Report on contractual clauses for the online distribution of content : final report.
Date: 2014-02-17
Institutions: Directorate-General for Communications Networks, Content and Technology
Subjects: contract, copyright, cross-border dimension, digital distribution, digital single market, digital technology, intellectual property, ownership, territorial jurisdiction

Ref. Ares(2017)5134801 - 20/10/2017

REPORT ON 
CONTRACTUAL 
CLAUSES 

FOR THE ONLINE 
DISTRIBUTION OF 
CONTENT 

FINAL REPORT

A study prepared for the European Commission 
DG Communications Networks, Content & Technology 
by: 

Digital 
Single 
Market 

This study was carried out for the European Commission by 

Jean-Paul TRIAILLE, partner, De Wolf & Partners, lecturer, University of Namur 

Alain  STROWEL,  avocat  at  the  Brussels  Bar,  professor,  UCLouvain  and  University  Saint-Louis-
Brussels 

With the assistance of Sari DEPREEUW, De Wolf & Partners, PhD, Vrije Universiteit Brussel, 

And Charlotte SARTORI 

September 2014 

Internal identification 

Contract number:     MARKT/2013/113/D1/ST/SC 

DISCLAIMER 

By the European Commission, Directorate-General of Communications Networks, Content & Technology. 

The information and views set out in this publication are those of the author(s) and do not necessarily reflect 
the official opinion of the Commission. The Commission does not guarantee the accuracy of the data included in 
this study. Neither the Commission nor any person acting on the Commission’s behalf may be held responsible 
for the use which may be made of the information contained therein. 

© European Union, 2014. All rights reserved. Certain parts are licensed under conditions to the EU. 

INTRODUCTION – CONTEXT, SCOPE AND STRUCTURE OF THE STUDY 

Context of the Study  

by 

study 

previous 

(DG  Markt) 

commissioned 

the  Commission 

(i.e.  Study 
A 
MARKT/2012/013/D1/ST/SC, titled “Study on the application of Directive 2001/20/EC on copyright and 
related  rights  in  the  information  society”)1,  in  particular  its  chapter  “Localisation  of  the  act  of  making
available  to  the  public  and  its  consequences”,  concluded  that  it  was  difficult  to  solve  the  territoriality 
issues  linked  to  the  online  licensing  of  copyright  by  adopting  a  “country  of  origin”,  a  “targeting” 
approach  or  a  combination  of  criteria  to  define  where  the  making  available/communication  to  the 
public of works takes place. As an alternative or additional option to the determination of the location 
of  the  communication  to  the  public,  the  Commission  suggested  us  to  explore  some  contractual 
aspects  linked  to  cross-border  issues  and  the  portability  of  services.  The  analysis  of  the  contractual 
aspects  developed in the present study (hereafter the “Study”)  builds  in part on the  Premier  League 
decision  of  the  Court  of  Justice  of  the  EU  (“CJEU”)  which  reiterated  the  prohibition  of  absolute 
territorial exclusivity in the context of copyright and cross-border (satellite) broadcasting. 

The issue of “absolute territorial exclusivity” (ATE) is at the core of the Study, but it is examined from 
the point of view of the freedom to provide services (Art. 56 Treaty on the Functioning of the European 
Union or “TFEU”), rather than competition law (Art. 101 TFEU). It is in this context that we were asked 
to  analyze  whether  and  to  what  extent  measures  related  to  contractual  clauses  and  based  on  the 
principle of freedom to provide services across the EU could address some problems and bottlenecks 
associated with the territoriality of copyright. 

Scope of the Study: the contract-based territorial limitations 

The aim of the Study is to assess whether the possibility to partition the internal market on the basis of 
contracts should be limited by a possible new legal rule. This assessment of contracts should be done 
at two levels in the chain of contractual relations: 




in the licences between the rightholders and the distributors;
in  the  contracts  between  the  distributors/licensees    who  acquire  a  multi-territorial  or  pan-
European licence from the rightholders and their customers.

Structure of the Study  

The Study contains two parts: 

Part  I  presents  the  arguments  and  the  underlying  reasoning  which  may  justify  the  adoption  of  new 
rules at EU level in order to control/prohibit clauses which partition the digital internal market for the 
distribution  of  protected  content.    We  therefore  explain  in  Chapter  I  how  the  territorial  nature  of 
copyright  allows such  partitioning  of  the  market.    Territoriality  of  copyright  and  its  bundle  of  rights  is 
one aspect. This territorial aspect can be reinforced by territorial licensing of copyright or by the use of 
technological  protection  measures.  In  Chapter  II,  we  examine  whether  the  Treaty  provisions  on  the 
free  movement  of  services  could  provide  a  sufficient  remedy.    We  describe  in  Chapter  III  how  the 
Court  of  Justice  dealt  with  absolute  territorial  exclusivity  (ATE)  schemes,  including  in  the  Premier 
League case.  We then examine to which extent the principle of freedom to conduct a business should 
be taken into account (Chapter IV). 

Part II describes what a possible initiative of the Commission could be.  We give reasons why such an 
initiative would be useful and some of the main principles which the text could contain. 

In an Annex to our Study, we have included, merely for illustration purposes, excerpts of standard 
clauses contained in the terms and conditions of several service providers (we relied on terms and 
conditions that were available online in November 2013). 

1Jean-Paul TRIAILLE, e.a. Study on the application of Directive 2001/29/EC on copyright and related rights in the information 
society, 2013, 586 p., available at  http://ec.europa.eu/internal_market/copyright/docs/studies/131216_study_en.pdf  

Table of contents 

Introduction – Context, scope and structure of the Study ....................................................................................................................2 

PART I.  HOW TO ADDRESS CROSS-BORDER CONTRACTUAL RESTRICTIONS THROUGH THE FREEDOM 
TO PROVIDE SERVICES ........................................................................................................................................................................................5 

Chapter I. 

Various aspects of territoriality in copyright ..........................................................................................................6 

A.

B.

C.

D.

Territoriality of copyright ..............................................................................................................................................................6 

Territoriality reinforced by contracts .......................................................................................................................................7 

Territoriality reinforced by technical protection measures ...........................................................................................7 

The territoriality issues differ from sector to sector .........................................................................................................8 

Chapter II. 

The freedom to provide services ............................................................................................................................... 10 

A.

The freedom to provide services in the TFEU .................................................................................................................... 10 

1.

2.

B.

C.

A fundamental principle of Union law ................................................................................................................................... 11 

Limited direct effect of Article 56 TFEU between private parties ............................................................................ 11 

(a) Direct effect principle ................................................................................................................................................................ 11 

(b) Limited direct horizontal effect of Article 56 ................................................................................................................. 12 

The freedom to receive services .............................................................................................................................................. 14 

Justifications of restrictions on the freedom to provide services ............................................................................. 15 

Chapter III. 

The prohibition of absolute territorial exclusivity (ATE) ............................................................................... 17 

A.

B.

C.

D.

E.

F.

1.

2.

1.

2.

1.

2.

3.

1.

2.

Distinction between exclusive territorial protection and absolute territorial exclusivity (ATE) ............... 17 

ATEs and freedoms to provide goods and services ......................................................................................................... 18 

The early decisions of the CJEU on ATEs .............................................................................................................................. 19 

Consten v. Grundig ......................................................................................................................................................................... 19 

Nungesser v. Commission ........................................................................................................................................................... 20 

Analysis of the CJEU decision in Premier League .............................................................................................................. 20 

Background ........................................................................................................................................................................................ 21 

The CJEU’s Decision ....................................................................................................................................................................... 21 

Lessons from Premier League ................................................................................................................................................... 22 

The regulation of contractual provisions based on competition law ...................................................................... 22 

The invalidity of national legislative provisions which protect ATE clauses ....................................................... 23 

Reasons to limit the enforcement of copyright and of contractual limitations ................................................... 24 

Prohibiting ATEs does not mean that pan-European licenses must be imposed ............................................... 25 

The issue of pan-European v. national licensing (focus on audiovisual works) ................................................. 25 

Compatibility of a pan-European compulsory licence with international obligations? .................................. 26 

Chapter IV. 

Restrictions for online distributors vs. freedom to conduct a business ................................................... 28 

A.

B.

Scope of the freedom to conduct a business under Article 16 Charter ................................................................... 28 

Conditions for interference to be allowed under Article 16 Charter ....................................................................... 28 

PART II.  WHAT A POSSIBLE LEGISLATIVE INITIATIVE COULD LOOK LIKE .......................................................................... 30 

a) Why would a legislative initiative be needed? ................................................................................................................... 30 

b) What are the precedents for regulating contractual clauses? ..................................................................................... 33 

c) What could be the main features of a new legislative initiative? .............................................................................. 34 

(i)

(ii)

(iii)

(iv)

(v)

The text should be technology-neutral ................................................................................................................... 34 

The text should be limited to clauses for the on-line distribution of content ........................................ 34 

The text could focus on unsolicited requests or could prohibit ATEs ....................................................... 35 

The text should respect the freedom to conduct business principle ......................................................... 35 

The  text  should  distinguish  between  two  types  of  agreements  and  make  restrictive
clauses unenforceable ..................................................................................................................................................... 35 

(vi)

The text should allow for (limited) derogations ................................................................................................. 35 

(vii)

The text should apply without prejudice to competition law ....................................................................... 37 

CONCLUSIONS ....................................................................................................................................................................................................... 38 

ANNEX - Presentation of clauses in some selected contracts .......................................................................................................... 40 

HOW TO ADDRESS CROSS-BORDER CONTRACTUAL 

RESTRICTIONS THROUGH THE FREEDOM TO PROVIDE 
SERVICES  

The achievement of a Digital Single Market, where protected content can circulate between Member 
States without obstacles, is  high  on the list of priorities of the European Commission2.  The  existing 
issues  with cross-border  access  to  services  or  the  portability  of  access  to  services  illustrate  that  the 
Digital  Single  Market  has  not  been  achieved  so  far.  This  is  a  point  of  attention,  as  appeared  from 
various policy documents.  

In 2011, the Communication on A Single Market for IPRs observed that “[the] internet is borderless but 
online  markets  in  the  EU  are  still  fragmented  by  multiple  barriers.  Europe  remains  a  patchwork  of 
national online markets  and there are cases when Europeans are unable to buy copyright protected 
works or services electronically across a digital single market”3.  

The issue was stressed again in the 2012 Communication on content in the Digital Single Market in 
the  following  terms4:  “(i)  Cross-border  access  and  the  portability  of  services.  The  Commission's 
objective is to foster cross-border on-line access and "portability" across borders of content. To benefit 
from new developments, like cloud-computing, cross-border legal access to cloud-stored content and 
services  should  also  be  facilitated.  Service  providers  interested  in  providing  their  services  to 
consumers  across  the  EU  need  to  ensure  that  they  have  secured  all  the  necessary  rights  in  the 
Member State in which they wish to provide services. Both multi-territory and single territory licensing 
is possible, depending on the sector, the service provider and the rights holder. However, distribution 
of  content  is  often  limited  to  one  or  a  few  Member  States  (e.g.  using  geo-blocking),  with  service 
providers  (online  platforms)  or  rights  holders  electing  to  impose  cross-border  sales  restrictions.  This 
work strand should identify the main categories of restrictions on cross-border access and portability 
by sector (taking into account some aspects of the consultation responses to the 2011 Green Paper 
on  the  online  distribution  of  audiovisual  works  in  the  EU)  and  the  main  reasons  behind  these 
restrictions.  On  this  basis  it  should  take  stock  of  current  industry  initiatives  and  deliver  practical 
solutions to promote multi-territory access.” 

Finally, it was concluded after European Summit of 24-25 October 2013 that “[there] is also a need to 
address the bottlenecks in accessing one's "digital life" from different platforms which persist due to a 
lack  of  interoperability  or  lack  of  portability  of  content  and  data.  This  hampers  the  use  of  digital 
services and competition. An open and non-discriminatory framework must therefore be put in place to 
ensure  such  interoperability  and  portability  without  hindering  development  of  the  fast  moving  digital 
sphere  and  avoiding  unnecessary  administrative  burden,  especially  for  SME's.  Providing  digital 
services and content across the single market requires the establishment of a copyright regime for the 
digital age. The Commission will therefore complete its ongoing review of the EU copyright framework 
in  Spring  2014.  It  is  important  to  modernise  Europe's  copyright  regime  and  facilitate  licensing,  while 
ensuring  a  high  level  of  protection  of  intellectual  property  rights  and  taking  into  account  cultural 
diversity.” 

Despite  an  important  effort  of  harmonisation  in  the  field  of  copyright,  it  has  been  observed  that  the 
digital single market is still largely absent, at least for certain types of protected content.   

Article 26 of the TFEU defines the Internal Market “as an area without internal frontiers in which the 
free  movement  of  goods  (and)  services  (…)  is  ensured”.    National  regulations  which  directly  or 
indirectly segment this internal market along national borders are at odds with the principles of Article 
26 and the free movement of goods and services (art. 34 and 56 TFEU). This Study will however not 
examine how national regulations restrict the freedom of services but how contracts between private 

2 Communication from the Commission to the European Parliament, the Council, the European Economic And Social 
Committee and the Committee Of The Regions “A digital agenda for Europe”, COM(2010)245;  Communication from the 
Commission to the European Parliament, the Council, the European Economic And Social Committee and the Committee Of 
The Regions, “A Single Market For Intellectual Property Rights”, COM(2011) 287 final ;  Communication from the Commission 
on content in the digital single market, COM(12)789. 
3 A Single Market for IPRs, COM(2011) 287 final, p. 9. 
4 Commission Communication (COM(2012) 789 final) on content in the Digital Single Market. 

