Australia's ACCC targets exclusive 3G sport deals

January 30, 2005

Australia's competition watchdog is to clamp down on deals that would allow telecommunication companies such as Telstra snapping up exclusive rights to major sporting events and stifling competition in areas such as 3G mobile telephony.

Australian Competition and Consumer Commission (ACCC) chairman Graeme Samuel said there may be several avenues under the Trade Practices Act to prevent Telstra from aggregating vital content assets.

"Clearly the ACCC has any concerns where there's an aggregation of assets; in this case, content to be transmitted by whatever means that may lead to an anti-competitive result," Samuel told ABC radio.

"In the area of 3G telephony, we now have the real potential for, at the very least, Hutchison, Vodafone, Optus and Telstra to be making major inroads in the joint venture arrangements they've reached on infrastructure.

"We wouldn't want to see any of those particular competitors aggregating all the valuable sporting content that might be ... an integral part of the bundling and of the competition in this area, such that they excluded other competitors."

Samuel said he was not singling out Telstra but could see the potential for a dominant market player to use rights over certain content to their competitive advantage. Telstra has just under 40% of the Australian mobile phone market, followed by Optus with 36% and Vodafone 17%.

Optus and Vodafone have an agreement to share a 3G mobile telephone network while Telstra and Hutchison Whampoa also have an agreement to share a 3G network.

Samuel said he wants to be sure that competition can thrive, such that no one party have absolute dominance in the Australian environment.

"We are doing it at this early stage because there are already signs that some of the major sporting bodies are moving to commence negotiations for the acquisition of their rights for the years 2007 and onwards at a time when for example 3G telephony will start to become potentially a significant part of the mobile telephony market in Australia."

He noted the Australian Football League has said it is contemplating negotiations on a new rights deal early this year before its five-year arrangement with Telstra, Foxtel, and television broadcasters the Nine Network and Ten Network Holdings expires in December 2006.

Responding to Samuel's comments, Telstra angrily denied its negotiation of exclusive rights to major sporting events could be anti-competitive.

"The issue that should not be ignored is that acquisition of content rights is a very competitive business," Telstra national manager, media relations, Michael Grealy said. "The owners of the content seek to extract maximum price for their content and they use exclusive rights to bring themselves a greater return.

Grealy said the ACCC appears to act as policy maker instead of a regulator.

"There can be no suggestion made that Telstra is in breach of the Trade Practices Act in this area."

Samuel said the ACCC was examining the issue now because a number of sporting rights agreements are due to expire. Rights to Australian Football League games coverage is due to expire in 2006, as are rights to coverage of the National Rugby League.

Optus said exclusive rights deals effectively denied Australians choice and called on the ACCC to crack down on such arrangements.

"Customers from all networks should get access to the sports they want to see," an Optus spokesperson said. "If Telstra gets its way then too much content will be locked up behind legal bars by Telstra rather than being available to all.

"The ACCC should use its powers to block exclusive deals because they are not in the interests of consumers."