The European Commission is inviting (de) comments from interested parties on commitments offered by Paramount Pictures to address competition concerns relating to contractual clauses preventing the cross-border provision of pay-TV services.
The Commission has concerns relating to contractual clauses in certain bilateral agreements between six major film studios, including Paramount Pictures, and Sky UK under which the studios license their output of films over a certain period of time for pay-TV to Sky UK. These clauses appear to prevent Sky UK from allowing EU consumers located elsewhere to access, via satellite or online, pay-TV services available in the UK and Ireland. Some agreements also contain clauses requiring the studios to ensure that, in their licensing agreements with broadcasters other than Sky UK, these broadcasters are prevented from making their pay-TV services available in the UK and Ireland. The Commission informed the six major film studios and Sky UK of these concerns in a Statement (de) of Objections in July 2015.
The Commission’s preliminary view, as outlined in the Statement of Objections, is that these clauses grant ‘absolute territorial exclusivity’ to Sky UK and/or other broadcasters, and that they eliminate cross-border competition between pay-TV broadcasters and partition the Single Market across national borders.
To address the Commission’s competition concerns, Paramount Pictures has offered the following commitments, which would apply throughout the European Economic Area (EEA):
– When licensing its film output for pay-TV to a broadcaster in the EEA, Paramount Pictures would not (re)introduce contractual obligations, which prevent or limit a pay-TV broadcaster from responding to unsolicited requests from consumers within the EEA but outside of the pay-TV broadcaster’s licensed territory (No “Broadcaster Obligation”);
– When licensing its film output for pay-TV to a broadcaster in the EEA, Paramount Pictures would not (re)introduce contractual obligations, which require Paramount to prohibit or limit pay-TV broadcasters located outside the licensed territory from responding to unsolicited requests from consumers within the licensed territory (No “Paramount Obligation”);
– Paramount Pictures would not seek to bring an action before a court or tribunal for the violation of a Broadcaster Obligation in an existing agreement licensing its film output for pay-TV;
– Paramount Pictures would not act upon or enforce a Paramount Obligation in an existing agreement licensing its film output for pay-TV.
The commitments would apply for a period of five years and cover both standard pay-TV services and, to the extent that they are included in the licence(s) with a broadcaster, also subscription video-on-demand services. The commitments would cover both online services and satellite broadcast services. A summary of the proposed commitments has been published in the EU’s Official Journal (de).