matters which they had to have regard to, and the matters which they
did specify in their code were, as your Lordship had decided, not on their own,
sufficient matters to be taken into account. It is clear in our submission that
the code is, if your Lordship's judgment is to stand, manifestly deficient.
Your Lordship has also held that TV Danmark purchased its rights in the
believe and the legitimate expectation certainly at that stage, at the time of
acquisition----
MR BEATSON QC: The expectation?
MS GLOSTER: That if the criteria specified in the code was satisfied,
consent would be granted. Your Lordship has now held, as a matter of law, that
the ITC were not entitled to regard the satisfaction of those specified
criteria as being a sufficient basis for them to give consent, but the whole
point of the code, as the statute makes clear, is to give guidance to
broadcasters as to what criteria they have to satisfy. On any basis, as your
Lordship's judgment makes clear, this code promulgated by the ITC gave no
guidance or no sufficient guidance at all. In our submission, on any basis,
this was clearly a matter that required clarification. My clients TV Danmark
should not have to pay the costs of the regulator's inefficiency and the costs
of, in effect, the regulator's failure to comply with their statutory
obligations to promulgate an appropriate and workable code that is of
assistance to people who have to apply for consent. My Lord, in those
circumstances, we would respectfully submit that the appropriate order is no
order as to costs.
MS APPLEBY: My Lord, we would oppose that order and would submit that
that would be unfair in the light of the outcome of the case. This case was not
run exclusively on the code. As your Lordship points out on page 14, paragraph
31, there were four separate issues relating to the Directive, the Act, the
Code and legitimate expectation.
My Lord, in relation to the Code, as your Lordship has said in his judgment,
it was singularly unhelpful, but it was made, as your Lordship held, in
paragraph 54. From the outset the ITC had indicated, considered that if TVD
offered its rights to the public broadcasters it would strengthen its case.
Your Lordship refers thereafter to the meetings and statements to which that
refers.
At paragraph 56, your Lordship's conclusion was that ITC had done enough in
the present case, in relation to the following factors that:
"TVD was aware of ITC's view that offering the rights to the public broadcasters would strengthen TVD's case for consent, and had made representations as to why it considered there was no legal basis for the request, and TVD also made representations on the argument put to it that the Directive was concerned with the exercise of the rights and post acquisition conduct and knew that the ITC was concerned with this."
1.1.1.1.1.1. Your Lordship's conclusion was, that in the circumstances of
the case, although it would have been desirable for ITC to put the matter more
clearly, you did not accept Mr Leaver's submission that it was required to do
so as a matter of fairness, so in the context of this case and in the light of
your Lordship's judgment, my friend did not succeed on, in effect, the
legitimate expectation argument. Your Lordship rejected any argument that there
was unfairness to the degree that it took them home.
MR BEATSON QC: That is right, but the problem was, was it not, that in a
sense, colloquially, TV Danmark got itself into the position that it was in
because there was the Code which told it -- at the time it acquired the rights,
there was no indication that anything but the Code would be looked at. Later
on, they were asked to do other things.
MS APPLEBY: My Lord, anyone who purchases rights in the context of this
jurisdiction and in circumstances where they require consent -- in
circumstances where the giving of consent is relied upon the exercise of a
statutory discretion -- the discretion cannot be fettered in any way. That is
clear from the Directive, the Act and the regulations in the Code. The fact
that the Code is guidance and not a rigid set of criteria, my Lord, cannot
possibly have led TVD to assume that they would get consent. Indeed, if one
looks at the letters which were written at the outset, they were searching for
assistance with a view to ascertaining what information was required. They were
not letters which were written on Day 1, following purchase, `we have purchased
it on the basis that there is a fixed set of criteria which we have satisfied,
here is the information in relation to the acquisition to grant consent'. It
was not in that way at all, my Lord. The correspondence and meetings which
followed the purchase, which took place on 5th June, made it quite clear that
the ITC was extremely concerned on a much wider level than the mere
acquisition.
