Bad News for SPFL – Court Allows £1.75 Million Damages Claim Against SPFL to Continue

The Inner House of the Court of Session has today upheld the decision of Lord Woolman in the case of the SPFL v Lisini Pub Management. The full decision can be read here.

In terms of this decision the Court has upheld the dismissal of the action brought by the SPFL to prevent the defender, which owns various pubs, showing SPL/SPFL football matches via a Polish decoder and for damages for breach by Lisini of an undertaking not to do so.

This case follows that where the English courts referred a similar dispute to the European Court of Justice and as Lord Woolman noted:-

“Put short, the ECJ found that clauses prohibiting the use of foreign decoders and smart cards were void. They constituted a restriction on competition and the [free competition] provisions of European law prevailed over the 1988 Act.”

Lord Woolman’s decision was challenged by the SPFL but this appeal has failed.

The action raised by the SPFL sought to prevent Lisini acting unlawfully by using the Polish decoder. Once the ECJ ruled that it was not unlawful to use such a device, then the court order sought by SPFL to prevent that unlawful act fell. An interdict is only competent against an act which is or would be unlawful.

Probably even worse for the SPFL is the decision of the Court too to allow the counterclaim by Lisini for damages to continue. Lisini claims damages of £1,761,749 from the SPFL on the basis that the interdict granted against Lisini in 2007 was unlawful and that Lisini has suffered losses as a result of that unlawful court order being granted.

The SPFL tried to have the counterclaim dismissed as not representing a valid legal claim. This failed.

The court ruled:-

[78] … The ECJ’s decision was that a particular type of obligation (namely an exclusive territorial licence granted to a broadcaster containing terms preventing the broadcaster from distributing decoder devices such that the broadcast could be accessed by viewers outside the particular territory) was, by its very nature, injurious to the proper functioning of normal competition in the internal market (unless other circumstances falling within its economic and legal context justified an alternative conclusion, which it would be for those seeking to uphold the restriction to establish: cf paragraphs 140 and 143 of the decision). …

[79] In the present case, there is no need for a particular averment by the defenders about what inter-state competition might be affected. The member states involved are obviously Poland and the United Kingdom, both members of the EC. Further the defenders offer to prove (admittedly on a “believed and averred” basis – with which the pursuers take no issue at this stage) that the restriction imposed by the contractual chain between the pursuers in the United Kingdom and Polsat in Poland, is that Polsat’s standard terms when supplying a decoding device must restrict the use of the decoding device to the territory within the Republic of Poland. We consider therefore that the defenders have averred sufficient to support a claim that the contractual chain described in paragraph [6] above was, by its very nature, injurious to the proper functioning of normal competition for member states. As the Grand Chamber said at paragraph 140:

” … where a licence agreement is designed to prohibit or limit the cross-border provision of broadcasting services, it is deemed to have as its object the restriction of competition, unless other circumstances falling within its economic and legal context justify the finding that such an agreement is not liable to impair competition.”

[80] Thus in terms of the ruling at page 102 R1 of the English Premier League case, such contractual arrangements by their very nature amount to “a restriction on competition prohibited by art.101 TFEU”. Accordingly we agree with Mr McIlvride that, in the context of any contract connected with that contractual chain, all that would be required of the defenders would be to aver the type of contract which by its very nature restricted normal competition, without the need to specify in any detail facts that would tend to show that the restriction would have an “appreciably injurious effect” on the market. It would be for the pursuers to “put forward any economic and legal context of such clauses that would justify the finding that … these clauses are not liable to impair competition and therefore do not have an anti-competitive object” (paragraph 143 of the English Premier League case).

…

We therefore consider that the ruling of the Grand Chamber in the English Premier League case applies with equal force to the undertaking, such that it is deemed, by its very nature, to have an injurious effect on normal competition within the internal market. Alternatively the defenders seek to establish that, because of the ex hypothesi void condition in the agreement with Polsat, the undertaking, on a proper analysis, would not have prevented them having the access to broadcasts which they wished to have. On either basis, they thus seek to establish inter alia that the interim interdict pronounced against them was, insofar as based on the undertaking, wrongfully obtained.

This decision is one which makes clear that the present model where the SPFL prevents (or tries to prevent) matches being seen on TV in Scotland from foreign broadcasters is doomed to fail. It also places in jeopardy the contracts the football authorities presently have with broadcasters. If a pub can show matches sourced via another broadcasters for less than the cost payable to Sky, then that is surely simply an example of the free market in process?

It will, I am sure, be greeted by the SPFL as a decision which could impoverish the football clubs as less money will be paid for rights to cover football.

However it could in fact provoke more of an auction, with foreign bidders looking to profit from having the rights and legitimately selling them to Scotland.

It almost certainly means that the SPFL will appeal to the Supreme Court, even if only to delay matters, and of course the decision does  not say that the counterclaim is in any way justified, rather that it is still an issue which the court has to decide. The counterclaim has the potential, if successful, to bankrupt the SPFL. And it falls upon the SPFL to justify the purported restraint of trade, rather than for Lisini to say that is was unjustified.

It is clear that in Angels in Uddingston and in other pubs around the land, there should be popping of champagne corks today at a notable victory, and one achieved in the face of overwhelming opposition from the football authorities and satellite broadcasters!

Posted by the Harry Hood Fan Club!