Advocate General finds that territorial exclusivity agreements relating to the transmission of football matches are contrary to EU law.

Summary

In June 2008, the question of the legality of the use of foreign decoder cards in the UK to enable access to foreign transmissions of live Premier League football matches, together with a number of related questions, was referred to the Court of Justice of the European Union (“ECJ”) by the High Court. The foreign cards, which were subject to territorial exclusivity agreements, were being used to show live matches in pubs in the UK.

In the view of Advocate General Kokott, territorial exclusivity agreements relating to the transmission of live football matches are contrary to EU law relating to free movement of services. If the ECJ follows her opinion, this case could have serious implications because it may prevent national broadcasters from controlling reception of their live programming across the EU. (Football Association Premier League Ltd & others v QC Leisure & others; Karen Murphy v Media Protection Services Ltd, Advocate General's Opinion in Joined cases C-403/08 and C-429/08).

Business Impact

  • This opinion, if followed by the ECJ, could be of major significance as it may prevent national broadcasters from controlling reception of their live programming across the EU. Rights holders may need to change how they exploit their content through sales to broadcasters, as they may no longer be able to segment the market on a territorial basis. Customers may also be able to subscribe to foreign broadcasters and use their decoder cards to buy rights to content, thereby circumventing the UK broadcaster. This in turn could lead to reduced prices to consumers, as well as broadcasters paying less for the rights in question.
  • However, as Advocate General Kokott herself notes, this approach could in fact have a counter-effect and make access to the transmissions of football matches more difficult for consumers and/or broadcasters in Member States, such as Greece. If FAPL cannot prevent the use of cheaper decoder cards from other Member States, it could opt in future to offer transmission rights only in the most lucrative markets in the European Union, or make the service offered to other markets conditional on the charging of prices similar to those more lucrative markets. Such an economic decision would be for the rights holder to make and would ultimately depend on how that holder can best exploit its rights overall.
  • Such a judgment could also have implications reaching beyond the realm of sports broadcasting. Advocate General Kokott draws parallels with computer software, musical works, e-books and films which are downloaded from the internet and can easily be passed on in electronic form, noting that this shows that the question at issue has considerable importance for the functioning of the internal market beyond the scope of the cases in the main proceedings.

Facts

The Football Association Premier League (“FAPL”) is the governing body of the English football Premier League and the vehicle through which the 20 Premier League clubs market the Premier League. FAPL owns various copyrights in the broadcasts of live Premier League matches.

FAPL grants its licensees the exclusive right to broadcast Premier League matches and to exploit them economically within their respective broadcasting areas. The licence fees payable vary depending on how lucrative the market is in each territory. In order to safeguard this exclusivity, each licensee is contractually obliged to transmit its satellite signal in encrypted form to subscribers in its territory. Subscribers then require decoders, and therefore decoder cards, to decrypt the signal and the exclusivity agreement also imposes restrictions on the circulation of authorised decoder cards outside the territory of each licensee.

The proceedings which resulted in the reference to the ECJ concerned attempts to circumvent this exclusivity. Companies offered pubs in the UK decoder cards imported from Greece, thereby enabling them to show live transmissions of Premier League football matches at more favourable prices than those offered by the broadcaster with territorial exclusivity for the UK.

The Advocate General’s Opinion relates to (i) civil law actions brought by FAPL against users and suppliers of foreign decoder cards in UK; and (ii) criminal proceedings brought against a landlady of a pub who used a Greek decoder card to show Premier League matches. In each set of proceedings, the High Court has referred a number of questions to the ECJ on the interpretation of EU law. These questions included:

  1. Whether decoder cards purchased in Greece and imported into the UK for use in the UK are “illicit devices” within the meaning of Directive 98/84 on the legal protection of conditional access services (the “Conditional Access Directive”) and therefore prohibited;
  2. The meaning of “communication to the public” under Article 3 of Directive 2001/29 on the harmonisation of certain aspects of copyright and related rights in the information society (the “Copyright Directive”);
  3. Questions on the interpretation of the Treaty Rules on free movement of goods and services under Articles 28, 30 and 49 EC (Articles 34, 36 and 56 TFEU) in the context of the Conditional Access Directive; and
  4. A question on the interpretation of the Treaty rules on competition under Article 81 EC (Article 101 TFEU).

