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2018:904 Groupe Canal + v European Commission

Court

General Court

Date of ruling

12 December 2018

Case name (short version)

Groupe Canal + v European Commission

Case Citation

T-873/16

ECIL:EU:T:2018:904

Key words

Competition — Agreements, decisions and concerted practices — Television distribution — Decision making commitments binding — Territorial exclusivity — Preliminary evaluation — Effect on the contractual rights of third parties — Proportionality

Basic context

Application under Article 263 TFEU for annulment of the Commission Decision of 26 July 2016 relating to a proceeding under Article 101 TFEU and Article 53 of the EEA Agreement (Case AT.40023 — Cross-border access to pay-TV), making legally binding the commitments given by Paramount Pictures International Ltd and Viacom Inc., in the context of the licensing agreements on audiovisual content which they concluded with Sky UK Ltd and Sky plc

Points arising – admissibility

Points arising – substance

First plea, alleging a manifest error of assessment as regards the compatibility of the relevant clauses with Article 101 TFEU and the effects of the commitments imposed

 

36      Thus, in the context of the application of Article 9 of Regulation No 1/2003, the Commission’s role is limited to verifying that the commitments proposed address the concerns which the Commission expressed to the undertakings concerned and that they have not offered less onerous commitments that address those concerns equally adequately (judgment of 29 June 2010, Commission v Alrosa, C‑441/07 P, EU:C:2010:377, paragraph 41).

 

37      It should also be observed that, as is apparent from Article 9 of Regulation No 1/2003, the preliminary assessment referred to in that provision (see paragraph 34 above) is made in respect of the undertakings concerned by the Commission’s investigation and is intended to allow them to determine whether it is appropriate to propose appropriate commitments to address the competition concerns found by the Commission. In fact, the closure of the infringement proceedings brought against those undertakings allows them to avoid a finding of an infringement of competition law and a possible fine (judgment of 29 June 2010, Commission v Alrosa, C‑441/07 P, EU:C:2010:377, paragraph 48).

 

43      In particular, in a factual context characterised by significant barriers that seriously restrict the opportunities for cross-border television broadcasting, the fact that the owner of the copyright grants the exclusive right to broadcast the audiovisual content on the territory of a Member State, and therefore to prohibit, during a specific period, the broadcasting of that content by other operators who have not obtained authorisation from the holders of the rights in question or paid remuneration to them, is indeed not sufficient to justify a finding that such an agreement must be considered to be the object, the means or the result of an arrangement prohibited by the Treaty (see, to that effect, judgments of 6 October 1982, Coditel and Others, 262/81, EU:C:1982:334, paragraphs 15 and 16, and of 4 October 2011, Football Association Premier League and Others, C‑403/08 and C‑429/08, EU:C:2011:631, paragraph 137).

 

44      Consequently, a copyright holder may in principle grant to a sole licensee the exclusive right to broadcast by satellite subject matter protected by such a right, during a specified period, from a single Member State of broadcast or from a number of Member States (judgment of 4 October 2011, Football Association Premier League and Others, C‑403/08 and C‑429/08, EU:C:2011:631, paragraph 138).

 

45      On the other hand, when the agreements concluded by the copyright holder contain clauses under which the holder is thereafter required to prohibit all its contracting partners on the EEA market from making passive sales to geographic markets situated outside the Member State in respect of which it grants them an exclusive licence, those clauses confer a contractually specified absolute territorial exclusivity and thereby infringe Article 101(1) TFEU.

 

46      In fact, an agreement which might tend to restore the partitions between national markets is liable to frustrate the Treaty’s objective of achieving the integration of those markets through the establishment of a single market. Thus, agreements which are aimed at partitioning national markets according to national borders or make the interpenetration of national markets more difficult must be regarded, in principle, as agreements whose object is to restrict competition within the meaning of Article 101(1) TFEU (judgment of 4 October 2011, Football Association Premier League and Others, C‑403/08 and C‑429/08, EU:C:2011:631, paragraph 139).

 

48      In that context, where a licence agreement is designed to prohibit or limit the cross-border provision of broadcasting services, it is deemed to have as its object the restriction of competition, unless other circumstances falling within its economic and legal context justify the finding that such an agreement is not liable to impair competition (judgment of 4 October 2011, Football Association Premier League and Others, C‑403/08 and C‑429/08, EU:C:2011:631, paragraph 140).

