Notice published pursuant to Article 19(3) of Council Regulation No 17 concerning case COMP/C.2/37.398 - Joint selling of the media rights of the UEFA Champions League on an exclusive basis

(2002/C 196/03)

(Text with EEA relevance)

1. THE NOTIFICATION

1. On 1 February 1999 the "Union des Associations Européennes de Football" (UEFA) applied for a negative clearance under Article 81(1) of the EC Treaty or, failing this, an exemption under Article 81(3) of the EC Treaty in respect of its arrangements for the joint selling of the commercial rights of the UEFA Champions League(1).

2. UEFA is a society registered in the register of companies under the terms of the Swiss Civil Code. Its headquarters is located in Switzerland. As the European confederation recognised by Fédération Internationale de Football Association (FIFA), UEFA is the governing body for European football. UEFA membership is open to all national football associations in the European Continent. UEFA is thus an association of national football associations. Currently, UEFA's membership comprises 52 national football associations. 21 of these member associations are located in the EEA(2). UEFA organises a number of football tournaments in addition to the UEFA Champions League.

3. The notified arrangement provides that UEFA is granted the exclusive right to sell the commercial rights of the UEFA Champions League. This excludes clubs from taking independent commercial actions regarding the exploitation of these rights. Consequently, UEFA negotiates and concludes contracts pertaining to the exploitation of the commercial rights of the UEFA Champions League. UEFA's commercial policy is to sell the TV rights in a single package on an exclusive basis to a single broadcaster per Member State.

4. Several third parties submitted observations on the notified arrangements. These observations added no new arguments in favour of the notified arrangement to those submitted by UEFA in its notification. These relate essentially to solidarity, the social and economic aspects of sport, and the balance in sport competition between rich and poor clubs and associations. Several third parties argued against joint selling. They essentially argue that joint selling leads to higher prices, and less football on TV. They also argue that UEFA's solidarity measures are inefficient, insufficient and conducted in a non-transparent way.

5. On 19 July 2001, the Commission issued a statement of objections finding that the notified arrangement for the joint selling of the TV broadcasting rights restrict competition pursuant to Article 81(1) of the EC Treaty and that they were not eligible for exemption under Article 81(3). Even though UEFA may be regarded as a co-owner of the commercial rights of the UEFA Champions League, joint selling still restricts competition on the horizontal level by preventing clubs from taking independent commercial action in respect of their rights. UEFA's joint selling arrangement also restricts competition on the vertical level, because UEFA's commercial policy is to grant an exclusive license to a single broadcaster in each Member State covering all TV rights of the UEFA Champions League. The combination of the two restrictions reinforces their restrictive effect.

6. The arrangements restrict competition in the upstream market for the acquisition of TV rights of football. This market is closely linked with the downstream television markets where free-TV broadcasters compete for advertisers and pay-TV broadcasters compete for subscribers: the restrictions therefore affect the downstream markets as well. Football is in most countries the driving force not only for the development of pay-TV services but it is also an essential programme item for free TV broadcasters.

7. The statement of objections found that any possible efficiencies and benefits that joint selling could provide in the broadcasting market are negated by the commercial policy pursued by UEFA. This is because all TV rights of the UEFA Champions League are sold to a single broadcaster in each territory for several years in a row on an exclusive basis. Consequently, only a single large broadcaster in each territory is able to acquire the TV rights of the UEFA Champions League. The statement of objections concluded that the combination of these restrictions has a negative effect on the structure of the downstream TV broadcasting markets since football is in most countries a driving force for the development of the TV markets. The restrictions therefore enhance media concentration and hamper competition between broadcasters. If one broadcaster holds all relevant football TV rights in a Member State, it will become extremely difficult for competing broadcasters to establish themselves in that market due to the inability to acquire interesting content.

8. On 16 November 2001, UEFA submitted its formal reply to the statement of objections and on 8 January 2002 it presented a preliminary outline of a possible new commercial policy. Subsequently, on 12 March 2002 UEFA presented a rights segmentation table for the exploitation of not only the TV rights but also all the media rights of the UEFA Champions League, including radio, television, Internet, UMTS and physical media rights (such as DVD, VHS, CD Rom, etc.). Based on the principles in this proposal, on 13 May 2002 UEFA notified a new commercial policy designed to remedy the infringements that were the subject of the statement of objections. The Commission's preliminary view is that the competition concerns that were expressed in the statement of objections will be remedied by UEFA's new commercial policy.

2. THE NOTIFIED AGREEMENT

9. The notified new revised UEFA Champions League joint selling arrangement may be summarised in the following manner(3):

2.1. Television broadcasting rights

10. UEFA will award the TV rights of the UEFA Champions League following a public invitation to broadcasters to bid. The TV rights contracts shall be concluded for a period not exceeding three UEFA Champions League seasons.

11. UEFA will offer its TV rights in several smaller packages (the precise format of which may vary depending on the structure of the TV market in the particular Member State in which the rights are being offered).

