Digital TV row could end in court
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The company that lost the bid for the second digital platform has asked the European Commission to step in and declare the tender null and void on the grounds the entire competition process was flawed, to the consumer’s detriment.
LRG has filed a complaint with the Information Society and Media Directorate General of the European Commission regarding “manifest violations of EU antitrust laws.”
A group that includes three enterprises from other European countries, two from Greece and one from the UK, LRG this week bowed out of an auction for the right to broadcast digital television.
This week the license for the second digital platform went to Velister, a consortium of Cypriot television broadcasters, for €10 million. LRG stopped bidding at €9 million.
Velister won the auction after the procedure re-started after a month’s interruption prompted by recriminations between itself and LRG.
State telecommunications company CyTA, which also competed, withdrew in round seven, with its bid standing at €4.1 million.
The government has touted 2011 for the switchover from analogue to digital TV.
In a letter to the European Commission, dated August 12, LRG claims Velister sought to create a cartel of broadcasters to squeeze out any other rivals for the second digital license.
The complaint is lodged against Velister itself, but also concerns the Telecommunications Regulator’s handling of the auction.
In it, LRG urges the Commission to declare the participation of Velister, one of the rival bidders in the auction, as null and void ab initio [from the beginning].”
The company claims that Velister used its influence with politicians to exclude CyTA from the auction, after which it turned its attention to LRG itself by claiming that the latter and CyTA were colluding to win the competition. The Regulator dismissed the claim.
“It is clear that Velister was established with the aim of excluding other companies from entering in the auction and getting the license for themselves at the lowest possible price, since all of the aforementioned channels, which are otherwise competitors, were participating in Velister by way of cartel,” the complaint reads.
The Velister consortium consists of channels Antenna, Logos, Sigma TV, Plus TV, LTV and Alpha, and internet providers Primetel and Cablenet.
LRG claims Velister lobbied politicians so intensely that it managed to get parliament to pass a law forbidding CyTA from taking part in the auction.
On April 15, the House voted by majority the legislation restricting CyTA from participating alone, “therefore obliging CyTA to either merge with another applicant which would be in breach of the Tender documents or to withdraw from the auction. Indeed, the Law prohibits CyTA from participating alone by itself in the bidding, but does not prohibit CyTA from participating together with another entity!” the complaint reads.
LRG accuses the private Cypriot channels of “trying, through their joint venture and their dominant position, to prevent competition by stopping new players, such as our client, from entering the digital TV market.”
“We believe that the behaviour of the channels and the IPTV platforms amounts to a cartel and joint bidding by similar firms that would otherwise have been competing among themselves and that this is one of the most serious forms of anti-competitive behaviour,” the complaint concludes.
Yiannis Georgiades, one of the legal consultants for LRG, said all options were on the table, including challenging the competition process in Cyprus or European courts.
The European Commission will now study LRG’s complaint and, if it finds it is warranted, can either issue guidelines for the government (which are, however, non-binding), refer the matter to the European Court of Justice or decide to issue fines against all those involved (Velister and/or the state of Cyprus).
Though the Commission cannot force the government to cancel the competition, its opinion on the matter could serve as a powerful tool if LRG were to take its case to court.
CyTA chairman Stathis Kittis, who has admitted to meeting with officials from Velister but not with LRG while the competition was still ongoing, said yesterday he was willing to ‘testify’ before the European Commission if the latter decided to open an investigation into LRG’s claims.
And Stelios Chimonas, director of electronic communications (Communications Ministry) said the government would “respond” to any queries or demands made by the Commission. He declined to comment on what would happen in the event the Commission deems that LRG’s claims are founded.
source cyprus-mail.com
