The European Commission has sent a Statement of Objections to Sky UK and US film studios, Disney, NBCUniversal, Paramount Pictures, Sony, Twentieth Century Fox and Warner Bros., asserting that they have broken EU competition regulations by blocking access to film content in other EU countries.
“European consumers want to watch the pay-TV channels of their choice regardless of where they live or travel in the EU,” commented Margrethe Vestager, EU Commissioner in charge of competition policy. “Our investigation shows that they cannot do this today, also because licensing agreements between the major film studios and Sky UK do not allow consumers in other EU countries to access Sky’s UK and Irish pay-TV services, via satellite or online. We believe that this may be in breach of EU competition rules. The studios and Sky UK now have the chance to respond to our concerns.”
US film studios typically license content, such as films, to a single pay-TV broadcaster in each member state. The Commission’s investigation, which was opened in January 2014, identified clauses in licensing agreements between the six film studios and Sky UK which require Sky UK to block access to films through its online pay-TV services (‘geo-blocking’) or through its satellite pay-TV services to consumers outside its licensed territory (UK and Ireland).
The Commission’s view is that such clauses restrict Sky UK’s ability to accept unsolicited requests for its pay-TV services from consumers located abroad, ie from consumers located in member states where Sky UK is not actively promoting or advertising its services. Some agreements also contain clauses requiring 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.
This grants ‘absolute territorial exclusivity’ to Sky UK. It eliminates cross-border competition between pay-TV broadcasters and partitions the internal market along national borders.
The Commission previously also set out concerns as regards licensing agreements between the film studios and other major European broadcasters (Canal Plus of France, Sky Italia of Italy, Sky Deutschland of Germany and DTS of Spain). The Commission continues to examine cross-border access to pay-TV services in these member states.