SKY Italia Wins Highly-Publicized Victory in Litigation with Conto

Cleary Gottlieb won a fundamental defensive victory for SKY Italia in connection with Conto TV’s suit brought against SKY and Lega Nazionale Professionisti (the association of Italian football teams) (LNP) regarding live satellite broadcasting rights for the Italian Serie A football league for the seasons 2010-2011 and 2011-2012 (together valued at € 1.14 billion).

Conto TV sued both SKY and LNP, claiming that LNP’s call for tenders relating to one single all-inclusive package for Serie A satellite broadcasting rights could have favored SKY and that, therefore, the Tribunal of Milan should suspend the contract between SKY and LNP, as well as order LNP to set up a new competitive procedure for the assignment of different Serie A packages. On behalf of SKY Italia, Cleary Gottlieb argued, among other things, that Conto TV’s arguments were seriously flawed, based on its improper definition of the relevant market, and that there was no insurmountable technical or financial barrier which could justify Conto TV’s decision not to compete with SKY for the assignment of the rights at stake.

On May 24, upholding SKY and LNP’s defenses, the Tribunal of Milan issued an order rejecting all of Conto TV’s requests. The court acknowledged that Conto TV had wrongly depicted the existence of a separate market for satellite provision of pay-tv services, whereas it was manifest that SKY faced the vigorous competition of other operators in a wider pay-tv market including all television platforms (which includes, chiefly, digital terrestrial television). Moreover, according to the Tribunal of Milan, LNP had offered various other appealing TV content in compliance with national rules on the offering of football broadcasting rights, and Conto TV had not suffered any competitive disadvantages in the related call for tenders. Thus, the Court ordered that Conto TV bear all costs of the proceedings, including attorneys’ fees of the other parties.

As highlighted by LNP and the Presidents of various Italian Serie A football clubs in the previous weeks, this litigation had put at risk the entire Italian football system, since - had the Court decided to uphold Conto TV’s requests - many clubs would have lacked the necessary financial resources to enroll in the Serie A championship and to conduct their market campaigns for the acquisition of new players. Furthermore, Conto TV’s initiative could have distorted competition in the pay-tv market, leaving pay-tv operators free to broadcast Serie A live games only on digital terrestrial television, but not on the satellite, to the advantage of Mediaset Premium and Dahlia TV (SKY and Conto TV’s main competitors). Thus, this decision was much awaited and received the attention of all Italian medias.