Final Report of the Hearing Officer (1)

Case AT.40023 — Cross-border access to pay-TV

Sky, Disney, NBCUniversal, Sony Pictures and Warner Bros. commitments

(2019/C 132/05)

(1) The present report relates to a draft commitments decision under Article 9 of Regulation No 1/2003 (2) (the ‘Draft Decision’). The Draft Decision is addressed to Universal Studios International B.V., Universal Studios Limited and Comcast Corporation (together ‘NBCUniversal’), CPT Holdings Inc., Colgems Productions Limited and Sony Corporation (together ‘Sony Pictures’), Warner Bros. International Television Distribution Inc. and Warner Media LLC (together ‘Warner Bros.’), The Walt Disney Company and The Walt Disney Company Limited (together ‘Disney’) and Sky UK Limited and Sky Limited (3) (together ‘Sky’). NBCUniversal, Sony Pictures, Warner Bros. and Disney are hereinafter collectively referred to as ‘the Studios’.

(2) This is the second Hearing Officer Final Report in the context of Case AT.40023, the first one being the Final Report in relation to the Commission's decision of 26 July 2016 (4) (the ‘Paramount Decision’) accepting commitments from Paramount Pictures International Limited (formerly Viacom Global (Netherlands) B.V.) and Viacom Inc. (together ‘Paramount Pictures’) (5).

(3) Case AT.40023 concerns clauses (the ‘Clauses at Issue’) in certain bilateral licensing arrangements between, on the one hand, Sky and on the other, each of the Studios, Twentieth Century Fox Telecommunications International Inc. (together with Twenty-First Century Fox Inc., ‘Fox’ (6)) and Paramount Pictures. Certain of the Clauses at Issue prohibit or limit Sky from making its retail pay-TV services available in response to unsolicited requests from consumers residing and located in the European Economic Area (‘EEA’) but outside the United Kingdom and Ireland. The rest of the Clauses at Issue require NBCUniversal, Sony Pictures, Warner Bros., Fox or Paramount Pictures to prohibit or limit pay-TV broadcasters located within the EEA but outside the United Kingdom and Ireland from responding to unsolicited requests from consumers residing and located inside the United Kingdom and Ireland.

(4) On 23 July 2015, the Commission adopted a Statement of Objections (the ‘SO’), in which the Commission expressed its preliminary view that the Clauses at Issue constitute an infringement by Universal Studios International B.V., Comcast Corporation, Disney, Sony Pictures, Warner Bros., Fox, Paramount Pictures and Sky (‘SO Addressees’) of Article 101 of the Treaty and Article 53 of the EEA Agreement.

(5) All SO Addressees accessed the Commission's file between 3 and 5 August 2015. Following correspondence with Sony concerning its request for access to the information underlying the preliminary assessment in paragraph 267 of the SO, DG Competition provided each SO Addressee with the full text of footnote 132 of the SO. None of the SO Addressees referred the matter to me.

(6) On 16 December 2015, following correspondence with Sky, Warner Bros. and Fox, DG Competition granted access to non-confidential versions of parts of the written responses to the SO of the other SO Addressees.

(7) Upon consideration of requests from Sky, Fox, Warner Bros. and NBCUniversal in particular, DG Competition granted the SO Addressees access to non-confidential versions of the written observations of interested third persons (7). All SO Addressees were given the possibility to present written comments on these observations.

(8) All the SO Addressees responded in writing to the SO by the deadline or, if applicable, the extended deadline, set by DG Competition and requested to be heard orally (8).

(9) The oral hearing was held over three days, from 18 to 20 January 2016. All SO Addressees and 11 interested third persons participated in the oral hearing.

(10) The Paramount Decision of 26 July 2016 made binding the commitments offered by Paramount Pictures to meet the concerns expressed to it by the Commission in the SO. On 12 January 2018, the Commission formally closed proceedings in Case AT.40023 to the extent that these concerned Paramount Pictures.

(11) On 12 January 2018, following changes to NBCUniversal's corporate structure, the Commission initiated proceedings pursuant to Article 2(1) of Regulation No 773/2004 in respect of Universal Studios Limited. On the same date, the Commission adopted a supplementary statement of objections addressed to NBCUniversal in which it reached the preliminary conclusion that the relevant Clauses at Issue constitute an infringement of Article 101 of the Treaty and Article 53 of the EEA Agreement by NBCUniversal. NBCUniversal responded in writing to this supplementary statement of objections by the set deadline and did not request to exercise its right to be heard orally.

(12) Also on 12 January 2018, the Commission adopted a Letter of Facts addressed to the Studios, Fox and Sky, (together, the ‘Letter of Facts Addressees’) informing them about further evidence that the Commission had not expressly relied upon in the SO or the SSO but that may be relevant to support the preliminary conclusions reached in the SO and the SSO.

