RAI-RTI-CECCHI GORI COMMUNICATIONS (Conclusion of investigation)
PRESS RELEASE
The Antitrust Authority rules against RAI, RTI and Cecchi Gori Communications regarding agreements for television rights to broadcast major sports events
The Antitrust Authority has completed two investigations into RAI, RTI and Cecchi Gori Communications relating to agreements governing television broadcasting rights for major sports events. The Authority considered these agreements as restricting competition, in violation of Section 2(2) of the Antitrust Act, and imposed fines on all three broadcasting companies totalling an aggregate 2.5 billion lire.
In the course of its investigations, the Authority ascertained that the relevant markets affected by the agreements between these broadcasting companies television rights to broadcast sports events with large audiences, and commercial TV advertising.
The broadcasting of major popular sports events regularly attracts large numbers of viewers, who are a very appetizing target audience for commercial advertisers. By accustoming TV viewers to selecting the channels on which these events are televised, the availability of broadcasting rights for them enables television broadcasting companies to make the most of their programme schedules, and can produce effects on the television commercial advertising market.
The first of these two proceedings was instituted following a complaint to the Authority, to which was annexed an anonymous document setting out the substance of an agreement between RAI and RTI over broadcasting rights for the Football Championship, the Italian Cup and the European Football Championships, Formula I and the Giro d'Italia cycle race.
With the discover of the original agreement on the premises of RAI, and taking into consideration other evidence that emerged during the course of the investigation, the Authority ascertained that in May 1996 RAI and RTI had concluded an agreement to divide between them the main sports events, and to exclude Cecchi Gori Communications from access to these rights (specifically undertaking not to assign to CGC the broadcasting rights for the Football Championship and the Italian Cup Championship).
The Authority ascertained that the proposed sharing of broadcasting rights for the sports events as set out in the document covered more than 80% of the total value of those rights, and considered that the agreement between RAI and RTI was likely to restrict competition on the television commercial broadcasting market.
RAI and RTI account for over 90% of the demand for television rights and of the offering for television commercials. The Authority ruled that the sharing between these two broadcasting companies of sports television broadcasting rights would guarantee them a substantial share of the commercial revenues, and consequently reduce competition on the television commercials market.
By preventing Cecchi Gori from gaining access to the major sports broadcasting rights, the market-sharing arrangements agreed upon between RAI and RTI also prevented CGC from trading on the television commercials market.
With regard to the second investigation, the Authority found that the agreement between RAI, RTI and CGC dated 18th July 1997 relating to the Italian Football Cup for the seasons 1997/1998 and 1998/1999 contained a provision for the agreed sharing of rights to broadcast these matches between the three broadcasting companies in proportion to their respective audience shares, and was likely to restrict competition on the television commercials market.
For the Authority found that the sharing of rights and the formalities for doing so shored up these broadcasting companies' audience shares, thereby reducing the level of competition on the television commercials market.
Considering the serious nature of these offences against Antitrust legislation in both instances, the Authority decided to impose fines. RAI, RTI and Cecchi Gori have been ordered to pay fines totalling, respectively, 1,450 billion, 997 million and 12.5 million lire, within ninety days of receiving service of notice.
For serious offences, Section 15 of the Antitrust Act makes provision for a fine of between 1% and 10% of the turnover from the sale of the products forming the subject matter of the agreement. The fine applied in the first case was 3%, and the turnover used as a basis for calculating it was the income from marketing commercials connected with the main television sports broadcasting rights. This turnover was 47.5 billion lire for RAI, and 32.75 billion for RTI.
In the second proceeding, the Authority imposed a fine of 1% of the turnover, which in this case related to the marketing of commercials connected with television rights to broadcast the Italian Cup alone.
This turnover was 2.5 billion for RAI and 1.25 billion for CGC.