On December 9, 2020, the Court of Justice annulled the Commission’s decision that accepted Paramount’s commitments to remove from its licensing agreements with broadcasters any obligation that prevents broadcasters from responding to cross-border requests for pay-TV subscriptions (the “Commitments Decision”). The Court of Justice concluded that the Commitments Decision breached the principle of proportionality because it negated contractual rights of Canal+ and other counterparties to Paramount’s licensing agreements who were not involved in the Commission’s proceedings.
This is the first time a third party has successfully challenged commitments adopted by the Commission. The judgment will have a chilling effect on the Commission’s ability and willingness to accept commitments in circumstances where they may have a direct impact on pre-existing third-party rights, particularly where such third parties have not been involved in the Commission’s administrative proceedings.
In 2015, the Commission issued a statement of objections against six U.S. film studios, (NBCUniversal, Paramount, Sony, TWDC, Twentieth Century Fox, and Warner Bros.) and U.K. broadcaster Sky. It alleged that certain contractual provisions in the licensing agreements between the studios and Sky which prevented Sky from passively selling Paramount’s content in other countries within the EEA amounted to restrictions of parallel trade within the EEA. According to the Commission, such clauses had the object of restricting competition and therefore infringed Article 101(1) TFEU. In 2016, the Commission closed the proceedings by adopting a decision under Article 9 of Regulation 1/2003 that accepted Paramount’s commitments:
- not to (re)introduce or enforce any obligation on broadcasters that prevent them from responding to cross-border requests for pay-TV subscriptions (“Broadcaster Obligation”), and
- not to accept or comply with any obligations on Paramount itself to impose Broadcaster Obligations in its pay-TV license agreements with other broadcasters (“Studio Obligation”).
Canal+, a French TV broadcaster, who was not a party to the Commission’s proceedings, objected to Paramount’s commitments. In 2014, Canal+ had concluded with Paramount an exclusive pay-TV licensing agreement for the French market. To protect that exclusivity, its agreement with Paramount also included the Studio Obligation. Canal+ appealed the Commitments Decision before the General Court. Canal+ claimed that Paramount’s commitments negatively affected its commercial interests because Canal+ would no longer be protected from cross-border passive sales by Paramount’s licensees outside France. The General Court dismissed Canal+’s appeal in December 2018 and Canal+ appealed to the Court of Justice.
The Court of Justice Judgment
The Court of Justice upheld Canal+’s claim that the Commitments Decision violated the principle of proportionality by disregarding the effects of the Paramount commitments on Canal+, which had not been a party to the Commission’s investigation.
The Court of Justice relied on the Alrosa precedent confirming that the principle of proportionality required the Commission to “take account of the interests of third parties” when adopting commitments decisions under Article 9 of Regulation 1/2003. According to the Court, the Commission must verify that the rights of third parties “are not emptied of their substance” by the commitments accepted by the Commission.
Applying this principle, the Court went on to find that Paramount’s commitments disproportionately infringed the contractual rights of Canal+ and other third parties that licensed TV content from Paramount. The Court of Justice followed the opinion of Advocate General Pitruzzella and annulled the Commitments Decision in its entirety because it breached the principle of proportionality for the following reasons.
- First, Canal+ had not offered the commitments, had not been part of the Commission proceedings, and had not provided any indication that it agreed with the 
- Second, the commitments had the effect of negating Canal+’s existing contractual rights. The commitments obliged Paramount not to impose and enforce contractual clauses that restricted other broadcasters from selling outside their licensed territory, and into Canal+’s exclusively licensed territory. In so doing, they “automatically implied that Paramount would breach certain contractual obligations to Canal+.” The intended effect of the commitments was to “automatically put into question” Canal+’s exclusivity to the licensed Paramount content.
- Third, Canal+ could not have mitigated the impact of the commitments by bringing a claim before a national court to uphold the validity of the relevant clauses and to obtain damages from Paramount. Although commitments decisions in principle do not have a precedential effect, the Court of Justice referred to the duty of national courts to avoid judgments that contradict Commission decisions. This meant that national courts could not oblige Paramount to comply with its contractual obligations or award damages for their breach, nor could national courts adopt “negative” decisions finding that the relevant conduct by Paramount did not violate Articles 101 and 102 TFEU.
The Court of Justice distinguished the Canal+ appeal from Alrosa, where Alrosa had also relied on the principle of proportionality to challenge a commitments decision. In Alrosa, De Beers and Alrosa had entered into a purchase agreement that was conditioned on the Commission giving advance negative clearance. The Commission subsequently opened an investigation into the agreement, which De Beers settled by committing to reduce its purchases from Alrosa. The Court explained that the present case involved an interference with pre-existing rights, whereas Alrosa concerned future or conditional contractual rights (at least in the Court’s view).
The Commission and parties that are seeking to offer commitments will likely need to adapt their approach in future cases. The commitments adopted must not nullify pre-existing contractual rights of third parties who are not part of the proceedings, and the Court of Justice’s reasoning suggests that “rights” should be read broadly, to encompass the essence of the parties’ commercial bargain, and not only explicit contractual provisions.
This judgment could mean that commitments will not be available where they implicate existing contractual relations, unless the counterpart(ies) are also party to the Commission investigation and sign on to the commitments. The Commission may remain receptive to accepting commitments that regulate future relationships and future commercial practices with third parties, even if those third parties are not formally involved in the proceedings.
 Groupe Canal+ v. Commission (Case C-132/19 P) EU:C:2020:1007. See, Cross-border access to pay-TV (Case COMP/AT.40023), Commission decision of July 26, 2016.
 Groupe Canal+ v. Commission (Case C-132/19 P) EU:C:2020:1007, para. 125.
 As reported in our March 2019 EU Competition Law Newsletter, on March 7, 2019, the Commission accepted comparable commitments offered by Disney, NBCUniversal, Sony Pictures, and Warner Bros, Sky. Canal+ has also challenged this decision before the General Court. See Groupe Canal+ v. Commission (Case T-358/19), case pending.
 Groupe Canal+ v. Commission (Case T-873/16) EU:T:2018:904.
 The Court of Justice dismissed Canal+’s other claims that the Commission (i) misused its powers in light of the then-ongoing legislative process relating to the issue of geo-blocking; (ii) breached the adversarial principle by failing to evaluate Canal+’s argument under Article 101(3) TFEU; and (iii) failed to properly examine Canal+’s arguments regarding the appropriate legal and economic context of these cross-border restrictions.
 Commission v. Alrosa (C-441/07) EU:C:2010:377, para. 41.
 Groupe Canal + v. Commission (Case C-132/19 P) EU:C:2020:1007, para. 106.
 Opinion of AG Pitruzzella in Groupe Canal + v. Commission (Case C-132/19 P) EU:C:2020:355.
 Groupe Canal + v. Commission (Case C-132/19 P) EU:C:2020:1007, paras. 107 and 124.
 Ibid., para. 107.
 Ibid., para. 125.
 Ibid., paras. 112–113.