(13) After the Letter of Facts was issued, the Commission granted the Letter of Facts Addressees additional access to its file in Case AT.40023. Certain requests for further access to file were referred to me. I granted parts of these requests and rejected the remainder.

(14) Following the issuing of the Letter of Facts, certain interested third persons requested access to a non-confidential version of this document in order to provide observations. I rejected the requests since interested third persons had already been informed by DG Competition of the nature and subject matter of the proceedings (which remained unchanged by the Letter of Facts) and had already provided their comments.

(15) On 25 October 2018, Disney offered commitments to meet the Commission's concerns expressed in the SO (‘Disney's initial commitments’).

(16) On 9 November 2018, the Commission published a notice pursuant to Article 27(4) of Council Regulation (EC) No 1/2003 (‘the first Notice’), summarising the case and Disney's initial commitments and inviting third parties to submit their observations on these commitments within one month from the date of publication of the first Notice (9).

(17) On 12 and 13 December 2018, NBCUniversal, Sony Pictures, Warner Bros. and Sky offered commitments to meet the Commission's concerns expressed in the SO and the SSO.

(18) On 21 December 2018, the Commission published a second notice, summarising the case and the commitments offered by NBCUniversal, Sony Pictures, Warner Bros. and Sky and inviting third parties to submit their observations on these commitments within one month after the date of publication of that second notice (10).

(19) The Commission received observations from 10 respondents on the initial commitments offered by Disney and the commitments offered by NBCUniversal, Sony Pictures, Warner Bros. and Sky.

(20) On 5 February 2019, Disney further clarified certain aspects of its commitments.

(21) The Draft Decision concludes that in the light of Disney's revised commitments and the commitments offered by NBCUniversal, Sony Pictures, Warner Bros. and Sky, there are no longer grounds for action against the Studios and Sky, and, without prejudice to Article 9(2) of Regulation (EC) No 1/2003, the proceedings against the Studios and Sky should therefore be brought to an end.

(22) Overall, I consider that the effective exercise of procedural rights has been respected.

Brussels, 26 February 2019. Wouter WILS

(1) Pursuant to Articles 16 and 17 of Decision 2011/695/EU of the President of the European Commission of 13 October 2011 on the function and terms of reference of the hearing officer in certain competition proceedings (OJ L 275, 20.10.2011, p. 29) (‘Decision 2011/695/EU’).

(2) Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty (OJ L 1, 4.1.2003, p. 1) (‘Regulation 1/2003’).

(3) Sky Limited was formerly Sky Plc.

(4) Commission Decision of 26 July 2016 relating to a proceeding under Article 101 of the Treaty on the Functioning of the European Union and Article 53 of the EEA Agreement (Case AT.40023 — Cross-border access to pay-TV), C(2016) 4740 final.

(5) Final Report of the Hearing Officer — Cross-border access to pay-TV content — Paramount commitments (AT.40023) (OJ C 437, 25.11.2016, p. 3).

(6) On 14 December 2017, Disney announced an agreement to acquire all or almost all of the capital of Twenty-First Century Fox Inc., which ultimately held all or almost all of the capital of Twentieth Century Fox Telecommunications International Inc. The completion of this acquisition is pending at this moment in time.

(7) I have recognised 26 interested third persons in Case AT.40023: ANICA, Associazione Nazionale Industrie Cinematografiche Audiovisive Multimediali; APA — Asociace Producentů v audiovizi, z.s; Association des Producteurs de Cinéma; BEUC, The European Consumer Organisation; BT Group plc; C More Entertainment; Danish Producers' Association; DTS, Distribuidora de Televisión Digital S.A.; EFADs — European Film Agency Directors Association; European Producers Club; Groupe Canal+; FAMA — Film and Music Austria; FAPAE; Film Producers Netherlands; KIPA — Polish Audiovisual Producers' Chamber of Commerce; La Liga — Liga Nacional de Fútbol Profesional; Polish Film Institute; Producers Alliance for Cinema and Television Limited; ProSiebenSat.1 Media SE; Spitzenorganisation der Filmwirtschaft e.V.; Swedish Film & TV Producers Association; The British Film Institute; The Football Association Premier League Limited; UPFF — Union des Producteurs Francophones de Films; VOFTP — Vlaamse Onafhankelijke Film & Televisie Producenten; and Zentropa.

(8) This was with the exception of Sky Plc, that did not respond to the SO.

(9) Communication from the Commission published pursuant to Article 27(4) of Council Regulation (EC) No 1/2003 in Case AT.40023 — Cross-border access to pay-TV (OJ C 403, 9.11.2018, p. 17).

(10) Communication from the Commission published pursuant to Article 27(4) of Council Regulation (EC) No 1/2003 in Case AT.40023 — Cross-border access to pay-TV (OJ C 460, 21.12.2018, p. 32).