My Lord, what they are saying is and as they said at the substantive
application but lost, this is a fixed criteria. Once we ticked all the matters,
we are home. My Lord, it is not. It never would be and it never could be. If it
was, it would be fettering our discretion unlawfully. Indeed it would be
illegal for us so to do, in the light of the Directive and the Act, whilst a
submission made in the skeleton argument was that, in effect, the Directive
could be ignored because it did not bind public authorities, that was
erroneous.
MR BEATSON QC: It is true, that they could not fetter their discretion
on that, but that they were required to give guidance as to the matters they
had taken into account. As I have said, in the circumstances of new
legislation, it may be understandable, that there is force in the submission.
The statutory regulator, when taking on board a new piece of legislation --
where there is a statutory obligation to give guidance as to what it is doing,
what factors it is going to take into account -- has failed to do that. You
say, well, they may not have done it in the Code but, long before the decision,
TV Danmark knew where they stood.
MS APPLEBY: My Lord, I say they may not have done it sufficiently
clearly in the Code. What was submitted before was, that all one was entitled
to look at was the acquisition only. Once one had set up a clear and fair
acquisition process, that let them into the exercise of exclusive rights. That
was quite clearly, we respectfully submit, a misreading of both paragraphs 24
to 26, the Directive and to the Act, because the Act clearly made a difference
between the acquisition and exercise of the rights purchased. In effect, the
dispute was that acquisition is exclusive, that is all you look at. You cannot
look at anything that happens post-acquisition. As your Lordship has held, it
would have been unlawful for us not to have looked at the post-acquisition
events.
MR BEATSON QC: My reading of paragraphs 24 to 26 was that what the
Commission said was, that `yes, the Directive says that we have to look at the
exercise of the rights and, the criteria that we look at will be similar to a
list of criteria that all refer to acquisition'. Unless it is contended that
looking at the circumstances after acquisition is similar to the circumstances
at acquisition, how is that similar?
MS APPLEBY: My Lord, that is assuming that one is looking at the
acquisition once and for all. It would also mean that once one has acquired, if
that be right, it did not matter whether one acquired last year, last week or
two years ago, one only looks at the acquisition. It was an interpretation
which, in the context of the three matters, could not stand. It was "guidance
only, shall have regard" and whatever one says, my Lord, it is virtually saying
that this is more than guidance, it is written in stone.
My Lord, as your Lordship was aware from the argument, the four, five or six
hours it was before your Lordship----
MR BEATSON QC: We must not rerun that.
MS APPLEBY: No, it was not actually spent on just this part. We looked
at the Directive, the Regulation, the Act and the background. My Lord, at the
end of the day, TVD has lost on each and every aspect. The only criticism that
your Lordship has had is that the Code needs to be revised. It would be quite
wrong on that foot to have no order as to costs, because that is not reflecting
what took place, particularly, my Lord, when one takes into account that your
Lordship found that before the decision was made by ITC, the Applicant knew the
position and stance of the Commission. They knew that it was looking at the
events post acquisition, and they had actually suggested that public
broadcasters -- you looked at that specific factor.
My Lord, at the time they requested the Commission to make a decision, namely
the letter of 11th August, they clearly knew that the Commission was minded to
refuse because they were looking at events post-acquisition.
My Lord, in relation to costs, we respectfully submit that one would have to
look at TVD's position and knowledge of the Code and status at the time of the
commencement of the litigation, not necessarily the acquisition, and they knew
quite clearly, not only at the time the decision was made but also at the time
that they commenced litigation, that other matters would be taken into account.
There was no finding that section 104 was breached by the Code.
They knew the position of the Commission, and yet they persisted in arguing,
right until the end, that it was a fixed set of criteria. That is why we were
continually taken aback, right up to the interim relief, on the acquisition.
Look at the acquisition, fair. Look at what we have paid, etcetera.
My Lord, therefore, we submit that costs are there to reflect the final
position of the litigation, and that there should be no order as to costs in
the context of a case where the Applicant has lost on each and every issue.