 
 
 
 
                                                            
parties  (legal  entities,  individuals)  can  form  an  obstacle  to  the  freedom  to  provide  or  receive  digital 
content services relating to subject matter protected under copyright.   

Various aspects of territoriality in copyright 

In this section, we briefly explain that copyright is defined on a (national) territorial basis and how this 
territoriality can be reinforced by contracts and by technical measures.  It is however observed that, in 
practice, the “territoriality issues” are more or less prominent in various sectors. 

Territoriality of copyright 
Copyright5 is territorial in the sense that exclusive rights are acquired and enforceable on a country-by-
country  basis  under  national  law.  In  the  absence  of  a  unitary  copyright  protection  in  the  European 
Union, all the rights which result from the creation of an original work are defined and granted by each 
national  copyright  law.  Moreover,  without  a  unified  copyright  title  and  the  competence  of  a  special 
court,  measures  for  enforcing  copyright  can  only  be  obtained  from  national  judges  and  for  one  or 
several national territories at a time.  This characteristic of copyright may in some cases conflict with 
the freedom to provide services in the internal market, because the candidate licensee who intends to 
offer an online service in several Member States may have to acquire rights from different “national” 
right holders. 

Some solutions to reconcile both copyright (on a national basis) and internal market objectives have 
been adopted and integrated in copyright. 

For tangible forms of distribution, the principle of exhaustion which has progressively been developed 
by  the  CJEU  has  reconciled  the  partly  conflicting  principles  of  copyright  territoriality  and  free 
movement of goods. 

For intangible forms of exploitation, the CJEU has so far not taken a position on the question whether 
the  exhaustion  principle  applies  in  the  online  environment  (with  the  exception,  and  under  specific 
conditions, of computer programs6).  The rights in a work must be cleared for each Member State as 
soon as it is made available to a customer in that Member State. 

The Study on the application of Directive 2001/29/EC on copyright and related rights in the information 
society7 has identified problems and bottlenecks resulting from the territoriality of copyright, whether or 
not a rule of “country of origin” approach or a “targeting approach” is adopted for clearing the making 
available right.  

More generally, the main bottlenecks and problems can be presented as follows:  

  From  the  service  providers’/suppliers’  point  of  view  (referring  here  to  persons  or  companies 
who intend to make copyright-protected content available on the internet): the rights must be 
cleared,  meaning  that  the  service  provider  must  acquire  a  specific  authorization  from  the 
rightholder,  for  each  Member  State  in  which  the  service  is  provided.  In  case  of  fragmented 
ownership, this can become a burdensome task for the service provider.  

  From the consumers’/end-users’ point of view: generally, consumers' willingness to pay for a 
service  varies  across  Member  States.  Consequently,  the  territoriality  of  copyright  supports 
price-discrimination inside the internal market, given that service providers have an interest in 
limiting  the  flow  of  service  from  low-value  territories  to  high-value  territories  in  order  to 
maintain price differences between Member States. But territorial segmentation can also result 
in a lack of cross-border access to online services (where access to the service is for instance 
conditional on residence in a particular Member State) or in a lack of portability of access to 

5In this Study, we use copyright in the broad sense to cover not only the rights of authors on their works, but also the related 
rights enjoyed by other rightholders (such a producers of phonograms or first fixations of films). 
6 See CJEU, UsedSoft v. Oracle, C-128/11. 
7 Jean-Paul TRIAILLE  e.a. Study on the application of Directive 2001/29/EC on copyright and related rights in the information 
society, MARKT/2012/013/D1/ST/SC, 124 et s. 

 
 
 
 
 
                                                            
online services. 

Territoriality reinforced by contracts  

Because copyright is defined on a territorial (Member State) basis, copyright licences can be and are 
often  granted  on  a  national  basis.    Where  an  exclusive  licence  is  granted,  it  means  that  the 
licensor/copyright  owner  guarantees  to  the  licensee  that  the  latter  will  not  be  confronted  with  other 
licensees on this same territory: everyone else trying to commercially exploit or make available a work 
to users located in the territory of the exclusive licensee would be infringing copyright.  Territoriality of 
copyright thereby facilitates territorial licensing from the copyright owner to the online content provider 
and, if pushed further, facilitates territorial exclusivity and segmentation of national markets, which is 
contrary to one of the objectives of the Treaty8.  In an online context, a copyright owner (holding the 
copyrights  for  all  Member  States)  could  thus  allow  several  distributors  to  set  up  an  online  content 
service  on  a  strictly  national  basis,  for  example  by  including  the  obligation  to  serve  only  customers 
residing in one Member State and refusing to serve customers residing in other Member States (e.g. 
by means of geo-blocking measures – cf. infra sub C). 

As  identified  by  the  Commission  in  the  Task  Specifications  to  this  Study,  when  protected  works  are 
distributed online in a digital format (music file, e-book, etc.), the territoriality of copyright, according to 
which the making available of a work requires a specific authorization for each Member State, can be 
strengthened by contractual clauses, which may: 

1) 

limit or block the cross-border access to online services.  Such clauses require that an end-
user  reside  in  a  specific  Member  State  (or  be  connected  in  another  way  to  that  Member 
State) in order to have access to online services in that Member State. 

This  could  mean  that  some  online  services  are  not  offered  in  the  whole  EU.  Contractual 
restrictions  between  licensors  and  distributors  might  have  the  effect  that  residents  in  one 
Member State cannot access the service offered in another Member State.  In some cases, 
the  service  is  present  in  the  Member  State  of  the  end-user  but  she  cannot  choose  which 
“national  variety”  of  the  service  she  uses:    she  can  only  use  the  service  as  offered  in  her 
Member State, in other cases the end-user has no access to services abroad which are not 
available in her Member State at all.   

By  requiring  that  an  end-user  must  reside  in  a  specific  Member  State  (or  be  connected  in 
another way to that Member State) to have access to an online service, a contract between a 
licensor and a distributor might create a barrier to the cross-border provision of services. 

2)  reduce or prevent the portability of access to online services.  Such contractual clauses entail 
that  an  end-user  who  has  access  to  an  online  service  offering  copyrighted  works  in  the 
Member State in which she usually resides (or is connected to in another way, e.g. via her IP 
address or her credit card) cannot maintain that access when she leaves that Member State 
for a limited period of time (e.g. because of a business trip).  This could mean that an end-
user  has  access  in  her  Member  State  of  residence  but  cannot  use  the  service  (e.g.  music 
streaming by subscription) when she temporarily stays in another Member State, where the 
same  service  is  available  to  residents  of  that  Member  State  or  where  the  service  is  not 
offered  at  all.  Those  contractual  restrictions  could  also  create  some  barriers  to  the  cross-
border provision of services. 

Territoriality reinforced by technical protection measures  

The  territorial  fragmentation  resulting  from  the  acquisition  of  national  copyrights  can  also  be 
strengthened by technical protection measures (TPMs) which reduce the possibility to offer or access 
online services across borders. In this case, the territoriality of copyright is reinforced through the de 
facto borders created by the use of technology (such as geo-localization tools). The law (see Art. 6 of 
the  2001/29  Copyright  Directive)  protects  TPMs  against  circumventing  acts  and  other  acts 
(manufacture,  import,  distribution,  etc.)  dealing  with  circumvention  tools.  This  practice  of  restricting 

8 A distinct issue is the offer of online content services on a national basis, where the content provider has acquired a multi-
territorial licence from the right holder.  In that case, it is not so much the copyright owner but the service provider/distributor that 
segments the market on a contractual basis (without underlying justification of copyright for such segmentation). 

 
 
 
 
                                                            
access  to  protected  subject  matter  to  users  in  another  Member  State  could  also  result  in  a 
segmentation of the internal market and thus constitute a restriction of the freedom to receive services. 

One remedy could be found in limiting the protection of TPMs to cases where TPMs are not primarily 
used to enforce territorial limitations along national borders. TPMs which would primarily reinforce the 
territorial  fragmentation  of  access  to  online  services  could  for  instance  be  deemed  not  worthy  of 
protection by the anti-circumvention provisions9. Studying this issue, however, goes beyond the scope 
of the present Study10. 

The territoriality issues differ from sector to sector 

While some territorial restrictions (e. g. the prohibition of cross-border passive sales) are questionable 
in  the  field  of  sports  (see  the  CJEU  Premier  League  case),  it  is  not  clear  to  what  extent  unjustified 
territorial restrictions are imposed in other fields covered by copyright (such as e-books, music, films). 
The situation thus might well vary significantly from sector to sector. For example, it appears that in the 
field  of  e-books,  the  possible  territorial  limitations  might  not  be  such  a  concern  for  consumers,  but 
rather the limitations resulting from the absence of interoperable formats for e-books.  

The “Licences for Europe” exercise has shown that the issues potentially preventing the provision of 
online services across borders might differ from sector to sector11: 

-  Music:  Several  music  online  distributors  now  offer  their  services  across  the  whole  EU.  As 
illustrated  by  a  quick  review  of  the  clauses  in  the  contracts  between  distributors  and  end-
users, the remaining problem in the field of music seems to be that the same repertoire is not 
available  across  borders,  although  (most  of  the  main)  services  remain  accessible  for 
consumers crossing national borders. In the field of music, the model involving the download 
of music files is increasingly competing with popular streaming services. The territorial issues 
linked to respectively downloading and streaming services differ. In the case of downloading, 
the  consumer  will  keep  his/her  access  to  the  files  while  travelling;  however,  the  consumer 
might  not  have  access  to  the  same  repertoire  of  files  to  download  after  having  crossed  a 
border  or  might  not  be  able  to  download  anything  new  beyond  borders  of  the  territory  of  a 
given Member State. In the case of streaming services, the portability of the service might be 
an issue. 

-  Premium sport. Territorial limitations were included in some contracts for the broadcasting of 
football  matches  as  shown  by  the  Premier  League  case  (the  CJEU  considered  that  some 
provisions  of  the  contracts  between  Premier  League  and  the  national  broadcasters  led  to 
absolute territorial exclusivities; see below) .  

-  Films. For various reasons, the model of territorial licensing remains strong in the field of films 

and audiovisual works, which could lead to some cross-border restrictions. 

-  Books.  The  territoriality  of  the  services  is  not  the  main  concern:  indeed,  e-books  are  still 
mainly distributed as downloads, and the copies downloaded by the end-users remain on the 
portable device used by the end-users to access the literary works even if they travel across 
the  EU  (yet  sometimes  new  downloads  become  impossible  after  the  user  has  crossed  a 
border  of  a  Member  State).  However,  regarding  e-books,  the  most  pressing  issue  from  a 
consumer point of view results from the lack of full interoperability between the various formats 
used by the online providers of e-books.  

It  appears  that  in  some  sectors  the  copyright  is  exercised  in  such  a  way  that  the  market  for  digital 

9See CJEU, 24 January 2014, C-355/12, para. 30 and ff (Nintendo v. PC Box). 

10 Another issue related to technical measures is the interoperability of services.  This should however be distinguished from the 
territoriality issues under consideration in this Study.  The issue of interoperability will not be resolved through an instrument on 
contractual clauses. Arguably, one possible way forward for reducing the limits to the interoperability ( for ex. of e-books formats 
is to discuss the proportionality of the technical measure : technical protection measures which would go beyond what is 
necessary/proportional to protect the copyrighted material itself or which completely exclude interoperability should not benefit 
from the protection granted by Article 6 of Directive 2001/29 (see the interoperability requirement mentioned in recital 48 of 
Directive 2001/29). Of course, any restriction to interoperability would not necessarily be disproportionate. In each case, the 
courts would have to check “whether other measures (…) could have caused less interference with the activities of third parties 
(…) while still providing comparable protection of that rightholder’s rights” (para.32 of the CJEU decision Nintendo v. PC Box). 
This issue however goes beyond the scope of the present Study.  
11 See also the Study “Economic analysis of the territoriality of the making available right in the EU”, Charles River Associates, 
2014, available at http://ec.europa.eu/internal_market/copyright/docs/studies/1403_study1_en.pdf, p. 8 et s. 

 
 
                                                            
 
online content is fragmented12. Based on her copyrights, a right holder, such as a producer, may be 
entitled  to  grant  licences  to  distributors  with  a  territorial  scope  that  coincides  with  the  territory  of  a 
Member State.  This will however restrict this distributor in its right to provide services in other Member 
States and restrict end-users in other Member States in their choices as to the provider of audiovisual 
content.    Such  exercise  thus  conflicts  with  the  internal  market  objective  and  the  freedom  to  provide 
and receive services within the European Union, across the borders of the Member States.   

In  the  following  pages  we  will  examine  how  this  freedom  to  provide  services  is  regulated  at  the 
European level. 

12 See Study “Economic analysis of the territoriality of the making available right in the EU”, 44.  In the music sector this 
fragmentation is reinforced by the role of the collecting societies, organised on a national basis.  In the audiovisual sector, 
producers generally hold the exploitation rights but grant licences to one distributor per Member State.  

