Guidance on Pay-TV Exclusivity in Apartment Developments
What’s our general view on pay-TV exclusive agreements?
The Competition Authority (predecessor of the CCPC) conducted a detailed investigation into the agreements entered into between builders and pay-TV providers in apartment blocks. These agreements often bound apartment residents to initial exclusivity periods of five years. The Authority formed the view that these agreements were not likely to breach competition law if they were not longer than five years in duration.
What was behind these agreements and their duration?
During the construction boom we regularly received complaints from people living in apartment buildings who were prevented from choosing their own TV provider. This was because builders often entered into exclusivity contracts with TV providers during the construction phase. Apartment residents were then bound by this exclusivity when they moved in, and did not have the option to switch to other TV providers who might offer cheaper packages, better service and reliability, a greater variety of channels, or bundled TV, telephone and broadband packages.
Following a detailed investigation, in 2010 the Authority found that initial exclusivity periods were not likely to breach competition law if they were not longer than five years in duration. This is because putting pay-TV infrastructure into new apartment developments is expensive, and pay-TV firms were not willing to cover that cost unless they were guaranteed a return on their investment in the form of exclusivity. Otherwise, developers ran the risk of having no pay-TV provider available to residents.
However, after five years have passed, pay-TV firms should have recouped the cost of their investment, and residents should be able to switch to any pay-TV provider which is willing to install infrastructure at the development.
In reality, this did not happen in a number of cases because alternative pay-TV providers have to get permission from the management company to install infrastructure in the common areas. The management company was often still controlled by the builders, and not by the residents. This was due to a legal loophole which allowed builders to control the management company until every apartment had been sold. In many cases, the management company did not act in the interests of residents, and did not allow competing pay-TV companies to install infrastructure.
What are my options?
The Multi-Unit Developments Act 2011 requires the apartment complexes to establish ‘Owners’ Management Companies’ which are composed of apartment owners and will be responsible for items of common interest to residents. This new legislation should allow for alternative or competing pay-TV services to be available in apartment developments, if that is what owners want.
The Authority at the time of its investigation also found that blanket bans on having satellite dishes erected on apartment balconies were not likely to breach competition law. However, we welcome the fact that various local Authority planning guidelines recommended that shared satellite dishes should be allowed on apartment rooftops, in order to facilitate greater choice of pay-TV provider, while at the same time avoiding numerous satellite dishes appearing on balconies and side walls.
To recap:
- Bans on erecting satellite dishes on apartment balconies are permitted under competition law
- Limited exclusivity periods following construction are permitted under competition law
- Residents should generally be free to switch provider after a maximum of five years’ exclusivity
- Under new legislation, owners’ management companies should be able to decide on behalf of residents which pay-TV providers can offer services to residents
- Pay-TV providers have the absolute right to decide whether or not to offer service to a development
Is there more detail on this topic?
The Authority published the above Pay-TV Exclusivity Guidance note and Pay-TV Exclusivity Decision note following this investigation, in which we gave our view that these agreements are not likely to infringe competition law.
