Attheraces Ltd & Anor v The British Horseracing Board Ltd & Anor

The British Horseracing Board Ltd is the governing authority for horseracing in Great Britain. Its activities include the maintenance and operation of a computerised database containing a large amount of information relating to horseracing in Great Britain. Part of the data thereon comprises pre-race information (“Pre-Race Data”) such as the place and date of race meetings, the distance over which a race is to be run, the list of entrants, the owner and trainer of each entrant, the list of declared runners and riders, the weight to be carried by each runner, its saddlecloth number and the number of the stall from which it will start. BHB Enterprises plc is a wholly owned subsidiary. Its object is the commercial exploitation of such data rights through licensing agreements with third parties. As no distinction is to be drawn between the holding company and its subsidiary for the purposes of this action I shall refer to them individually and collectively as “BHB”.

Attheraces Ltd (“ATR”), formerly called Go Racing, seeks to exploit commercial opportunities arising from horseracing in Great Britain and overseas. It has obtained exclusive rights of access to certain racecourses in Great Britain and the Republic of Ireland so that it may produce audio and visual coverage of horse races. It exploits that coverage by four means, namely, an ATR branded website (“the ATR Website”), an ATR branded TV channel available to satellite and cable subscribers in the United Kingdom and Ireland (“the ATR Channel”), an ATR branded international bookmaker audio-visual service (“ATR International”) and a service called SIS Facts (“SIS Facts”). The distinction between ATR International and SIS Facts is that the former service is available to bookmakers in countries where fixed odds betting is illegal but the latter is not.

From May 2001 to 29th March 2004 ATR enjoyed exclusive rights of access to 49 of the 59 racecourses in Great Britain under a Media Rights Agreement. From various commencement dates to 29th March 2004 it also enjoyed rights to BHB’s pre-race data under a binding term sheet agreement between BHB and ATR made on 25th June 2001. The combination of the two enabled ATR to provide a service under which bookmakers and the general betting public might take and place bets and then view the race. Both agreements terminated on 29th March 2004, ATR was then restructured and relaunched its service on 11th June 2004. It is with that service that this case is concerned.

By an agreement dated 28th March 2002 (“the PA Agreement”) made between BHB and PA News Ltd (“PA”) BHB had appointed PA to collect data at horse race meetings, to combine it with BHB’s own pre-race data and to distribute the resultant package to end-users who had a valid and subsisting licence from BHB for the use of its pre-race data. Such end-users were PA subscribers and distributor licensees. The consideration due to BHB by PA was a sum equal to 10% of its income from such end-users to be paid to BHB as and when the cumulative receipts of PA from end-users exceeds the costs of providing its service. That time has not yet arrived. Not only was the authority of PA limited to distribution of the package to those with licences from BHB but clause 11.8 of the PA Agreement required PA to discontinue any supply after receipt of notice from BHB that the end-user in question did not have a licence from BHB.

Following the reconstruction of ATR it entered into a number of relevant agreements, including the following:

In addition, in May 2004, ATR entered into negotiations with BHB with regard to the grant by the latter to the former of a new data licence. This was against the background of the reference by the Court of Appeal to the European Court of Justice in British Horseracing Board v William Hill of questions designed to ascertain whether BHB enjoyed in respect of its pre-race data any database rights under Directive 96/9/EC (OJ 1996 L 77 p.20)(and, consequently, under Copyright and Rights in Databases Regulations 1997 SI No:3032) and if so whether they had been infringed by the use made of such data by William Hill. On 9th June 2004 the solicitors for ATR specifically reserved ATR’s position pending the final determination of the issues by ECJ. Negotiations continued during the summer and autumn 2004. On 9th November 2004 ECJ gave its ruling in British Horseracing Board v William Hill. ATR claims that such ruling established that BHB had and has no such database rights in relation to pre-race data. This is not accepted by BHB and the matter was further considered by the Court of Appeal on the first day of the hearing of the applications before me. The Court of Appeal gave judgment allowing the appeal on 13th July 2005. Accordingly, subject only to a further appeal, it is now established that BHB does not have database rights in relation to pre-race data.

At all events the determination of the preliminary issues by ECJ undermined the negotiations between BHB and ATR for the new data licence agreement. In the course of further correspondence in February, March and April 2005 BHB threatened to cause PA to stop supplying the pre-race data to ATR unless it entered into a data licence and paid arrears allegedly due in respect of its use of such data since June 2004. ATR was prepared to pay such arrears into an escrow account pending the resolution of the dispute but that was not satisfactory to BHB.