 
 
 
                                                            
The freedom to provide services  

The  freedom  to  provide  services  is  one  of  a  key  principle  of  the  Treaty  on  the  Functioning  of  the 
European  Union,  which  has  devoted  a  chapter  to  this  freedom  in  Title  IV  on  the  free  movement  of 
persons, services and capital (art. 56-62 TFEU).  This principle prohibits Member States from adopting 
measures  that  restrict  the  freedom  to  provide  services  to  persons  established  in  another  Member 
State.    Copyright  could  be  such  restriction,  which  may  in  some  cases  conflict  with  the  freedom  to 
provide services.   

In  the  context  of  this  Study,  it  is  examined  whether  clauses  in  agreements  between  private  entities 
(rather than a regulation or legal measure by a Member State) that fragment the internal market can 
be dealt with under the freedom to provide services.  It is unmistaken that a contract between private 
parties  can  have  the  effect  of  restricting  the  free  provision  or  reception  of  services  in  the  internal 
market.  A right holder and online content providers could agree on licences with territorial exclusivity 
to  the  effect  that  each  content  provider  is  the  only  one  to  distribute  the  content  per  Member  State.  
Furthermore, a content provider (having acquired a multi-territorial licence from the right holder) could 
adopt a contractual policy towards its end-users to grant only access to its service to users depending 
on the Member State of residence or access.  The question is then whether such “private” restrictions 
can be effectively tackled on the basis of the freedom to provide services as guaranteed by the TFEU. 

Firstly, we will take a brief look at the freedom to provide services as provided in the Treaty (sub A).  
We  will  also  examine  to  which  extent  this  freedom  to  provide  services  has  a  “horizontal  effect”  and 
allows prohibiting any behaviour of private parties resulting in a fragmentation of the internal market.  
The freedom to receive services will also be examined (sub B).  The freedom to provide services is not 
absolute and is subject to restrictions, provided that there is a ground that justifies such restriction (sub 
C).   

A.  The freedom to provide services in the TFEU 

The Study considers the issue of the contractual clauses under the freedom to provide services. One 
could raise the question whether digital content should be considered as a good or as a service. The 
CJEU  decided  that  offering  television  signals  must,  in  the  absence  of  an  express  provision  to  the 
contrary, “be regarded as provision of services”13. The same answer was given by the CJEU regarding 
broadcasting14.    The  same  reasoning  may  therefore  apply  to  the  provision  of  digital  content  on  line:  
this should be considered as a service, at least when it is normally provided for remuneration (Article 
57(1)  TFEU).    The  freedom  to  provide  services  (rather  than  the  free  movement  of  goods)  will  be 
examined in this section. 

The  principle  of  freedom  to  provide  services  in  the  Treaty  is  directed  to  the  Member  States,  which 
should refrain from adopting measures that restrict such freedom.  As stated before, copyright could in 
some  cases  restrict  the  free  provision  of  services  within  the  European  Union:  this  possible  conflict 
between  the  freedom  of  services  and  copyright  should  therefore  be  addressed  when  legislation  is 
adopted  by  national  legislators  and  applied  by  courts.    In  addition,  private  parties  can  rely  on  their 
(national)  copyrights  and  conclude  contracts  that  reinforce  the  fragmentation  of  the  (digital)  internal 
market for services.   

We will examine in this part to which extent the freedom to provide services as stated in the Treaty can 
be relied upon by private parties to prohibit such contractual behaviour (direct horizontal effect of art. 
56 TFEU).  First the freedom to provide services will be briefly described (sub 1).  Then the “horizontal 
effect” principle will be explained and applied to the freedom to provide services as stated in the TFEU 
(sub 2).   

13 CJEU, Sacchi, 155/73, 1974, E.C.R., 409(6) ; 1974 2 CM.L.R. 177 (and other references quoted by P. MATHIJSEN,  A Guide 
to European Union Law (as amended by the Treaty of Lisbon), Sweet & Maxwell, 2010, p. 289, footnote 23). 
14 CJEU, Centro Europea 7, C-380/05, 2008, E.C.R., I-349 (regarding the scope of article 46 EC and finding restriction on 
services in the area of TV broadcasting). 

 
 
 
 
 
                                                            
A fundamental principle of Union law 

The freedom to provide cross-border services, set out in Article 56 TFEU, is one of the fundamental 
freedoms  which  is  central  to  the  effective  functioning  of  the  EU  Internal  Market.    Article  56  TFEU 
states:  

“Within  the  framework  of  the  provisions  set  out  below,  restrictions  on  freedom  to  provide 
services within the Union shall be prohibited in respect of nationals of Member States who are 
established  in  a  Member  State  other  than  that  of  the  person  for  whom  the  services  are 
intended (…).” 

Member States must, as a consequence of the principle of primacy of Union law, modify national laws 
that  restrict  the  freedom  to  provide  services  and  are  therefore  incompatible  with  this  principle.  They 
may  only maintain such  restrictions  in  specific  circumstances where these are justified by  overriding 
reasons of general interest, for instance on grounds  of public policy, public security or public health, 
and then only to the extent they are necessary and proportionate (see infra sub C). 

Under  the  TFEU,  the Commission  is  responsible  for  ensuring  that  Union  law,  including  Article  56,  is 
correctly applied by Member States.  We will examine below whether the freedom to provide services 
has  a  direct  horizontal  effect  and  can  be  relied  upon  regarding  agreements  between  private  parties 
(horizontal direct effect).  This analysis will assess whether the Treaty provisions suffice or whether a 
legislative  initiative  would  be  useful  to  regulate  agreements  restricting  the  freedom  of  services  and 
segmenting the internal market.  

Limited direct effect of Article 56 TFEU between private parties 

While  the  Treaty  obliges  the  Member  States  to  guarantee  the  freedom  of  services  and  the 
achievement of the internal market (including for digital goods and services), one should examine what 
can  be  undertaken  if  measures  contradict  this  objective.    One  possibility  is  to  rely  directly  upon  the 
Treaty  and  its  Article  56  (“direct  effect”)  against  Member  States  (“vertical”  direct  effect)  or  against 
private  individuals  or  entities  (“horizontal”  direct  effect).    The  case  law  of  the  CJEU  provides  the 
guiding principles to answer this question and it will be established hereafter that it is complicated to 
address contractual agreements on the basis of the Treaty.  Article 56 has indeed been considered as 
having  a  horizontal  direct  effect  under  very  specific  circumstances.  Only  in  exceptional  cases  can 
individuals and private parties rely on the Treaty in national court proceedings and can ensure that this 
Article is correctly applied15. 

(a)  Direct effect principle 

The principle of direct effect enables individuals (or private parties) to invoke a provision of Union law 
against a Member State (vertical effect) or against other individuals or private parties (horizontal effect) 
before national courts.  

The direct effect of European law has first been recognized by the CJEU in the judgment Van Gend en 
Loos of  5 February  196316.  In  this  judgment,  the  Court  stated  that  European  law  not  only  creates 
obligations for Member States, but also rights for individuals. Individuals may therefore take advantage 
of  these rights  and directly  invoke  provisions  of  Union  law before national  courts.  It  is  not  necessary 
that  a  Member  State  has  implemented  the  provision  of  Union  law  concerned  into  its  internal  legal 
system for such act to be “invokable” in court.   
Generally,  it  is  presumed  that  a  provision  of  EU  law  has  direct  effect17.    However,  despite  this 
presumption,  the  effect  is  not  automatic  and  the  CJEU  has  defined  several  conditions  in  order  for  a 
Union  legal  act  to  be  directly  applicable.    The  provision  has  to  be  unconditional  and  sufficiently 
precise18, but the CJEU has adopted a flexible interpretation of these conditions.  As a consequence, it 
has  mostly  been  considered  that  only  those  Union  provisions  that  leave  no  discretionary  latitude 

15 J. ROUX, Droit général de l’Union Européenne, 4th ed., Lexis Nexis, 2012, p. 296. 
16 CJEU, Van Gend en Loos, February 5, 1963, case 26/62. 
17 J. ROUX, Droit général de l’Union Européenne, op. cit., 2012, p. 295. 
18 CJEU, Ministère public c. Ratti, April 5, 1979. 

 
 
 
 
                                                            
 
(margin for policy) to the addressee of the obligation (mainly Member States) can have direct effect19. 

There are two aspects to direct effect, i.e. a “vertical” aspect and a “horizontal” aspect: 

- 

- 

“Vertical direct effect” applies to relations between individuals and the State. This means that 
individuals  (or  private  parties)  can  invoke  a  European  provision  in  claims  and  court 
proceedings against a Member State before national courts; it is a legal doctrine developed by 
the CJEU since Van Gend en Loos; 

“Horizontal  direct  effect” applies  to  relations  between  individuals.  This  means  that  an 
individual (or private party) can invoke a European provision in claims and court proceedings 
against  another  individual  (or  private  party).    Horizontal  direct  effect  is  also  a  legal  doctrine 
developed by the CJEU.   

One should then examine to which provisions of Union law the theory of direct effect (vertical and/or 
horizontal) applies, i.e.: does it apply to all or only some of them, and to both primary legislation and 
secondary legislation?20 

(b)  Limited direct horizontal effect of Article 56 

In the context of this Study, the question must be asked whether a private individual, such as an end-
user, could rely on the freedom of services provision in the TFEU against another private party, such 
as the content provider or the right holder, to obtain a larger territorial scope of her user’s licence, and 
whether a content provider, having obtained a licence from the right holder, would perhaps be able to 
rely  on  the  Treaty  to  declare  invalid  the  clauses  that  prohibit  access  to  its  service  to  potential  end-
users in other Member States.   

We should thus examine whether a horizontal direct effect of Article 56 TFEU could perhaps provide a 
legal basis for  a concerned party to oppose the contractual practices  of other private parties, on the 
ground that such practices constitute a restriction of the freedom to receive/provide services.  Where a 
right holder refuses to grant a multi-territorial licence but prefers a bundle of “national” licences instead 
(for  the  provision  of  a  strictly  national  content  services),  the  candidate  content  provider  could  then 
argue that this refusal constitutes an impediment of its right to provide services in the European Union.  
An end-user who has limited access to her music when she travels abroad could then try and claim 
that terms of her end-user agreement restrict her right to receive services in all Member States of the 
EU. 

The horizontal direct effect of EU law is subject to several conditions. 

In  1979  already,  the  CJEU  held  that  the  “freedom  to  provide  services  (...)  imposes  an  obligation  to 
attain a precise result, the fulfilment of which had to be made easier by, but not made dependent on, 
the  implementation  of  a  programme  of  progressive  measures”21.    The  essential  requirements  of  the 
freedom  to  provide  services  “abolish  all  discrimination  against  the  person  providing  the  service  by 
reason of his nationality or the fact that he is established in a Member State other than that in which 
the  service  is  to  be  provided”.    Once  the  transitional  period  was  over,  these  essential  requirements 
became  directly  and  unconditionally  applicable  and  national  regulations  restricting  the  freedom  to 
provide  services  could  no  longer  be  relied  upon.    In  other  words,  “the  essential  requirements  of  the 
freedom to provide services are unconditionally applicable and have direct effect”22.  

It  is  usually  considered  that  provisions  of  the  EU  Treaties  which  are  not  addressed  to  anyone  in 
particular (e.g. they are not explicitly addressed to Member States) impose upon both Member States 
and individuals obligations which may be invoked against them.  

This is however only partly the case for Article 56, which may be held to have a vertical direct effect 
but was held, under very specific circumstances only, to also have a horizontal direct effect23.  On the 

19 P. MATHIJSEN, A Guide to European Union Law, op. cit., p. 45. 
20 http://europa.eu/legislation_summaries/institutional_affairs/decisionmaking_process/l14547_en.htm  
21 CJEU 18 January 1979, joined cases 110-111/78, Ministère public and "Chambre syndicale des agents artistiques et 
impresarii de Belgique" ASBL v Willy van Wesemael and others., ECR 1979, 35, paras. 25-27. 
22 P. MATHIJSEN, A Guide to European Union, op. cit.,  p. 290.  See CJEU, Ministère public v. Van Wesemael (joined cases 
110/78 and 11/78), 1979, EC.R., 35. 
23 P. MATHIJSEN, A Guide to European Union Law, op. cit., p. 299.  See also L. DEFALQUE, “Effet direct, primauté et 
contentieux communautaire (la théorie) », in Actualités en droit européen et rappel de quelques principes, Bruylant, Brussels, 
2006, p. 6 ; CJEU, Walrave, case 36/74, 12 September 1974, Rec., 1974, p. 1405 ; CJEU, Defrenne II, case 43/75, 20 April 

 
 
                                                            
horizontal direct effect of Article 56, two decisions of the CJEU are worth mentioning: 

 

 

In  the  Laval  case24,  the  CJEU  had  to  ascertain  whether  Article  49  EC  (now  56  TFEU) 
precludes  trade  unions  from  attempting,  by  means  of  collective  action  in  the  form  of  a 
blockade to force a foreign undertaking to apply a Swedish collective agreement.  The CJEU 
reaffirmed the direct effect of Article 49 EC (now 56 TFEU), also on trade union action, which 
the  Court  described  as  “rules  which  are  not  public  in  nature  but  which  are  designed  to 
regulate,  collectively,  the  provision  of  services”  (para.  98).    It  did  consider  that,  in  this 
particular case, “the right of trade unions of a Member State to take collective action by which 
undertakings  established  in  other  Member  States  may  be  forced  to  sign  the  collective 
agreement for the building sector (…) is liable to make it less attractive, or more difficult, for 
such  undertakings  to  carry  out  construction  work  in  Sweden,  and  therefore  constitutes  a 
restriction on the freedom to provide services within the meaning of Article 49 EC”.  The CJEU 
further adds that “since the freedom to provide services is one of the fundamental principles of 
the Community (…), a restriction on that freedom is warranted only  if it pursues  a legitimate 
objective compatible with the Treaty and is justified by overriding reasons of public interest; if 
that  is  the  case,  it  must  be  suitable  for  securing  the  attainment  of  the  objective  which  it 
pursues and not go beyond what is necessary in order to attain it”. 
The case concerned a dispute between private parties (trade unions v. industrial companies) 
and the CJEU applied Article 56 TFUE to conclude that, in this case, practices by trade unions 
may be held to be at odds with such Article.  It is important to note however that even if the 
dispute  was  involving  private  parties,  the  parties’  behaviour  had  larger  effects  on  a  whole 
economic  sector  than  just  on  their  private  dispute;  the  Court  refers  (as  indicated  above)  to 
“rules  which  are  not  public  in  nature  but  which  are  designed  to  regulate,  collectively,  the 
provision  of  services”  (para.  98)  (our  emphasis).    The  dispute  therefore  was  not  limited  to  a 
purely private dispute between individual entities but it had a spill-over effect on a wider scope, 
beyond the borders of the individual dispute. 
In  the  Viking  Line  ABP  case25  (which  was  handled  together  with  the  Laval  case),  the  CJEU 
similarly dealt with the lawfulness of industrial action that had the effect of placing restrictions 
on  the  freedom  to  provide  services.    Interestingly,  the  CJEU  considered  that  “since  working 
conditions in the different Member States are governed sometimes by provisions laid down by 
law  or  regulation  and  sometimes  by  collective  agreements  and  other  acts  concluded  or 
adopted  by  private  persons”,  Article  56  TFEU  must  be  considered  to  apply  also  to  acts 
concluded by private persons, to avoid creating inequality in the application of Article 5626.   

