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 Paramount (amongst other studios) and Sky UK breach EU antitrust rules. These clauses (a) required Sky UK to block access to Paramount’s films through its online pay-TV services (so-called “geo-blocking”) or through its satellite pay-TV services to consumers outside its licensed territory (UK and Ireland) and (b) required Paramount 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.
In April 2016, Paramount offered commitments in order to address the Commission’s concerns. The Commission then consulted market participants to verify the appropriateness of the proposed commitments.
In light of the results of this market test, the Commission was satisfied that the commitments, as clarified by Paramount, addressed its concerns and has made them legally binding on Paramount:
- When licensing its film output for pay-TV to a broadcaster in the EEA, Paramount will not (re)introduce contractual obligations, which prevent or limit a broadcaster from responding to unsolicited requests from consumers within the EEA but outside of the broadcaster’s licensed territory (no “Broadcaster Obligation”);
- When licensing its film output for pay-TV to a broadcaster in the EEA, Paramount will not (re)introduce contractual obligations, which require it to prohibit or limit broadcasters located outside the licensed territory from responding to unsolicited requests from consumers within the licensed territory (no “Paramount Obligation”);
- Paramount will not seek to bring an action before a court or tribunal for the violation of a Broadcaster Obligation in an existing licensing agreement;
- Paramount will not act upon or enforce a Paramount Obligation in an existing licensing agreement.
The commitments will apply throughout the EEA for a period of five years and cover both standard pay-TV services and, to the extent that they are included in film licensing contracts for pay-TV with a broadcaster, subscription video-on-demand services as well. The commitments cover both online services and satellite broadcast services. Finally, 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.