On July 7, 2009, the French Competition Authority released an opinion on bundling by Internet service providers of content with broadband subscriptions. This opinion does not create new obligations but might lead to action under existing competition law or regulations, or even to new legislation.

The Competition Authority analyzed the "double exclusivity" system implemented by Orange, the broadband affiliate of France Telecom. The new service offered by Orange consists of an exclusive offer of sports and other programming to triple play customers of its broadband access services. According to the Competition Authority, Orange's new service is based on a "double exclusivity" system (exclusivity of content distribution as well as exclusivity of transmission and access to the content).

The Competition Authority analyzed the difficulty of entering the French pay TV market, mainly due to the strong market position of Canal + and to the exclusive programming deals entered into by Canal +. The French Competition Authority acknowledged that the French pay TV market would benefit from the entry of new players. Further, the Competition Authority found that Orange's market entry had led to more competition and benefited consumers by stimulating new mid-market offers.

Nevertheless, the Competition Authority considered that Orange's double exclusivity raises serious competition law questions:

  • The answer to insufficient pay TV competition is not to encourage a solution which could potentially block downstream competition on the broadband access market. In the French market, it would lead to two closed ecosystems combining programming and broadband (SFR/ Canal +; Orange).
  • More extensive use of double exclusivity systems could create serious risks for competition and consumer choice on the high speed broadband access markets. Consumers would no longer choose broadband access based on the merits of the broadband product, but on the kind of programming offered. Tying content to broadband subscription would also increase switching costs for consumers who want to change broadband providers.

As a consequence, the Competition Authority took the following position:

  • Exclusivity linked to access is not illegal per se, but to be legal it must be limited in time (12-24 months max.), limited in scope, and linked to new innovative serv ices.
  • "Self-distribution" should be used. The French Competition Authority wants to encourage distributors of programming to make their services available on multiple broadband platforms, using the "self-dis tribution model."
  • Continued oversight of the pay TV providers such as Canal+ is needed to make sure that the market for program ming overall is sufficiently open. The Competition Authority recommends that Canal + be subject to greater transparency regarding existing exclusivity and exclusivity premiums to facilitate market entry by other distributors. The Competition Authority cites OFCOM’s must-offer pro posal, described in its recent 3rd pay TV consultation, as a possible route to follow.

The Competition Authority considered that existing competition law and regulations are not sufficient to deal with the issues raised by "double exclusivity." According to the Competition Authority, new legislation should be considered.