The CJEU also confirmed that agreements falling outside the scope of competition law do not 
consequently  fall  outside  the  scope  of  the  free  provision  of  services.    It  also  notes  that  “the 
abolition, as between Member States, of obstacles to freedom of movement for persons and 
freedom to provide services would be compromised if the abolition of State barriers could be 
neutralised  by  obstacles  resulting  from  the  exercise,  by  associations  or  organisations  not 
governed  by  public  law,  of  their  legal autonomy”  (para.  57;  see  also  para.  62  and  64).  Here 
also it is important to note that even if it was involving private parties, the parties’ behaviour 
had  larger  effects  on  a  whole  economic  sector;  the  Court  refers  (as  indicated  above)  to 
“obstacles resulting from the exercise, by associations or organisations not governed by public 
law”  (para.  57)  (our  emphasis).  The  dispute  therefore  was  not  limited  to  a  strictly  private 
dispute  between  two  individual  entities  litigating  in  court  but  it  had,  like  in  the  Laval  case,  a 
wider effect on other parties which were not involved the dispute. 

In both the Laval and the Viking cases, as well as in a few other cases27, the dispute did not strictly 
concern  a  legal  provision  emanating  from  public  authorities  but  practices  of  trade  unions  or 
demonstrators, to which the CJEU accepted to apply Treaty provisions on the fundamental freedoms 
(services,  establishment)28.  To  our  knowledge,  no  decision  deals  with  “purely  private”  clauses  of 
agreements  which  could  have  as  their  effect  to  limit  the  free  provision  (and  the  free  reception)  of 
services,  even  if  parts  of  the  Viking  decision  quoted  above  (as  well  as  of  the  opinion  of  the  AG)  do 

1976, Rec., 1976, p. 455. 
24 CJEU 18 December 2007, Case C-341/05, Laval un Partneri Ltd. 
25 CJEU 11 December 2007, Case C-438/05, International Transport Workers’ Federation, Finnish Seamen’s Union, v Viking 
Line ABP, OÜ Viking Line Eesti. 
26 The CJEU on this issue refers to previous case-law (by analogy, Walrave and Koch, paragraph 19; Bosman, paragraph 84; 
and Angonese, paragraph 33). 
27 Case C-265/95 Commission v France [1997] ECR I-6959; Case C-112/00 Schmidberger [2003] ECR I-5659. 
28 See also CJEU, Case C-13/76, 14 July 1976, Donà (national practice of a sport organization). 

 
                                                                                                                                                                                          
refer to “acts concluded by private persons”.    

Regarding  Article  56,  it  would  thus  be  hard  to  suggest  that  it  has,  generally  speaking,  a  horizontal 
direct effect.   

To this, one may add other additional elements of uncertainty.  Should the question of the application 
of Article 56 to agreements arise in a case before the CJEU, it is likely that the Court would examine 
the case with much scrutiny, because the potential impact of its decision on the principle of contractual 
freedom  in  general  could  be  very  important.    It  is  hard  to  know  whether  the  CJEU  would  impose 
specific  conditions  before  concluding  that  certain  clauses  in  a  contract  should  be  disregarded  (and 
held unenforceable before national courts, due to their contradiction with Article 56).  The CJEU could 
e.g. impose a “de minimis” test before considering a private agreement as partly unenforceable29.   

Another interesting question is whether parties themselves to an agreement contrary to Article 56, who 
have (knowingly or unknowingly) accepted such clauses, could invoke Article 56 or whether the CJEU 
would only allow third parties, affected by the existence of the agreement, to ask that the agreement 
be scrutinized for its alleged contradiction with Article 56.  We have not come across any case-law on 
this either. 

Another factor of uncertainty is the possibility that the restriction of the freedom to provide services can 
be considered by the courts as being justified, where it pursues a legitimate objective and overriding 
reasons  of public interest (such as copyright protection), on condition that it is suitable for achieving 
this  objective  and  proportionate  to  attaining  this  goal  (see  C  hereunder).    This  assessment  may 
sometimes be hard to make in the case of contractual  practices within a certain sector, with its own 
customs and exploitation models.   

As  a  summary  and  in  relation  to  the  subject-matter  of  this  Study,  one  should  conclude  that  the 
possibilities for a private party (here, mainly an end user or a service provider) to rely on Article 56 are 
very  uncertain  and  cannot,  in  the  present  state  of  the  case-law  of  the  CJEU,  be  considered  as  a 
readily available remedy.   

Should  the  Commission  want  to  ensure  that  efficient  remedies  against  such  restrictive  clauses  are 
available, our view is that it should opt for a new legislative instrument (infra sub Part II). 

B.  The freedom to receive services 

A restriction to the online provision of services must take into account the effect on the end-users who 
enjoy those services.  

Interestingly, the CJEU has also confirmed that a restriction on the freedom to provide services has an 
indirect  effect  for  those  who  enjoy,  via  the  internet,  those  services.  The  fact  that  end-users  are 
prohibited to access online services has to be factored in the analysis of the freedom of services. 

For  instance,  in  Liga  Portuguesa  de  Futebol  and  Bwin  International  v.  Departamento  de  Jogos  (C-
42/07),  the  CJEU  indicated  that  freedom  to  provide  services  is  for  the  benefit  of  both  providers  and 
recipients of services. It is accepted that the legislation of a Member State, which prohibits providers 
established in other  Member States from offering  via the internet services in the territory of that first 
Member  State,  constitutes  a  restriction  on  the  freedom  to  provide  services  and  also  imposes  a 
restriction on the freedom of the residents of the Member State concerned to enjoy, via the internet, 
services which are offered in other Member States (Case 42/07, para.51). The Court thus includes in 
the freedom of services the freedom of end-users to enjoy and access those services.  

This  interest  of  the  end-users  to  access  services  (for  instance  across  borders)  is  also  protected  by 
other fundamental freedoms such as the freedom of expression which includes the freedom to receive 
information. Therefore, in SABAM v. Scarlet (C-70/10), the CJEU has considered that any restriction 
on the possibility of the access provider to offer its services must take into account the freedom of the 
end-users  to  receive  or  impart  information,  which  is  protected  by  Article  11  of  the  Charter  on 
Fundamental Rights (and Art. 10 of the ECHR). Similarly, in UPC Telekabel (C-314/12), the CJEU has 
emphasised  that  the  possible  injunction  against  the  access  provider  whose  services  are  used  to 
commit  infringements  should  serve  to  bring  an  end  to  the  copyright  infringement  “without  thereby 
affecting internet users who are using the provider’s services in order to lawfully access information. 
Failing  that,  the  provider’s  interference  in  the  freedom  of  information  of  those  users  would  be 

29 On the « de minimis » condition, see infra. 

 
 
                                                            
unjustified.” (§ 56). 

The freedom of the users to access services (across borders) is thus reinforced by the fundamental 
freedom of users to receive information. 

Justifications of restrictions on the freedom to provide services 

The  freedom  to  provide  services  being  one  of  the  cornerstones  of  the  European  Union,  Member 
States must modify national laws that restrict the freedom to provide services and that are therefore 
incompatible with this principle. As briefly stated in the previous section however, Member States may 
maintain such restrictions in specific circumstances where these are justified by overriding reasons of 
general interest, for instance on grounds of public policy, public security or public health, to the extent 
they are necessary and proportionate.   

Intellectual property is also a ground which may justify restriction to the free provision of services.  This 
has been recognized by the CJEU for example in the Premier League case30 and in the OSA case31, 
where  it  stated  that  intellectual  property  law  is,  in  principle,  capable  of  justifying  a  restriction  to  the 
freedom to provide services. Such restriction must, however, not go beyond what is necessary and is 
in  fact  only  allowed  to  the  extent  required  to  safeguard  the  specific  subject  matter  of  the  concerned 
intellectual property right32.   

In Coditel I, the CJEU decided, in relation to copyright, that the freedom to provide services can indeed 
be restricted to allow “certain economic activities which have their origin in the application of national 
legislation for the protection of intellectual property, save where such application constitutes a means 
of  arbitrary  discrimination  or  a  disguised  restriction  on  trade  between  Member  States”33.    The 
protection of intellectual property would not go as far as to allow the parties to create “artificial barriers 
to  trade  between  Member States”.  The CJEU  stated that  copyright  allows  the right  holder  to  require 
fees  for  “any  showing  or  performance”  of  protected  subject  matter  (which  is  part  of  the  “essential 
function” of copyright34)  and the parties to a contract can agree on geographical limits to protect the 
author and the licensees without such agreement amounting automatically to a prohibited restriction of 
the  freedom  to  provide  services,  considering  the  context  of  television  broadcasts”.    Moreover,  “the 
mere  fact  that  those  geographical  limits  may  coincide  with  national  frontiers  does  not  point  to  a 
different solution in a situation where television is organized in the Member States largely on the basis 
of legal broadcasting monopolies, which indicates that a limitation other than the geographical field of 
application of  an  assignment  is  often  impracticable”35.    In  the case  Coditel  I,  it  was  decided  that  the 
holder of the right to screen a film in Belgium was entitled to oppose the cable retransmission of that 
work  by  a  cable  operator  in  the  same  Member  State:  this  was  not  considered  as  an  unjustified 
restriction of the freedom to provide services. 

Copyright  can  thus  be  a  ground  that  justifies  the  restriction  of  the  freedom  to  provide  services, 
provided  that  the  restriction  does  not  go  beyond  the  protection  of  the  specific  subject  matter  of  this 
right.    It  was  decided  in  Musik  Vertrieb  that  the  commercial  exploitation  of  copyright  is  its  specific 
subject matter, which constitutes a source of remuneration and a form of control on marketing36.  In 
Phil  Collins,  the  CJEU  went  on  to  describe  the  specific  subject  matter  of  copyright,  which  was  “to 
ensure the protection of the moral and economic rights of their holders. The protection of moral rights 
enables  authors  and  performers,  in  particular,  to  object  to  any  distortion,  mutilation  or  other 
modification of a work which would be prejudicial to their honour or reputation. Copyright and related 
rights are also economic in nature, in that they confer the right to exploit commercially the marketing of 
the protected work, particularly in the form of licences granted in return for payment of royalties”37. 

30 CJEU, Premier League, October, 4, 2011, case C-403/08. 
31 CJEU, OSA, 27 February 2014, case C-351/12, para. 71. 
32 See inter alia CJEU 31 October 1974, case 16/74, Centrafarm v Winthrop, par. 7 (on trademarks), CJEU 31 October 1974, 
case 15-74, Centrafarm, de Peijper v Sterling Drug, par. 8 (on patents);  CJEU 22 June 1976, case 119/75, Terrapin v 
Terranova Industrie, par. 5 (trademarks) ; CJEU 17 October 1990, Case C-10/89, SA CNL-SUCAL NV v HAG GF AG, par. 12 
(trademarks). 
33 CJEU 18 March 1980, SA Compagnie générale pour la diffusion de la télévision, Coditel, and others v Ciné Vog Films and 
others.case 62/79, Reports of Cases 1980 00881, par. 15 (Coditel I). 
34 CJEU, Coditel I, para. 14. 
35 CJEU, Coditel I, para. 16. 
36 CJEU, joined Cases 55/80 and 57/80 Musik-Vertrieb Membran v GEMA [1981] ECR 147 (Music Vertrieb), para. 13. 
37 CJEU, 20 October 1993, Joined cases C-92/92 and C-326/92, Phil Collins v Imtrat Handelsgesellschaft mbH and Patricia Im- 
und Export Verwaltungsgesellschaft mbH and Leif Emanuel Kraul v EMI Electrola GmbH. 

