Commission puts Paramount’s geoblocking commitments to test

The European Commission is consulting on commitments offered by film studio Paramount to resolve its investigation into ‘geoblocking’ and territorial restrictions.

In 2014 the Commission launched a formal investigation into agreements between six film studios and Sky which allegedly prevent access by EU consumers outside of the UK and Ireland to Sky’s services.  The Commission maintains that other provisions seem to require the studios to restrict non-UK broadcasters from granting access to UK consumers.

The Commission is concerned that the agreements confer on Sky absolute territorial exclusivity over the studios’ films in the pay tv market in violation of Article 101 TFEU.

Paramount has offered to commit not to limit passive sales to consumers outside the broadcaster’s licensed territory in any future agreements.  It also offers not to litigate against any broadcasters that agree to passive sales even where they would be prohibited under the terms of existing agreements.

Similar agreements between Sky and Disney, NBC Universal, Sony, Twentieth Century Fox and Warner Bros are also under investigation, although only Paramount has offered commitments at this stage.  Third parties have one month to submit comments on the commitments.

The Commission’s antitrust interest in the issue of geoblocking coincides with its policy initiative to promote the digital single market.  In May 2015, the Commission launched a competition sector inquiry into e-commerce which will probe particularly contractual barriers to cross-border trade. On 18 March 2016, the Commission published its initial findings of its sector inquiry in relation to geoblocking.

Case AT.40023: Cross-border access to pay TV; Commission press release IP/16/1530

European Commission sends Android Statement of Objections

The European Commission has issued a Statement of Objections to Google alleging abuse of dominance in the mobile phone operating market.  The Commission has accused Google of using restrictive licensing and giving preference to its own pre-installed applications that use the Android operating system.

The objections follow a year after the Commission launched an investigation which found that Google obliges manufacturers who wish to pre-install Google’s Play Store application store for Android to also pre-install Google Search as the default search engine for the devices and Google Chrome as their browser.  The Commission also found that Google granted significant financial incentives to large smartphone manufacturers on the condition that they pre-install Google Search.  The Commission believes that as a result of these practices rivals have been unable to compete on the merits.

Google has countered the Commission’s case by claiming that the Android operating system has helped to promote innovation based on open source software.   Google maintains that its practices do not exclude rivals from the market. 

Only yesterday an investigation by the Canadian Competition Bureau raising similar theories of harm was closed because the authority did not find sufficient evidence to establish that Google had used exclusionary terms in its contracts with advertisers.

Meanwhile Google faces a host of other antitrust investigations.  It is continuing to challenge the Statement of Objections sent by the Commission in April 2015 relating to abuse of dominance through the self-preference of Google’s own shopping sites.  Just this week News Corporation has lodged a complaint with the Commission alleging that Google discourages users from accessing its news content from the original source.

European Commission press release.  Antitrust: Commission sends Statement of Objections to Google on Android operating system and applications, Brussels, 20 April 2016

Standalone abuse of dominance claim against the Law Society

Standalone abuse of dominance claim against the Law Society

An online training company, Socrates Training, has filed a claim in the Competition Appeal Tribunal (CAT) alleging that the Law Society of England and Wales abused its dominant position in the anti-money laundering and financial crime training market by bundling its own training products.

Law firms are obliged to provide money laundering training to their staff.  Socrates claims that the Law Society’s requirement of firms to purchase its own training products in order to retain accreditation with the Conveyancing Quality Scheme restricts competition in the downstream market for anti-money laundering and financial crime online training services.

The competitor training firm is claiming damages and an injunction to prevent the Law Society from bundling its services.  The claimant has applied for fast-track designation of the proceedings pursuant to Rule 58 of the Tribunal Rules

The case is the third standalone damages action before the CAT since the UK Consumer Rights Act reforms expanded its jurisdiction with effect from 1 October 2015.  In January, National Compliance and Risk Qualifications (NCRQ), a health and safety body settled a claim against the Institution of Occupational Health and Safety after the latter had failed to accredit the NCRQ’s own diploma.  In March, a real estate developer withdrew a claim against Tesco after settling a dispute relating to a restrictive covenant over the use of land.

Whatever the substantive merits of these cases they illustrate that claimants are availing themselves of the opportunities provided by the reformed competition law litigation regime.  The rate of settlement is hardly surprising as most competition law claims will not proceed to full judgment.  Although it would certainly be useful in terms of precedent value if a sufficient number did.

CASE NO. 1249/5/7/16

Société Générale gets refund of over €200 million on Euribor fine

Société Générale gets refund of over €200 million on Euribor fine

The European Commission has taken the unprecedented move of reducing the fine imposed on Société Générale for its involvement in a cartel relating to Euro interest rate derivatives.

In the original 2013 infringement decision the Commission found that Barclays, Deutsche Bank, RBS and Société Générale participated in a cartel for varying periods between September 2005 and May 2008.  Barclays received full immunity as the leniency applicant.  Each of the fines on the remaining parties included a 10% reduction under the Commission’s cartel settlement procedure.

The Commission has reduced the original €446 million fine imposed on Société Générale by more than 50%, apparently due to errors in the value of sales originally submitted by Société Générale.  The amended fine has been calculated according to the same methodology in the Commission’s 2013 infringement decision and the corrected amount is now approximately €228 million.  The reason for the apparent error in Société Générale’s data was that it had omitted to net cash flows on over-the-counter derivatives, which was permitted by the Commission’s request for information.

The case has raised questions about the robustness of the Commission’s cartel settlement procedure and approach to calculating fines.  The Commission’s move to reduce the fine through an administrative decision rather than take its chances on appeal to the General Court is illuminating.  This rather extraordinary step is also difficult to reconcile with the mantra that there is limited administrative discretion in setting the fine within the Commission’s methodology. 

The case illustrates the scope for mistakes to be made, although it is not entirely clear how such a fundamental error and with such significant financial consequences could have been made and not come to light until after the fining decision. 

The case may embolden settling parties to appeal their fines to the General Court once the levels of fine visited on other companies are revealed in the infringement decision and which may reveal inconsistencies.  The last thing that the Commission wants is a challenge based on discriminatory treatment as in Air Cargo, albeit not a settlement case.

European Commission announcement, 6 April (MEX/16/1281)