UPDATE 1-UK court sends BSkyB's pay-TV terms back for review

Mon Feb 17, 2014 11:02am EST

LONDON Feb 17 (Reuters) - Britain's Court of Appeal on Monday ruled that a lower court should look again at how pay-TV group BSkyB sells its sports channels to rivals, in the latest twist in a near four-year battle.

Market regulator Ofcom ruled in March 2010 that Rupert Murdoch's BSkyB should make its two main sports channels available to rivals such as Virgin Media and BT at a lower price.

Sky, which built its business around offering exclusive sports programming, responded by taking the case to the Competition Appeal Tribunal (CAT). When that ruled in its favour, BSkyB's rivals took the case to the higher Court of Appeal.

On Monday, the Court of Appeal said it could not uphold the earlier CAT ruling because it had failed to take into consideration whether the prices charged by Sky gave rise to "competition concerns" for its rivals.

"The only way in which this error can satisfactorily be dealt with is for the order of the CAT of 6 March 2013 to be set aside and for the matter to be remitted to the CAT for further consideration, findings and conclusions," the court said.

BSkyB, which offers pay-TV, broadband and telephony to customers in more than 10 million homes, said the CAT would now only look at a very specific aspect of the case. Sky said the ruling did not change the fundamental finding that it had engaged constructively with other distributors over the supply of its sports channels.

"Sky continues to believe that Ofcom's 2010 decision is flawed and that the (wholesale) obligation ought properly to be removed, and will continue to pursue all available options to achieve this aim," it said.

Shares in BSkyB were up 1 percent at 899.50 pence by 1450 GMT, when the FTSE 100 index was up 1.2 percent.

Regulator Ofcom said it welcomed the ruling.

"Ensuring fair and effective competition in the pay TV market has always been Ofcom's objective," it said. "Ofcom's 2010 decision that Sky must offer premium sports channels to other providers was designed to deliver choice and innovation to consumers through greater competition."