On September 30, 2021, the Paris Court of Appeals upheld the FCA’s decision of April 24, 2020 (the “Decision”) to dismiss Molotov’s complaint regarding certain practices allegedly carried out by the two main private free-to-air television broadcasters in France, TF1 and M6. The Court held that, in line with the FCA’s findings, neither the evidence on file nor that adduced by the complainant were sufficient to establish any of the alleged infringements.

Background

Molotov is a television distribution platform launched in 2016 which aggregates and streams French audiovisual programs “over the top”, i.e., via its internet website Molotov.tv. Molotov uses a “freemium” model whereby users can access basic services for free (e.g., linear television services) whilst additional services (e.g., downloading and recording) are provided for a premium.

In July 2019, Molotov filed a complaint against the two main private free-to-air broadcasters in France, TF1 and M6, requesting that the FCA order interim measures. First, the complaint alleged that TF1 and M6 collectively held a dominant position together with the public television group France Télévisions (“FTV”), and that TF1 and M6 abused their dominant position by abruptly terminating Molotov’s distribution contract regarding TF1 and M6 channels. The plaintiff also pointed out that termination of the contract coincided with the launch of Salto, the joint venture established by TF1, M6 and FTV[1] which was a direct competitor of Molotov. Second, Molotov alleged that TF1 and M6 abused its economic dependence[2] vis-à-vis their services.

Third, Molotov claimed that TF1 and M6 colluded to exclude Molotov. Fourth, Molotov held that M6’s general distribution terms, which imposed a ‘paywall’ clause, according to which M6 channels could no longer be accessed for free, constituted an illegal vertical restraint which limited Molotov’s freedom to implement a “freemium” model.

The FCA Decision dismissed the complaint altogether, including the request for interim measures, finding that there was no “sufficiently convincing evidence”[3] to establish the allegations made against TF1 and M6. In particular, the FCA concluded that the evidence was not sufficient to establish (i) the existence of a dominant position held collectively by FTV, TF1, and M6;[4] (ii) any situation of economic dependence by Molotov;[5] (iii) the existence of an agreement between TF1 and M6 with the object or effect of restricting competition by excluding Molotov from the market;[6] or (iv) the existence of a vertical agreement between M6 and Molotov in respect of M6’s general distribution terms, thereby excluding any potential vertical restraint.

On June 24, 2020, Molotov appealed the FCA Decision.

The Paris Court of Appeals’ ruling

On September 30, 2021,[7] the Paris Court of Appeals upheld the FCA’s Decision in its entirety.

First, the Paris Court of Appeals dismissed all grounds of appeal put forward by Molotov relating to the intrinsic legality of the Decision. In particular, the Paris Court of Appeals rejected the claim made by Molotov according to which the FCA failed to instruct the complaint, stressing that Molotov bore the burden of proving that the practices were likely[8]. Furthermore, the FCA did not infringe the rights of the defense by refusing to grant Molotov access to some of the evidence that was protected by business secrets.[9] In this respect, the Paris Court of Appeals clarified that, whilst a plaintiff is not required to prove the existence of alleged practices, it is nevertheless required to show that they are likely,[10] and the FCA is not required to fill the evidentiary gap.

Second, the Paris Court of Appeals dismissed all the other grounds of appeal and upheld the FCA’s decision to dismiss the complaint based on the fact that the evidence on file, and that adduced by Molotov, was not sufficient to demonstrate the existence of the alleged practices.

As regards the FCA’s decision to reject the allegation of an abuse of dominance, the Paris Court of Appeals confirmed that the evidence on file was insufficient to demonstrate the existence of a collective dominant position, stressing that a collective dominant position can only be established when the relevant companies constitute a collective entity (i.e., given their structural capital or legal links) vis-à-vis their competitors and commercial partners.[11] In the present case, although both TF1 and M6 requested to be paid between 2016 and 2018 for the supply of their channels, this was not the case for FTV, such that the alleged existence of a collective entity could not stand. Furthermore, the Paris Court of Appeals held that FCA’s Decision to reject the allegation of an abuse of dominance was well-founded notwithstanding the fact that the FCA relied on a definition of the market, for the purposes of the assessment of dominance, that was left open and which had been carried out in the context of merger control proceeding, which is, by definition, forward- looking. The Paris Court of Appeals confirmed that the FCA was well-founded to refer to forward- looking market definition stemming from merger control proceedings given that such proceedings[12] were contemporaneous to the case at hand and therefore enabled the FCA to satisfactorily carry out the necessary backward-looking analysis required for antitrust investigations.

As regards the FCA’s decision to reject the allegation of an abuse of economic dependence, the Paris Court of Appeals found that, in light of the fact that M6, TF1 and FTV did not constitute a collective entity as mentioned above, the alleged abuse of economic dependence was required to be assessed between Molotov and TF1 on the one hand, and between Molotov and M6 on the other hand.[13] The Paris Court of Appeals found that the evidence was insufficient to conclude that Molotov was economically dependent on TF1 and/or M6, given that, inter alia, TF1 and M6 did not have a significant market share on the relevant market, and that Molotov was unable to provide sufficient evidence to determine which proportion of its turnover resulted from TF1 and M6.[14]

Finally, as regards the existence of an alleged anticompetitive agreement, whether horizontal or vertical, the Paris Court of Appeals upheld the FCA’s decision to reject these claims on the basis that the evidence on file and that adduced by the plaintiff was not sufficient to establish the existence of an agreement,[15] which is an essential element to establishing a collusive practice or anticompetitive vertical restraint. As regards a possible horizontal agreement specifically, the Paris Court of Appeals stressed that a mere parallelism of behavior, which may result from competitors defining autonomous strategies to adapt to new market trends,[16] is not sufficient to establish the existence of an agreement. As regards a possible vertical agreement specifically, the Paris Court of Appeals upheld the FCA’s decision to reject this claim on the basis that M6’s general distribution terms constituted a unilateral decision by M6 and was not the subject of an agreement, whether implicit or explicit.

[1] FCA Decision no. 19-DCC-157 of August 12, 2019 regarding the creation of a joint venture by France Télévisions, TF1 and Métropole Télévision companies (Salto)

[2] An abuse of economic dependence is an anticompetitive practice prohibited under French Law (Article L. 420-2 of the French Commercial Code, which consists in a company which, without having a dominant position as such, holds significant economic power which it uses to impose abusive commercial conditions on other trading parties.

[3] Decision, para. 125.

[4] Ibid., para. 89.

[5] Ibid, para. 106.

[6] Ibid, para. 115.

[7] Paris Court of Appeals decision n°20/07846 of September 30, 2021 (the “Ruling”).

[8] Ruling, para. 65.

[9] Ibid., para. 72.

[10] Ibid., para. 77.

[11] Ibid., para. 154. See, e.g., European Court of First Instance, Gencor (T-102/96) ECLI:EU:T:1999:65; European Court of Justice, Compagnie maritime belge (Joined Cases C-395/96 and C-396/96) ECLI:EU:C:2000:132; Cour de cassation, March 5, 1996, Total Réunion Comores and Paris Court of Appeals, October 30, 2001, OMVESA and June 4, 2002, CFDT Radio Télé.

[12] FCA Decision no. 19-DCC-157 of August 12, 2019 regarding the creation of a joint venture by France Télévisions, TF1 and Métropole Télévision companies (Salto).

[13] Ruling, para. 175. FTV was not targeted by this claim of economic dependence.

[14] Ibid., para. 181.

[15] Ibid., para. 211.

[16] Ibid., paras. 202 and 203.