Your Lordship was aware as to how the skeletons were put which, we respectfully
submit, were not in a proper order.
MR BEATSON QC: Ms Gloster, I have, I hope, showed, although in moderate
terms, some sympathy for the position TV Danmark has found itself in. For the
reasons Ms Appleby makes, in particular the fact that by the time of the
decision in August, the Commission's position was known to them, I am going to
make the usual order for costs, because the case was fought on four grounds. Mr
Leaver made it clear that the allegations of Grounds 1, 2 and 3 were important
and that the legitimate expectation ground was not the main ground.
MS GLOSTER: As your Lordship pleases. In relation to permission to
appeal, we would invite your Lordship to give TV Danmark permission to appeal
as permission is required under the current rules.
The criteria for granting leave is a real prospect of success; in other words,
as the authorities have held, arguable and not fanciful.
The first ground of your Lordship's decision -- again, I am very concerned not
to reargue the case, and not to go behind your Lordship's judgment. The first
ground of your Lordship's decision, and I am looking here at paragraph 45 of
your judgment, is that your Lordship held that the ITC did not misdirect
itself in law in determining that to grant consent to TV Danmark would be
contrary to the terms of the Directive and section 101B(1) of the 1996 Act.
Your Lordship sees that from the last sentence of paragraph 45. Again, I do not
want to reargue the point.
MR BEATSON QC: You would say it is arguable that I am wrong.
MS GLOSTER: It is not only arguable, but your Lordship clearly thought
that TV Danmark's submissions on the point of construction and the various
points of----
MR BEATSON QC: At the close of argument I said there was a strong
prima facie case.
MS GLOSTER: Your Lordship clearly thought they were cogent. You
described them in paragraph 32 as a strong prima facie case and that was
after you heard full argument from my learned friend and you granted the
interim declaration. Your Lordship has clearly had second thoughts and I am
not, in any way, complaining about that but, in our submission, this is just
the sort of case involving an important point of statutory construction against
the background of the Directive that the Court of Appeal should be given an
opportunity to look at, and to test whether your Lordship's preliminary
conclusion was right or whether your Lordship's second thoughts were right.
MR BEATSON QC: There was a prima facie case. We tackled it at a
gallop. At the end of the gallop, it was clear there was a prima facie
case. The case was arguable and the ITC did not resist permission. At that 4.40
p.m. on Friday, it seemed more sensible to reserve judgment.
MS GLOSTER: Indeed. Your Lordship, in our submission, and again I do not
want to go behind your judgment, clearly could not have made an interim
order.
MR BEATSON QC: I am just coming back at you on the words "second
thoughts".
MS GLOSTER: I stand corrected. This is clearly an important issue on the
Directive and on the construction of section 101B. It is a point of
construction that is going to have importance for broadcasters in this country
as well as for those who are regulated here but are broadcasting elsewhere. It
is the relationship between the Directive and section 101B(1) and how one is to
construe the different wording of the Directive. I remind your Lordship that
3a(3) uses different wording, as I am sure your Lordship will recall: "Ensure
they do not exercise in such a way that a substantial proportion". It could be
said that there is a cause or connection between the exercise of the rights and
the depravation of the possibility. Whereas, in section 101B, where the consent
procedure is provided for, there is no cause or connection between the
prohibition on a television programme provider, not exercising his rights to
televise the whole or part of an event which is a designated event, where a
"substantial proportion", save where consent is given.
So the issue that arises is whether consent may be given - and it is one of
the issues that arises on the question of construction, `whether consent may be
given in circumstances where the exercise of the rights is regarded as not
causing or not being exercised in such a way that a substantial proportion of
the public is being deprived, albeit that the conditions of section 101B are
satisfied; that is to say, the situation is one where a substantial
proportion', which brings in the consent procedure. In our submission, again, I
am not in any way wanting to reargue the case. Here your Lordship has, in fact,
determined on your construction that it would not have been lawful for ITC to
have consented to TV D's request, and you said, well, in the circumstances, the
Directive is not complied with because your Lordship has held or appears to
have held that TVD was exercising its rights so as to deprive and, therefore,
consent could not be given. One might wish to argue in the Court of Appeal that
your Lordship, with respect, has not noticed or has not taken into account the
difference----
MR BEATSON QC: In such a way....
