Fox cartel probe takes a Dutch twist after dawn raids in Europe
The dawn raids on European broadcasters, including Rupert Murdoch’s Fox Networks Group, suggest that the European Commission has strong evidence of alleged wrongdoing in a football media rights auction, a legal expert says.
Dutch sports media company Ziggo Sport has revealed it was also raided, leading to speculation the Commission is investigating a potentially anti-competitive deal sewing up Dutch football broadcast rights.
However, the Commission said the raids were "preliminary" and did not necessarily imply any company had broken the law.
The Commission would likely have been looking for evidence of communication between companies competing for the rights, said Alex Haffner, a sports and regulatory lawyer and head of competition law at London firm Fladgate.
What exactly they were investigating was a matter for speculation, he said.
"But dawn raids are quite a significant step to take because typically you only use those powers if you have quite strong suspicions of wrongdoing.
"You can’t just turn up unannounced without enough grounds… they would have seized a lot of electronic material to go away and review. They will definitely have been fairly well-informed as to what they were looking for. It can’t just be a 'finger in the air'."
There are significant incentives for whistleblowers in such cases, including "leniency" or even immunity from prosecution, Haffner said.
"My initial suspicion is [the investigation] is something to do with premium sports rights auctions and the way people have - or haven’t - participated in those auctions."
The stakes are high for Fox: the maximum fine for breaching European competition law is a tenth of the group’s entire global turnover. FNG’s parent 21st Century Fox collected $US28.5 billion ($36.7 billion) in revenue in 2017 of which $US3.1 billion came from Europe, according to its annual report.
On Tuesday, the European Commission - the European Union’s executive government - confirmed its officials had carried out "unannounced inspections in several member states".
The Commission said it would not confirm the names of the companies or the countries involved.
FNG confirmed it was "cooperating fully with the EC inspection".
FNG is a subsidiary of 21st Century Fox, managing Fox’s entertainment, sports and non-fiction TV channels in Europe, Asia, Latin America and Africa.
It owns a controlling stake in Eredivisie Media and Marketing, which owns the Dutch Premier League (known as the Eredivisie) media and sponsorship rights.
Endemol Shine, half-owned by Fox, also has a significant stake in EMM. Endemol is the biggest sports producer in the Netherlands, producing FOX Sports Eredivisie and FOX Sports International channels.
Ziggo is Fox’s main competitor in sports broadcasting in the Netherlands - its cable arm owns the rights to the UK Premier League, Spain’s La Liga and the Champions league.
VodafoneZiggo Group confirmed in a statement it had been inspected by European regulators but would not comment further.
The Commission keeps a close eye on the companies that win European football rights because they deliver a lot of market power, said Haffner.
"Football rights have this real ability to attract a particular consumer demographic, particularly those attractive to advertisers," he said. "The Commission and other authorities have decided it’s important to monitor carefully how these rights are tendered and who won them."
There was a risk that consumers’ interests would not be served if one particular broadcaster became "entrenched". The Commission wants to ensure that every bidder has an equal opportunity to win the rights each time they are up for auction, Haffner said.
The Commission said the companies it was investigating had been active in the distribution of media rights or broadcasts relating to sports events.
"The Commission has concerns that the companies involved may have violated EU antitrust rules that prohibit cartels and restrictive business practices," it said in a statement.
The inspections were a "preliminary step" in investigating suspected anti-competitive practices, and did not mean the companies were guilty of anti-competitive behaviour.
The investigation comes at an awkward time for Fox, as its proposed takeover of Sky is also being investigated by the UK’s competition regulator, which has raised preliminary concerns over media plurality. Its final report is due at the end of the month.
Labour deputy leader Tom Watson said the role of Fox in a potential sports rights cartel in Europe should be considered by the regulator before it made a final decision.
Sky was involved in a fight with the Commission ten years ago over football rights. The Commission had called for an end to Sky’s 15-year monopoly of the Premier League, and forced Sky to share the spoils with other broadcasters, most recently BT Sport.
21st Century Fox is also fighting formal anti-trust proceedings initiated by the Commission in 2014 over licensing agreements between several US film studios and European pay-TV broadcasters, it said in its 2017 annual report.
The Commission claimed the studios, including 21st Century Fox, were acting anti-competitively by blocking consumers from accessing pay TV services in other European countries.