Studios Face Antitrust Probe by the European Union13 Jan, 2014 By: Erik Gruenwedel
The European Commission Jan. 13 said it has opened antitrust proceedings to examine provisions in licensing agreements between several Hollywood studios (20th Century Fox, Warner Bros., Sony Pictures, Universal Studios, Paramount Pictures) and the largest European pay-TV broadcasters, such as BSkyB of the United Kingdom, Canal Plus of France, Sky Italia of Italy, Sky Deutschland of Germany and DTS of Spain.
The commission is a legal arm of the European Union.
At issue is why pay-TV subscribers in one country can’t access their broadcasters’ TV Everywhere content across borders. The commission seeks to determine if contractual language in the license agreements with studios procluding that violates antitrust law.
Following a fact-finding investigation carried out in 2012, the commission said it would now examine whether provisions of licensing arrangements for broadcasting by satellite or through online streaming between the studios and the major European broadcasters, which grant to the latter "absolute territorial protection," may constitute an infringement of EU antitrust rules that prohibit anticompetitive agreements.
Currently, the content license agreements afford "absolute territorial protection" to movies licensed by the studios mandating they are shown exclusively in the country where each broadcaster operates via satellite and the Internet. These movies cannot be made available outside that country, even in response to unsolicited requests from potential subscribers in other EU countries.
The commission said it would investigate whether these provisions prevent broadcasters from providing their services across borders, for example, by refusing potential subscribers from other countries or blocking cross-border access to their services.
Indeed, in October 2011 the EU Court of Justice found that efforts by broadcasters of England’s Premier League soccer federation to limit access based on a territorial basis eliminated competition and harmed consumers. The court held that such provisions could not be justified by the need to ensure appropriate remuneration for the content holder, given that this could be calculated by taking into account the actual and potential audience both in the country of broadcast and in any other country in which the broadcasts were received.