These proceedings were commenced by a claim form issued on 21st April 2005. ATR contends that the threat of BHB to prevent PA supplying pre-race data to ATR constitutes the abuse of a dominant position for the purposes of both s.18 Competition Act 1998 and Article 82 of the EC Treaty. It seeks declarations that BHB has no intellectual property rights in its pre-race data and injunctions to restrain BHB from causing PA to terminate the supply of such data. On the same day ATR issued an application for an interim injunction to restrain BHB from causing any such termination. This was countered by an application by BHB issued on 12th May 2005 for an order striking out or summarily dismissing that part of the claim which relies on s.18 Competition Act 1998 and Article 82 of the EC Treaty. On 27th May 2005 a similar claim was struck out by Laddie J in the case of BHB Enterprises plc v Victor Chandler (International) Ltd [2005] EWHC 1074 (Ch) (“VCI”). On 10th June 2005 ATR applied for permission to amend its particulars of claim. I do not understand that application to be opposed if I decide not to strike out or summarily dismiss the claim. It is, in any event, agreed that I should determine the first and second applications on the basis of the proposed amended particulars of claim.

Accordingly the issues which arise are:

It is necessary to have a broad understanding of how horseracing in Great Britain is funded. In paragraph 9 of his judgment in VCI Laddie J explained:

It is also necessary to consider the contractual relationship between BHB and PA in more detail. The PA Agreement to which I referred in paragraph 4 above is described as an agreement for “a data compilation and delivery service”. It recites that BHB “arranges for the receipt, compilation, verification and supply to third parties of the Pre-Race Data (as defined below)”.

“Pre-Race Data” is defined in clause 1 as:

In addition

So far as material clause 2 provides:

By clause 3.1 BHB granted to PA a non-exclusive licence to use and reproduce all or part of the Pre-Race Data but only as part of the “Data Package”. The consideration for that grant provided for by clause 3 is £1 and 10% “of the total income (less VAT) [PA] receives from providing the Service to End Users per year, but excluding revenues received by or on behalf of the PA from Distributor Licensees”. Clause 3.3(b) provides that PA “is only obliged to begin payment to BHB...when PA first realises a profit from provision of the Service to End Users”. Profit is defined as an excess of cumulative revenues from provision of the Service to End Users less the cumulative direct costs of providing the Service and a reasonable pro rata attribution of cumulative overhead costs. Clause 3.4 provides that “all supplies of Pre-Race Data to End Users shall be on the Service Terms which shall include reference to the BHB’s ownership of the rights in the Pre-Race Data...”.

Clause 4.1 recognised that “PA is entitled to charge a fee or fees for the provision of the Service to End Users as determined by the costs to PA of providing the Service to End Users and the state of the market for the Service from time to time...”. Finally I should refer to clause 11.8 which contains an undertaking from PA “not [to] enter into any agreement with any person to become an End User or continue to supply such End User with the Data Package after receipt of notice from the BHB if an agreement has already been entered into with such End User where that person does not have an appropriate rights licence from the BHB to use the Pre-Race Data”.

Schedules 3 and 4 contain pro forma agreements for use by PA with its Distributor Licensees and PA subscribers as foreshadowed in the definition of Service Terms in clause 1. In each case PA agrees to supply specified information for use by the distributor/licensee in its information service to subscribers. The consideration for that supply is based on the number of subscribers to the relevant information service. PA does not warrant the accuracy of the information supplied and the customer acknowledges that intellectual property rights remain the property of BHB, PA or other licensor.

As I indicated in paragraph 5(3) above there are two basic contracts between PA and ATR. The first in time is that effective from 18th October 2004. This follows the form authorised in Schedule 3 of the PA Agreement for use by PA in connection with a Distributor Licensee. By clause 1 PA agrees to supply to ATR “the information and material set out in Schedule 2” defined as “the PA Material”. The PA Material comprises race cards containing for each race a list of horses, saddle-cloth number, name of horse and non-runners, the tote prices and the results. For this material ATR agreed to pay to PA a one-off set-up fee and minimum annual fee of £52,000. The fee of £52,000 was based on ATR supplying such information, in conjunction with its audio-visual coverage of the race to 1,000 betting shops or premises. If ATR had more such outlets the annual fee to PA was increased in accordance with a scale set out in clause 4. Equally the annual fee might be reduced in the event that PA was unable to supply the BHB material.

The second agreement effective 1st January 2005 is in the form authorised by Schedule 4 of the PA Agreement for use by PA in relation to a PA Subscriber. By that agreement PA agreed to supply ATR with “the information/material set out in” Schedule 2, defined as the PA Material. Schedule 2 to this agreement prescribed a wider range of information relating to races in the UK, Ireland, France and the US. The charges for that information are specified in schedule 3 to the agreement and, if all the information was taken by ATR, could amount in all to £100,000 per annum.

The negotiations started with a letter from ATR to BHB rejecting the suggested terms put forward on behalf of BHB and proposing alternatives. On 28th April 2004 BHB served a statutory demand on ATR in respect of unpaid fees amounting to £823,381 for sums (including VAT) allegedly due under the Media Rights Agreement and in respect of overseas licences granted by ATR to bookmakers as agent for BHB. There was a meeting between the parties on 12th May 2004 at which the representatives of ATR and BHB discussed what licences ATR would need from BHB in connection with its proposed website and TV subscription channel. Further requests for such information from ATR were contained in an e-mail and letter dated 14th May and 2nd June 2004 respectively.

