Sky likely breaches Commerce Act, gets off with a warning

Sky likely breaches Commerce Act, gets off with a warning

The Commerce Commission has found that Sky Network Television likely breached section 27 of the Commerce Act so it issued the company with a warning not to do it again.

ComCom found that certain provisions in Sky's contracts with telecommunications retail service providers (RSPs) were "likely" to have breached the Commerce Act but says the breach is "unlikely to have the effect of substantially lessening competition" and is "unlikely to cause harm in the future". 

The slap on the wrist is the result of an 18 month investigation into the historical breaches. 

ComCom says Sky had the purpose of "substantially lessening competition". "“We believe that Sky entered into historical agreements with RSPs that had the purpose, effect, or likely effect of substantially lessening competition," says ComCom chairman Mark Berry.

“However due to market developments, the key commitments Sky has with RSPs are unlikely to continue to have the same effect. For example the new sports pay TV product from Coliseum and the recent exemption granted by Sky to Telecom to market this product. ” he adds.

Sky got a warning letter in the mail and ComCom says it will continue to monitor its contracts.

“However, if evidence is brought to the Commission’s attention that competition is, or is likely to be substantially lessened, we will take the necessary enforcement action to remedy the situation and ensure that the long term interests of consumers are protected. In this respect we reserve the right to draw the warning letter that has been sent to Sky, to the attention of a court in any subsequent proceedings against Sky," says Berry.

“A case like this could take several years to conclude, costing several million dollars and finish in an era that is likely to be vastly different to the one we lived in when this breach occurred,” adds the chairman.

As part of the investigation, the Commission also concluded that Sky’s contracts with content providers were not likely to have breached the Commerce Act. 

ComCom reminds that the decision does not stop other parties from taking their own private action.

Reactions on Twitter this morning were less than positive with many people saying ComCom's decision was a victory for Sky and a loss for its customers.