MS GLOSTER: Yes, in such a way -- I do not want to go into the
argument.
MR BEATSON QC: I see this is the first time this provision has come
before the court, I understand and it was the first time it came before the
Commission. I can see that all our judgments are open to....
MS GLOSTER: I am much obliged. Again, the fact that the Code may be
amended will not meet the point of argument because the meaning and
relationship between the two will still be there even if additional criteria
were put in the Code.
The second point which again, in my submission, makes this case one that is
proper for appeal and is a point that my clients might wish to argue on appeal,
is the point that your Lordship makes at paragraph 42, where your Lordship
about a third of the way down the paragraph says:
"But the safeguard lies in the ability of the regulator... to give consent where such abuse has been established."
Again, without rearguing it or going behind your Lordship's judgment, there
is clearly attention, we would submit, between your Lordship's view that on the
one hand the ITC could not have given consent here, because to do so would have
been inconsistent with Article 3a(3) of the Directive and, on the other hand,
your Lordship is saying, `yes, they can, where abuse has been established,
notwithstanding, in your Lordship's views or in ITC's view that 3a(3) has not
been complied with because the exercise is still in such away that a
substantial proportion of the public may be derived.' We say, and this is
something we want to argue on appeal, that actually the answer is in the
consent procedure and the difference in the wording in 101B which does not
include the causative requirement.
We would want to argue, in addition, that on the facts here, that neither the
ITC nor, with respect your Lordship, gave consideration to the evidence that
just came in during the course of the proceedings. That the other Danish
broadcasters, that is DR and TV2 -- that the evidence before your Lordship was
not only that they were abusing their dominant position in the original bidding
process, but that the two rounds of bidding in May and June 2000 when it was
clear from the evidence that they had combined together to make a joint bid was
substantially below UFA's estimate of the market value, but that there was also
sufficient evidence before your Lordship and before the ITC which is what they
received during the course of the hearing.
There was sufficient evidence before your Lordship and the ITC to demonstrate
that it was clear that the commercial intention and likelihood of the two
Danish public broadcasters was to continue the approach -- the abuse which they
had previously indulged in, in the bidding process. It was clear that they
were only prepared to offer together, 2.5 or 2.6 million Danish kroner for each
match, and that they were going to continue to do so together in a collusive
way, and that that was sufficient evidence upon which the ITC should have
formed a view that it was appropriate to give consent. That was not part of our
original ground, it could not have been, because we did not have that evidence
at the time. It is perfectly clear we would wish to submit, from the evidence
that they did put in, that even if we were to reoffer, their clear intention is
only to offer the 2.5, 2.6 figure below the market price and that they were
clearly going to, particularly in circumstances where TV Danmark had lost this
case before your Lordship. The chances of them putting their bid up was very
remote indeed. That further evidence was something that the ITC should have
taken into account as evidence of likely abuse. My Lord, for both those
reasons, we would invite your Lordship in the particular circumstances of this
case to grant permission to appeal.
MS APPLEBY: My Lord, firstly we would submit that this is not an
appropriate case for permission to be granted. In response to the submissions
made by my friend, we make the following points: first of all the starting
point on the construction is the Directive, which has to be given a purposive
construction and has to dominate the construction of the statute. Where the
Directive states, in Article 3(a)3:
"do not exercise the exclusive rights purchased in such away that a substantial proportion..."
The words, as we argued, my Lord before you, were in fact the overriding
words and their meaning could not be altered by the Act using the word "where".
My Lord, therefore, whilst one is embarking on a rerun of what was argued
before your Lordship, your Lordship looked at that particular submission and
rejected it, quite clearly, in the judgment.