On 9th June 2004 solicitors for ATR wrote to BHB:

BHB responded on 10th June 2004:

There were further meetings and much more correspondence in the summer and autumn. ECJ gave judgment in the William Hill case on 9th November 2004. On 15th November 2004 ATR wrote to BHB:

BHB responded by letter dated 17th November 2004. It contended that ECJ had exceeded its jurisdiction and misunderstood the facts of the case. It claimed that BHB was entitled to copyright in some elements of pre-race data to which the ECJ judgment had no application. The writer offered to discuss the matter. On 3rd December 2004 ATR replied. The writer acknowledged that it might be helpful to meet to discuss the copyright claim and continued:

As far as ATR was concerned there matters rested until 10th February when BHB wrote to confirm a telephone conversation that morning that:

ATR responded on 14th February 2004 rejecting the proposal made by BHB and expressing surprise:

On 22nd February 2004 BHB wrote refuting the various complaints made by ATR. The writer continued:

After a further exchange of correspondence BHB wrote on 17th March claiming that the judgment of ECJ

The terms now sought by BHB are set out in the witness statement of its chief executive, Mr Greg Nichols, made on 12th May 2005. They are:

In his second witness statement Mr Ian Penrose, a director of ATR, draws attention to the discrepancy between the charges BHB seeks to make for the use of its pre-race data on the ATR website and channel when compared with such use on ATR International and SIS Fact Service. The former is an annual fee of £3,600, the latter, if alternative (d) is adopted is £1,049,400. What, asks counsel for ATR, is the justification for such a charge if BHB is not entitled to any intellectual property rights in its database?

S.18 Competition Act 1998 provides that:

In its amended particulars of claim ATR sets out details of the parties and their businesses (paragraphs 1-6), the BHB database (paragraphs 7-10), the former agreements (paragraphs 11-16), the supply of pre-race data (paragraphs 17-19), the course of the negotiations for a licence and the William Hill judgment of ECJ (paragraphs 20-23), the threat by BHB to terminate the supply of pre-race data by PA (paragraph 24) and the terms of s.18 Competition Act 1998 and Article 82 of the EC Treaty (paragraphs 25-27).

Paragraphs 28-30, reproduced in the appendix to this judgment, set out ATR’s case that BHB has abused its dominant position. It contends that the relevant market is the supply of pre-race data to those who require it for the services they provide to their customers such as bookmakers and the producers of TV channels and that BHB has a position of dominance in that market (paragraphs 28 and 29). In paragraph 30 it sets out its contentions that BHB has abused that position in a number of respects summarised under the headings (1) unjustified cessation of supply (paragraphs 30.1-30.4), (2) unfair purchase or trading conditions (30.5-30.7), (3) excessive price (30.8), (4) exploitation by unilateral imposition of terms (30.9) and (5) elimination of a competitor or product on a downstream market (30.10 and 30.11). In paragraph 30.12 ATR contends that such abuse will or may affect trade within the UK and/or trade between EU Member States.

In the light of those allegations ATR seeks injunctions to restrain BHB from, in effect, cutting off supplies of pre-race data to ATR (paragraph 31). In addition it seeks declarations (paragraph 32) that BHB enjoys no database rights or copyright in the pre-race data and that it is not lawfully entitled to require ATR to enter into a direct data licence as a condition of obtaining a continued supply of such data.

BHB seeks an order striking out pursuant to CPR Rule 3.4(2)(a) and/or (b) summarily dismissing under CPR Rule 24.2(a) the claim that BHB is abusing its dominant position set out in paragraphs 25-31, 32(f) and declaration (f) of the Particulars of Claim. Thus it must show either that ATR has no reasonable grounds for bringing that claim or that ATR has no real prospect of succeeding on it and that there is no other compelling reason why the issue should be disposed of at a trial.

The principal submission for BHB is that the issue has already been determined in its favour by Laddie J in VCI and I should follow it. ATR contends that Laddie J was wrong in law and that this case is distinguishable on its facts. ATR contends that I am not bound by the decision of Laddie J and should not follow it. The response of BHB is to the effect that the objections to the conclusions of Laddie J on both the law and the facts are without foundation.

Accordingly I must consider at the outset the decision of Laddie J in VCI. VCI was and is a bookmaker carrying on business from Gibraltar. There were three relevant agreements, the PA Agreement, an agreement between PA and Newcote Services Ltd of which VCI was a part and a data licence agreement between BHB and VCI. VCI considered that the judgment of ECJ in the William Hill case had destroyed the intellectual property rights underlying the data licence. It contended that such agreement was void and stopped paying to BHB the sums payable thereunder. BHB commenced proceedings against VCI for breach of contract and threatened to cause PA to stop supplying pre-race data to VCI, as it was entitled to do under the PA agreement. In its defence VCI contended that BHB was abusing its dominant position by forcing or attempting to force VCI to pay to BHB charges under its data licence which were abusively high and excessive.