 
 
                                                            
In the OSA case, the CJEU held that a restriction to the free provision of services may be justified by 
copyright if such restriction “serves overriding reasons in the public interest, is suitable for securing the 
attainment of the public interest objective which it pursues and does not go beyond what is necessary 
in order to attain it” (para. 70). 

Consequently, the consequences in a particular case of relying on Article 56 are difficult to predict in 
advance.  Even if Article 56 TFEU can  – in certain specific circumstances – have a direct horizontal 
effect  and  even  if  it  could  apply  to  contractual  clauses  with  the  effect  of  restricting  the  freedom  to 
provide  services,  the  parties  to  the  contract  (in  particular  right  holders)  could  also  justify  such 
restriction  by  invoking  the  existence  of  their  copyright.    A  right  holder  could  indeed  pursue  the 
exploitation of her work by organising it in function of the public of each Member State.  It should then 
be verified whether such restrictions are excessive and do not go beyond what is necessary to achieve 
this  specific  subject  matter  (cf.  “appropriate  remuneration”  in  Premier  League).    Especially,  this 
proportionality requirement causes uncertainty for assessing whether a clause or a contract is globally 
legitimate or not.  It is less likely that a distributor/content provider be able to justify restrictive clauses 
based on the protection of its copyright; in his case, other grounds would need to be invoked (such as 
the right to conduct a business – art. 16 EU Charter). 

This  leads  us  to  an  important  legal  uncertainty  and  does  not  create  a  very  satisfactory  basis  for 
ensuring compliance with the internal market objectives.  A legislative instrument would by contrast be 
more adequate to remedy this legal uncertainty. 

 
 
 
 
The prohibition of absolute territorial exclusivity (ATE) 

This chapter aims at identifying  the type  of contractual  arrangements with a territorial restriction that 
the  CJEU  considers  as  not  compatible  with  EU  law,  and  in  particular  with  the  rules  on  freedom  of 
movement  of  goods/services  and/or  competition  rules.  When  considering  contractual  arrangements 
and  the  cross-border  licensing  of  rights,  the  CJEU  sometimes  combines  an  analysis  of  the 
requirements  imposed  by  the  achievement  of  free  provision  of  goods  or  services  with  a 
competition-based analysis38.  

The case law of the CJEU, for quite some time, distinguishes between exclusive territorial protections, 
which are in principle compatible with EU law, and absolute territorial exclusivities (ATEs) which are in 
principle prohibited. However, the CJEU case law, as will be explained below, does not offer a crystal 
clear standard for distinguishing unacceptable ATEs from acceptable territorial restrictions.  

The need to offer a workable and predictable criterion for assessing the contractual restrictions could 
thus justify an intervention of the European legislator.  

In addition, the CJEU case law shows that it appears easier to rely on the competition rules than on 
the freedom of goods/services to deal with unjustified territorial exclusivities. This also means that the 
remedy is ex post (as is mostly the case for competition law in general). This, in turn, makes it more 
complicated  for  private  parties  to  adjust  their  contracts,  as  the  (competition-related)  approach  and 
outcomes are determined on a case-by-case basis.  

A clearer ex ante guidance or regulation could help the market to adjust to the Treaty (and in particular 
the freedom of service) requirements.  

Such a priori guidance or regulation would also help to create more legal certainty. 

A.  Distinction  between  exclusive  territorial  protection  and  absolute  territorial 

exclusivity (ATE) 

Regarding contractual clauses, the rules of competition law and of distribution law within the EU and 
several decisions of the CJEU (see below) rely on a distinction between exclusive territorial protection 
(which is generally allowed) and absolute territorial exclusivity (which is generally prohibited): 

  Exclusive territorial protection means licensing the rights exclusively to a single licensee for 

a specific Member State.  

Accordingly, the right holder undertakes not to grant other licences for the same territory and 
not to compete himself with the licensee. Each licensee of this exclusive system will generally 
be forbidden to 'actively sell' its services  to any customer residing in another Member  State. 
Thus “the exclusive distributors can be protected against each other’s active sales, i. e. they 
can  be  required  not  to  actively  approach,  for  instance  by  direct  mails  or  visits,  customers  in 
each  other’s  exclusive  territories  and  not  to  specifically  target  by  advertising,  in  whatever 
media, customers in each other’s exclusive territories.”39 Similarly, active sales are defined in 
the  EU,  more  particularly  in  the  Commission’s  Vertical  Guidelines  to  assess  vertical 
agreements  under  Article  101  TFEU40,  which  complements  the  Commission  Regulation 
330/2010 on the application of Article 101(3) TFEU to categories of vertical agreements and 
concerted  practices41  (hereafter  “the  Vertical  Block  Exemption  Regulation”  or “VBER”) which 
regulates the contractual clauses contained in supply and distribution contracts. According to 
the Vertical Guidelines (para. 51), active sales are defined as “actively approaching individual 
customers by for instance direct mail, including the sending of unsolicited e-mails, or visits; or 
actively  approaching  a  specific  customer  group  or  customers  in  a  specific  territory  through 

38 See CJEU, C-403/08 and C-429/08 (Premier League) and C-351/12 (OSA) where arguments based on Article 56 TFEU and 
on Articles 101/102 TFEU are discussed. 
39OECD, Policy Roundtables. Vertical Restraints for On-line Sales, 2013, p. 77. 
40 See Guidelines on Vertical Restraints (2010/C 130/01), O. J., 19.5.2010, C 130/1. 
41 J.O., 23.4.2010, L. 102/1. 

 
 
 
 
                                                            
advertisement  in  media,  on  the  internet  or  other  promotions  specifically  targeted  at  that 
customer group or targeted at customers in that territory. Advertisement or promotion that is 
only attractive for the buyer if it (also) reaches a specific group of customers or customers in a 
specific  territory,  is  considered  active  selling  to  that  customer  group  or  customers  in  that 
territory ». 

However, passive sales, in response to unsolicited orders, remain free in this kind of exclusive 
distribution  scheme.  According  to  the  Vertical  Guidelines  (para  51),  passive  sales  involve: 
“responding  to  unsolicited  requests  from  individual  customers  including  delivery  of  goods  or 
services to such customers ». This does not exclude all advertising : « General advertising or 
promotion  that  reaches  customers  in  other  distributors'  (exclusive)  territories  or  customer 
groups but which is a reasonable way to reach customers outside those territories or customer 
groups, for instance to reach customers in one's own territory, are considered passive selling. 
General advertising or promotion is considered a reasonable way to reach such customers if it 
would be attractive for the buyer to undertake these investments also if they would not reach 
customers  in  other  distributors'  (exclusive)  territories  or  customer  groups »  (para  51  Vertical 
Guidelines). 

  An  absolute  territorial  exclusivity  (ATE)  scheme,  by  prohibiting  all  passive  sales,  goes 
beyond  an  exclusive  territorial  protection  as  it  allows  eliminating  all  competition  from  third 
parties in a given territory. It is therefore considered as not compatible with EU (competition) 
law. Where a service provider already enjoys an exclusive territorial protection, an additional 
restriction that blocks passive sales into the territory from the licensee for another territory or 
from the consumer located in another territory creates an ATE. 

An ATE can be considered from the point of view of competition law (elimination of all competition in 
a territory), but it can also be envisaged (see hereafter) from the point of view of the free movement 
of goods or services. 

ATEs and freedoms to provide goods and services 

ATEs  which  allow  a  segmentation  of  markets  along  national  borders  are  at  odds  with  the  principles 
upon which the internal market is built, namely the free movement of goods and services (Articles 34 
and  56  TFEU)  that  are  supposed  to  ensure  the  convergence  of  prices  at  a  lower  level  and  the 
provision of goods and services across the internal borders. 

As illustrated by the case law reviewed below, Article 101 TFEU generally prohibits ATEs. It is more 
complicated  to  use  the  freedom of  goods or services  to directly discard  a  contractual restriction  that 
would create an ATE.  

When competition law prohibits ATEs, it relies on the overall objective to achieve the internal market 
as illustrated by the case law reviewed below. Therefore, it is often considered that the requirement of 
free movement of goods is “reflected in competition law by the treatment of contractual restrictions on 
parallel imports between EU member states of products placed on the market in the EEA by or with 
the  consent  of  the  proprietor  of  the  applicable  intellectual  property  rights”.42  The  anticompetitive 
contractual provisions which, in addition, have a territorial effect incompatible with the achievement of 
the  internal  market  risk  to  be  treated  more  severely  under  competition  law  than  anticompetitive 
provisions without any territorial effect. 

It thus appears that situations involving ATEs could be treated in a similar way both by competition law 
and  by  freedom  of  goods/services.  However,  the  conditions  regarding  the  effect  of  the  Treaty’s 
freedoms create some additional difficulty (see above).  

In  the  cases  mentioned  below,  the  Court  reviews  some  contractual  provisions  leading  to  ATE  (not 
national measures having an equivalent effect to a restriction to import). This aspect explains why they 
were  tackled  under  competition  law.  The  CJEU  however  implicitly  acknowledges  that  the  same 
outcome could result from the application of freedom of goods/services. 

Arguably,  certain  situations  which  do  not  have  the  effect  of  preventing,  restricting  or  distorting 
competition  will  be  more  easily  tackled  under  the  principles  of  freedom  of  goods  and  services.  In 
particular, it is possible that some contractual clauses can be exempted under Article 101(3) TFEU if 

42 J. Turner, Intellectual Property and EU Competition Law, Oxford U.P., 2010, p. 33, 1.33. 

 
 
                                                            
the  agreement  “contributes  to  improving  the  production  or  distribution  of  goods  or  to  promoting 
technical or economic progress, while allowing consumers a fair share of the resulting benefit ».  

Should Articles 34 and 56 TFEU have an horizontal effect, they could be used to restrict those clauses 
as  a  form  of  unjustified  exercise  of  intellectual  property  rights  (see  Art.  36  TFEU  allowing  some 
restrictions to freedom of goods as long as they are justified by the protection of intellectual property 
rights;  as  is  known,  the  same  justification  based  on  the  protection  of  intellectual  property  can  be 
invoked to justify a restriction to the freedom to provide services under Art. 56 – see supra Chapter II, 
C).43  We have seen however that Article 56 is far from having such a direct horizontal effect. 

The early decisions of the CJEU on ATEs 

1.  Consten v. Grundig 

Consten  S.A.R.L.  v.  Grundig-Verkaufs-Gmbh44  is  a  landmark  case  involving  the  appointment  of 
Consten as “sole representative” of the German company Grundig for distributing the goods in France. 
Consten  was  required  by  contract,  among  other  obligations,  to  buy  a  certain  amount  of  articles,  to 
provide  appropriate  publicity,  to  carry  out  the  guarantee  and  after-sales  service.  Consten  also 
undertook not to sell similar articles capable of competing with the goods which were the subject of the 
contract  and  not  to  make  deliveries  for  or  to  other  countries  than  France.  The  other  exclusive 
distributors  of  Grundig  were  subject  to  the  same  restriction  with  regard  to  the  delivery  outside  their 
distribution territory. Grundig undertook for its part not to make deliveries, either directly or indirectly, to 
other persons in the area covered by the contract. In addition, Consten was authorised to register the 
GINT trademark (Grundig International) for France. 

The Court stated that “an agreement between producer and distributor which might tend to restore the 
national divisions in trade between Member States might be such as to frustrate the most fundamental 
objections of the Community” (p. 340) and Article 101 (1) TFEU (ex Art. 85(1)) is designed to pursue 
the  aim  of  abolishing  the  barriers  between  States,  “even  in  the  case  of  agreements  between 
undertakings placed at different levels in the economic process”. 

The  CJEU  thus  identified  an  absolute  territorial  protection  as  the  parties  wanted  to  “eliminate  any 
possibility of competition”. The elimination of competition was achieved by two methods: 

i. 

ii. 

The  obligation  not  to  deliver  to  third  parties  products  (even  indirectly)  intended  for  the  area 
covered by the contract; 
The authorization given to the distributor to apply for trademark protection in France, leaving 
the  possibility  for  the  distributor  to  oppose  the  importation  of  trademarked  goods.  The 
registration in France of the trademark “is intended to increase the protection inherent in the 
disputed  agreement,  against  the  risk  of  parallel  imports  into  France  of  Grundig  products,  by 
adding the protection deriving from the law on industrial property rights”. (p. 343) 

Thus the contractual provision which allows the licensee to use the trademark to block imports is part 
of the ATE scheme.  

The  breach  of  competition  rules  does  not  result  from  the  undertaking  by  Grundig  to  ensure  that 
Consten  remains  the  exclusive  distributor  in  France,  but  it  “arises  from  the  clauses  which,  added  to 
this  grant  of  exclusive  rights,  are  intended  to  impede,  relying  upon  national  law,  parallel  imports  of 
Grundig  products  into  France  by  establishing  absolute  territorial  protection  in  favour  of  the  sole 
concessionaire”. Thus “the agreement by which Grundig, as the holder of the trade-mark by virtue of 
an  international  registration,  authorized  Consten  to  register  it  in  France  in  its  own  name  tends  to 
restrict  competition »  (p.  345).  The  combination  of  (i)  the  exclusive  distribution  system  with  (ii)  an 
authorization  granted  to  the  distributor  to  register  the  trademark  and  (iii)  the  additional  exclusivity 
resulting from the trademark right create the ATE.  

