European Commission takes action against geo-blocking in pay-TV sector

 

On 23 July 2015, the European Commission sent a so-called Statement of Objections to the pay-TV broadcaster Sky UK and to the Hollywood film studios Disney, NBC Universal, Paramount Pictures, Sony, Twentieth Century Fox and Warner Bros.

The Commission’s objections

The Commission’s preliminary view is that the existing licence agreements between the film studios and Sky UK prevents consumers from outside the UK and Ireland to access pay-TV content (such as movies and TV shows) of Sky UK either online (streaming) or via satellite. According to the Commission, the clauses constitute an agreement on absolute territorial exclusivity that, in the absence of convincing justification, violates Article 101(1) TFEU, which prohibits anticompetitive agreements.

Film studios typically grant licences for broadcasting movies and TV shows within a specific territory. That is, a broadcaster is allowed to broadcast such content only in a specific Member State. While this does, in principle, not violate antitrust rules, the Commission is concerned about the fact that consumers from other Member States cannot access such services. For example subscribers of online streaming services may not be able to use the service when travelling in another Member State.

ECJ judgment in Premier League/Murphy

The European Commission relies on a judgment of the European Court of Justice (ECJ) from 2011 (joined cases C-403/08 and C-429/08, Premier League/Murphy) in which the ECJ held that licence agreements which grant absolute territorial exclusivity for the broadcasting of football matches via satellite constitute a violation of Article 101(1) TFEU. However, it is unclear to what extent the judgment can be applied to the case at issue.

Further procedure

In the present proceedings, the companies concerned will now have the opportunity to respond to the objections raised against them. Thereafter, the Commission will complete the investigation by taking a final decision which may also include a fine. In parallel, the Commission continues to probe similar licence agreements between the above-mentioned film studios and the pay-TV broadcasters Canal Plus (France), Sky Italia, Sky Deutschland and DTS (Spain).

Digital Single Market Strategy

The proceedings, for which investigations were initiated already 18 months ago, are of particular importance as they perfectly fit into the “Digital Single Market strategy” which was launched by Commissioners Andrus Ansip and Günther Oettinger in early May 2015. One focus of the strategy is to prevent geo-blocking (i.e., technical measures to block access to a website based on a consumer’s location, or to re-direct consumers to a domestic website) as far as possible. The Commission takes the view that such measures often cause artificial and unjustified price differences between the Member States. The Commission also launched sector inquiry into e-commerce in May to examine barriers to cross-border trade of goods and services. Furthermore, the Commission intends to modernize copyright law to facilitate cross-border access to digital content within the European Union.

These developments clearly illustrate that the European Commission is willing to use antitrust law as a tool to implement its ambitious digital strategy. Companies should be prepared in this respect.

Further information: European Commission e-commerce sector inquiry