The relevant allegations were in the following terms:

Laddie J dealt with this claim in paragraphs 40-60 of his judgment. He assumed that the allegations in paragraph 35 were arguable. In paragraph 41 he noted the argument of counsel for BHB that even if dominance in the relevant market, as alleged, was arguable VCI had failed to raise a proper case that there had been an abuse. In paragraphs 42 and 43 he referred to the function of pleadings and of the particular care to be expected of a party who pleads a breach of s.18 of the Act or an Article 82 offence. He observed:

I pause there to observe that the particulars of claim in this case (see appendix) are materially different. First, ATR alleges abuses other than excessive prices, namely unjustified cessation of supply, unfair purchase or trading conditions, exploitation by unilateral imposition of terms and the elimination of a competitor or product on a downstream market. Second, the allegation of excessive prices goes much further than the comparable allegation in VCI. In paragraph 30.8 of its proposed amended particulars of claim ATR alleges in detail why it contends that the prices charged by BHB are both excessive and unfair. Thus ATR avers that it is unreasonable and unfair to double prices charged in so short a period of time (paragraph 30.8.3), to use its charges to discriminate against foreign bookmakers (paragraph 30.8.4), to discriminate against ATR in its capacity as a broadcaster (paragraph 30.8.5), to make ATR responsible for the liabilities of foreign bookmakers (paragraph 30.8.6/7) and to render ATR unprofitable (paragraph 30.8.8). Counsel for BHB observes that these allegations might have been made in VCI. So they might, but they were not and ATR was not a party to those proceedings. It follows that the decision of Laddie J in VCI is distinguishable on these grounds alone and cannot determine the outcome of this application. However I should refer to the subsequent paragraphs of his judgment which deal with an aspect of the law on which BHB placed some reliance.

In those subsequent paragraphs Laddie J considered a further argument of counsel for BHB that there was an underlying defect in the case for VCI which no redrafting of the pleading could overcome. In paragraph 47 he summarised the argument for VCI that “the rate charged by BHB for the Pre-Race Data is unfair, whether or not database rights exist”.

The views of Laddie J in relation to the factual allegations made by VCI in this connection are apparent from paragraph 45 of his judgment where he said:

Laddie J returned to this point in paragraph 48. He observed:

In paragraph 50 he referred to the decision of ECJ in United Brands v Commission [1978] ECR 207. As this is central to the argument I set out the passage quoted by Laddie J in full.

Other ways may be devised – and economic theorists have not failed to think up several – of selecting the rules for determining whether the price of a product is fair.”

In paragraph 51 Laddie J commented:

Laddie J then referred to passages in Bellamy & Child European Community Law of Competition 5th Ed para 2-115 and the opinion of the Advocate-General in Oscar Bronner v Mediaprint [1998] ECR I-7791 and concluded:

Laddie J then referred to evidence from the Finance Director of BHB as to the manner in which the income is fed back into the promotion and improvement of British horseracing. His conclusions in paragraphs 59 and 60 were:

The judgment of Laddie J has been subjected to minute examination and sustained criticism by counsel for ATR. As this is not the trial of the action I can take the matter more shortly. Counsel submits that the first step in any consideration of unfair pricing is to compare production costs with the price charged. This, he submits, is clearly stated in paragraph 252 in United Brands and recognised in the subsequent paragraphs 254-267 to which Laddie J did not refer. It is supported by paragraph (111) of the European Commission’s decision in Duales 2001 OJ L 166/1, paragraph 67 of the European Commission’s XXVIIth Report on Competition Policy, paragraph 2.2 of the OFT Guideline 414 (September 1999) paragraphs 6.11-6.13 of the OXERA Report commissioned by the OFT made in July 2003 and in paragraphs 390-392 and 402 NAPP Pharmaceutical Holdings Ltd v Director General of Fair Trading Case No:1001/1/1/01. It is submitted that in paragraphs 45, 48 and 51 Laddie J failed to appreciate that such a comparison is a necessary first step.

Counsel for BHB contends that Laddie J was right on this issue. He submits that it was a fully reasoned judgment which I should follow notwithstanding that this is an interlocutory application. I do not agree. The judgment of Laddie J was directed to the pleaded case before him. As he had observed, the allegation made was one of excessive pricing but the statutory test requires a claimant to establish unfair prices. I agree that United Brands and subsequent cases show that excessive pricing is, at least in all normal cases, the essential first step in establishing unfair pricing. VCI’s pleaded case started and stopped with excessive pricing which, as Laddie J observed is insufficient. If and to the extent that Laddie J may have considered that a comparison of cost and price was irrelevant then I disagree with him. Accordingly for this reason also I do not consider that the judgment of Laddie J in VCI is in any way determinative of this application.

