Notice published pursuant to Article 19(3) of Council Regulation No 17 in Case COMP/C.2/37.214 - Joint selling of the media rights to the German Bundesliga

(2003/C 261/07)

(Text with EEA relevance)

1. THE NOTIFICATION

1. On 25 August 1998 the German Football Federation (Deutsche Fußballbund (DFB)) applied for negative clearance or, failing this, an individual exemption under Article 81(3) of the EC Treaty in respect of the joint selling (or central marketing) of television and radio broadcasting rights and rights to other technical forms of exploitation(1) for matches in the first and second national football divisions ("Bundesliga" and "2. Bundesliga" respectively).

2. DFB is the German national football association. The League Association ("Ligaverband") is a member of the DFB. The members of the League Association are the professional clubs and companies in the first and second divisions ("the clubs"). The DFL (German Football League) conducts the operational business of its only shareholder, the League Association. Following the original notification, the DFB's application has been amended several times on account of internal structural reform and the setting-up of the League Association in 2001. The League Association adopted the DFB's amended notification as its own on 19 February 2003.

3. According to the DFB's articles of incorporation, the League Association is entitled to organise the professional league football competitions leased by the DFB and to exploit them exclusively in its own name(2). This prevents the clubs, which are at least coowners of the broadcasting rights, from making independent commercial use of those rights.

4. The firm Infront Buli GmbH (Infront), still trading as BULI Vermarktungs GmbH (BULI), acquired almost all of the centrally sold rights by contract signed on 28 June 2002. At the time, BULI was a subsidiary of KirchMedia GmbH and Co. KGaA. It is no longer part of the Kirch group and its shares are now held by independent investors. As owner of the rights, Infront grants sublicences for television and other types of coverage of league matches.

5. The notified arrangement is permissible under German domestic law(3).

6. After the originally notified arrangement was published, the Commission received comments from a number of third parties. The German and United Kingdom competition authorities took the view that central marketing constituted a restriction of competition and was not essential for club solidarity. Some of the larger clubs shared this view. However, the associations argued that only the notified arrangement allowed overall representation of the sports competition, its effective marketing and the necessary solidarity between clubs. Television broadcasters essentially agreed, stressing that they as users were interested in acquiring broadcasting rights for all matches, and that this would be more difficult if the rights were sold individually. A similar view was taken by sports-rights agents, which also felt that there was no distortion of competition on the other side of the market and no appreciable effect on trade within the meaning of Article 81(1) of the EC Treaty.

7. In the Commission's view, the central marketing system in place to date is incompatible with Article 81. It restricts competition on the upstream market for the acquisition of television rights for football matches played regularly and the corresponding rights for mobile telecommunications and internet broadcasting. It also restricts competition on the downstream television markets for free-TV and pay-TV and on the downstream markets where mobile telecommunications and internet providers compete for customers. Under the existing system, the first- and second-division clubs have no right to exploit their German football league games or to act as independent suppliers. Moreover, central marketing, together with the exclusive selling of all rights to one broadcaster, means that only a few broadcasters, or other content users have a chance of participating in the market.

8. The total exclusion of the clubs from marketing their matches is not necessary to achieve efficiency gains for content providers and clubs or other benefits of joint selling on media markets. Moreover, the duration and extent of the exclusive rights granted to date by the DFB/League Association to a single broadcaster cancel out any possible benefits. They strengthen the tendencies towards concentration in the media industry. The arrangement as originally notified also acts as a barrier to the development of football coverage via the new media, such as the internet and mobile telecommunications. Bundling together the sale of television rights and the sale of rights in respect of the new media discourages broadcasters from fully developing the markets in the new media because they wish to protect their traditional branch of business.

9. In these circumstances, the League Association and the DFL presented the Commission on 10 June 2003 with a new plan which significantly amends the originally notified arrangement. In future, the League Association will market centrally packages of broadcasting rights under established and transparent rules. In addition, clubs will be able to sell certain rights individually. The Commission has come to the provisional conclusion that the new arrangement allays its concerns.

2. NEW MARKETING MODEL PROPOSED BY THE PARTIES

2.1. Central marketing

2.1.1. Award procedures

10. The rights will be offered in several packages via a transparent and non-discriminatory procedure. The public invitation to tender will be published four weeks before the start of the procedure. Tenderers will then have a further four weeks within which to bid for one or more packages. The rights will be awarded by the League Association or an authorised independent agent. An arbitration panel will be set up to handle disputes over the award procedure. The contracts to be concluded with the agent and the sublicence holders may not cover more than three seasons.

2.1.2. Television

11. Live broadcasts of first- and second-division matches will be offered in two packages. Package 1 includes the main match days of the two leagues (Saturday and Sunday), which can be broadcast in parallel and in full. Package 2 covers the other match days for both leagues (Sunday and Friday) with possible parallel broadcasting in full. Both packages also entitle the successful bidder to broadcast matches on the other days through a conference channel and can, in addition, include the right to deferred first-highlights coverage on pay-TV.

12. A third package comprises live broadcasting rights to at least two first-division matches and to deferred first-highlights coverage on free-TV. A fourth package covers live second-division matches as well as deferred first-highlights coverage on free-TV. Secondary and tertiary exploitation rights are offered in a fifth package. Packages 3 to 5 can be awarded to several operators.

2.1.3. Internet, mobile communications and other

13. Package 6 covers live and/or deferred internet broadcasting of first- and second-division matches, in the form of extracts or in full. The right to deferred exploitation (without priority) is also included. This package will be specified in more detail by the League Association in the tender procedure and can be awarded to several operators. A seventh package comprises deferred highlights coverage and can also be awarded to several operators.

