Notice published pursuant to Article 19(3) of Council Regulation No 17(1) concerning an application for negative clearance or exemption under Article 81(3) of the EC Treaty

(Case COMP/C2/38.287 - Telenor/Canal+/Canal Digital)

(2003/C 149/10)

(Text with EEA relevance)

I. THE NOTIFICATION

1. On 16 November 2001 Telenor Broadband Services AS ("TBS") applied to the Commission, pursuant to Article 4 of Regulation No 17, for negative clearance under Article 81(1) of the EC Treaty and Article 53(1) of the EEA Agreement or, alternatively, for exemption under Article 81(3) of the EC Treaty and Article 53(3) of the EEA Agreement in respect of three agreements entered into with inter alia Groupe Canal+ SA ("Groupe Canal+") and its Nordic subsidiary Canal+ Television AB ("Canal+ Nordic"), respectively. The notified agreements stipulate the conditions under which the parties intend to conduct their pay-TV operations in the Nordic region, in particular, the distribution of pay-TV premium content channels via the direct-to-home ("DTH") satellite platform of Canal Digital AS ("Canal Digital")(2).

2. TBS is a subsidiary of the Norwegian incumbent telecommunications operator Telenor AS and a provider of inter alia TV services to consumers across the Nordic region through DTH satellite transmission, satellite master antenna networks ("SMATV") and cable networks. Groupe Canal+ is the film and TV division of the Vivendi Universal group and produces, acquires and distributes feature films, audio-visual works and sports broadcasting rights. Groupe Canal+ also produces pay-TV channels and distributes, through its subsidiary Canal+ Nordic, bouquets of pay-TV channels including pay-per-view ("PPV") and near-video-on-demand ("NVOD") channels via cable networks and satellite TV platforms in the Nordic region.

3. TBS/Telenor/Canal Digital on the one hand and Groupe Canal+/Canal+ Nordic on the other hand are hereinafter referred to as "the parties" to the notified agreements.

II. THE NOTIFIED AGREEMENTS

4. As from 1997 to 2001, TBS and Groupe Canal+ were jointly running the DTH satellite platform of Canal Digital, each of them holding 50 % of the shares in the joint venture, respectively. The parties entered into the notified agreements as a follow-up to the decision by Groupe Canal+ in 2001 to divest of its shareholding in Canal Digital and to transfer it to TBS. The notified agreements essentially aim at ensuring the sales transaction as well as the continuity of supply that was hitherto guaranteed by the vertical structural link between Canal Digital and Canal+ Nordic. The notified agreements accordingly consist of:

- a sale and purchase agreement between inter alia Groupe Canal+ and TBS regarding the sale of Groupe Canal+' 50 % shareholding in Canal Digital to TBS,

- a distribution agreement between inter alia Groupe Canal+ and TBS regarding the distribution of Canal+ Nordic's pay-TV premium content channels via DTH through Canal Digital,

- an agreement for the supply of PPV and NVOD channels by Canal+ Nordic to Canal Digital.

These agreements stipulate inter alia the following:

II.1. Pay-TV channel exclusivity

5. Groupe Canal+ grants TBS the exclusive right to distribute Canal+ Nordic's pay-TV premium content channels through Canal Digital and renounces to own or operate a competing DTH/SMATV distribution platform in the Nordic region during ten years ("pay-TV channel exclusivity"). The exclusivity however does not affect distribution of Canal+ Nordic's pay-TV premium content channels through third party cable networks with more than [...](3) households connected ("CATV") in the Nordic region.

II.2. Pay-TV channel non-compete

6. TBS commits vis-à-vis Groupe Canal+ neither to own or operate a pay-TV premium content channel for DTH/SMATV distribution nor to distribute pay-TV premium content channels of competing suppliers via DTH, SMATV and certain smaller cable networks in the Nordic region for a period of ten years ("pay-TV channel non-compete"). The non-compete however does not affect distribution of third suppliers' pay-TV premium content channels via CATV networks owned or controlled by Telenor.

7. The non-compete arrangement is coupled with a mechanism for joint acquisition of certain content by the parties. In addition, the parties have agreed on a range of clauses affecting neighbouring markets including clauses on cooperation on the market for the provision of satellite transponder services and New Media markets.

II.3. PPV/NVOD channel exclusivity and non-compete

8. Canal+ Nordic furthermore grants Canal Digital the exclusive right (and obligation) to distribute its PPV/NVOD movie channels through DTH/SMATV, smaller cable networks and Telenor's CATV networks in the Nordic region for a period of five years ("PPV/NVOD channel exclusivity").

9. The exclusivity is combined with a non-compete arrangement, under which Canal Digital may under certain circumstances - after having observed a negotiation procedure with Canal+ Nordic - supply additional PPV/NVOD channels and services from third suppliers ("PPV/NVOD channel non-compete").

III. REMEDIES PROPOSED BY THE PARTIES

10. The Commission had come to the preliminary conclusion that a range of the relevant clauses in the form as notified have as their object and/or effect to restrict competition within the meaning of Article 81(1) of the EC Treaty and Article 53(1) of the EEA Agreement and/or do not meet the conditions set out in Article 81(3) of the EC Treaty and Article 53(3) of the EEA Agreement.

11. On 31 March 2003 the parties submitted a proposal to accommodate the Commission's provisional competition concerns. They accordingly proposed to amend the notified agreements so as to:

- reduce the length of the pay-TV channel exclusivity to a maximum of four years,

- reduce the scope of the exclusivity by narrowing the definition of DTH/SMATV distribution to cable networks,

- reduce the length of the pay-TV channel non-compete and joint acquisition arrangements to a maximum of three years,

- reduce the scope of the joint acquisition arrangement to premium content for pay-TV,

- reduce the length of the PPV/NVOD channel non-compete to a maximum of three years,

- reduce the length of the satellite transponder non-compete to a maximum of five years,

- eliminate bilateral rights of first refusal regarding the acquisition and marketing of premium content and new channels via New Media platforms.

IV. THE COMMISSION'S INTENTIONS

On the basis of the foregoing, the Commission intends to take a favourable view in respect of the parties' revised exclusivity and non-compete arrangements. Before adopting a favourable opinion, the Commission invites third parties to send their observations within one month of the publication of this notice by e-mail (Hanns-Peter.Nehl@cec.eu.int), by fax (No (32-2) 295 01 28) or by mail to the following address, quoting the reference Case No 38.287 - Telenor/Canal+/Canal Digital: Commission of the European Communities Directorate-General for Competition

Anti-trust Registry

J-70

Office 0/28

B - 1049 Brussels.

If a party considers that its observations contain business secrets or other confidential information, it must indicate the passages which in its opinion ought not to be disclosed on the ground that they contain business secrets or other confidential material, and state the reasons. If the Commission does not receive a request with reasons it will assume that the observations do not contain any confidential information.

(1) OJ 13, 21.2.1962, p. 62.

(2) Commission Notice, OJ C 340, 4.12.2001, p. 6.

(3) Confidential information.