The judgment ruled that despite being a
dominant player in the market for racing information, BHB was
entitled to charge high fees for its information because its
customers could, in turn, make significant income from the
data.
The BHB, which is the governing authority for
British horseracing, compiles databases of all the runners and
riders in horse races up and down the country and sells the right
to use and republish those lists to bookmakers, newspapers and
television stations. The lists are made available for publishing
the morning before the race.
Companies that are said to have a dominant
market position are held to more stringent rules when it comes to
competition law than other companies.
The High Court found that the BHB had a
dominant market position in the supply of its information, and that
it used that to charge too high a price for that information to web
business and overseas betting company Attheraces.
Attheraces Ltd is a joint venture between
media and racing companies BSkyB, Arena Leisure, Ascot Racecourse
and other racecourses. It challenged the BHB and won its case in
2005, but lost on appeal last week. It is believed likely to seek
permission to appeal to the House of Lords.
Attheraces had argued that the price of
information should be decided by working out the cost of producing
it and adding on a reasonable profit margin, a mechanism which was
backed by the High Court.
The Court of Appeal, however, ruled that that
BHB was entitled to justify high prices by looking at the economic
benefit that the information would bring to its customer, in this
case Attheraces.
Angelo Basu, a competition law specialist at
Pinsent Masons, the law firm behind OUT-LAW.COM, said: "BHB wanted
to charge Attheraces 50% of the profit that it made from
Attheraces' use of the database rather than just a mark up on the
cost to BHB of producing the database and Attheraces thought that
this was an excessive price and an abuse of BHB's dominant
position."
"The Court of Appeal turned around and said
no, you don't just have to look at it in terms of cost. Instead, it
focused on the question of the commercial use to which Attheraces
would put the information," said Basu. "The proper questions were,
what is the economic value to Attheraces of the information and can
the price charged by BHB be justified in that context? If it could,
it would not be abusively excessive."
The Court of Appeal ruled that it could, and
that such an approach was reasonable.
The case also touched on the controversial
issue of database rights, and slightly strengthened the BHB's
rights to exploit its own database.
The courts have had to decide before exactly
what database rights mean, in cases involving BHB. In a landmark
ruling of 2004 the European Court of Justice ruled that bookmaker
William Hill did not violate the BHB's database rights when it
published runners and riders lists online.
The ECJ found that the amount of information
carried by William Hill relative to the whole database was not
substantial. The database rights that the BHB sought to protect are
relative to the investment that an organisation puts into a
database's creation and maintenance. Here, too, the ECJ said the
investment was not substantial.
The ECJ drew a distinction between the
investment involved in creating horse races, which necessarily
involved creating lists of runners, riders, form information and
pedigree data, and the putting of that information into a database.
The BHB, it said, could not claim that all of its activity in
putting on horse races was solely for the purposes of creating a
database.
The ECJ said that the resources used by the
BHB in the course of organising horse races, to decide the date,
the time, the place and or name of the race and the horses running
in it, represented investment in the creation of the materials
contained in its database, which is not relevant in terms of the
Database Directive's protection.
In the Attheraces case, though, the Court of
Appeal said that BHB did not need a formal database right in order
to conduct commercial exploitation of its rights. The Court's
decision confirms that even where it has no database rights or
other intellectual property, an organisation still has the right to
commercially exploit the information it maintains, without such
commercial dealing being considered an abuse.
