On August 12, 2019, the FCA approved, subject to remedies, the creation of TV platform Salto by TF1, France Télévisions (“FTV”), and Métropole Télévision (“M6”) following a referral by the European Commission. Salto is intended to offer television services, including free-to-air digital terrestrial television (“DTT”) channels and related (e.g. catch-up TV) services and functionalities, together with subscription video on-demand services. Salto’s offering will be distributed directly over the internet (known as “over-the-top” or “OTT”).
The FCA identified several competition concerns resulting from the transaction. On the upstream markets for the acquisition of broadcasting rights, the FCA has, for the first time, considered the existence of a single market for the acquisition of both linear (i.e. real time viewing) and non-linear (i.e. on-demand viewing) broadcasting rights (except for recent films). The FCA analysed to what extent the parent companies were likely to use their strong market position on the markets for the acquisition of linear broadcasting rights in order to favour Salto’s access to non-linear broadcasting content. While the risk has been eliminated in relation to American and European content, due to the presence of strong competitors, the FCA found that such a bundling strategy would have been possible in relation to original French-language content. On the intermediate markets for production and supply of television channels, the FCA found that the parent companies would have the ability and incentive to limit or eliminate Salto’s competitors access to their channels and related services. In this respect, the FCA noted that the parent companies’ channels constituted important input for other distributors, representing more than 70% of the national audience. On the downstream distribution market, the FCA identified a risk of cross-promotion between the parents’ popular free-to-air DTT channels and the Salto platform. The FCA was also concerned that the common platform would increase market transparency and facilitate coordination between the parent companies, and between the parent companies and their joint subsidiary.
To address the FCA’s concerns, TF1, FTV and M6 offered a long list of remedies, which were adjusted following market tests launched by the FCA. Concerning the upstream markets for the acquisition of broadcasting rights, the parent companies committed to inter alia limit the amount of video-on-demand content that Salto can purchase from them and limit the possibilities for joint purchases of linear and non-linear rights. In the intermediary markets for production and supply of television channels, TF1, FTV, and M6 will ensure that Salto will not conclude exclusive distribution agreements for free-to-air channels and related services offered by them or third party operators. In addition, the parent companies committed to offer directly, without Salto as intermediary, the distribution of their free-to-air DTT channels along with their associated services and functionalities to any interested third party distributor, on objective and non-discriminatory terms. The commitments further provide that the remuneration due by Salto to its parent companies will be set by two independent experts. The parent companies have also undertaken to limit the cross- promotion risk in the downstream distribution market and to sell advertising space to Salto on the basis of general terms and conditions of sale. Finally, the parent companies have committed to establish a set of individual and collective guarantees to limit the exchange of information to what is strictly necessary. These include the implementation of rules on incompatibilities between a membership in Salto’s governing bodies and certain functions within the parent companies, the signature of confidentiality agreements by parent companies’ representatives participating in Salto’s governing bodies, the limitation of access to information to what is strictly necessary for the exercise of the supervisory board members’ duties, and the presence of the trustee appointed by the FCA during discussions related to Salto’s acquisition of rights and distribution activities.
With the exception of commitments to prevent the risk of coordination, which will apply throughout Salto’s lifetime, the remedies will apply for a period of five years from the date of the decision, and can be renewed for a maximum period of five years. In the event of significant market changes, the FCA may also re-examine some of the remedies.