European antitrust case targets US movie studio contracts

The European Commission has opened an antitrust investigation involving contracts that give broadcasters exclusive territorial rights to show video content.

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European Union fragmentation and unification
European Commission

The European Commission has opened an antitrust case involving licensing agreements between US film studios that can preclude European TV broadcasters in one country from showing movies in another.

The investigation involves licensing agreement provisions in contracts between Twentieth Century Fox, Warner Bros., Sony Pictures, NBCUniversal, and Paramount Pictures on the one hand, and on the other "the largest European pay-TV broadcasters, such as BSkyB of the UK, Canal Plus of France, Sky Italia of Italy, Sky Deutschland of Germany, and DTS of Spain," the commission said Monday in a statement. At issue is whether such contracts hobble broadcasters' efforts to operate in different European countries. It said:

The commission will in particular investigate whether these provisions prevent broadcasters from providing their services across borders, for example, by refusing potential subscribers from other member states or blocking cross-border access to their services. ...

The provisions granting "absolute territorial protection" ensure that the films licensed by the US studios are shown exclusively in the member state where each broadcaster operates via satellite and the Internet. These films cannot be made available outside that Member State, even in response to unsolicited requests from potential subscribers in other Member States.

Countries in the European Union have a lot of independence, but they're also linked by a common currency, unified employment pool, shared court proceedings, and some EC regulations. Commissioner Neelie Kroes also has been pushing hard to lower European borders by trying to unify Europe's telecommunications service market.

Language barriers can hamper cross-border expansion, but the broadcasting industry is changing dramatically as distribution moves from over-the-air radio to Internet-based streaming that's much less tied to one geographic region or another.

The EU Court of Justice frowned on contracts that granted territorial exclusivity in a 2011 case involving broadcast of Premiere League soccer matches. "The clauses of an exclusive license agreement concluded between a holder of intellectual property rights and a broadcaster constitute a restriction on competition prohibited by Article 101 TFEU [Treaty on the Functioning of the European Union], where they oblige the broadcaster not to supply decoding devices enabling access to that right holder's protected subject-matter with a view to their use outside the territory covered by that license agreement," the court said in its judgment.

The EC's action involving the studios comes after a fact-finding investigation in 2012, but there's no deadline for future stages of the new antitrust investigation.