EC Begins Pay-TV Antitrust Investigations

The European Commission has involved six major US film studios in an antitrust filing. A Statement of Objections (a formal step in EC violations into expected antitrust inquiries) has been sent to Disney, NBC Universal, Paramount Pictures, Sony, 20th Century Fox and Warner Bros., as well as Sky UK.

In the view of the EC, the studios and Sky UK have bilaterally agreed to put in place contractual restrictions, which prevent Sky UK from allowing EU consumers located outside of the UK and Ireland to access pay-TV services from those locations. Without these restrictions, says the EC, Sky UK would be free to decide whether to sell its pay-TV services to these consumers.

If the EC’s position is confirmed, each of the bodies involved would have breached EU competition rules, which prohibit such anti-competitive agreements.

“European consumers want to watch the pay-TV channels of their choice, regardless of where they live or travel in the EU”, said the EU commissioner in charge of competition policy, Margrethe Vestager. “Our investigation shows that they cannot do this today…because licensing agreements between the major film studios and Sky UK do not allow consumers in other EU countries to access Sky’s UK and Irish pay-TV services, via satellite or online. We believe that this may be in breach of EU competition rules. The studios and Sky UK now have the chance to respond to our concerns”.

US film studios typically license content to a single pay-TV broadcaster in each EU Member State. The EC investigation found clauses in licensing agreements with Sky UK, which require Sky to block access to films through its online or satellite pay-TV services outside of the UK and Ireland. Clauses were also found in other agreements, which require the US studios to ensure that other broadcasters cannot make their content available in Sky UK’s operating areas.

As a result of the agreements, Sky UK has ‘absolute territorial exclusivity’ in the UK and Ireland.