Grundig  also  argued  « that  without  absolute  territorial  protection  the  sole  distributor  would  not  be 
inclined to bear the costs necessary for market observation since the result of his efforts might benefit 
parallel  importers »  (p.  350).  The  fact  that  the  exclusive  distribution  system  contributes  to  an 
improvement  in  production  and  distribution  in  France  cannot  in  itself  justify  the  ATE  under  Article 

43 J. Turner, op. cit., p. 59, 1. 79. 
44 CJEU, Consten v. Grundig, joined cases C-56/64 and 58/64, 1966 ECR 299. 

 
 
 
                                                            
101(3)  TFEU:  for  the  Court,  “the  fact  that  absolute  territorial  protection  was  still  indispensable  to 
enable the high costs borne by Consten in launching the Grundig products on the French market to be 
amortized (…) has no connection with the improvements in distribution referred to in Article 101 (3)”. 

In conclusion, a sole distributorship contract does not in itself infringe competition law but can, along 
with additional contractual clauses, frustrate the most important Treaty’s objectives. 

2.  Nungesser v. Commission 

The Nungesser decision45 concerned exclusive licensing clauses for breeders’ rights in plant varieties. 
The  breeder’s  rights  on  the  plant  varieties  developed  by  the  French  Institut  de  la  Recherche 
Agronomique (INRA) had been assigned for Germany to Nungesser. Nungesser also had the right to 
enforce  INRA’s  proprietary  rights  in  its  varieties  and  to  use  INRA  trademark.  DG  Competition 
considered  that  the  contract  was  not  compatible  with  Article  101  (ex  Art.  85)  to  the  extent  that  it  is 
used  to  prevent  all  imports  into  Germany  or  exports  to  other  Member  States  of  the  INRA  varieties. 
Nungesser appealed before the CJEU arguing that the Commission’s decision was in breach of Article 
101, but as well of Articles 34 and 36 (ex 30 and 36). 

The  CJEU  underlines  that  “the  exercise  of  an  industrial  or  commercial  property  right”  might  be 
prohibited “where an agreement granting exclusive rights to utilize an industrial or commercial property 
right in a certain territory, in conjunction with an agreement appointing the licensee sole distributor for 
that  territory”  because  it  has  “the  effect  of  ensuring  absolute  territorial  protection  for  the  licensee  by 
preventing all parallel imports” (para. 30). 

The decision of the CJEU reinforces the Consten/Grundig distinction between exclusivity and ATE.  

The Court indeed distinguishes two legal situations which are “not necessarily identical”.  

The  first  is  a  so  called  open  exclusive  licence  or  assignment  where  “the  exclusivity  of  the  licence 
relates  solely  to  the  contractual  relationship  between  the  owner  of  the  right  and  the  licensee,  and 
whereby the owner merely undertakes not to grant other licences in respect of the same territory and 
not to compete himself with the licensee on that territory” (para.53). 

The  second  case  involves  “an  exclusive  licence  or  assignment  with  absolute  territorial  protection, 
under which the parties to the contract propose, as regards the products and the territory in question, 
to  eliminate  all  competition  from  third  parties,  such  as  parallel  importers  or  licensees  for  other 
territories” (para.53). 

Concerning  the  first  situation,  the  Court  repeats  the  principle  that  “the  grant  of  an  open  exclusive 
licence,  that  is  to  say  a  licence  which  does  not  affect  the  position  of  third  parties  such  as  parallel 
importers  and  licensees  for  other  territories,  is  not  in  itself  incompatible  with  Article  101  (1)  of  the 
Treaty” (para.60). 

The Court found however that “absolute territorial protection granted to a licensee in order to enable 
parallel imports to be controlled and prevented results in the artificial maintenance of separate national 
markets,  contrary  to  the  Treaty”  (para.  61).  The  anticompetitive  effect  is  thus  directly  linked  to  the 
artificial fragmentation of the market and the freedom of movement of goods rationale. 

Moreover,  “absolute  territorial  protection  manifestly  goes  beyond  what  is  indispensable  for  the 
improvement  of  production  or  distribution  or  the  promotion  of  technical  progress”  and  therefore 
“constitutes a sufficient reason for refusing to grant an exemption under Article 101 (3) of the Treaty”. 

The Court adds that “the power of the Commission [in the field of competition] is not affected by the 
fact  that  persons  or  undertakings  subject  to  such  restrictions  are  in  a  position  to  rely  upon  the 
provisions of the Treaty relating to the free movement of goods in order to escape such restrictions” 
(para.63). The Court points to the fact that a single situation involving contractual restrictions can be 
considered under competition law and under the internal market’s freedoms; however, the fact that a 
conduct would not infringe the freedom of goods cannot be used as a defence against a claim based 
on competition law. 

45 CJEU, Nungesser v. Commission (Maize seeds), C-258/78, 1982 ECR 2015. 

 
 
 
                                                            
Analysis of the CJEU decision in Premier League 

On  October  4,  2011,  the  CJEU  handed  down  its  judgment  in  the  litigation  between  the  Football 
Association Premier League and UK pubs screening their matches. 

1.  Background 

The  Football  Association  Premier  League  (FAPL)  organizes  the  filming  of  Premier  League  matches 
and licenses the rights to broadcast them.  For this purpose, FAPL also organizes the transmission of 
the captured images to a production facility that adds on-screen graphics, logos, music, commentary 
and other content on top of the filmed footage.   

FAPL grants licenses for the live transmissions on a territorial basis.  Tenderers are invited to submit 
bids for global, regional or territorial rights; because there is limited demand for EU and international 
rights, licenses are in practice granted on a national basis, with licensees granted the exclusive right to 
broadcast  in  a  given  EU  Member  State.    To  enforce  this  exclusivity,  each  broadcaster  is  required 
under  the  license  to  encrypt  its  broadcast,  and  is  prohibited  from  supplying  decryption  devices 
(decoders) for use outside the licensed territory. 

Defendants in the case – operators of UK public houses – acquired legitimate, lower-priced decoders 
intended for the Greek market, and used them in the UK to access and screen Greek transmissions of 
live Premier League matches.  FAPL sued both the pub operators and the suppliers of the decoders in 
the  UK  courts,  alleging  among  other  claims  that  their  activity  violated  section  298  of  the  UK’s 
Copyright, Designs and  Patent Act (which prohibits trading in or being in possession for  commercial 
purposes  of  foreign  decoding  devices).    FAPL  also  claimed  that  the  pubs  infringed  its  copyright  by 
making  copies  of  FAPL’s  copyrighted  works  in  the  satellite  decoders  and  displaying  those  works  on 
screen to the public.   

The UK court concluded that the case raised novel issues of EU law, and decided to refer a series of 
questions to the CJEU – along with questions from two related cases – for guidance.  

The CJEU’s Decision 

In its October 4, 2011 judgment, the CJEU reached several conclusions: 

 

The  CJEU  held  that  national  laws  (such  as  the  UK’s)  that  prohibit  the  supply  and 
possession  of  foreign  decoder  devices  contravene  EU  law.    Specifically,  the  CJEU 
concluded that because the  UK law prevented UK residents from receiving broadcast services 
from other Member States, it restricted the free movement of services in the EU – in violation of 
Article  56  TFEU.  The  CJEU  considers  that,  while  the  UK  law  prohibits  the  supply  and  use  of 
telecommunication  equipment  (the  decoders),  the main  objective  of  the  law  relates  to services 
as  the  equipment  is  secondary  to  the provision of  the  encrypted  broadcasting  services (paras. 
80-82) 

In  concluding  that  the  UK  law  violates  Article  56,  the  CJEU  recognized  that  national  laws 
restricting free movement could be justified in certain situations – including where necessary to 
safeguard intellectual property rights (“IPRs”).  However, the CJEU concluded that the protection 
of IPRs was not a justification here for two reasons: 

o  First, the CJEU held that there was no copyright in the underlying football match.  In 
order  to  be  eligible  for  copyright,  the  CJEU  explained,  a  work  must  be  the  “author’s 
own  intellectual  creation”  –  a  standard  that  football  matches  did  not  meet  because 
they were subject to rules of the game that did not leave room for creative freedom;    

o  Second,  while  the  CJEU  acknowledged  that  Member  States  were  free  to  confer  IP-
related  protections  on  sporting  events  (via  “related  rights,”  described  below),  it 
concluded  that  even  then,  such  protections  would  not  necessarily  justify  laws 
prohibiting  the  supply  or  possession  of  decoders.    As  the  CJEU  explained,  national 
laws restricting free movement must not go beyond what is necessary to protect the 
IPR owner’s rights – e.g. the right to exploit the work commercially.   

In  the  CJEU’s  view,  a  prohibition  on  foreign  decoders  exceeded  what  was  necessary.  
Specifically, the prohibition was not necessary to ensure that holders of rights in sporting events 

 
 
 
received  appropriate  remuneration  for  the  use  of  their  copyrighted  works  –  but  instead,  the 
law was designed to maximize remuneration by generating a premium from broadcasters who 
wanted  territorial  exclusivity.    In  the  CJEU’s  view,  protecting  IP  “does  not  guarantee  the  right 
holders concerned the opportunity to demand the highest possible remuneration.”  (para. 108)46.  
A  level  of  remuneration  which  is  directly  linked  to  the  creation  of  an  ATE  is  not  worth  to  be 
protected and goes beyond the subject matter of the intellectual property right.  

 

 

Turning  to  FAPL’s  license  agreements,  the  CJEU  concluded  that,  in  principle,  granting  a  sole 
licensee the exclusive right to broadcast a match via satellite from a single Member State was 
not  in  and  of  itself  anti-competitive.    However,  the  CJEU  also  held  that  additional  license 
terms  that  imposed  absolute  bars  on  the  cross-border  provision  of  services  –  such  as 
prohibitions on the supply of decoders for use outside the licensed territory – were anti-
competitive and violated Article 101 of the TFEU.47   

As  the  CJEU  saw  it,  the  terms  in  the  license  agreements  effectively  gave  each  broadcaster 
ATE, eliminating all competition between broadcasters and partitioning national markets.  While 
Article  101  does  allow  for  certain  exceptions  (again,  including  for  the  protection  of  IP),  the 
prohibition  on  supplying  decoders  clearly  went  further  than  necessary  to  protect  IP  as  it 
guaranteed to obtain more than an appropriate remuneration.  
The CJEU stresses the link between freedom of services and competition law.  

Relying on the decision in Phil Collins v Imtrat (joined cases C-92/92 and C-326/92), the CJEU 
reiterates that copyright and related rights are economic in nature, in that they confer the right to 
exploit  commercially  the  marketing  of  the  protected  work,  particularly  in  the  form  of  licences 
granted  in  return  for  payment  of  royalties.  The  commercial  exploitation  of  copyright  also 
constitutes a form of control of marketing and, from this point of view, raises the same problems 
as  does  the  commercial  exploitation  of  any  other  industrial  and  commercial  property  right,  i.e. 
they  are  by  their  nature  such  as  to  affect  trade  in  goods  and  services  and  also  competitive 
relationships within the Community (Joined cases C-92/92 and C-326/92, para.21 to 25).  

When  agreements  “are  aimed  at  partitioning  national  markets  according  to  national  borders or 
make  the  interpenetration  of  national  markets  more  difficult”,  then  they  “must  be  regarded,  in 
principle,  as  agreements  whose  object  is  to  restrict  competition  within  the  meaning  of  Article 
101(1) TFEU” (para.139).  

In  this  sense,  a  license  agreement  “designed  to  prohibit  or  limit  the  cross-border  provision  of 
broadcasting  services”  (para.140)  is  a  hardcore  (by  object)  restriction  to  competition.  In  this 
sense, there is a link between freedom of services and competition law: an anticompetitive 
restriction  that  partitions  the  market  and  limits  the  provision  of  services  is  a  core  restriction  of 
competition. 

Lessons from Premier League 

Premier  League  only  deals  with  licensing  restrictions  in  the  context  of  satellite  broadcasting.  The 
decision  does  not  say  that  the  same  conclusions  apply  to  the  online  distribution  of  copyrighted 
content. However, there is no compelling reason to distinguish the provision of broadcasting or online 
services. The same principle of freedom to provide service applies online. Thus the reasoning of the 
Court in Premier League can apply by analogy to online services.  

The analysis below relies on the presumption that the  Premier League reasoning also applies to the 
distribution of content on the Internet.  

46 Along the same line of reasoning, the Court of Justice, in UsedSoft v. Oracle (C128/11), considered that the assessment of 
whether a sale took place, triggering the exhaustion of copyright, must be assessed with regard to whether the copyright owner 
obtained an adequate remuneration, it. e. “ a remuneration corresponding to the economic value of the copy of the work of 
which it is the proprietor” (para. 45). 
47 TFEU Art. 101 prohibits as incompatible with the single market “all agreements between undertakings, decisions by 
associations of undertakings and concerted practices which may affect trade between Member States and which have as their 
object or effect the prevention, restriction or distortion of competition within the common market . . . .” 

