The European Commission has issued a statement of objections
to Sky UK and six major US film studies (Disney, NBCUniversal, Paramount
Pictures, Sony, Twentieth Century Fox and Warner Bros). The Commission has formed a preliminary view
that a licensing agreement between Sky UK and the studios restricts the ability
of Sky to sell its pay-TV services to
customers outside the UK and Ireland.
The announcement is the latest development in an
investigation which began in 2012 and where in 2014 the Commission disclosed
its targets. The addition of Disney as a
target of investigation is a new development.
The Commission has concerns that provisions that require Sky
to block access to the studios’ films on a territory basis so that the content
is available only in the UK and Ireland effectively grant absolute territorial
exclusivity. According to the Commission,
this practice – known as ‘geo blocking’ - eliminates cross-border competition
between pay-TV providers in Europea. Sky
and the studios now have to respond to the statement of objections and put
forward their case as to why they consider that the practices do not violate
Article 101 TFEU.
The Commission’s pay-TV investigation comes in the wake of
the ruling by the Court of Justice in Joined Cases C-403/08 and C-4429/08,
Football Association Premier League Ltd (FAPL) v QC Leisure, Murphy v Media
Protection Services Ltd [2012] 1 CMLR.
The proceedings concerned attempts by FAPL to enforce its exclusive
licensing of satellite TV rights for the Premier League through the criminal
and civil law. The English domestic case
involved the now infamous Mrs Murphy who faced criminal prosecution for
allegedly illicitly obtaining satellite decoders to show Greek satellite
broadcasts of Premier League matches.
The High Court referred certain questions of EU law to the Court of Justice. The Court of Justice ruled that the EU rules
on free movement contained in Article 56 TFEU precluded national legislation that
made it unlawful to import and sell foreign decoding devices. The restriction could not be justified by
the objective of protecting IP rights.
It further ruled that the grant of exclusive satellite broadcasting
licences for the territory of a member state or states and which required the
licensee not to supply decoding cards to enable viewing outside the territory
restricted competition within Article 101(1) TFEU. Mrs Murphy’s appeal against criminal
conviction was allowed.
The Commission has linked its current pay-TV investigation
to the FAPL case. However, the
Commission’s investigation appears to be rather more specific in focusing on
absolute territorial protection in the licensing of films in the pay-TV sector
and whether such clauses infringe competition law. However, owners and licensees of other
premium content such as music and sports will be watching developments for potential
read-across to or differentiation from their situation.
In a parallel development the Commission has recently opened
a sector inquiry into e-commerce which is aimed at improving access to digital
goods and services across the EU. The
Commission is meanwhile pledging a reform of the EU copyright rules to seek to
ensure that consumers who buy content in one EU country are able to access it
elsewhere in the EU. The Commission
finds that currently some media providers are not able to provide cross-border
access due to copyright agreements.
Case COMP/40023: Cross-border access to pay TV content;
Commission press release IP/15/5432: http://europa.eu/rapid/press-release_IP-15-5432_en.htm
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