Making the Digital Single Market a Reality: the limits of regulatory antitrust

Making the Digital Single Market a Reality: the limits of “regulatory antitrust”

Prof. Dr. Ben Van RompuyPrivate Television in Europe: Competition Rules ?! – 3 June 2015

1.FAPL v QC Leisure: practical impact so far

Premier League (1)

•Before FAPL v QC Leisure:

•Broadcaster (licensee) required to undertake that it shall:

“procure that no device (including but not limited to any “smart card” and any decoding equipment which is necessary to decode or decrypt any such Transmission) shall be knowingly authorized or enabled by or with the authority of the Licensee and/or Permitted Sub-Licensee … so as to permit any person to view any such Transmission outside the

Territory in an intelligible form”

Premier League (2)

•After FAPL v QC Leisure:

•Contractual amendments in overseas licensing agreements:

• Licensees no longer allowed to offer an optional English language feed to its customers (only language of the country)

• Non-UK licensees no longer allowed to transmit more than one live PL game on Saturday afternoon (3-5 pm) ~ “closed period” (blackout) rule

•Little has changed, but consumers everywhere in EU worse off

Other sports properties?

European Commission (DG COMP)

•Antitrust investigation into pay TV services (2014-)

• Scope: premium pay-TV content (first-run movies of major US studios)

• “Not calling into question exclusive territorial licensing or trying to oblige the sale of pan-European rights”

• Focus on “restrictions preventing the selling of the content in response to unsolicited requests from viewers located in other Member States or from existing subscribers who move or travel abroad”

• Passive sales• Portability

•E-commerce sector inquiry (2015-2016)

European Commission, “Statement on opening of investigation into Pay TV services”, 13 January 2014

2.Absolute territorial exclusivity and Article 101 TFEU

Article 101(1) TFEU (1)

The following shall be prohibited as incompatible with internal market:

•All agreements between undertakings, decisions by associations of undertakings and concerted practices;•which may affect trade between Member States; and

•which have as their object or effect the prevention, restriction or distortion of competition within the internal market


Restriction of competition by object?

•An agreement which might tend to restore the divisions between national markets is liable to frustrate the Treaty’s objective of achieving the integration of those markets through the establishment of a single market.

•That case law is fully applicable to the field of cross-border provision of broadcasting services.

Joined cases 56 and 58-64 Consten and Grundig v Commission [1996] ECR 299

Joined Cases C-403/08 and C-492/08 FAPL v QC Leisure and Karen Murphy v Media Protection Services [2011] ECR I-9083, para. 140.



•The mere fact that the right holder has granted to a sole licensee the exclusive right to broadcast protected subject-matter from a Member State, and consequently to prohibit its transmission by others, during a specified period is not sufficient to justify the finding of an anti-competitive object.

• >< Licence was open, not closed

• >< Territorial limitations upon the exercise of the rights (cf. “additional obligations designed to ensure compliance with the territorial limitations”)

Case 262/81 Coditel and Others (‘Coditel II’) [1982] ECR 3381, par. 15.

Case 258/78 LC Nungesser KG and Kurt Eisele v Commission [1982] ECR 2015.



•Regard must be had to the content of the agreement’s provisions, its objectives, and the economic and legal context of which it forms part.

•When determining that context, it is also appropriate to take into consideration the nature of the goods or services affected, as well as the real conditions of the functioning and structure of the market or markets in question.

Case C‑226/11 Expedia Inc. v Autorité de la concurrence and Others, 13 December 2012; Case-67/13 P Groupement des cartes bancaires v Commission and others, 11 September 2014.

Joined Cases C-501/06 P, 513/06 P, 515/06 P and 519/06 P GlaxoSmithKline Services and Others v Commission and Others [2009] ECR I-9291, para. 58.



• Not “inherent” to the essential function of copyright

• Quid real functioning and structure of the market in question?

Joined Cases C-403/08 and C-492/08 FAPL v QC Leisure and Karen Murphy v Media Protection Services [2011] ECR I-9083, paras. 105-117; Case T-451/08 Stim v Commission [2013] para. 92.

T-442/08, CISAC v Commission [2013] 12 April 2013


Restriction of competition by effect?

•Commission needs to demonstrate that absolute territorial exclusivity clauses have likely anti-competitive effects on the market

•Quid counterfactual?

Article 101(3) TFEU

Scope for an efficiency defense?

1.The agreement must contribute to improving the production or distribution of goods or to promoting technical or economic progress.

2.Consumers must receive a fair share of the benefits.

3.Restrictions are indispensable.

4.No elimination of competition.

3.The remedial potential of EU competition law

Scenarios

SCENARIO

Developing cross-border competition between pay TV operators

SCENARIO

Legalizing the grey market and catering for mobility of EU citizens

Scenario (1)

•= develop cross-border competition between pay TV operators

• Absence of cross-border competition ≠ the result of the restraints (or downstream rights clearance as such)

• Prevailing market dynamics - no viable business case

• E.g. Case M.7332 BSkyB/Sky Deutschland/Sky Italia, Commission decision of 11 September 2014, on multi-territory licensing:

1. Practical obstacles, such as different timelines for negotiations2. Rights holders would not deviate from current preferred model of

licensing unless it is in their interest in terms of maximising revenues

Scenario (2)

•Altering rather than protecting the prevailing market structure: remedial potential is limited

•Cf. remedy package designed in the context of joint selling of football media rights

1. Segmentation of rights in different packages2. Reduction in exclusive right to sell (fallback option)3. Offering of all media rights4. Reduction in hold back for internet & mobile services5. Contractual period max. 3 years

6. No single buyer obligation

Pablo Ibanez Colomo, “The Commission investigation into pay TV services: open questions” (2014) Journal of European Competition law & Practice

Scenario (2)

•Challenging existing market dynamics?

Ligue 1 (FR) Bundesliga (GER)

Serie A (IT) Premier League (UK)

Contract duration

4 years(2008-12)

4 years(2009-13)

2 years(2010-12)

3 years(2010-13)

Number of matches 380 / 380 306 / 306 380 / 380 138 / 380

Configuration of rights packages

Platform neutral Per platform Per platform Platform neutral

Number of live rights packages

8

7+2 5 (4) 6

Number of operators (live rights)

2 (Canal Plus, Orange)

2 (Sky D, DT) + ARD (6 matches)

2 (Sky, RTI) + Vodafone

2 (BskyB, ESPN)

Scenario XS

•= legalizing the grey market & cater for mobility of European citizens

• Accept territorial licensing only to the extent that it protects the licensees against active sales (cf. traditional active/passive distinction in vertical agreements) + allow cross-border portability

•Contractual practices do function as the main obstacle

• Satellite versus online (geo-blocking, credit card, …)

•Unlikely to have major practical impact (price)

Thank you for your attention

Prof. Dr. Ben Van RompuyT.M.C. Asser Institute, The Hague / iMinds-SMIT, VUB, [email protected]

Making the Digital Single Market a Reality: the limits of regulatory antitrust

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