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The Competition Court upheld FNE’s complaint of abuse of dominant position and imposed a fine of US$ 27,6 million on CDF, the highest ever imposed

16 / 05 / 2024

The Chilean Competition Court (TDLC) upheld the complaint filed by the National Economic Prosecutor’s Office (FNE) in 2020 against Canal del Futbol or CDF (TNT Sports currently), the Chilean football channel. According to the FNE, CDF abused its dominant position in the live football matches transmission market through a series of practices regarding pay-tv operators that hinder competition.

The decision stated that “the Court was convinced that the practices are not consistent with efficiencies put forward by CDF and that, in the present situation, clearly since July 2017, they are consistent with an abuse of the dominant position that CDF enjoy in the transmission of live football matches”. Therefore, the TDLC imposed a fine equivalent to US$ US$ 27,6 million on CDF.

This fine is the highest ever imposed by the TDLC on a company breaching competition rules. The Chilean competition law empowers TDLC to impose fines up to the double of the gain obtained from the infringement or up to 30% of the sales linked to the offense.

“The unanimity on this decision, the remedies established on CDF and the amount of the fine, which is the highest ever imposed by the TDLC to a firm in its 20 years of existence, demonstrates the gravity and importance of the abuses of dominant position within our competition environment. The prosecution of this type of behavior will continue to be a priority in our work”, stressed the Nation Economic Prosecutor, Jorge Grunberg.

The infringement

The investigation carried on by the FNE showed that since the creation of CDF in 2006, the company gradually implemented a series of commercials conditions on pay-tv operators that jeopardized competition. Among these were a minimum guaranteed payment, usually a number of subscriptions to CDF’s premium channels that operators had to compulsory pay. According to the TDLC, this practice allowed CDF “applied different average prices per premium subscribers among pay-tv operators, which is not justified in costs”.

Additionally, the TDLC ruled that both the control of discounts that an operator might offer to its subscribers regarding CDF’s premium channels and the imposition of resale prices regarding those signals were anticompetitive. According to the TDLC, the implementation of these practices, which allowed CDF to maintain the anticompetitive effect of the minimum guaranteed payment, limited the “incentives that pay-tv operators individually face” to offers discounts to consumers.  According to the FNE, both practices harmed consumers because they were not able to enjoy lower prices that could have existed in the market absent CDF’s restrictions on pay-tv operators.

A similar conclusion was reached by the TDLC regarding the obligation by which pay-tv operators were forced to purchase and deliver the basic CDF channel to all its subscribers as condition to access and sell the premium CDF channels. In this regard, the TDLC pointed out that this behavior harmed some operators to a greater extent than others and that the negative effect, at least partially, “has been passed on consumers that are no interested in football”. According to the FNE during the proceeding, all subscribers had to pay this cost regardless of whether they were football fans or not.

These practices were implemented by CDF on pay-tv operators given the monopoly it has on exclusive tv rights to broadcast Chilean football matches -which is a relevant content for the distributors and for those consumers that follow this sport-, among other factors that enabled the company to impair competition.

In its decision, alongside the fine, the TDLC ordered CDF no to condition the sale of its premium channels to the purchase of its basic channel, not to force the inclusion of any of its channels in television plans, as well as not to establish discriminatory minimum guarantee payments.