Decision

  1. Illicit Devices

The Conditional Access Directive regulates the protection of devices for access to services based on conditional access and the free movement of such devices in the internal market. Under Article 4, the manufacture, import, distribution, sale, rental or possession for commercial purposes of illicit devices must be prohibited and appropriately sanctioned. Under Article 2(e), an “illicit device” is said to mean any equipment or software designed or adapted to give access to a protected service in an intelligible form without the authorisation of the service provider.

FAPL takes the view that a decoder card lawfully sold in one Member State becomes an illicit device, if it is used in another Member State against the will of the undertaking broadcasting the protected service. However, Advocate General Kokott gave this argument “short shrift”, noting that Article 2(e) is not directed at preventing the use of an access device against the will of the service provider; rather, it refers to equipment that has been designed or adapted to give access without the authorisation of the service provider. The definition therefore covers equipment that has been manufactured or modified specifically for that purpose. However, where a conditional access device is made by or with the consent of a service provider and sold subject to a limited authorisation to use the device, that device does not become an “illicit device” within the meaning of Article 2(e) if it is used to obtain access to that protected service in a place or in a manner or by a person outside the authorisation of the service provider. In this case, the decoder cards in issue were specifically designed to provide access with the authorisation of the Greek service provider and were not adapted so as to make them “illicit devices” by virtue of their importation and use in the UK.

  1. “Communication to the public”

Article 3(1) of the Copyright Directive gives authors the exclusive right to authorise or prohibit any communication to the public of their works by wire or wireless means, including the making available to the public of their works, in such a way that members of the public may access them from a place and at a time individually chosen by them.

Clarification was sought as to whether the showing of live transmissions of football matches in pubs represents “communication to the public… by wire or wireless means” within the meaning of Article 3(1). In the Advocate General's opinion, as EU law currently stands, there are no comprehensive rights protecting the communication of a broadcast to the public in the absence of an entrance fee. Article 3(1) covers only communication of works to a public which is not present at the place in which the communication originates. Accordingly, a copyright work is not “communicat[ed] to the public… by wire or wireless means” where it is received or viewed as part of a satellite broadcast at commercial premises (for example, a pub) or shown at those premises, free of charge, via a single television screen and speakers to members of the public present on those premises.

  1. Free movement of goods and services

Having considered that the present proceedings relate to the use of decoder cards to gain access to encrypted programmes in the UK, rather than the trade in the cards themselves, the Advocate General examined the questions in relation to the freedom to provide services (Article 56 TFEU), rather than the free movement of goods (Article 34 TFEU).

The Advocate General explained that the territorial exclusivity rights in issue had the effect of partitioning the internal market into quite separate national markets, something which constitutes a serious impairment of the freedom to provide services. In considering whether this restriction was justified under Article 36 TFEU in order to protect industrial and commercial property, Advocate General Kokott determined that the specific subject-matter of the rights in live football transmissions lies in their commercial exploitation through the charge imposed for decoder cards. She considered that such exploitation is not undermined by the use of foreign decoder cards, as corresponding charges were paid for those cards. Whilst those charges are not as high as the charges imposed in the UK, there is no specific right to charge different prices for a work in each Member State, and FAPL's approach of marketing the broadcasting rights on a territorially exclusive basis amounts to profiting from the elimination of the internal market. Accordingly, a partitioning of the internal market for the reception of satellite broadcasts was not necessary in order to protect the specific subject matter of the rights to live football transmissions and was therefore not a justified restriction of the freedom to provide services.

  1. Competition

The Advocate General also held that the provision in the exclusive licences requiring the broadcasters to prevent their satellite decoder cards from being used outside the licensed territory had the same effect as an agreement to restrict parallel trade and was therefore liable to prevent, restrict or distort competition. Such restrictions are classified as serious restrictions under Article 101(1) TFEU (restrictions by object) and there is no need to demonstrate actual anti-competitive effects.

An exemption under Article 101(3) may be possible but the parties would have to demonstrate, by means of convincing arguments and evidence, that the conditions for obtaining an exemption are satisfied.