Counsel for ATR also criticised other aspects of the judgment of Laddie J. He submitted that there is no warrant in the authorities for the statement in paragraph 56 that value of the asset to both vendor and purchaser must be a crucial part of the assessment. He contended that as BHB does not rely on Article 86 of the EC Treaty the matters referred to by Laddie J in paragraphs 57 and 58 cannot be relied on to swell the costs of production. As the judgment of Laddie J is not determinative of this application, I shall deal with these submissions on their merits in due course and not by reference to what Laddie J said about them.

It is common ground that in the action it will be incumbent on ATR to establish that (1) BHB enjoys a dominant position in the relevant market, (2) BHB has abused that position in one or more of the relevant senses and (3) there is no objective justification for that abuse. On this application I am concerned with different questions, namely whether ATR has reasonable grounds for beginning the claim and whether it has a real prospect of success. In connection with those questions Counsel for ATR referred me to the speech of Lord Hope of Craighead in Three Rivers DC v Bank of England (No 3) [2003] 2 AC 1, 260, with which Lord Steyn, and Lord Hutton agreed.

Lord Hope of Craighead found the distinction between the two tests to be elusive but that in many cases the practical effect would be the same (paragraph 92). He considered that in difficult and complex cases observance of the overriding objective was more important than any distinction between the two tests. He continued:

ATR’s case on the first issue, namely whether BHB enjoys a dominant position in the market is set out in paragraphs 28 and 29. Paragraphs 9.1 – 9.3 of the Particulars of Claim set out passages from the OFT Rule 14 Notice issued in April 2003, ECJ’s judgment in William Hill and BHB’s own report entitled “The Modernisation of British Racing” paragraph 4.1.1. Each of them refers to the essential nature of the pre-race data to bookmakers and the fact that BHB has an effective monopoly in its supply. BHB disputes this but its Counsel accepted, correctly, that I cannot determine that issue on this application.

The alleged abuses on which ATR relies are set out in considerable detail in paragraphs 30.1 – 30.11. These allegations involve substantial and complex issues of fact as well as of law which I cannot determine on this application. Similarly the effect of the abuses, if made out, on trade within the UK or between Member States is alleged in paragraph 30.12 and is or at least involves a question of fact. None of these matters can be determined on this application.

So I turn to the third ingredient over which much of the argument raged, that of objective justification. BHB contends that ATR is refusing to pay anything at all to BHB for the pre-race data it receives via PA. It submits that a refusal to pay for a supply is, par excellence, an objective justification for preventing any further supply. It relies on Leyland DAF v Automotive Products [1994] 1 BCLC 245. ATR does not dispute the proposition of law but strenuously denies the allegation that it has not paid for the pre-race data. It points to the considerable sums it has paid and continues to pay to PA, the supplier authorised by BHB. BHB does not dispute these payments but seeks to draw an analogy with the case of a paper shop and a delivery boy. It submits that payment to the delivery boy is not payment for the paper.

The agreements to which I have already referred in detail show that ATR pays substantial sums to PA for the pre-race and on-course data with which it is supplied. PA is liable to BHB for substantial sums for the pre-race data it obtains from BHB and supplies to PA. The fact that PA does not have to pay it to BHB until it has covered its costs is a term of the PA agreement but does not diminish the value of what ATR pays and receives. Accordingly it is not correct to say that ATR has not paid anything for the pre-race data emanating from BHB. Nor in my view is it correct to draw an analogy between a delivery boy and PA. PA is paid for the information, part of which it has obtained itself, as well as for its supply. The fact that BHB has not received anything from PA is because of the terms of the PA agreement to which it adhered in what is to be presumed to be its own economic interests.

It is quite true that under the PA agreement PA is not authorised to supply anyone with whom BHB does not have a direct agreement, sometimes called a rights licence. Accordingly it is not disputed that BHB has the contractual right to prevent further supply, the question is whether it can exercise that right without abusing its dominant position and that depends on whether it is objectively justified in requiring further payment from ATR. It cannot justify such a demand as a licence to use its intellectual property rights because it has no database right and, as appeared to be common ground, copyright does not arise except in a very tangential form. So, for what does it seek to charge ATR?

Ultimately the objective justification on which BHB relies is twofold: (1) its responsibility for horse racing in Great Britain requires it to finance much of those activities and therefore entitles it to charge the cost of doing so to those who profit from them, such as bookmakers; (2) unless ATR enters into the licensing agreements BHB wants foreign bookmakers, who do profit from such activities but are not liable for the levy, will pay less than their British counterparts. ATR challenges both these suggested justifications.

Article 86(2) of the EC Treaty provides:

These are points of novelty and considerable public importance. They are fact sensitive. They may require a reference to the European Court of Justice. They are unsuitable for determination on an application such as this. I am unable to conclude that ATR has no reasonable grounds for bringing its claim nor any real prospect of success. Accordingly I dismiss the application of BHB to strike out or for summary judgment dismissing the claim of ATR under s.18 Competition Act 1998 and Article 82 of the EC Treaty.