14. Package 8 comprises live and/or near-live and/or deferred broadcasting rights for first- and/or second-division matches via mobile phones, whether in the form of extracts or in full. This package will be specified in more detail by the League Association in the tender procedure and can be awarded to several mobile communications operators. In this case, the League Association can ensure that the offers are mutually consistent as regards content. Package 9 comprises deferred mobile phone broadcasting rights in respect of extracts of first- and/or second-division matches.

15. All other media rights not covered by packages 1 to 9 or by the exploitation rights of the clubs are combined in a further package that includes audio and moving picture rights for public productions, advertising and production of picture/sound carriers for end consumers (video, CD, DVD) and for computer-aided game and player analysis. This package can be awarded to several operators with variations in content.

2.2. Rights marketed by the clubs

Under the new system, the clubs have the following exploitation rights.

2.2.1. Television

16. Every club can sell its home games to a free-TV broadcaster 24 hours after the match for one-off free-TV broadcasting of the full match.

2.2.2. Internet, mobile telecommunications and other

17. Every club can show a summary (not more than 30 minutes) of its home and away matches on its own internet website two hours after the end of the match. After 24 hours, the entire match can be shown. In the case of audio reporting via the internet, clubs can provide live, full coverage of home and away matches. Internet exploitation can also be assigned exclusively to a third party by way of "outsourcing", but the presentation of the matches must be recognisably linked to the club.

18. Every club can sell to a mobile communications provider the rights to coverage of its home matches on mobile networks within the EEA. During a match, an unlimited number of one-minute deferred clips are allowed. Up to two hours after the end of the match, two-minute clips may be transmitted. After two hours, the entire match can be broadcast via mobile phone.

19. Every club can sell unlimited rights to freely receivable radio coverage of its home matches after the end of the game. Live coverage may not exceed ten minutes per half.

20. Clubs are also entitled to show limited moving picture coverage of their own matches (the match in progress or past matches) in the stadium (ten seconds of pre-goal play per goal during the match; three minutes of past play from the match in progress; three minutes from other matches in the current season). In addition, they are entitled to use moving picture material for advertising (30 seconds per match, where this does not interfere with the rights of other clubs or players), club-related picture/sound carriers (video, CD, DVD) for end-consumers or for their own computer-aided game and player analysis.

2.2.3. Rules for individual selling

21. The above rights may not be sold in such a way as to allow a user to produce a product which runs counter to the interests of the DFB and the League Association or of the holders of rights packages 1 to 9 in a uniform product or which undermines the benefits of branding and central marketing (one-stop shop). Where clubs individually sell exploitation rights, therefore, they may not bundle together more than two matches. For the same reason, coverage of a league match based on rights sold by the clubs may not exceed 30 % of the total coverage of a programme. However, if the coverage is broadcast via a club's broadcasting platform ("club-TV"), 100 % of the programme can be league-related. If club matches are broadcast via the platform of a third party (e.g. "Club-TV Magazine" or "Club-Radio Show"), league coverage can take up 50 % of the programme.

2.3. No unused rights

22. According to the parties' amended proposal, unused rights may be exploited by the clubs. However, the league association remains entitled to parallel, non-exclusive marketing of the corresponding package.

- This applies when the League Association has failed to sell certain rights covered by the joint selling procedure. If, on completion of the fourth fixture of the season, no agreement has been concluded with a user for one of the above packages as defined, the clubs themselves, from the fifth fixture until the end of the season, may exploit the rights from the unused package in respect of their home games. The conditions outlined in Section 2.2.3 must be met.

- Clubs are also entitled to sell rights where the holder of those rights, for no objective reason, fails to use them, i.e. where on more than two match days in a season he does not exploit the number of matches allocated to him or does not do so in the form (live, near live, deferred) or to the extent laid down. The rights holder must immediately inform the League Association so that the clubs can be informed and use their rights.

2.4. Transitional phase

23. The amendments relating to television will enter into force on 1 July 2006. All other amendments will apply from 1 July 2004. These transitional phases will allow successive account to be taken of competition concerns, without interfering with the smooth operation of the first and second divisions of the Bundesliga.

24. The licensing agreements to be concluded are not covered by the marketing model outlined above. The Commission reserves the rights to scrutinise them separately in the light of Community law, especially if several of the centrally marketed packages comprising exclusive rights are acquired in combination by a single operator.

3. THE COMMISSION'S INTENTIONS

25. The amended arrangement is likely to bring benefits for consumers which outweigh the competition concerns. The Commission therefore intends to take a favourable view of the amended arrangement notified. However, before doing so, it invites interested third parties to submit their comments within one month of the publication of this notice to the following address, quoting the reference "Case No 37.214 - Joint selling of the media rights to the German Bundesliga": European Commission Directorate-General for Competition

Directorate C-2

B - 1049 Brussels Fax (32-2) 296 98 04 E-Mail: Stefan.WILBERT@cec.eu.int

(1) The joint selling right covers all types of broadcasting right: free-TV, pay-TV and pay-per-view TV terrestrial broadcasting, cable or satellite broadcasting; live or deferred broadcasting; showing of the entire event, of extracts or of compiled highlights; and radio. It also covers rights for all kinds of existing and future technical facilities such as UMTS, the internet or business-TV.

(2) The marketing of international club competitions is not covered. The selling of rights to UEFA Champions League games is thus covered by the decision of 23 July 2003 on the joint selling of the media rights of the UEFA Champions League on an exclusive basis (IP/03/1105).

(3) Under Section 31 of the German Law against Restraints of Competition, Section 1 of the same Law, which prohibits anticompetitive agreements, does not apply to the central marketing of rights to television broadcasting of sports competitions organised according to by-laws, by sports associations which, in the performance of their socio-political responsibilities, are committed also to promoting youth and amateur sports activities and which fulfil this commitment by allocating an adequate share of the income from the central marketing of these television rights.