 
 
 
                                                            
1.  The regulation of contractual provisions based on competition law 

Granting a single broadcaster/distributor the exclusive right to broadcast/distribute a protected 
work  in  a  given  territory  remains  permissible  in  the  European  Economic  Area  (“EEA”).48    The 
CJEU expressly stated that the mere fact that a right holder grants a sole licensee the exclusive right 
to broadcast from a single Member State is not alone sufficient to render that license anti-competitive 
by object under EU law (para. 137). Thus “the actual grant of exclusive licences for the broadcasting of 
Premier League matches is not called into question” (para.141). What instead can impair competition 
are  “the  additional  obligations  designed  to  ensure  compliance  with  the  territorial  limitations  upon 
exploitation  of  those  licences  that  are  contained  in  the  clauses  of  the  contracts”  (para.141).  In  the 
present  case,  “the  clauses  prohibit  the  broadcasters  from  effecting  any  cross-border  provision  of 
services  that  relates  to  those  matches,  which  enables  each  broadcaster  to  be  granted  absolute 
territorial exclusivity in the area covered by its licence and, thus, all competition between broadcasters 
in the field of those services to be eliminated” (para.142). 

This  is  completely  in  line  with  the  previous  case  law  of  the  CJEU  which  has  always  distinguished 
exclusive agreements and ATEs (see above). 

Direct  restrictions,  including  through  digital  rights  management  systems,  imposing  ATE,  will 
violate  EU  competition  law.    Following  the  CJEU’s  judgment,  provisions  in  licensing  agreements 
prohibiting  broadcasts/distribution 
requiring 
broadcasters/distributors  to  use  encryption  or  digital  rights  management  technology  to  prevent  their 
broadcasts/works  from  being  received or  viewed  in other  EEA  countries,  will  almost  certainly  violate 
freedom of services and EU competition law at the same time.   

in  other  EEA  countries,  or 

to  customers 

Competition law thus allows to deal with ATEs, but the competition law instrument arguably is a tool 
that has its limits, as it used only ex post, involves long and costly proceedings and does not confer 
the  same  guidance  and  legal  certainty  as  an  a  priori  guidance  or  regulation  (based  on  freedom  to 
provide services). 

The invalidity of national legislative provisions which protect ATE clauses  

The ATEs in the licensing agreement are considered as in breach of Article 101 TFEU. At the same 
time, the CJEU considers that the legislation which confers legal protection on the clauses leading to 
ATE  is  not  compatible  with  the  freedom  of  movement  of  services  and  should  thus  be  disregarded. 
According  to  the  CJEU,  “the  actual  origin  of  the  obstacle  to  the  reception  of  such  services  is  to  be 
found in the contracts concluded between the broadcasters and their customers, which in turn reflect 
the territorial restriction clauses included in contracts concluded between those broadcasters and the 
holders of intellectual property rights” (para. 88)49. “As the legislation confers legal protection on those 
restrictions and requires them to be complied with on pain of civil law and pecuniary sanctions, it itself 
restricts the freedom to provide services” (para. 88).  

Freedom of services thus prohibits the parties to rely on the principle of freedom to contract and on the 
sanctions  provided  by  national  law  in  case  of  breach  of  contract.  This  implies  that  the  freedom  to 
provide  service  can  block  the  application  of  national  provisions  giving  effect  to  the  prohibited 
contractual clauses.  

The CJEU then elaborates on when a restriction to the freedom to provide services can be justified by 
the  protection  of  IPRs.  The  Court’s reasoning  puts  forward  the economic  rationale  of  copyright,  i.  e. 
the possibility to obtain an appropriate remuneration (but not the maximum remuneration):  

 

 

 “However,  it  is  also  necessary  that  such  a  restriction  does  not  go  beyond  what  is 
necessary in order to attain the objective of protecting the intellectual property  at issue” 
(para.105).  
In other words, the restrictions must be “justified for the purpose of safeguarding the rights 
which constitute the specific subject-matter of the intellectual property concerned”, namely 
“the  right  to  exploit  commercially  the  marketing  or  the  making  available  of  the  protected 
subject-matter,  by  the  grant  of  licences  in  return  for  payment  of  an  appropriate 

48 While the Court’s judgment addresses the European Union, it will indirectly apply throughout the entire European Economic 
Area (the EU Member States plus Iceland, Liechtenstein and Norway). 
49 The CJEU links the territorial restrictions in the contracts between distributors and end-users and those contained in the 
contracts between the holders of IPRs and the distributors. Both types of contractual restrictions must therefore be addressed 
(see below parts II and III respectively). 

 
 
                                                            
 

remuneration and not of the highest possible remuneration” (para.106 to 108). 
“In  order  to  be  appropriate,  such  remuneration  must  be  reasonable  in  relation  to  the 
actual  or potential  number  of  persons  who enjoy  or wish  to  enjoy  the service”  “in  the 
Member  State  of  broadcast  and  in any  other  Member  State  in  which  the broadcasts are 
also  received”,  all  the  more  that  “it  is  possible  to  determine  with  a  very  high  degree  of 
precision the total number of viewers who form part of the actual and potential audience” 
(para.109 to 113). 

  None  the  less,  “a  premium  paid  to  the  right  holders  in  order  to  guarantee  absolute 
territorial exclusivity” which is such as “to result in artificial price differences between the 
partitioned  national  markets”  and  is  irreconcilable  with  completion  of  the  internal  market 
“cannot be regarded as forming part of the appropriate remuneration” (para.114 to 117). 

This economic reasoning used to draw the line between a justified and an unjustified restriction to the 
free movement of services is in line with the previous case law of the CJEU such as in Coditel v. Ciné-
Vog (C-262/81) and Lagardère v. SPRE (C-192/04). 

In Coditel, the CJEU already distinguished between an exclusive agreement for exhibiting a film in a 
territory (justified) and an artificial partitioning of the market (unjustified) and linked the analysis under 
Article  101  and  under  Articles  36  and  56.  The  preliminary  question  was  whether  Article  101  is 
inapplicable  to  an  agreement  providing  an  exclusive  right  to  communicate  to  the  public  a  film  in  a 
certain Member State because this exclusive right is part of the specific object of copyright and there is 
thus a justification under Article 36. To draw the line between the justified and the unjustified exercise 
of the right, the Court underlines the need to verify whether the exercise of the right creates “barriers 
which  are  artificial  and  unjustifiable  in  terms  of  the  needs  of  the  cinematographic  industry”  or  “the 
possibility of charging fees which exceed a fair return on investment” (para.19). Thus the criterion of 
the  proportionality  (fairness)  of  the  fees  to  be  paid  in  exchange  for  the  copyright  authorization  is 
already singled out as an element for assessing whether a restriction is justified by the protection of 
intellectual property.  

In Lagardère v. SPRE, the Court had to assess the royalties to be paid for broadcasting phonograms 
(the  so-called  “equitable  remuneration”  provided  by  Art.  8(2)  of  Directive  92/100)  in  case  the 
broadcasting involves a transmitter situated on the territory of another Member State. For the Court, 
the royalties which represent the consideration paid for the use of the protected phonograms for the 
purposes of television broadcast, must, in particular, be reasonable in relation to the economic value 
of  that  use  in  trade.  The Court  thus  anticipates  the  requirement  more clearly  put  forward  in  Premier 
League  that  the  remuneration  be  appropriate  or  reasonable  (para.49).  According  to  the  Court,  the 
rightholder  has  a  legitimate  interest  in  calculating  the  fees  on  the  basis  of  the  actual  or  probable 
number of performances. In the field of television broadcasting, such remuneration must be in relation 
to  parameters  of  the  broadcasts  concerned,  such  as  their  actual  audience,  their  potential  audience 
and  the  language  version  (C-192/04,  para.51).  The  decision  -  which  prohibits  the  broadcaster  to 
unilaterally  deduct  the  amount  already  paid  for  the  phonogram  use  in  another  Member  State  where 
the transmitter of the broadcast is located - is otherwise not relevant for the present Study. 

The case law of the CJEU indicates that the justification for some territorial restrictions relying on the 
protection of intellectual property should thus be scrutinized at the light of an economic criterion (some 
restrictions  allowing  a  maximal/excessive  remuneration  are  not  justified).  An  instrument  to  deal  with 
restrictions  on  cross-border  services  should  thus  integrate  this  economic  criterion  –  even  if  such 
criterion would not always be easy to implement. 

Reasons to limit the enforcement of copyright and of contractual limitations  

In the online environment, licensing mechanisms based on ATEs will rely on two grounds:  

- 

- 

the principle of territoriality of copyright, according to which the making available of a work or 
other protected subject matter requires a specific authorization for each Member State; and  
contractual  clauses  that  reinforce  the  licensee’s  obligation  not  to  provide  its  service  to  any 
customer residing in another Member State.  

This means that an online distributor that has only acquired a licence for Member State A and provides 
its  service  (i.e.  makes  available  a  work)  to  a  customer  in  Member  State  B,  infringes  both  (i)  the 
exclusive right of making available (and in certain situations also the exclusive right of reproduction) as 
provided for in the national copyright law of Member State B; and (ii) the obligation not to provide the 
service outside Member State A, as provided for in the contract with t he rightholder. 

 
 
For the purposes of this Study, one could make the following suggestion: in order to address ATEs in 
the provision of cross-border online services, a possible legislative measure should have a provision to 
the  effect  that  the  clause  relying  on  copyright  in  a  given  territory  be  made  unenforceable  insofar  it 
contradicts the freedom to provide services. 

A specific legislative mechanism having the effect that a clause relying on a national right (such as the 
making available right) belonging to copyright is unenforceable when it is in conflict with the freedom to 
provide services would reinforce and further develop the ruling in Premier League based on freedom 
to  provide  services.  Deciding  when  such  clause  would  be  “in  conflict  with  the  freedom  to  provide 
services”  would  be  left  at  the  discretion  of  the  courts  but,  in  order  to  diminish  legal  uncertainty,  a 
legislative text could e.g. list clauses which will be automatically presumed to be in conflict.  According 
to  the  CJEU,  a  national  law  that  confers  legal  protection  to  contractual  provisions  that  restrict  the 
provision  of  services  is  itself  a  restriction  to  the  freedom  to  provide  services  (para.88  of  Premier 
League).  

The case law of the CJEU thus allows considering as unenforceable a national provision that can be 
used to confer legal protection to a contract-based territorial limitation (creating an ATE). 

A further step would be to design a legislative mechanism that prohibits, on the basis of the freedom to 
provide  services,  the  incorporation  in  the  agreements  of  clauses  which  would  create  an  ATE.  The 
instrument  should  remain  flexible  enough  so  that  the  courts  can  assess  when  the  effect  of  the 
contractual restrictions and the possibility to enforce them create an obstacle to the freedom to provide 
services.   

Prohibiting ATEs does not mean that pan-European licenses must be imposed  

The case law of the CJUE thus prohibits ATEs. A further question is whether it would be wise to go 
one  step  further and impose that all copyright licences be automatically granted on a pan-European 
basis. 

We explain hereafter why there is no reason to impose a pan-European model for licensing all content 
in all Member States and why non-legal grounds still favour territorial licensing for certain content (in 
particular audiovisual content) in the EU.  

1.  The issue of pan-European v. national licensing (focus on audiovisual 
works) 

In the field of online distribution of audiovisual works, the 2011 Green Paper stressed the increasing 
pressure resulting from technology developments on the traditional distribution model for audiovisual 
services50: 

The traditional “audiovisual media services focus on a national audience or a particular linguistic area. 
Multi-territory  broadcast  services  have  largely  not  emerged,  and  broadcasters  often  refrain  from 
clearing rights on a pan-European basis because the consumer demand abroad and the potential for 
advertising  generated  revenue  does  not  justify  the  additional  costs  related  to  the  setting  up  of 
services”  and  the  multi-territorial  licensing  of  content  (COM(2011)  427,  p.  6).  And  when  some 
platforms  offer  transactional  on-demand  services  over  multiple  territories,  those  services  “tend  to 
continue  the  practice  of  addressing  customers  “in  their  own  language”  and  tailoring  content  to  local 
preferences  such  as  language,  film  classification,  dubbing  or  subtitling  requirement,  advertising, 
holiday periods and general consumer tastes” (p. 7).  
A recent study51 considers “the practice of territorial licensing of audiovisual works” as “the prevailing 
outcome of the arms-length negotiations between rightholders and licensees”. This study justifies this 
practice by the following key structural factors:  

-  “the  linguistic  and  cultural  preferences  of  target  audiences  in  the  presence  of  24  official 
languages;  

- the national footprint of broadcasting (other than by satellite) and telecom networks;  

50 Green Paper on the online distribution of audiovisual works in the EU : opportunities and challenges towards a digital single 
market (COM(2011) 427. 
51Enders Analysis, The value of territorial licensing to the EU, 8 Oct. 2013. 

 
 
 
                                                            
- public service broadcasting and subsidies to audiovisual works;  

- the national organisations of advertising markets:  

-  and  the specific  commercial  opportunities  that  arise  in  each  market  for  audiovisual  content 
due to its history”(p. 2).  

All those factors might indeed play a significant, if not leading role, in the prevalence of the territorial 
model for licensing (audiovisual) works. Some of those factors (for ex. the national financing schemes) 
might not be relevant for the distribution of content other than audiovisual works. For books, music or 
videogames,  different  structural  factors  might  slow  down  the  advent  of  a  pan-European  distribution 
model.  Therefore,  there  is  no  reason  to  adopt  rules  that  would  impose  a  pan-European  model  for 
licensing all types of content in all Member States. 