 

53      Second, while it is true that the specific subject matter of the intellectual property is intended in particular to ensure for the holders of the rights arising therefrom the opportunity to exploit those rights commercially, the fact nonetheless remains that that subject matter does not guarantee them the opportunity to demand the highest possible remuneration, but only appropriate remuneration. That conclusion is confirmed by recital 10 of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ 2001 L 167, p. 10), and by recital 5 of Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (OJ 2006 L 376, p. 28) (judgment of 4 October 2011, Football Association Premier League and Others, C‑403/08 and C‑429/08, EU:C:2011:631, paragraphs 107 and 108).

 

54      An appropriate remuneration of the holder of that right is remuneration that is reasonable in relation to the actual or potential number of persons who enjoy or wish to enjoy the service provided. Thus, with regard to television broadcasting, such remuneration must in particular be reasonable in relation to the parameters of the broadcasts concerned, such as their actual audience, their potential audience and the language version. That approach is confirmed by recital 17 of Directive 93/83 (judgment of 4 October 2011, Football Association Premier League and Others, C‑403/08 and C‑429/08, EU:C:2011:631, paragraphs 109 and 110).

 

55      In that regard, it must be held that, in the context of a system of licences without clauses intended to partition the markets according to national borders, there is nothing to prevent the holder of the rights from negotiating an amount that takes account of the potential audience both in the Member State for which the exclusive licence is granted and in any other Member State in which the broadcasts forming the subject matter of the distribution agreement are also received. In fact, the technology necessary to receive the works covered by the rights in question makes it possible to determine the actual and potential audience, by breaking down that audience by country of origin of the purchase request (see, to that effect, judgment of 4 October 2011, Football Association Premier League and Others, C‑403/08 and C‑429/08, EU:C:2011:631, paragraphs 112 and 113). The same technology also makes it possible to regulate active promotion activities in order to limit them to the territory for which an exclusive licence is granted.

 

56      In such a context, there is nothing to preclude the holder of the rights from demanding a premium in return for a licence taking account of the actual and potential audience throughout the EEA. Conversely, the reason for the necessarily higher premium paid for absolute territorial exclusivity is the artificial price differences between the partitioned national markets, which are irreconcilable with the fundamental aim of the Treaty, which is completion of an internal market. To that extent, that premium goes beyond what is necessary in order to ensure appropriate remuneration for those right holders (see, to that effect, judgment of 4 October 2011, Football Association Premier League and Others, C‑403/08 and C‑429/08, EU:C:2011:631, paragraphs 114 to 116).

 

61      However, as is apparent from the grounds set out in paragraphs 34 to 39 above, the procedure giving rise to the acceptance of commitments offered is governed by the principle that the undertakings covered by the investigation are informed of the Commission’s concerns and assess whether it is appropriate to propose commitments for the future in return for the Commission’s not making a finding of infringement for the past. The Commission, for its part, assesses whether it is appropriate not to make a finding of infringement of Article 101(1) TFEU and thus to save the resources which it would have had to devote to the case in question, in exchange for commitments relating by definition to the future and dispelling all its competition concerns.

 

62      In that context, the question whether the conduct that gave rise to the concerns in question satisfies the cumulative conditions of the application of Article 101(3) TFEU has no bearing on the actual nature of a decision such as the contested decision. First, the application of that provision assumes a finding of infringement of Article 101(1) TFEU; and, second, the application of Article 101(3) TFEU consists in determining the pro-competitive effects produced by the agreement that infringes Article 101(1) TFEU and in seeing whether those pro-competitive effects outweigh the anticompetitive effects (judgment of 23 October 2003, Van den Bergh Foods v Commission, T‑65/98, EU:T:2003:281, paragraph 107).

 

Third plea, alleging breach of the principle of proportionality

 

86      In fact, the right of economic operators to configure their relationships according to their intention as expressed in the agreements which they enter into forms part of freedom of contract. That freedom, which includes the ability to choose with whom to do business and to determine the terms of an agreement, is guaranteed by Article 16 of the Charter of Fundamental Rights of the European Union, which enshrines the freedom to conduct a business (judgment of 22 January 2013, Sky Österreich, C‑283/11, EU:C:2013:28, paragraphs 42 and 43).

