Antitrust Law Daily Wrap Up, TOP STORY: Film studios’ territorial exclusivity agreements challenged by EC, (Jul 23, 2015)

By Jeffrey May, J.D.

The European Commission (EC) is objecting to territorial restrictions contained in licensing agreements between six major U.S. film studios and Sky UK that require the pay-TV broadcaster to block access to films made available through its services to consumers outside the United Kingdom and Ireland. The EC announced today that it has sent a Statement of Objections (SO) to Sky UK and the film studios—Disney, NBCUniversal, Paramount Pictures, Sony, Twentieth Century Fox, and Warner Bros.

The move brings Disney into the proceedings that were announced last year. In January 2014, the EC disclosed its formal investigation of the agreements involving the five other studios and the largest European pay-TV broadcasters such as BSkyB (UK), Canal Plus (France), Sky Italia (Italy), Sky Deutschland (Germany), and DTS Distribuidora de Television Digital (Spain).

The EC expressed concerns that the territorial restrictions eliminate cross-border competition between pay-TV broadcasters and partition the internal market along national borders. Each of the six studios and Sky UK bilaterally agreed to put the contractual restrictions in place, according to the competition authority. The clauses purportedly restrict Sky UK's ability to accept unsolicited requests for its pay-TV services from consumers in member states other than the UK and Ireland. Some agreements also require the studios to block other broadcasters from making their pay-TV services available in the UK and Ireland, according to the announcement. The companies now must provide “convincing justifications” for what the EC calls “anticompetitive agreements.”

Companies: Walt Disney Co.; NBCUniversal; Paramount Pictures; Sony Pictures; Twentieth Century Fox; Warner Bros.; BSkyB; Canal Plus; Sky Italia; Sky Deutschland

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