12. Subject to the above, UEFA will have the exclusive right to sell two main live rights packages (free or pay-TV) each comprising two matches per match night (UEFA Champions League matches are currently played Tuesday and Wednesdays). The first package will usually include first and third pick per match day and the second package second and fourth pick. These two packages would cover 61 matches out of a total of 157.

13. UEFA will likewise have the exclusive right to sell the remaining matches for live pay-TV/pay-per-view exploitation. However, if UEFA has not managed to sell the rights within one week after the draw for the First Group stage of the competition, UEFA will lose its exclusive right to sell these TV rights. Thereafter, the individual home clubs participating in a given match will also be able to sell the rights of their matches for live pay-TV/pay-per-view exploitation. The right of UEFA and the individual football clubs to sell these matches will be subject to picks one to four made by the broadcasters having bought the main live packages. While these rights may not be bundled together with the rights of other clubs thus creating an alternative UEFA Champions League programming offer, football clubs may under certain circumstances combine their TV rights with a view to make a regional offering. Any purchaser of these rights from UEFA (or the clubs, as the case may be) will be obliged to show the matches live.

14. UEFA will in addition have the exclusive right to sell a highlight package covering all matches of the UEFA Champions League available as of 22.45 on each match night.

15. As of Thursday midnight (i.e. one day after the last match of the match week), both UEFA and the football clubs can exploit the deferred TV rights. UEFA exploitation shall be related to action from the whole UEFA Champions League; the individual football clubs exploitation shall be in relation to matches in which they participate, it must be "club branded" and must not be bundled with rights of other clubs to create a competing UEFA Champions League programming offer, save once again that football clubs may under certain circumstances combine their TV rights with a view to make a regional offering.

16. UEFA will have the exclusive right to sell live TV rights outside the EEA area. Deferred rights available to clubs are subject to the same rules both inside and outside the EEA area.

2.2. Internet

17. Both UEFA (in respect of all matches) and the clubs (in respect of matches in which they participate) will have a right to provide video content on the Internet as of midnight on the night of the match. This content will be based on the raw feed produced for television. UEFA will apply a revenue sharing system in respect of the income generated from the raw feed or the Internet content. UEFA intends to build a service that will produce UEFA Champions League content for streaming of moving pictures on the Internet. This service can be exploited both via uefa.com and via the football clubs' web-sites. Clubs may acquire the raw feed from UEFA or they may participate in the UEFA service. Clubs may customise and edit the content for the purposes of creating a club focused and club branded product. Clubs will pay a fee for the UEFA Internet service and/or the raw feed. This fee shall be both transparent and fair, reasonable and non-discriminatory and submitted to an arbitration system to solve possible disputes.

18. Both UEFA (in respect of all matches) and the clubs (in respect of matches in which they participate) may likewise offer streaming of live audio rights. UEFA will establish a revenue sharing mechanism from the income generated from uefa.com.

2.3. Wireless 3G/UMTS product

19. Both UEFA (in respect of all matches) and the clubs (in respect of matches in which they participate) will have a right to provide audio/video content via UMTS services. This content will be based on the raw feed produced for television. UEFA will apply a revenue sharing system in respect of the income generated from the raw feed or the UMTS content. UEFA intends to build a 3G/UMTS wireless product that will be based on an extensive video database to be developed by UEFA. UEFA will offer the rights on an exclusive or non-exclusive basis to operator(s) with an UMTS licence, initially for a period of four years and subsequently for periods of three years. Clubs may acquire the raw feed from UEFA or they may participate in the UEFA service. The clubs may customise and edit the content for the purposes of creating a club focused and club branded product. This product may not consist solely or mostly of UEFA Champions League content and must include other club-related multimedia content as well. Clubs will pay a fee for the UEFA wireless service and/or the raw feed. This fee shall be both transparent and fair, reasonable, and non-discriminatory and submitted to an arbitration system to solve possible disputes.

2.4. Physical media rights

20. Both UEFA and the football clubs are entitled to exploit the physical media rights (DVD, VHS, CD Rom, etc.) to archive material from the previous UEFA Champions League season with an embargo of 48 hours after the final. While UEFA's rights extend to all action in the UEFA Champions League, the rights of the football clubs are limited to action in which the football clubs are participating.

2.5. Radio broadcasting rights and Internet audio

21. Both UEFA and the clubs may sell licenses to live radio broadcasting of UEFA Champions League football matches on a non-exclusive basis.

THE COMMISSION'S INTENTIONS

22. On the basis of the foregoing, the Commission intends to take a favourable view in respect of UEFA's revised joint selling arrangement. Before adopting a favourable opinion, the Commission invites third parties to send their observations within one month of the publication of this notice to the following address quoting the reference Case 37.398 - Joint selling of the TV rights to the UEFA Champions League on an exclusive basis: European Commission Directorate-General for Competition

Office J-70 0/18

B - 1049 Brussels Fax (32-2) 295 01 28.

(1) TV broadcasting rights, sponsorship, suppliership, licensing and IPR.

(2) In the UK there are four UEFA member associations: England, Wales, Scotland and Northern Ireland.

(3) The notified documents explaining UEFA's new commercial policy is displayed on UEFA's official web http://www.UEFA.com