 

87      While it is true that the freedom to conduct a business is not absolute, but must be viewed in relation to its social function, the fact nonetheless remains that any limitation of that right must, in accordance with Article 52(1) of the Charter of Fundamental Rights, be provided for by law and respect the essence of that right (see, to that effect, judgment of 22 January 2013, Sky Österreich, C‑283/11, EU:C:2013:28, paragraphs 45 to 48).

 

100    It follows that, as the Commission submits, when the contested decision requires that Paramount no longer honour the relevant clauses in its relationships with its contracting partners, that obligation does not in any way prejudge the powers of the national courts, in an action brought by the applicant, to assess whether those clauses are in fact contrary to Article 101(1) TFEU and, if appropriate, to draw the necessary conclusions under paragraph 2 of that article and under national law. In that context, the contested decision can, at most, influence the findings of the national court only in so far as it contains a preliminary assessment which the national court must take into account solely as an indication of the anticompetitive nature of the agreement examined in the light of Article 101(1) TFEU (judgment of 23 November 2017, Gasorba and Others, C‑547/16, EU:C:2017:891, paragraphs 27 and 29). Thus, having regard to its summary and provisional nature, the Commission’s assessment of conformity with competition law set out in a decision under Article 9(1) of Regulation No 1/2003 must not ultimately prevent the national court from reaching a conclusion which deviates in whole or in part in the same case following further investigations and a more thorough examination (Opinion of Advocate General Kokott in Gasorba and Others, C‑547/16, EU:C:2017:692, points 33 and 35).

 

101    Consequently, the fact that the individual commitments offered by an undertaking have been made binding by the Commission does not mean that other undertakings are deprived of the possibility of protecting the rights they may have in connection with their relations with that undertaking (judgment of 29 June 2010, Commission v Alrosa, C‑441/07 P, EU:C:2010:377, paragraph 49).

 

102    In that context, if the national court considers, following its analysis and after examining the possibility of pursuing the routes provided for in Articles 15 and 16 of Regulation No 1/2003, that the relevant clauses infringe Article 101(1) TFEU without satisfying the conditions in paragraph 3 of that article, it will be required to declare that they are void pursuant to Article 101(2) TFEU. On the other hand, if it considers that the relevant clauses do not infringe Article 101(1) TFEU or that they satisfy the conditions of paragraph 3 of that article, it will have to assess, where necessary, the merits of the claim before it, as Article 101 TFEU does not preclude the application of the relevant clauses.

 

103    In the latter situation, if the outcome of the proceedings before the national court leads Paramount to breach the commitment made binding under the contested decision, it will be for the Commission, where appropriate, to reopen its investigation in accordance with Article 9(2)(b) of Regulation No 1/2003, in which case it will not be bound by the decision of the national court (see, to that effect, judgments of 14 December 2000, Masterfoods and HB, C‑344/98, EU:C:2000:689, paragraph 48, and of 25 November 2014, Orange v Commission, T‑402/13, EU:T:2014:991, paragraph 27).

 

Second plea, alleging infringement of Article 9 of Regulation No 1/2003 as regards the identification of the concerns addressed by the commitments imposed

 

113    It should be borne in mind that the specific characteristics of the mechanisms provided for in Articles 7 and 9 of Regulation No 1/2003 and the means of action available under each of those provisions are different, which means that the obligation on the Commission to ensure that the principle of proportionality is observed has a different extent and content, depending on whether it is considered in relation to the former or the latter article (judgment of 29 June 2010, Commission v Alrosa, C‑441/07 P, EU:C:2010:377, paragraph 38).

 

114    In particular, the application of the principle of proportionality in the context of Article 9 of Regulation No 1/2003 is confined to verifying that the commitments offered address the concerns which the Commission expressed to the undertakings concerned and that the latter undertakings have not offered less onerous commitments that address those concerns equally adequately. It is in that context that the Commission must take account of the interest of third parties, but it is not required itself to seek out less onerous or more moderate solutions than the commitments offered to it (judgment of 29 June 2010, Commission v Alrosa, C‑441/07 P, EU:C:2010:377, paragraphs 41 and 61).

