WRITTEN QUESTION E-1174/02

by Toine Manders (ELDR) to the Commission

(24 April 2002)

Subject: Position of power of media undertakings

As a result of the recent bankruptcy of the Kirch Media Group German pay-TV football organisations can expect as of next season to forego the estimated EUR 358 million in TV rights that they currently receive. This leaves the clubs in a difficult position, with the sword of Damocles of players' salaries hanging over them. The bankruptcy shows how a whole industry can be ruined as a result of a disproportionate dependency on a single company. The situation in Germany is not a one-off case. In other Member States too the football industry depends for an excessively large part of its income on companies with monopoly or quasi-monopolistic positions.

1. Does the Commission have information about the failure of Kirch in Germany?

2. Does the Commission take the view that this is a case of authorised cartel formation, with the result that a whole sector, in this case the football industry, has become disproportionately dependent for its income on a monopoly holder, so that as soon as the monopoly holder runs into trouble the industry is dragged along with it, making it necessary to give state support to suffering clubs in order to placate public opinion, which then conflicts with Article 87 of the EU Treaty concerning unlawful state aid?

3. Does the Commission know if Kirch's broadcasting rights form part of the bankruptcy assets?

4. Is the Commission prepared to take measures to prevent such practices in future and, if so, what measures?

Answer given by Mr Monti on behalf of the Commission

(10 June 2002)

1. and 3. The Commission's knowledge concerning the circumstances of KirchMedia GmbH & Co. KGaA's filing for insolvency and the state of play of the insolvency procedure is based on publicly available information. KirchMedia GmbH & Co. KGaA had previously acquired the broadcasting rights of the German first and second division football league matches. The Commission does not have information on the insolvency procedure's exact impact on this contract.

2. A cartel is an arrangement between firms designated to limit or eliminate competition between them, with the objective of increasing prices and profits of the participating companies and without producing any objective countervailing benefits. The Commission does currently not have indications that the Kirch group or parts thereof have engaged in such an activity in order to obtain their position on any market.

However, as pointed out in the Union of European football Associations (UEFA) Champions League case(1), an agreement among football clubs to sell their media rights jointly on an exclusive basis for a long period of time to a single broadcaster, via a football association, fosters oligopolistic structures in the broadcasting markets. The Commission has not yet examined whether this would create a dependency of the football clubs on the buyer.

The Commission is currently not aware of any measure in favour of the German football clubs contrary to Article 87 of the EC Treaty.

4. The Commission will continue to monitor closely the ongoing developments and ensure compliance with Community competition law.

(1) IP/01/1043.