EU antitrust body probes US film studio contracts

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Associated Press

Posted on January 13, 2014 at 8:03 AM

BRUSSELS (AP) — The European Union's antitrust watchdog is investigating whether some clauses demanded by major U.S. film studios in their contracts with Europe's largest pay TV broadcasters hurt competition.

The probe, unveiled Monday, covers Twentieth Century Fox, Warner Bros., Sony Pictures, NBCUniversal and Paramount Pictures.

Studios mostly sell film rights for use in only one country, rather than across the EU's 28 nations. The European Commission, the EU's executive arm, said it is investigating the legality of clauses in contracts that prevent broadcasters from providing services across borders.

"Such provisions might constitute an infringement of EU antitrust rules," said Commissioner Joaquin Almunia, the bloc's antitrust chief. "More and more European citizens watch films, use pay TV services broadcast by satellite and increasingly available through online streaming," he told reporters in Brussels.

Contract clauses granting "absolute territorial protection" might be forcing pay TV operators such as Britain's BSkyB, France's Canal Plus, Spain's DTS or Italy's and Germany's Sky channels to refuse subscribers from other EU nations, according to the Commission.

Almunia specified the antitrust body's investigation doesn't question all forms of territorial limitations and doesn't aim at introducing flat-out European contracts instead of national ones.

The question is, for example, whether a subscriber to a German pay TV channel should be able to watch his content also when using his laptop to stream it online while on vacation in another EU nation, he said.

"Or if you live in Belgium and you want to subscribe to a Spanish pay TV service, (you) may not be able to subscribe at all if there's absolute territorial exclusivity," Almunia said.

The Commission has no legal deadline to complete its antitrust inquiries. If it finds violations of competition rules, it can hand firms fines worth a percentage of the annual sales of the relevant products, capped at a maximum of 10 percent of a firm's overall annual revenues.

The bloc's top court, the EU Court of Justice, in 2011 found in a case involving territorial licensing restrictions for Premier League football matches that they eliminate competition between broadcasters and partition the market according to national borders, the Commission said.

Regarding football rights "these exclusivity conditions are being eliminated or have been eliminated" following the court ruling, Almunia said. On film rights, however, such clauses of territorial exclusivity still exist, he added.

"We will carefully examine the principle set out by the court," Almunia said.

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Follow Juergen Baetz on Twitter at http://www.twitter.com/jbaetz

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