By its application issued on 21st April 2005 ATR seeks an injunction to restrain BHB from ordering, instructing, requesting or otherwise soliciting or encouraging PA or anyone else to cut off or otherwise interfere with the supply of pre-race data to ATR. Its original contention was that there was a seriously arguable case for such an injunction at trial and that the balance of convenience and the status quo indicated that an interim injunction should be granted now. My decision on BHB’s application and certain recent correspondence between the solicitors for the parties has narrowed the area of dispute.

The reasons for my decision not to strike out or give summary judgment on the claim also support the view that there is a seriously arguable case for the grant of an injunction at trial. Accordingly I must consider the balance of convenience. By a letter dated 26th May 2005 ATR offered to pay into an escrow account with its solicitors £900 per fixture since 11th June 2004 for overseas use of the pre-race data on ATR International and SIS Facts and £3,600 per annum from 11th June 2004 for use of such data on its website and channel. The sum so paid in would remain there pending final judgment in the action or order of the court. This was to be in exchange for an undertaking from BHB not to cause any interruption in the supply of pre-race data to ATR.

By a letter dated 8th June the solicitors for BHB rejected that offer on the grounds that it was unacceptable and unworkable. On 30th June 2005 the solicitors for BHB reconsidered the matter and wrote to those for ATR indicating that the offer would be acceptable if ATR entered into BHB’s standard form of agreement and paid to BHB, instead of into the proposed escrow account, the sums mentioned in their letter of 26th May 2005. This was unacceptable to ATR because it questions the ability of BHB to repay such sums if it is unsuccessful in the action.

The sums in question are those which BHB had originally sought in February and March 2005. Thus they are, effectively, agreed as being adequate payment pending judgment in the action for the continued supply of pre-race data. Their payment by ATR must be a condition for the grant of any interim relief for they represent the minimum sum for which ATR would be liable on its cross-undertaking in damages if it lost the action. But I see no sufficient reason for requiring them to be paid to BHB. One of the principal grounds advanced by BHB why I should not grant any injunction at all is that it would, if granted, encourage others to follow where ATR had led and deny to BHB the resources it requires for discharging its functions. If this fear is well founded then to lose the action would indeed lead to the wholesale refusal to pay BHB anything more for its pre-race data which it fears. This would jeopardise its ability to repay ATR.

If no interim injunction is granted then the supply of pre-race data by PA to ATR will be stopped. It is essential to the conduct of its business because although similar data can be taken from the newspapers it is by no means necessarily up to date; up to date and accurate information is crucial to bookmakers and punters alike. I do not think that the loss of business so caused could be properly compensated in money.

Thus the balance of convenience as well as maintenance of the status quo both favour the grant of an injunction. There is no reason why such an injunction should encourage others to follow the example of ATR because ATR will be required to pay out that for which they are prospectively liable if they lose. But I remain concerned that BHB is not kept out of the money for any longer than may be necessary if, in the event, it is shown by the judgment at trial that it is entitled to it.

Counsel agreed a timetable on 30th June 2005 designed to enable the trial to take place on 1st October 2005. The timetable required

In all the circumstances:

The particulars of claim as set out in the appendix to this judgment are in the form for which ATR seeks permission to amend. No argument has been addressed to me on the merits of the application but I did not understand it to be opposed if, as I have, I dismissed BHB’s application to strike out. Accordingly subject to any further argument on that application I will give the permission sought.

For all these reasons:

BHB and BHB Enterprises are (for the reasons set out above in paragraphs 9.1-9.3 above) in a dominant position in the market for the supply of Pre-Race Data and/or the Relevant Pre-Race Data to those in the horse racing industry in the UK and/or worldwide that require such information for the services they provide their customers (in particular, bookmakers and those that produce TV channels or internet sites relating to UK horse racing). Further, the BHB and/or BHB Enterprises enjoy a position of dominance that is an effective monopoly in this market. In particular,

The price that the BHB considers that it is able to charge in relation to the BHB Data (i.e. many times its cost of production) demonstrates that the BHB is able to behave to a significant degree independently of customers and competitors in the aforesaid market for the supply of the Pre Race Data and/or the Relevant Pre Race Data.

It is an abuse of a dominant position to cease to supply (or threaten to cease to supply) goods or services to an existing customer (whether directly to a customer or sub-distributor or indirectly through instructions to a sub-distributor to cease supply to a customer of that sub-distributor) without objective justification.

Further or alternatively, it is an abuse of a dominant position to cease to supply (or threaten to cease to supply) an essential facility to a customer without objective justification.

In the present case the BHB has threatened to cease to supply (or to cause PA and/or SIS and/or sub-distributors of its data to cease to supply) the Claimants with the Relevant Pre-Race Data and/or to instruct SIS to discontinue its supply of data to overseas bookmakers receiving the SIS FACTS service.

