If the charges are upheld, it could mean subscription channels across the EU will be forced to open their services to more than 500 million consumers.
Viewers in Portugal lost total access to British television at the beginning of 2014, though providers here have managed to offer a series of alternatives allowing expats and holidaymakers from the UK to continue watching some of their favourite British television programmes.
Following the removal of access to UK channels in countries like Portugal, the EU launched an investigation back in 2014, with its findings being released this week.
EU Commissioner in charge of competition policy Margrethe Vestager is arguing that the inability of EU nationals to watch pay-TV channels elsewhere in the EU is likely to be against the Union’s free movement regulations.
Verstager has gained a reputation for tackling big business and unfair competition and is empowered by EU legislation to stop anti-competitive practices, such as not allowing people to watch Sky while living or on holiday in other member states.
Margrethe Vestager explained: “European consumers want to watch the pay-TV channels of their choice regardless of where they live or travel in the EU. 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.”
The European Commission said it had on Thursday sent a Statement of Objections to Sky UK and six major US film studios: Disney, NBCUniversal, Paramount Pictures, Sony, Twentieth Century Fox and Warner Bros.
The Commission takes the preliminary view that each of the six studios and Sky UK have bilaterally agreed to put in place contractual restrictions that prevent Sky UK from allowing EU consumers located elsewhere to access, via satellite or online, pay-TV services available in the UK and Ireland.
EU says viewers should have access to Sky channels across Europe
The European Commission has accused companies like the UK’s Sky television of setting up agreements which mean that consumers outside Britain and Ireland cannot access the broadcaster’s full range of programming.
Without these restrictions, Sky UK would be free to decide on commercial grounds whether to sell its pay-TV services to such consumers requesting access to its services, taking into account the regulatory framework including, as regards online pay-TV services, the relevant national copyright laws.
If the Commission’s preliminary position were to be confirmed, each of the companies would have breached EU competition rules prohibiting anti-competitive agreements. The sending of a Statement of Objections does not prejudge the outcome of the investigation.
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 (so-called “geo-blocking”) or through its satellite pay-TV services to consumers outside its licensed territory (UK and Ireland).
The Commission’s preliminary view as set out in the Statement of Objections is that such clauses restrict Sky UK’s ability to accept unsolicited requests for its pay-TV services from consumers located abroad, i.e. from consumers located in Member States where Sky UK is not actively promoting or advertising its services (so-called “passive sales”).
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.
As a result, these clauses grant ‘absolute territorial exclusivity’ to Sky UK and/or other broadcasters. They eliminate cross-border competition between pay-TV broadcasters and partition the internal market along national borders. The Commission’s preliminary conclusion is that, in the absence of convincing justification, the clauses would constitute a serious violation of EU rules that prohibit anticompetitive agreements (Article 101 of the Treaty on the Functioning of the European Union).
The Commission previously also set out concerns regarding 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.