The
Competition Commission argued that Sky would gain an unfair advantage over other
TV bidders. Aware of this, other bidders might be deterred from bidding, further
enhancing Sky's dominant position.
The Commission's ruling, also argued that such mergers would reinforce the gap between rich and poor clubs, even within the Premier League; and would give Sky too much influence over regulation of football by the Premier League.
The Commission's judgement was based on its assertion that the relevant football market in which Manchester United operates is the Premier League. However, like other top UK clubs such as Arsenal, Newcastle or Leeds, Man United also cares a lot about its performance in European competitions that bring large revenues and considerable prestige. The money that Sky would have injected would have allowed Man United to buy more of the top world stars: Premier League revenues alone are still insufficient to finance the top Brazilians and Italians.
Whereas European club teams simultaneously compete in national and European competitions, most American sports compete in closed leagues. World Series baseball and the football Superbowl are strictly US affairs. This makes it easier to have salary caps and other rules for redistributing between clubs to prevent wide gaps persisting - typically the worst team one year gets first choice of the promising newcomers the next year. Sporting dynasties are therefore hard to maintain in the US. Within Europe, penalizing the top team within a country may be good for the domestic competition but threatens to deprive that country of honours on the European stage.
This example shows the difficulty of defining the relevant market within which to assess competition policy. Should it be the UK, Europe, or the global market? If the relevant market extends beyond a single country, which competition authority should have jurisdiction? Sometimes the answer lies at the European level.
For example, state aids (subsidies from national government) to major car manufacturers are now the subject of several investigations by the European Commissioner with responsibility for competition policy within Europe. UK workers may be disappointed that the UK is not allowed to provide unlimited subsidies to Rover, but they need simultaneously to remember that many of Rover's competitors in other European countries are similarly restricted in access to government subsidies.
Giving a green light for higher subsidies all round might not change the relative competitiveness of different car companies but simply divert tax revenues away from hospitals into car companies. And it there is any efficiency cost (induced distortions) in raising tax revenue in the first place, it may be more efficient to negotiate multilateral disarmament of state aids.