The only justifications advanced by the BHB in the present case is the refusal of ATR to enter into a data rights licence and/or the refusal by ATR to authorise the payment to the BHB by SIS of revenues earned from the production and distribution of the SIS FACTS service to third party overseas bookmakers to “regularise” the fact that such overseas bookmakers have not entered into data licence agreements with the BHB. Without prejudice to the fact that the burden of proof lies on the BHB to show objective justification, these matters do not amount to an “objective justification”.

The attempt to tie the provision by PA to ATR of a continuous feed of the relevant Pre-Race Data to the entry by ATR into the proposed “licence agreement” amounts to the imposition of “unfair purchase” or “unfair trading” conditions. In particular, given that no data (or other intellectual property) rights subsist in the Relevant Pre-Race Data, the condition that ATR should enter into a licence of such non-existent rights or authorise payment for them cannot be a fair purchase or trading condition.

Further or alternatively, the instructions to SIS to discontinue its supply of the SIS FACTS service to overseas bookmakers unless ATR authorises the payment by SIS to the BHB of revenues earned from the production and distribution of the SIS FACTS service amounts to the imposition of “unfair purchase” or “unfair trading” conditions. In particular, given that no data (or other intellectual property) rights subsist in the Relevant Pre-Race Data, the condition that ATR should authorise the payment of sums alleged due under licences of such non-existent rights or authorise payment for them cannot be a fair purchase or trading condition.

Further or alternatively, the BHB’s attempt to charge for a licence agreement in respect of intellectual property rights which do not exist is of itself an abuse of its dominant position. In particular, given that ATR already pays PA for the supply of the data in question, it is an abuse of a dominant position for the BHB effectively to demand payment twice for the provision of the same service (i.e. the supply of the Relevant Pre-Race Data).

Further, and/or alternatively, even if, which is denied, there is some other justification for the BHB charging in respect of its data even if there are no such intellectual property rights subsisting in it, then the BHB has sought to impose an unfair or excessive selling price. In particular:

The BHB anticipated in 2002 that its data licensing income would amount to approximately £550 to £600 million over 5 years. Further, the BHB anticipated in June 2004 that its data licensing income would increase from £110 million per annum in 2003 to £140 million per annum in 2006.

By contrast, the total cost of compiling the entire BHB database is a mere £4 million annually.

Accordingly, the proposed licence fees are out of all proportion to the economic value of the Relevant Pre-Race Data and the cost of its production.

At paragraphs 16 to 19 of the Second Statement of Mr Nichols served in these proceedings the BHB sets out what it purports to charge ATR in relation to the ATR International and SIS Facts services. First, the BHB seeks to charge ATR 10% of its own gross profits received from foreign bookmakers in respect of the ATR International and SIS Facts services. In addition, it demands one of the following from ATR (in relation to the ATR International and SIS Facts services):

For the reasons set out below, the New Charges demanded by the BHB are an unfair or excessive price and amount to an abuse of a dominant position contrary to the Chapter II Prohibition and Article 82.

The figure of £1800 per fixture represents a doubling of the previous charge of £900 per fixture that the BHB sought to impose by their letter and invoice dated 10 February 2005. The BHB alleged by their letter dated 31 March 2005 that SIS had agreed the previous charge of £900 as “fair and reasonable”. A doubling of that charge to £1800 is both unfair and unreasonable.

The New Charges discriminate against overseas bookmakers. In particular:

It would be, in any event, more burdensome for foreign bookmakers to pay for the data licences than it is for British bookmakers to pay the Levy. In particular, the Levy is paid free of VAT, whereas VAT would be paid in respect of the data licences by foreign bookmakers located in other Member States of the European Union.

The foreign bookmakers to whom ATR sells its ATR International service and to whom SIS sells its SIS Facts service, are not selling primarily to customers (i.e. bettors) based in the UK but rather to foreign bettors. Accordingly, foreign bookmakers sell to a very different market, namely, a foreign bettors’ market that is, by contrast with the British bettors’ market, interested in a large variety of foreign race and other products and may have no specific interest in (or knowledge of) British racing in particular. The value to foreign bookmakers of British racing (and hence data relating to British racing), therefore, is generally much less than the value of British racing (and hence data relating to British racing) to British domestic bookmakers. By seeking to charge bookmakers selling to (predominantly) foreign bettors in the same way as bookmakers selling to domestic bettors, the BHB are treating unlike cases alike (a form of discrimination).

Further, the New Charges the BHB threatens to impose would discriminate against ATR in its role as a supplier of broadcast services to overseas bookmakers. In particular, the BHB demands that ATR should pay (in addition to sums that would be due from overseas bookmakers under the “data licences” sought by the BHB, referred to in paragraph 30.8.1(a)) 10% of ATR’s own profits received from the overseas bookmakers. The BHB imposes no such charge on ATR in its capacity as a supplier of broadcast services domestically (instead, the BHB seeks to charge only £3,600). Moreover, ATR believes that the BHB imposes no such charge on other broadcasters that supply broadcast services to domestic bookmarkers or bettors.

