The CRTC has ruled that Cogeco Cable Inc. conferred an undue preference upon itself in contravention of section 9 of the Broadcast Distribution Regulations through agreements that offer free cable and Internet to multiple-unit dwelling (MUD) managers for promoting the cableco’s services in the building. The ruling results from a complaint filed with the CRTC in December 2002 and January 2003 by MDS distributor Cablevision TRP-SDM Inc. serving Rimouski QC. Cablevision charged that Cogeco’s offer of inducements to building owners had placed them in a conflict of interest and influenced them to deny Cablevision access to their buildings. As a result of Cogeco’s actions, Cablevision said it had effectively been prevented from offering its services to more than 2,000 tenants in Rimouski. While there were no exclusive service agreements between Cogeco and the owners, Cablevision argued that the effect was the same as if there were such agreements in place. In a decision rendered January 14 (Broadcasting Decision 2004-4), the CRTC agreed. Excerpts from the commission’s decision appear below.  The Commission’s analysis and determination ...Section 9 of the regulations stipulates that: "no licensee shall give an undue preference to any person, including itself, or subject any person to an undue disadvantage." The commission notes that the agreements in question are not exclusive distribution contracts. Rather, the agreements provide that the MUD owner grant Cogeco an "exclusive right to announce and promote services" to the MUD tenants. The MUD owner also agrees "to promote exclusively the services of Cogeco" to the MUD tenants. In addition, the agreements provide for extensive financial incentives to the owners and managers of the MUDs to promote the services of Cogeco. Owners obtain free services from Cogeco in return for ensuring that the managers support Cogeco’s promotional and marketing activities. In addition, managers can obtain free services, the extent of which varies according to the penetration rate achieved for Cogeco’s services among tenants. Based on the presence of the exclusive marketing clauses and related provisions in the agreements establishing financial incentives for building owners and managers, the commission considers that Cogeco has taken steps to prevent Cablevision and other competitors from announcing or promoting their services in the buildings affected, and to preclude the building owners from promoting the services of Cablevision or those of any other of Cogeco’s competitors. In the commission’s view, therefore, Cogeco, by virtue of such agreements, has given itself a preference and subjected Cablevision and residents of MUDs in the area in which the two BDUs operate to a disadvantage. Is the preference or disadvantage undue?  To determine whether or not the preference or disadvantage is undue, the commission has examined whether Cogeco’s actions have had or are likely to have a material adverse impact upon Cablevision, the residents of the MUDs in question, or any other person, as well as the impact they have had or are likely to have on the achievement of the objectives of the broadcasting policy for Canada set out in the Broadcasting Act (the Act). … The Commission notes that the exclusive marketing and related financial incentive provisions in these agreements do not explicitly prevent an occupant from choosing to subscribe to the services of a BDU competing with Cogeco, nor do they prevent a competing BDU from providing service to an occupant. However, the commission is concerned about the effect of these provisions on the practical ability of a new entrant to compete in these buildings, and consequently, on the practical choice available to end-users.  ...The commission considers that, in the circumstances of this case, including the particular market in question, the cumulative effect of these provisions has been to restrict, and is likely to restrict, access by Cablevision or other competitors to the tenants in the MUDs in question and would thus constitute a significant barrier to competition. Such a situation would be inconsistent with the commission’s policy objectives of assuring fair and sustainable competition and end-user choice.