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European Commission - Press release

Antitrust: Commission seeks feedback on commitments offered by NBCUniversal, Sony Pictures, Warner Bros, and Sky in pay-TV investigation

Brussels, 20 December 2018

The European Commission is inviting comments from interested parties on commitments offered by NBCUniversal, Sony Pictures, Warner Bros, and Sky to address competition concerns relating to contractual clauses preventing the cross-border provision of pay-TV.

The Commission's concerns relate to contractual clauses in certain bilateral film licensing contracts between six major film studios, including NBCUniversal, Sony Pictures, and Warner Bros, and the pay-TV broadcaster Sky UK, under which the studios license their output of films over a certain time for pay-TV to Sky UK. The clauses appear to prevent Sky UK from allowing EU consumers outside the UK and Ireland to access pay-TV services available in the UK and Ireland.

Some film licensing contracts also contain clauses requiring the studios to ensure that, in their contracts with broadcasters other than Sky UK, these broadcasters are prevented from making their pay-TV services available in the UK and Ireland.

In a Statement of Objections addressed to the film studios and Sky UK in July 2015, the Commission took the preliminary view that these clauses restrict broadcasters' ability to accept unsolicited requests from consumers located outside the licenced territory (so called "passive sales"), and, as a result, may eliminate cross-border competition between pay-TV broadcasters and partition the EU's Single Market across national borders.

 

Proposed commitments

NBCUniversal, Sony Pictures, and Warner Bros have decided to offer commitments to address the Commission's competition concerns. The proposed commitments are similar to those offered by Paramount in April 2016, which were accepted and made legally binding in July 2016. Disney has also offered comparable commitments in November 2018.

NBCUniversal, Sony Pictures, and Warner Bros have offered the following commitments, which would apply throughout the European Economic Area (EEA):

  1.     When licencing its film output for pay-TV to a broadcaster in the EEA, each committing studio would not (re)introduce contractual obligations which prevent or limit a pay-TV broadcaster from responding to unsolicited requests from consumers within the EEA but outside the broadcaster's licensed territory (no "Broadcaster Obligation").
  2.     When licensing its film output for pay-TV to a broadcaster in the EEA, each committing studio would not (re)introduce contractual obligations which require the studio to prohibit or limit a pay-TV broadcaster located outside the broadcaster's licensed territory from responding to unsolicited requests from consumers within the licensed territory (no "Studio Obligation").
  3.     Each committing studio would not seek to bring any action before a court or tribunal for the violation of a Broadcaster and/or Studio Obligation, as applicable, in an existing agreement licensing its output for pay-TV.
  4.     Each committing studio would not act upon or enforce any Broadcaster and/or Studio Obligation to which it is subject in an existing agreement licensing its output for pay-TV.

Similarly, Sky has offered the following commitments, which would apply throughout the European Economic Area (EEA):

  1.     In contracts licensing a film studio's output for pay-TV, Sky would not (re)introduce contractual obligations which prevent or limit Sky from responding to unsolicited requests from consumers within the EEA but outside the broadcaster's licensed territory (no "Broadcaster Obligation").
  2.     In contracts licensing a film studio's output for pay-TV, Sky would not (re)introduce contractual obligations which require the film studio to prohibit or limit a pay-TV broadcaster located outside the broadcaster's licensed territory from responding to unsolicited requests from consumers within the licensed territory (no "Studio Obligation").
  3.     Sky would not seek to bring any action before a court or tribunal for the violation of a Studio Obligation in an existing agreement licensing a film studio's output for pay-TV.
  4.     Sky would not act upon any Broadcaster Obligation to which it is subject in an existing agreement licensing a film studio's output for pay-TV.

The commitments would apply for a period of five years and cover both standard pay-TV services and, to the extent that they are included in the licence(s) with a pay-TV broadcaster, also subscription video-on-demand services. The commitments cover both satellite broadcast services and online services.

The proposed commitments concern NBCUniversal, Sony Pictures, Warner Bros and Sky, their successors and all of the current and future subsidiaries over which the committing parties exercise sole control within the meaning of Council Regulation (EC) No 139/2004.

A summary of the proposed commitments will published in the EU's Official Journal. Interested parties can submit comments within one month from the date of publication. The full text of the commitments will be available on the case website (NBCU, SkyWarner Bros, Sony).

 

Background

In July 2015, the Commission sent a Statement of Objections to six studios (NBCUniversal, Sony Pictures, Disney, Fox, Paramount and Warner Bros) and the pay-TV broadcaster Sky UK. It set out the Commission's preliminary view that each of the studios and Sky UK had bilaterally agreed to put in place certain contractual restrictions in breach of EU antitrust rules.

In April 2016, Paramount offered commitments to address the Commission's competition concerns. The commitments were accepted and made legally binding in July 2016.

In November 2018, Disney offered commitments to address the Commission's competition concerns. The Commission is currently assessing the comments it has received from interested third parties on these commitments.

In December 2018, the General Court of the European Union fully upheld the Commission's decision to accept commitments from Paramount (Case T-873/16 Groupe Canal +).

Article 101 of the Treaty on the Functioning of the European Union (TFEU) and Article 53 of the EEA Agreement prohibit agreements and concerted practices which may affect trade and prevent or restrict competition. Article 9(1) of Regulation 1/2003 enables companies investigated by the Commission to offer commitments in order to meet the Commission's concerns and empowers the Commission to make such commitments binding on the companies. Article 27(4) of Regulation 1/2003 requires that before adopting such decision the Commission shall provide interested third parties with an opportunity to comment on the offered commitments.

If the market test indicates that the commitments are a satisfactory way of addressing the Commission's competition concerns, the Commission may adopt a decision making the commitments legally binding on NBCUniversal, Sony Pictures, Warner Bros and Sky (under Article 9 of the EU's antitrust Regulation 1/2003). Such a decision would not conclude that there is an infringement of EU antitrust rules but legally binds the committing companies to respect the commitments they have offered.

If a company breaks such commitments, the Commission can impose a fine of up to 10% of the company's worldwide turnover, without having to find an infringement of the EU antitrust rules.

More information, including the full version of the commitments, is available on the Commission's competition website, in the public case register under the case number AT.40023.

IP/18/6894

Press contacts:

General public inquiries: Europe Direct by phone 00 800 67 89 10 11 or by email


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