Competition Bureau investigating Bell Media carriage agreements: court documents

The federal Competition Bureau is investigating whether BCE Inc. is using its stable of “high-demand television” channels to place “anti-competitive” restrictions on competing broadcast distributors, documents filed with the Federal Court show. In a July 19 application with the court, the Competition Bureau said it was “concerned that Bell is imposing, or seeking to impose, unlawful restrictions” on broadcast distributors that carry Bell-owned specialty channels, of which the company has 29. “As the owner of significant and high-demand television content, Bell itself has the ability to restrict the manner in which competing access and distribute Bell-owned content,” the bureau said in the application. “hese restrictions imposed by Bell prevent from offering television services responsive to customer demand.” The Competition Bureau said it launched an “inquiry” into whether those restrictions violate Part VIII of the Competition Act, which bars “major supplier” from imposing market restrictions that can “substantially lessen competition.” The bureau asked the court to order members of the Canadian Independent Distributors Group (CIDG)—which includes Bragg Communications Inc., the more than 100 members of the Canadian Cable Systems Alliance (CCSA), Cogeco Cable Inc., MTS Inc. and Telus Corp.—to hand over information to the bureau related to their carriage dispute with Bell Media. The carriage dispute was resolved last month following CRTC arbitration in which the commission sided with Bell's offer in an agreement with the independent distributors and with Telus in its agreement with Bell. According to court records, the distributors turned over the information to the Competition Bureau, which includes the affiliation agreements each distributor entered into with Bell Media following final offer arbitration hearings led by the CRTC on June 29. The information also includes the distributors final offers and earlier offers. An affidavit signed July 19 by Vincent Millette, senior competition law officer in the bureau’s civil matters branch, said the bureau sought “information detailing the precise nature of the restrictions being proposed and/or imposed by Bell on competing” distributors. Broadcast distributors pay specialty channel owners like Bell Media carriage fees based on the number of subscribers to each channel. At a CRTC hearing on the carriage dispute in March, the CIDG members said Bell was attempting to force them to put expensive specialty channels like TSN into packages that would guarantee those channels high penetration rates with the distributors’ TV subscribers. They also said non-linear (i.e., on-demand) programming rights such as mobile should be covered in the agreement. At the time, Bell said it had entered into carriage agreements with 159 other broadcast distributors under similar terms. In the CRTC's decision to end the carriage dispute, it agreed with Bell's proposal for a “penetration-based rate card” formula under which distributors pay more if they move popular channels into packages with lower penetration rates. Bell said the proposal was necessary to protect revenue streams derived from high-cost, high-revenue specialty services like TSN, Bravo!, and Discovery Channel, which help subsidize the cost of operating its less popular specialty channels. In the affidavit, Millette said the bureau pursued the court order after the CIDG members said they could not turn over the confidential documents voluntarily. A hearing to produce the documents, which was scheduled for Tuesday morning, was cancelled after the bureau received the requested information from the distributors, a separate notice in the court file says. In an emailed statement to The Wire Report, Bryan Parker, a Competition Bureau spokesman, said he could not confirm whether the bureau will pursue the investigation any further. “The Competition Bureau is required to conduct its work confidentially,” Parker said. “As such, we cannot provide details about specific investigations.” Parker drew attention to a May 2 statement from the bureau following its review of Bell and Rogers Communications Inc.'s joint-acquisition of Maple Leaf Sports and Entertainment (MLSE). The bureau said in a release at the time “that it had heard a number of serious concerns from market participants related to the effect of increased concentration and vertical integration in the broadcasting industry on consumers and others.” Bell spokeswoman Jacqueline Michelis said in an emailed statement that Bell’s carriage agreements with distributors “are designed to offer consumers maximum value, choice and flexibility.” She pointed to the commission’s decision to support Bell’s proposal in the carriage dispute with the CIDG, which she said “specifically endorsed and mandated Bell Media’s consumer-focused agreements.” “It was a precedent-setting and enlightened mandate from Canada’s broadcast regulator,” Michelis said. Michelis added that Bell Media has “the most robust mobile content offering in Canada, available to all Canadian mobile operators.” nkyonka@thewirereport.ca -- CORRECTION: An earlier version of the story incorrectly identified Bryan Parker's title at the Competition Bureau.

Competition Bureau investigating Bell Media carriage agreements: court documents

News | August 1, 2012

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Competition Bureau investigating Bell Media carriage agreements: court documents

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