The General Court recently dismissed the appeal brought by Canal+ against the decision of the European Commission making the commitments of Paramount legally binding. In 2015, the Commission sent a Statement of Objections alleging that certain geo-blocking clauses in licensing agreements between film studios and pay-TV broadcasters had the object of restricting cross-border competition.
The Commission accepted commitments offered by Paramount not to enforce or implement these clauses to address the Commission's concerns. Canal+ appealed the Commission's decision making the commitments binding, arguing that cultural diversity and intellectual property rights justified the restriction of cross-border competition. The Court fully dismissed the appeal of Canal+ and upheld the commitment decision.
In 2014, the Commission started investigating geo-blocking clauses in licensing agreements between the largest European pay-TV broadcasters and six major film studios, including Paramount. In July 2015, the Commission sent a Statement of Objections alleging that these clauses, which prohibited broadcasters from showing its pay-TV content to EEA consumers outside the exclusive territory, were deemed to have the object of restricting cross-border competition. On 15 April 2016, Paramount proposed that it would not enforce or implement the relevant clauses in order to address the Commission's concerns about their anti-competitive object that is contrary to Article 101 (1) TFEU [see our May 2016 Newsletter].
After receiving comments on the commitments of Paramount from interested parties, including Canal+, the Commission decided to make the commitments legally binding in July 2016. Canal+, being the exclusive Paramount licensee in France and an interested third party in the case, challenged the commitment decision.
On appeal, Canal+ argued that the intellectual property rights justified the absolute territorial exclusivity conferred by the relevant clauses. The General Court held that, while intellectual property rights are intended to protect these rights, the relevant clauses imposed restrictions going beyond what was necessary. The General Court also rejected the argument of Canal+ that the relevant clauses promoted cultural production and diversity. According to the General Court, this would involve an assessment under Article 101 (3) TFEU, which fell outside the scope of a commitment decision. Lastly, Canal+ claimed that the commitments violated the interests and procedural rights of third parties. The General Court found that the commitments in no way prevented a national court from ruling on the validity of the relevant clauses following an action brought before that court.
The General Court therefore fully dismissed the appeal of Canal+ and upheld the commitment decision. On 20 December 2018, the Commission also published the commitments offered by Sky and the remaining film studios under investigation. The proposed commitments are similar to those offered by Paramount.
This article was published in the Competition Law Newsletter of January 2019.