The European Commission has made commitments offered by Disney, NBCUniversal, Sony Pictures, Warner Bros. and Sky legally binding under EU antitrust rules. These commitments address the Commission’s concerns regarding certain clauses in these studios’ film licensing contracts for pay-TV with Sky UK.
These clauses prevented Sky UK from allowing EU consumers outside the UK and Ireland to subscribe to Sky UK’s pay-TV services to access films via satellite or online. They also required NBCUniversal, Sony Pictures and Warner Bros. to ensure that broadcasters other than Sky UK are prevented from making their pay-TV services available in the UK and Ireland.
Disney, NBCUniversal, Sony Pictures and Warner Bros. have now committed not to apply these clauses in existing film licensing contracts for pay-TV with any broadcaster in the European Economic Area (EEA). They have also committed to refrain from (re)introducing such clauses in film licensing contracts for pay-TV with any broadcaster in the EEA.
Similarly, Sky will neither apply existing clauses nor (re)introduce new ones in its film licensing contracts for pay-TV with Disney, Fox, NBCUniversal, Paramount Pictures, Sony Pictures and Warner Bros.
The Commission’s concerns
US film studios typically license audio-visual content to a single pay-TV broadcaster in each Member State (or combined for a few Member States with a common language).
The Commission sent a Statement of Objections in July 2015 setting out its preliminary view that certain clauses in film licensing contracts for pay-TV between Disney, Fox, NBCUniversal, Paramount Pictures, Sony Pictures, Warner Bros. and Sky UK breach EU antitrust rules. These clauses (a) required Sky UK to block access to the studios’ films through its online pay-TV services (so-called ‘geo-blocking’) and/or through its satellite pay-TV services to consumers outside its licensed territory (UK and Ireland); and (b) required some of the studios to ensure that broadcasters outside the UK and Ireland are prevented from making their pay-TV services available in the UK and Ireland.
Such clauses restrict the ability of broadcasters to accept unsolicited requests (so-called ‘passive sales’) for their pay-TV services from consumers located outside their licensed territory. The Commission had concerns that this may eliminate cross-border competition between pay-TV broadcasters and partition the EU’s Single Market along national borders.
The concerns identified by the Commission regarding the studios’ film licensing contracts for pay-TV are specific to this case. These licensing contracts’ economic and legal context was essential for the Commission’s assessment. That assessment can therefore not be extended to similar clauses that form part of a different economic and legal context.
In November 2018 and in December 2018, Disney, NBCUniversal, Sony Pictures, Warner Bros. and Sky offered commitments aimed to address the Commission’s concerns. The Commission consulted market participants to verify the appropriateness of the proposed commitments.
In light of the results of this market test, the Commission is satisfied that the commitments offered by Disney, NBCUniversal, Sony Pictures and Warner Bros. address its concerns, and has made them legally binding on the studios:
Similarly, in light of the results of this market test, the Commission is satisfied that the commitments offered by Sky address its concerns, and has made them legally binding on Sky:
The commitments will apply throughout the EEA for a period of five years. They cover both online and satellite pay-TV services and, to the extent that they are included in the licence(s) with a pay-TV broadcaster, they also cover subscription video-on-demand services. The commitments also contain a non-circumvention clause, as well as clauses on the review of the commitments and the appointment of a monitoring trustee.
All current and future subsidiaries of the committing parties are covered by the commitments. This means that, following the acquisition of Fox by Disney, the commitments will also apply to Fox.
The commitments are without prejudice to rights conferred on the committing studios under the Portability Regulation or under copyright law. They also do not affect the rights of the studios or a pay-TV broadcaster to decide unilaterally to employ geo-filtering technology.