BHB AD "MISLEADING AND WRONG" SAYS SIS IN COMPLAINT TO ADVERTISING WATCHDOG

26 November 2001 - The Advertising Standards Authority (ASA) today received a formal complaint about an advertisement in The Racing Post placed by the British Horseracing Board (BHB). SIS, the supplier of pictures and text to over 9,500 bookmakers, is the complainant.

The five point letter addresses an advertisement which appeared on 20 November 2001, headed "Bookmakers. 10 Facts about British Racing's Charges". SIS accuses the BHB of misleading readers, unfairly attacking SIS, making untrue statements, producing claims that cannot be substantiated and of not respecting the principles of fair competition.

The Chief Executive of SIS, David Holdgate, commented on the making of the complaint, "Bookmakers don't have to put up with this sort of thing. There are real deals on the table. It should be possible for everyone to put their case in a straightforward and honest way. Then bookmakers can decide on the facts. We believe that this advertisement falls short of the ASA standards of being legal, decent, honest and truthful."

The complaint starts by denying the BHB's right to call itself "British Racing" as it only represents 49 of the 59 courses. SIS also points out that the statement implies that courses signed up to GG Media are not part of British Racing.

Under Section 7.1 of the ASA Code the complaint accuses the BHB of being misleading where the advertisement attempts to define how SIS charges and what the breakdown of those charges are.

"Our price structure reflects the legal advice we have been given, said Holdgate, "That advice is that all our customers should be treated even-handedly. It is outrageous of the BHB to imply that any other pricing system is in place. We have twice successfully challenged similarly defamatory statements in the past."

The complaint also accuses the BHB of telling an untruth regarding charges for television pictures. SIS has the rights to show events from the courses signed up to GG Media and therefore has the rights to some British racing.

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Notes to Editors
Full text of the Advertising Standards Authority Complaint is attached below.

The sections under which SIS raised concerns are:
2.3 All advertisements should respect the principles of fair competition generally accepted in business.

3.1 Before submitting an advertisement for publication, advertisers must hold documentary evidence to prove all claims, whether direct or implied, that are capable of objective substantiation.

6.2 Advertisers should not exploit the credulity, lack of knowledge and inexperience of consumers.

7.1 No advertisement should mislead by inaccuracy, ambiguity, exaggeration, omission or otherwise (7.1)

20.1 Advertisers should not unfairly attack or discredit other businesses or their products

(Ref BHB AD "MISLEADING AND WRONG")
Advertisement by the BHB
Racing Post 20 November 2001

Introduction

SIS wishes to complain that the advertisement referred to above is in breach of the Advertising Code in several major respects. Before proceeding to the particulars of SIS's complaint, it is necessary to provide some information as to the context in which this complaint is made.

Since 1987, SIS has provided live television and data coverage of horseracing to the betting industry. Its rights to do so are obtained from the Racecourse Association Limited (RCA), which is a trade association representing all 59 racecourses in the UK. These rights expire on 30 April 2002.

The British Horseracing Board (BHB), the body that sets the racing calendar, undertakes the administration of racing and owns intellectual property rights in "pre-race information" - the lists of runners, riders and entries to thoroughbred horseracing in the UK. Earlier this year, the RCA and the BHB purported to pool their rights. They also decided that the sale of their rights to the betting industry would be handled by the BHB.

In September 2001, the BHB announced that from 1 May 2002, its nominated suppliers would be the sole source of television pictures and data, and invited bids from interested parties for licenses to deliver television pictures and data to licensed betting offices (LBOs). The Office of Fair Trading has launched an investigation under section 25 of the Competition Act 1998 in response to complaints from SIS and other organisations in the betting industry about these developments. The controversial nature of the BHB's proposals is also the subject of heated and continuing exchanges in the Racing Post a daily newspaper which is virtually indispensable reading for any person professionally involved in horseracing and betting in the UK

As a separate development, earlier this year, 10 of the RCA member racecourses decided that, from 1 May 2002, the media rights to events at their courses would no longer be marketed by the RCA, but by another company, GG Media Limited (GGM). GGM has granted rights to SIS which include the right to provide coverage from the 10 courses concerned to LBOs. The effect of this is that the BHB is able only to license television pictures from 49 out of 59 racecourses.

SIS was established by the then "Big 4" bookmakers in 1987 to deliver televised coverage of racing to betting offices. Although two large commercial bookmakers (Ladbrokes and William Hill) are still shareholders of SIS, together they hold less than 45% of the shares, and are unable to exert control or material influence over SIS. Nevertheless, SIS is perceived by "racing" (mainly but not exclusively the RCA and the BHB) as in the bookmakers' "camp". The relationship between "racing" and "betting" has traditionally been strained, but is at a particularly low point at present, partly due to the bookmakers' opposition to the BHB's plans for licensing racing coverage from 1 May 2002, and partly due to the breakdown in negotiations between the two interests for a replacement for the Levy, which the Government plans to abolish.