Further, it is not fair to seek to charge ATR on the basis that it should, in effect, be made liable for any alleged “default” by foreign bookmakers (to whom ATR or SIS supply their broadcast services) to enter into “data licences” with the BHB. In effect, the BHB seeks to compel ATR to be an unpaid tax collector for British racing by demanding that ATR should act as collection agent for the BHB in respect of “data licences” for foreign bookmakers.

ATR will not, in practice, be able to ensure that foreign bookmakers (to whom ATR sells its broadcast services) enter into the data licences that the BHB seeks to impose on those foreign bookmakers. This is because:-

In the premises, ATR itself (a broadcaster not a bookmaker) will have to pay the New Charges (or most of the New Charges) that the BHB seeks to impose. Those New Charges are unfair in relation to ATR for the following reasons:

If ATR were to pay the New Charges, the imposition of those charges would mean that it is doubtful that ATR would be able to make a profit from ATR International and it is doubtful that the SIS Facts service would be profitable to SIS or ATR.

If ATR were to pay the New Charges, ATR would be paying more in relation to the rights to the Pre-Race Data than it pays the racecourses for the rights to the pictures. This can be contested with the position under the former agreement between the RCA and SIS, for the year 2002, in which only approximately 2% of the total payment for pictures and data was in respect of data for use world-wide. The proportion of this money to cover use of the data other than by British bookmakers (i.e. for foreign bookmakers) was no more than approximately 0.16% of the total cost of the pictures.

ATR would be charged more by the BHB in relation to the Pre-Race Data than it is charged in other Member States of the European Union, such as Ireland, for equivalent or similar data.

If ADR were to pay the New Charges, ATR would be paying to the BHB more than 50% of the revenues it receives from the ATR International and SIS Facts services.

Since the Judgment of the ECJ in the William Hill Case, it has been clear that the Pre-Race Data is no longer protected by database rights. Further, ATR does not believe that the Pre-Race Data is protected by copyright. Accordingly, there is no longer any legal impediment to third parties copying or reproducing the Pre Race Data from publicly available sources (e.g. the Racing Post) or from ATR’s own services. It follows that the value of a licence of the Pre-Race Data to licensees or the supply of that data electronically from the PA and/or SIS to recipients (such as ATR and foreign bookmakers) has fallen. Notwithstanding this fall in the value of the Pre-Race Data (arising from the absence of intellectual property right protection in the Pre-Race Data), under the New Charges the BHB seeks to charge more in relation to the Pre-Race Data than it did previously (i.e. when it was generally considered that the Pre-Race Data was protected by database rights or copyright.

Further, in light of the Judgment of the ECJ in the William Hill Case, if the Levy were abolished and the BHB sought to actually charge British bookmakers the New Charges under data licence agreements, it is unlikely that British bookmakers would pay such charges. It is not fair or reasonable to expect or require ATR to collect from foreign bookmakers (or to pay itself) charges that would not, in practice, be paid by British bookmakers.

Furthermore, even if data or other intellectual property rights did subsist in the data, or there does exist some other justification for some form of payment to the BHB, the threatened conduct by the BHB amounts to exploitation of its dominant position in order to put undue pressure on a customer that is dependent on it to accept terms that are both unfair and unilaterally determined by BHB. In particular, it would still require the payment by ATR of an excessive (and/or discriminatory) sum for the use of the intellectual property.

The inability to provide the Relevant Pre-Race Data to its customers/viewers would have a seriously damaging effect on the business of the Claimant and/or threaten to eliminate ATR and/or ATR UK (or certain of their services) from the market. In particular, without the Relevant Pre-Race Data:

The ATR Website would lose the critical “race card” feature which is central to its success and, accordingly, its attraction to viewers/consumers (and hence its viewing figures) would be much reduced;

The ATR Channel would either cease to function altogether or its attraction to viewers/consumers (and hence its viewing figures) would be much reduced;

SIS FACTS service would either cease to function altogether or its attraction to viewers/consumers (and hence its viewing figures) would be much reduced;

ATR International would either cease to function altogether or its attraction to viewers/consumers (and hence its viewing figures) would be much reduced with the result that the provision of the service to new international markets and countries would likely be prevented or delayed.

Accordingly, the threatened conduct would be likely to lead to the elimination of a competitor (ATR) on a downstream market (for the provision of British horseracing programming to television channel and/or audio-visual service distributors and/or websites and the provision of associated bookmaking services to consumers/viewers) and/or the elimination of innovative products on that downstream market provided by ATR (namely, the ATR channels, audio-visual services and websites and/or the ATR channels and websites in their current form) and/or damage the interest of consumers and/or impede or reduce competition on that downstream market.

The ATR channels, audio-visual services and websites and the SIS FACTS service are provided to customers in the UK and in other Member States of the European Union. Accordingly, the aforesaid abuse consisting of the threatened conduct will or may affect trade within the UK and/or between EU Member States.