MR BEATSON QC: Is the difficulty not where the test is arguable, in a
sense, it is a sort of Catch 22 in judicial review. Let me just say, I do not
want to stop you, but I am minded, on the basis of what I have heard, to give
permission, because, although I have accepted your submission, it is not the
position that Miss Gloster takes important points of construction and the
section fit together, there is the question of construction which is a real
point.
MS APPLEBY: My Lord, there is an arguable case. We accepted there was an
arguable case and did not oppose permission, in effect, for leave and we would
not have been able to argue the substantive point if there had not been an
arguable case.
MR BEATSON QC: It has to be more than that.
MS APPLEBY: My Lord, it has to be more than that, otherwise every single
case for judicial review would go on appeal as it used to and this is really to
drop it out. In fact, the law is quite clear, there are as many cases on it as
we put before you, that the Directive is almost the starting point and the
finishing point and has to be given a purposive construction. Your Lordship
dealt with that fully and clearly in the judgment. My Lord, we respectfully
submit, in relation to arguments on words in such a way or where, and whether
it includes causation or not, they are not arguments that can justify taking
the case to the Court of Appeal.
My Lord, in relation to the second point my friend made, the abuse point, the
abuse by the two Danish broadcasters and sufficient information before ITC to
have concluded that the Danish broadcasters, in effect, were trying it on. All
those points were put before your Lordship. They were fully dealt with in the
skeleton and, indeed, they were carried in this part of the skeleton to show
that one could reach the most absurd results, because the Commission could
insist on going on and on.
My Lord as to the 2.6 figure which my friend has mentioned, that was in the
newspaper report dated 18th August.
MR BEATSON QC: Its was also in the form of Dutch marks which I think Mr
Choo-Choy translated for us. It was also in the papers in the responses from
the Danish companies to the Commission, they adapted most of it, but they did
not actually take all the figures out, the figures were there.
MS APPLEBY: My Lord, clearly what one does in the commercial world, in
arguing and negotiating, you argue and negotiate to get yourself in the very
best position, and they are not going to put their first bid forward and say,
`call it a day', they can see the position the Applicant has got themselves
into. All the Commission were saying is, we, as the exclusive decision-maker,
exercising our discretion, are not satisfied that you have provided us with
sufficient information to, in effect, cancel out the two Danish public
broadcasters. My Lord, the argument by my learned friend would mean that the
Commissioner has made a perverse decision, because it could only have gone one
way on the evidence that one had before it. My Lord that, we respectfully
submit, is a factual matter and not a matter that can possibly justify taking
this case to the Court of Appeal. My Lord, whilst it is the first case and
whilst it is a case of importance to the Applicant and to the Commission, we
respectfully submit that for the reasons we have given, it would not be proper
-- and this is not a case which falls within the requirements, namely we submit
that it does not, on the information one has, have a real prospect of success
and there is no other compelling reason why the appeal should be heard. My
Lord, those are our submissions.
MR BEATSON QC: I am going to grant the Applicant permission to appeal. I
do consider that there are questions about the way the Directive and section
101 fit together and which, in this fast moving and highly contentious area,
deserve sorting out at that level.
Before I rise, I should say that copies of this judgment will be made
available for you. Can I read out the way that I have put the amendment to
paragraph 32, the penultimate sentence, where I add a sentence:
"I have in mind the need to afford some comfort to TVD from action against them by the ITC in respect of the broadcast of the first match and the knowledge that the ITC would take the interim declaration into account in considering any disciplinary proceedings against TVD".
MS GLOSTER: I am much obliged.
MR BEATSON QC: It is not exactly the same words.
MS GLOSTER: Your Lordship will let the parties have a copy of it. Thank
you.
MS APPLEBY: My Lord, may we ask that the final version of the judgment
could be made available as soon as possible?
MR BEATSON QC: What we can do is, we are making copies for the Press.
You may have a copy of this with the correction that I think Ms Gloster
suggested, and also this addition can be given to you and then the final
version will come later.
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