 

115    Undertakings which offer commitments on the basis of Article 9 of Regulation No 1/2003 consciously accept that the concessions they make may go beyond what the Commission could itself impose on them in a decision adopted under Article 7 of the regulation after a thorough examination. However, the closure of the infringement proceedings brought against those undertakings allows them to avoid a finding of an infringement of competition law and a possible fine (judgment of 29 June 2010, Commission v Alrosa, C‑441/07 P, EU:C:2010:377, paragraph 48).

 

116    Moreover, as explained in paragraph 101 above, the fact that the individual commitments offered by an undertaking have been made binding by the Commission does not mean that other undertakings are deprived of the possibility of protecting the rights they may have in connection with their relations with that undertaking (judgment of 29 June 2010, Commission v Alrosa, C‑441/07 P, EU:C:2010:377, paragraph 49). In that regard, it follows from the assessments of the effects that the contested decision has for the applicant (see paragraphs 85 to 104 above) that the applicant may bring an action before the national court in order to establish the compatibility of the relevant clauses with Article 101(1) TFEU and to request that court to draw, with regard to Paramount, the conclusions provided for in national law, and does not exclude the possibility of interim measures being ordered that are necessary to safeguard the interests of the parties pending final judgment (see, to that effect, judgment of 14 December 2000, Masterfoods and HB, C‑344/98, EU:C:2000:689, paragraph 58).

 

117    It follows that taking the interests of third parties into account in the context of a commitments procedure means that, among several types of commitments proposed that address equally adequately the competition concerns expressed by the Commission, the Commission must make binding the commitment which, when it is implemented by the addressee of the decision, will have a less pronounced effect in regard to those third parties.

 

Fourth plea, alleging misuse of powers

 

128    It should be borne in mind that a misuse of powers exists when an institution exercises its powers with the exclusive or main purpose of achieving an end other than that stated or evading a procedure specifically prescribed by the Treaty for dealing with the circumstances of the case (judgment of 25 January 2007, Dalmine v Commission, C‑407/04 P, EU:C:2007:53, paragraph 99).

 

Intervention

Interim measures

Order

1.      Dismisses the action;

 

2.      Orders Groupe Canal + SA, in addition to bearing its own costs, to pay the costs incurred by the European Commission, with the exception of those relating to the intervention of the French Republic, the European Film Agency Directors — EFADs, the Union des producteurs de cinéma (UPC) and C More Entertainment AB, and by the Bureau européen des unions de consommateurs (BEUC);

 

3.      Orders the French Republic, EFADs, UPC and C More Entertainment, in addition to bearing their own costs, to pay the costs incurred by the Commission in relation to their intervention.

Fine changed

No

Case duration

24 months

Judge-rapporteur

Gratsias

Advocate-general

Notes on academic writings

  1. Bernault, Carine: Accès transfrontalier à la télévision payante – Cloisonnement des marchés nationaux – Droit de la concurrence, Propriétés intellectuelles 2019 n° 71 p.42-45 (FR)
  2. Idot, Laurence: Effets à l’égard des tiers d’une décision d’acceptation d’engagements, Revue des contrats 2019 N°2 p.70-72 (FR)
  3. Reyna, Agustín: Antitrust Cross-border Pay-TV Case: Accommodating Contractual Freedom Within the EU’s Single Market Objective, European competition and regulatory law review: CoRe 2019 Vol.3 N°3 p.340-343 (EN)

 

 

Kiran Desai

Kiran Desai

Partner at EY Law
Kiran S. Desai has over 25 years’ experience of private practice in EU competition law.He is engaged in all aspects of EU competition law, including litigation before the courts and has written extensively on EU competition law matters.He is a partner at EY Law, based in Brussels, and is the EU Competition Law Leader for the global EY Law network of firms.
Kiran Desai

About the Author

Kiran Desai

Kiran Desai

Kiran S. Desai has over 25 years’ experience of private practice in EU competition law. He is engaged in all aspects of EU competition law, including litigation before the courts and has written extensively on EU competition law matters. He is a partner at EY Law, based in Brussels, and is the EU Competition Law Leader for the global EY Law network of firms.


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