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Saturday, 23 April 2016

Geoblocking: is the end in sight through ... competition law? Possibly not

Tackling - and possibly getting rid of - "unjustified" geoblocking, ie the practice(s) of restricting or denying access to certain services or content outside a specified territory, is one the pillars of the Digital Single Market Strategy (DSMS) [here and here] that the EU Commission released last year. 

The EU Commission announced that it would consider action not only in relation to geoblocking in the ecommerce sector but also in the area of copyright. In relation to the latter the DSMS stated that:

"when trying to access or purchase online copyright-protected content from another Member State, consumers are sometimes told that it is unavailable or cannot be accessed from their own country. This situation is partly linked to the territoriality of copyright and difficulties associated with the clearing of rights. In other cases, the lack of availability and/or access may result from contractual restrictions between rights holders and distributors, or from business decisions taken by distributors. This may sometimes be due to the role territorial exclusivity plays in the financing of certain types of (audiovisual) works."

However, the DSMS did not reveal much as to whether and how geoblocking in the area of copyright would be addressed from a legislative standpoint. If one reads the DSMS retrospectively, ie with what Italians would call 'senno di poi', it appears that what the Commission was concretely discussing in that document was just what would then become the proposal for a regulation on cross-border content portability [here]

Back in the day this Kat wondered whether a possible solution in the hands of the Commission would be to review the Satellite and Cable Directive and extend the country of origin rule contained therein to online broadcast transmissions. However, this is not the only possibility. Indeed, it would appear that geoblocking in the area of copyright could be tackled not (just) through legislative intervention on the copyright acquis but rather the tools of ... competition law. 

As this blog reported last summer, the EU Commission is currently looking into certain agreements in the pay-TV sector with an allegedly anti-competitive smell. 

In its statement of objections to Sky UK and the ‘Big Six’ Hollywood majors (including Paramount Pictures), the EU Commission came to the preliminary conclusion that the territorial restrictions introduced in the agreements between this pay-TV operator and the studios are restrictive of competition, and this insofar as they give absolute territorial protection to broadcasters (both to Sky and to licensees based elsewhere in the EU). As a result of these agreements - the Commission argued - Sky is prevented from providing its services (online and via satellite) to end-users based in Member States other than the UK. 

Yesterday Paramount offered the EU Commission a number of commitments to address competition concerns relating to contractual clauses preventing the cross-border provision of pay-TV services. 

These consist of the following:

1.  When licensing its film output for pay-TV to a broadcaster in the EEA, Paramount Pictures would not (re)introduce contractual obligations, which prevent or limit a pay-TV broadcaster from responding to unsolicited requests from consumers within the EEA but outside of the pay-TV broadcaster’s licensed territory (No “Broadcaster Obligation”);
2.  When licensing its film output for pay-TV to a broadcaster in the EEA, Paramount Pictures would not (re)introduce contractual obligations, which require Paramount to prohibit or limit pay-TV broadcasters located outside the licensed territory from responding to unsolicited requests from consumers within the licensed territory (No “Paramount Obligation”);
3.  Paramount Pictures would not seek to bring an action before a court or tribunal for the violation of a Broadcaster Obligation in an existing agreement licensing its film output for pay-TV;
4.  Paramount Pictures would not act upon or enforce a Paramount Obligation in an existing agreement licensing its film output for pay-TV.

Restrictions in place
In other words: Paramount has offered the Commission to cease to geoblock its content.

The question is what effects these commitments might have should the EU Commission accept them.

According to the analysis of Chillin'Competition, commitments do not imply the admission of an infringement. This means that the other undertakings involved in the pay-TV investigation would not be necessarily in a worse position:

"Much to the contrary, it could even be argued that once the Commission has accepted commitments with regard to one undertaking, it could now not impose fines on others for exactly the same practices.  This is because, as you know, commitments are only appropriate in cases where the Commission does not intend to impose fines."

If Paramount's commitments were accepted, this would not mean that other studios would lose their ability to geoblock their content as a matter of principle. So the answer to the question whether geoblocking's end is in sight through competition law is: possibly not. 
All in all, the Commission so far has not showed any real intention to address geoblocking in the area of copyright from a legislative standpoint. So it seems that rightholders will likely retain their ability to license contents on a territorial basis [Member States' copyright laws are still drawn along national borders at the end of the day ... In this Kat's opinion the only possible solution to prevent geoblocking in copyright would be to create an EU-wide copyright title], as long as relevant behaviours are not caught in the net of Articles 101 or 102 of the Treaty on the Functioning of the European Union. 

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