On 3 February 2011, Advocate General Kokott delivered her Opinion in a reference for a preliminary ruling regarding the territorial limitations on the export of decoder cards as a key part of a system of territorial limitations on exclusive licensing of satellite TV broadcasting of top level (English Premier League) football matches. The Advocate General's view is that restrictions requiring broadcasters to prevent their satellite decoder cards from being used or sold outside their licensed territory are restrictions by object which infringe Article 101(1) of the Treaty on the Functioning of the European Union ("TFEU") and breach the principle of freedom to provide services (Article 56 TFEU). The European Court of Justice ("ECJ") will decide whether to follow the Advocate General's Opinion, after which the case will be remitted to the UK High Court.
The Football Association Premier League ("FAPL") grants licensees the exclusive right to broadcast football matches played in the top English league within a particular territory. The FAPL's licensees are required to prevent consumers outside their territory from being able to view their broadcasts. The UK proceedings concerned cases where undertakings had imported decoder cards from outside the UK, as well as certain UK pubs who had shown live FAPL matches broadcast on the channels of a broadcaster who was not the UK licensee, thus circumventing the FAPL's territorial exclusivity provisions. The English High Court referred certain questions to the ECJ, in relation to freedom to provide services, Article 101 TFEU and intellectual property rights.
Freedom to provide services
The case involved a UK law prohibition on the importation of decoder cards (i.e. goods). However, the Advocate General considered that what was at issue was the use of those cards to access transmission by foreign broadcasters, and that the principles of freedom to provide services were therefore relevant. The Advocate General concluded that the practice of prohibiting third parties from watching and sharing programmes in Member States other than those intended by the rights holder was a serious impairment of the freedom to provide services and effectively partitioned the EU into separate national markets. The Advocate General noted that similar problems existed in relation to other services, for example, computer software and e-books, and that the principles relevant to the present case therefore have "considerable importance for the functioning of the internal market beyond the scope of the cases in the main proceedings".
The Advocate General assessed whether the UK law restriction could be justified. She found that it was not necessary to partition the internal market in order to protect the specific subject matter of the rights to live football transmissions. The Advocate General also considered the FAPL's claims that the "closed period" for live transmissions (i.e. the period in a particular country when football associations can stipulate that no live football matches may be broadcast) could justify the restrictions. The Advocate General noted that a particularly strict test would need to be applied when assessing the need for closed periods. In light of her view that the use of the closed period in the UK might be due in part to economic considerations, rather than merely to encourage attendance at matches, the Advocate General did not consider that the closed periods justified the restriction. However, she noted that in the High Court proceedings it might be possible for the FAPL to demonstrate that different conditions in English football needed to be protected by closed periods and that live transmissions have substantial detrimental effects on match attendance.
The High Court had asked the ECJ whether it was sufficient for a licence agreement concerning the territorially limited transmission of a broadcast to be a restriction by object and so infringe Article 101(1) TFEU, or whether it was necessary to show an actual restrictive effect on competition. The Advocate General noted that, in line with previous case law, if an agreement or concerted practice has the object of preventing, restricting or distorting competition, it is not necessary to examine the effects of that agreement.
The Advocate General went on to consider whether the restriction in question was a restriction by object. She referred to the fact that the ECJ had in previous cases found that agreements which sought to partition the internal market along national borders, especially those aimed at preventing or restricting parallel imports, were restrictions of competition by object. The Advocate General stated that a contractual obligation requiring the broadcaster to prevent its decoder cards from being used outside the licensed territory had the same effect as agreements preventing or restricting parallel imports, and that this practice of absolute territorial protection was incompatible with the internal market. The Advocate General mentioned that an agreement that falls within the Article 101(1) prohibition may satisfy the conditions for exemption under Article 101(3), but noted that when assessing whether Article 101(3) was applicable, the considerations would be similar to those examined when analysing a possible justification for a restriction on the freedom to provide services. In this case it was for FAPL to prove that the Article 101(3) criteria were satisfied.
The ECJ must now consider whether to follow the Advocate General's Opinion. Once the ECJ has given its judgment, the matter will be referred back to the High Court to apply the ruling to the individual cases. The Advocate General's Opinion, if followed by the ECJ, will confirm that restrictions on competition which effectively partition the EU into national markets are still regarded as amongst the most serious violations of EU competition law. As noted by the Advocate General, the subject matter of the case and the ECJ's eventual judgment has implications not only for sports rights holders and how they exploit their rights in the future, but also for other sectors such as the distribution of e-books.
Source: Cases C-403/08 and C-429/08, Opinion of Advocate General Kokott, 3 February 2011, available at http://curia.europa.eu/jurisp/cgi-bin/form.pllang=EN&Submit=rechercher&numaff=C-403/08