On March 31, 2021, the Commission withdrew its decision which made binding—under Article 9 of Regulation No 1/2003—commitments offered by NBCUniversal, Sony, TWDC, Twentieth Century Fox, Warner Bros and Sky in the cross-border access to pay-TV antitrust proceedings.[1] The withdrawal follows the annulment by the Court of Justice of the Commission’s commitments decision against Paramount and its parent company Viacom[2] (the “Paramount Commitments Decision”), who had offered essentially identical commitments to those offered by the parties in the present case.
Background
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 UK broadcaster, Sky, voicing concerns that certain contractual provisions in the licensing agreements between the film studios and Sky restricted cross-border passive sales within the EEA and therefore amounted to a restriction by object of competition within the meaning of Article 101(1) TFEU.[3]
The Commission accepted commitments offered by Paramount in 2016 and those offered by the other five studios and Sky in 2019 (the “2019 Decision”). The commitments prohibited the studios and Sky from complying with, and enforcing contractual clauses that restricted the passive sale of pay-TV subscriptions across borders in the EEA.[4]
On December 9, 2020, the Court of Justice granted Canal+’s application to annul the Paramount Commitments Decision (the “Paramount Judgment”).[5] The Court of Justice concluded that the Paramount Commitments Decision breached the principle of proportionality because, without their agreement, it negated the contractual rights under the passive sales bans of third parties who were not involved in the proceedings (such as Canal+).[6]
In prohibiting Paramount from complying with its obligations under the clauses in question, the Commission undermined third parties’ contractual right to “absolute territorial protection.” The Court considered that commitments adopted must not nullify pre-existing contractual rights of third parties who are not part of the proceedings.
The Commission withdrew the 2019 decision, drawing on lessons from the Paramount Judgment
As a result of the Paramount Judgment, the Commission withdrew its 2019 Decision. The withdrawal and the subsequent closure of the antitrust proceedings in the cross-border pay-TV access case[7] evidence the practical hurdles established by the Court of Justice’s Paramount Judgment.
To avoid nullifying pre-existing contractual rights of third parties who are not part of the proceedings, the Commission would have had to broaden its investigation by including in the proceedings all relevant third parties affected by the commitments. The Commission would have also needed to issue a new Statement of Objections.
Instead—and although the Court of Justice upheld the Commission’s position with respect to the legality of the bans of passive cross-border sales of pay TV subscriptions—in view of the rulings and the changes made to the agreements between the studios and broadcaster, the Commission opted for a withdrawal.
[1] Commission decision C(2021) 2076 final of March 31, 2021, withdrawing Decision C(2019) 1772 final of 7 March 2019 relating to a proceeding under Article 101 of the Treaty on the Functioning of the European Union (TFEU) and Article 53 of the EEA Agreement Case AT.40023 – Cross-border access to pay-TV.
[2] For the remainder of this article together referred to as Paramount.
[3] Cross-border access to pay-TV (Case COMP/AT.40023), Commission decision of July 26, 2019.
[4] Cross-border access to pay-TV (Case COMP/AT.40023), Commission decision of March 7, 2019, as reported in our March 2019, EU Competition Law Newsletter.
[5] Groupe Canal+ v. Commission (Case C-132/19 P) EU:C:2020:1007, as reported in our Alert memorandum of January 4, 2021.
[6] Groupe Canal+ v. Commission (Case C-132/19 P) EU:C:2020:1007, as reported in our December 2020 EU Competition Law Newsletter.
[7] Commission notice of March 31, 2021, of closure of proceedings in case AT.40023 – Cross-border access to Pay-TV.