The BHB is on record as being particularly keen to create competition to SIS in the supply of services to the betting industry - a challenge which SIS has no objection in meeting. Indeed, the BHB has already announced its decision to award a number of licences to new entrants to the market.

SIS's Complaints

In general terms, SIS believes that the advertisement infringes the Code principles that advertisements should be legal, decent, honest and truthful, and that they should respect the principles of fair competition generally accepted in business.

Further particulars are set out below.

1. The BHB's representation of itself as "British Racing".

The use of this term is pernicious in two ways. Firstly, it is patently untrue: the BHB only has picture rights for 49 out of the 59 courses licensed to hold thoroughbred racing events in the UK. Although there is a reference to the 49 courses in the small print at the bottom of the page, the reference is not explicit, in that the reader is referred to another document which has to be obtained from the BHB. Secondly, it carries the implication that the 10 courses who have withdrawn their rights from the RCA and licensed them to SIS via GGM are not part of "British Racing", or if they are, are not worthy to be considered as such.

In SIS's opinion, the use of the term infringes the requirements of truthfulness set out in paragraph 7.1 of the Code.

2. Paragraph 3: "The BHB's royalty charges will be based on turnover, thereby spreading the charges fairly amongst those who can best afford them. SIS preferred to divide the charges equally between betting shops regardless of size and ability to pay, regardless of size".

This statement implies that SIS's pricing structure is designed to favour the larger operators (which include two of its shareholders, William Hill and Ladbrokes), to the detriment of smaller operators. SIS has twice successfully challenged defamatory statements of similar import on Channel 4. In addition, despite various complaints to the OFT over the last 10 years or so, no finding has ever been made against SIS. SIS's price structure reflects the legal advice it has been given, which is that it should treat all its customers even-handedly. If SIS were to charge on a turnover basis, there would, quite rightly, be an outcry by smaller bookmakers that commercially confidential information was potentially available to the two major competitor bookmakers who are SIS's shareholders.

Despite this, there remains at large a myth about the "unfairness" of SIS's pricing, which the BHB is here seeking to exploit. Certain legal and economic aspects of pricing can be arcane, and the majority of people, bookmakers included, could not be expected to pay much attention to them. However, those aspects were fully taken into consideration when SIS set its prices, and by alluding to SIS's prices in this way, the BHB is exploiting the credulity, lack of knowledge and inexperience of consumers contrary to paragraph 6.2 of the Code.

This less than frank description of SIS's pricing is misleading, and does not respect the principle of fair competition.

3. Paragraph 5: "SIS will not be entitled to charge for the rights to British racing".

This clearly implies that SIS is not entitled to charge for any television pictures coverage of any horseracing in the UK at all. This is untrue: SIS has the rights to show events from the 10 courses whose rights are licensed by GGM.

4. Paragraph 7: breakdown of SIS's charges.

In this paragraph, the BHB purports to quantify the proportion of bookmakers' turnover attributable to the Levy and payments to SIS. SIS offers a wide range of products to all bookmakers, ranging from the single shop to the multi-outlet chains, and delivers them via a number of mechanisms and formats. Furthermore, as the BHB is aware, there are products other than UK racing that SIS includes in its services: greyhound racing, numbers betting, and racing from other countries, notably Ireland and South Africa. Since the BHB does not have access to SIS's costs (which is commercial information confidential to SIS), it cannot identify with any certainty what proportion of SIS's pricing is attributable to UK horseracing, as it purports to do in this paragraph. Accordingly, its claim is not capable of objective substantiation, and falls foul of paragraph 3.1 of the Code.

Even if objective substantiation were possible, in view of SIS's product range, and the diversity of its customers, such a simplified "average" figure is useless at best, at worst, misleading. It also raises further questions: does the BHB mean a true statistical average, a mean or a mode? This ambiguity in itself is misleading, and thereby infringes paragraph 7.1 of the Code.

5. Overall balance.

As should be apparent, SIS is not a competitor to the BHB. If it were a competitor, it would perhaps be more prepared to let the advertisement pass as part of the inevitable cut and thrust of the free market. However, SIS is now one licensee among several, and as such, believes that it should be entitled to fair and even-handed treatment from its licensor in comparison with other licensees. This is demonstrably not the case. Why, for example, would the BHB give the telephone numbers of Alphameric and BSTV, but not that of SIS, if not to encourage custom away from SIS? If the BHB wished to be even - handed between all its licensees, it should have published to telephone number of all three licensees.

The overall tenor of the advertisement seems to be to present SIS in the worst possible light, by unfavourable comparisons to the other licensees. By so doing, the advertisement violates the general principle of fair competition, as well as the specific rule against denigration in paragraph 20.1 of the Code.