On 23 July, the European Commission, the EU´s watchdog of antitrust rules in the single market, sent the so-called Statement of Objections (first formal step in an antitrust investigation) to UK´s broadcaster Sky and to six major American studios (Disney, NBCUniversal, Paramount Pictures, Sony, Twentieth Century Fox and Warner Bros). As usual in the audiovisual services industry, Sky bought from the six studios content which it was authorized to broadcast only in the UK and in Ireland. Consumers from other EU member states which tried to buy subscriptions to watch said content from outside the UK or Ireland were rejected. This is a typical example of geo-blocking – selling broadcasting rights for a certain territory only. According to the Commission, geo-blocking leads to exclusive broadcasters of content in different territories inside the EU market, which in turn eliminates competition among them. Therefore, it could be classified as being against EU competition rules.
The EU announced its intention to reform the EU copyright rules as part of its Digital Single Market strategy announced in May. Geo-blocking will be among the key features of future legislative proposals. This antitrust move is therefore hardly surprising. The Commission announced it would look into geo-blocking practices of major EU broadcasters. The fact that UK´s Sky is the largest English-language broadcaster among them led the Commission to take on it first. It is important to stress, that the Statement of Objections does not mean the case is decided. Sky and the studios will have several weeks to respond to EC´s allegations.
An important feature of the EC´s case is the distinction between active and passive sales. The antitrust action is only directed against passive sales restriction. Passive sales are sales unsolicited and unadvertised by the broadcaster. In this case, the EC does not like that Sky refused to sell subscriptions, due to geo-blocking restriction, to consumers in other EU member states who took the effort to search for certain content and found it in Sky´s portfolio.
It is needless to point out, that the Americans are beginning to feel uneasy about the Commission´s antitrust appetite. The six major movie studios´ investigation comes after huge cases opened against Google and Mastercard, and possibly before another ones against the likes of Amazon and Qualcomm that the Commission is currently assessing.
2nd May 2018