It would, in our view, make the situation untenable for licensees, which would be (logically) asked to 
pay  a  higher  price  to  obtain  such  pan-European  licences  while  they  might  neither  be  interested  in 
obtaining  one  nor  have  the  resources  to  properly  serve  the  market  which  could  potentially  be 
generated  by  such  pan-European  licences.    Serving  such  pan-European  market  may  require 
resources (both in terms of the adequate personnel able to service customers in their own language 
and  in  terms  of  technical  resources  such  as  servers  etc.);  some  licensees  may  not  be  interested  or 
able  to  incur  the  corresponding  costs  and  would  thus  not  be  in  a  position  to  make  use  of  a  pan-
European  licence.    In  the  case  of  advertisement  based  services,  a  main  obstacle  is  likely  to  be  the 
absence of advertisers interested in such pan-European audiences. 

To impose a pan-European model of licence for online services is thus not an option to consider. Such 
obligation of a pan-European licence has not been envisaged for broadcasting or for other intellectual 
property rights such as patents or trademarks.  There is also no obligation for producers or distributors 
of  tangible  goods  or  providers  of  services  in  general  to  automatically  ensure  that  their  goods  or 
services  are  available  in  all  EU  Member  States.  All  those  mandatory  pan-European  models  entail 
considerable  costs  and  imposing  them  might  contradict  the  freedom  to  conduct  business  and  other 
legal  principles.  An  obligation  for  owners  of  copyright  to  grant  pan-European  rights  or  for  those 
providing  content  services  to  operate  at  pan-European  level  would  be  disproportionate,  if  not 
incompatible with basic freedoms at national and European level. 

Furthermore: 

- 

- 

- 

- 

in  many  situations,  there  is  no  demand  for  a  pan-European  licence.    While  music  is  more 
prone  to  be  successful  and  meet  customers’  demand  in  many  if  not  all  European  countries, 
particularly for popular modern music with English lyrics, this is much less the case for books 
or movies; 
cultural differences and tastes may entail that a particular film or book will be successful in one 
country or a limited number of countries sharing the same language or culture but not in other 
parts of the Union; 
some  types  of  works  may  not  require  much  marketing  efforts  and  make  their  way  to  their 
audience quite easily (music via radio programs, for instance), while some other works may be 
less easy to market or take more time before they reach some success (books, for instance); 
some  types  of  works  can  be  successful  without  being  translated  (English  music  being  an 
example), while others obviously need to be translated – films will either have to be dubbed or 
subtitled, books will have to be translated. 

The final purpose should not be that the work be available even where there is no demand for it, but 
that it is available for customers who actually are interested in obtaining it, even if they do not reside in 
the territory primarily targeted by the service provider. 

2.  Compatibility of a pan-European compulsory licence with international 

obligations? 

It  may  be  argued  that  an  obligation  to  grant  a  pan-European  licence  comes  down  to  a  sort  of 
“compulsory  licence”  or  another  type  of  limitation,  subject  to  conditions  laid  down  in  international 
copyright instruments52.   

52 It can be objected that not every restriction to the freedom of contract, in particular the freedom to determine the territorial 
scope of a licence, should be boiled down to the concept of a compulsory licence.  L. Guibault distinguishes several forms of 
limitations and defines a “compulsory licence” as an obligation upon the right owner “to grant individual licences, at a price and 

 
 
                                                            
The mandatory pan-European licences under consideration here (and which we do not suggest as an 
appropriate solution) would not amount to a compulsory licence, since the right holder would have the 
right  to  grant  or  not  to  grant  a  licence  and,  in  case  a  licence  is  granted,  the  parties  remain  free  to 
negotiate  all  terms  of  the  licence  except  for  the  geographical  scope.    Arguably,  this  entails  that  the 
legal provisions regarding compulsory licences do not apply to the mandatory pan-European definition 
of  online  licences.    The  Berne  Convention,  for  example,  regulates  compulsory  licences:    it  allows 
Member  States  to  impose  a  compulsory  licence  for  the  broadcasting  of  works  and  for  secondary 
communications of the broadcast53, but the effects of such restriction should be limited to the Member 
State that has imposed it (art. 11bis(2) BC54). This would pose a problem to the extent that the idea is 
precisely that the restriction lifts the territorial aspect of the limitation.  If the proposed restriction is not 
considered  as  a  compulsory  licence,  this  limitation  to  the  national  territory  of  the  Member  State  (as 
provided by the Berne Convention) does not apply per se. 

It is provided in art. 11bis BC that “it shall be a matter for legislation in the countries of the Union to 
determine  the  conditions  under  which  the  rights  mentioned  in  the  preceding  paragraph  may  be 
exercised”  (our emphasis).  The expression  “conditions  under  which the broadcasting rights  can be 
exercised” covers perhaps also other restrictions than compulsory licences, regarding the exercise of 
the exclusive rights, such as a mandatory pan-European scope for licences covering online services55.   

Should the Commission consider such mandatory pan-European licence, this should be looked into.  
Moreover, it may be required to verify whether the three-steps test is met (art. 9(2) BC, art. 13 TRIPS 
agreement,  art.  10  WCT,  art.  16  WPPT).    Divergent  opinions  exist  on  the  question  of  which  rules 
should  be  considered “limitations”  or  “exceptions” that trigger the application of the three-step test56.  
Considering that the obligation to provide licences of a pan-European scope is not a solution which we 
suggest in this Study, it seems premature to further examine this point at this stage. 

under conditions to be determined jointly with the user or fixed by the authorities where agreement cannot be reached”.  See 
L.M.C.R. GUIBAULT, Copyright limitations and contracts, Kluwer, 2002, 20. 
53 At this stage we leave the issues of qualification as « broadcasting » or other types of communication aside.  In any case it 
cannot be excluded that online service providers engage in some type of broadcasting activity (e.g. web-radio). 
54 A similar restriction is expressed in relation to the compulsory licences for the recording of musical works in art. 13(1) BC. 
55 S. Ricketson and J. Ginsburg write that the reference to « conditions » in art. 11bis(2) BC is usually taken to refer to the 
imposition of compulsory licences, for which the form may be chosen by the Member States.  See S. RICKETSON & J.C. 
GINSBURG, International Copyright and neighbouring rights, Oxford University Press, 2006, 822. 
56 See for an overview of the various interpretations:  S. DUSOLLIER & C.COLIN, « Peer-to-Peer File Sharing and Copyright: 
What Could Be the Role of Collective Management? », Columbia Journal of Law & the Arts 2011, available at 
http://hdl.handle.net/10022/AC:P:13798. 

 
 
 
                                                                                                                                                                                          
Restrictions for online distributors vs. freedom to conduct a business  

We have been asked to consider whether, building i.a. on the case law of the CJEU prohibiting ATEs, 
the Commission could envisage an instrument based on an internal market legal basis to prohibit the 
inclusion of certain contractual restrictions in distribution agreements.  

The  issue  considered  here  is  whether  such  legislative  instrument  prohibiting  certain  clauses  and 
thereby forcing service providers to offer cross-border access and portable services might contradict 
the fundamental freedom of the service provider to conduct its business. Article 16 of the Charter of 
Fundamental  Rights  indeed  provides  that  “[t]he  freedom  to  conduct  a  business  in  accordance  with 
European Union law and national laws and practices is recognized”. The freedom to conduct or run a 
business is a fundamental economic freedom which has a broad scope (it thus applies to providers of 
online services) and which can nevertheless be curtailed under certain conditions. 

In this chapter, we only deal with the freedom to conduct business as applied to the distributors. Such 
freedom could also apply to the right holders (licensors), but in practice, the right holders will rely on 
the  protection  of  intellectual  property  as  a  possible  justification  for  any  exception  to  the  freedom  to 
provide services. 

A.  Scope of the freedom to conduct a business under Article 16 Charter 

Freedom to conduct a business applies to online providers of services. The notion of ‘business’ 
is a deliberately broad one, and includes a wide range of economic or commercial activities, including 
the  provision  of  online  services.  In  a  decision  involving  online  copyright,  the  CJEU  has  granted  the 
protection  under  Article  16  to  an  access  provider  (ISP).  In  SABAM  v.  Scarlet,  the  Court  held  that 
« national authorities and courts must, in particular, strike a fair balance between the protection of the 
intellectual property right enjoyed by copyright holders and that of the freedom to conduct a business 
enjoyed  by  operators  such  as  ISPs  pursuant  to  Article  16  of  the  Charter »  (para.  46  in  SABAM  v. 
Scarlet, C-70/10). The SABAM v. Scarlet decision thus makes it clear that online operators, including 
internet access providers, enjoy this fundamental freedom. 

Freedom  to  conduct  a  business  includes  the  freedom  to  contract  and  to  determine  the 
conditions, including the price, of a service. According to the CJEU, Article 16 “covers the freedom 
to  exercise  an  economic  or  commercial  activity,  the  freedom  of  contract  and  free  competition”  (Sky 
Österreich v. Österreichischer Rundfunk, C-283/11, para. 42). For the Court, “the freedom of contract 
includes,  in  particular,  the  freedom  to  choose  with  whom  to  do  business  (see,  to  that  effect,  Joined 
Cases C-90/90 and C-91/90 Neu [1991] ECR I-3617, paragraph 13), and the freedom to determine the 
price  of  a  service  (see,  to  that  effect,  Case  C-437/04  Commission  v  Belgium  [2007]  ECR  I-2513, 
paragraph  51,  and  Case  C-213/10  F-TEX  [2012]  ECR  I-0000,  paragraph 45)”  (Sky  Österreich  v. 
Österreichischer Rundfunk, C-283/11, para. 43). 

Conditions for interference to be allowed under Article 16 Charter 

Article 52(1) of the Charter allows for restrictions interfering with the exercise of the freedoms of the 
Charter: those restrictions (i) must be provided for by law and (ii) respect the essence of those rights 
and freedoms. In addition, the limitations are (iii) “subject to the principle of proportionality” and “may 
be made only if they are necessary and genuinely meet objectives of general interest recognized by 
the Union or the need to protect the rights and freedoms of others” (Art. 52(1)).  

A measure to be considered would have to respect the freedom to conduct a business as well as the 
necessity and proportionality requirements. A measure could be considered that would only affect the 
contractual  freedom  of  the  service  provider  under  certain  circumstances  due  to  the  exercise  of  this 
freedom being incompatible with a fundamental freedom of the Treaty (to ensure portability of online 
services  and  access  to  such  services  across  borders).  Therefore  one  could  argue  that  such 
mechanism would “not prevent a business activity from being carried out as such”.  In other words, it 
would  “not  affect  the  core  content  of  the  freedom  to  conduct  a  business”  (Sky  Österreich  v. 
Österreichischer Rundfunk, C-283/11, para. 49).  

 
 
 
 
 
In addition, a restriction on freedom to conduct a business should be assessed with regard to the harm 
it  creates  to  both  businesses,  which  are  denied  the  opportunity  to  do  business  and  to compete  with 
existing businesses, and consumers, who are denied freedom of choice in the provision of goods and 
services.  The considered measure would enhance the choice of consumers to access services across 
borders.  Only  restrictions  on  freedom  to  conduct  a  business  that  are  clearly  and  disproportionately 
harmful for the online service provider itself would not pass the test of Article 16 of the Charter.  

In  a  case  involving  a  claim  based  on  Article  16  of  the  Charter,  the  CJEU  has  reaffirmed  that  the 
principle  of  proportionality  requires  that  measures  adopted  by  European  Union  institutions  do  not 
exceed  the  limits  of  what  is  appropriate  and  necessary  in  order  to  attain  the  objectives  legitimately 
pursued by the legislation in question; when there is a choice between several appropriate measures 
recourse  must  be  had  to  the  least  onerous,  and  the  disadvantages  caused  must  not  be 
disproportionate to the aims pursued (Case C-343/09 Afton Chemical [2010] ECR I-7027, paragraph 
45, and Joined Cases C-581/10 and C-629/10 Nelson and Others [2012] ECR I-0000, paragraph 71 
and the case-law cited)” (Sky Österreich v. Österreichischer Rundfunk, C-283/11, para. 50). 

In view of the above, the considered measure would have to: 

- 

- 

- 

- 

ensure  that  end-users  benefit  from  an  access  to  online  services  across  borders  and 
that  the  services  are  portable  -  this  is  obviously  a  legitimate  objective  for  a  secondary 
legislation. Arguably, other measures have been considered, including the adoption of pledges 
and  guidelines  by  the  interested  parties  (see  the  Licenses  for  Europe  process).  If  issues  of 
portability of services and cross-border access remain, it appears proportionate to consider a 
legislative instrument; 

allow for derogations when the service provider can demonstrate that the clause or practice 
limiting portability or cross-border access to services is justified due to binding legal provisions 
or if it is impossible to provide access due to technical constraints or other valid reasons. The 
inclusion  of  those  grounds  for  derogation  establishes  that  the  measures  provided  in  the 
instrument  are  proportionate  to  achieve  the  portability  objective  and  cross-border  access  in 
favour of end-users travelling in Europe (see our proposal in Part II of this Study).  

ensure that the service provider (and in consequence the rightholder) would be allowed 
to  perceive  adequate  remuneration  from  all  the  uses.  The  obligation  imposed  on  the 
service  provider  arguably  would  thus  not  qualify  as  a  disproportionate  interference  with  the 
freedom to conduct its business; at least, the possibility to obtain adequate remuneration will 
be  a  robust  argument  for  arguing  that  the  considered  measure  would  not  disproportionately 
prejudice the online distributors (and, at the end, the rightholders). 

ensure that the burden is not put solely on one business (the online distributors) to the 
sole advantage of another business (the rightholders). In SABAM v. Scarlet (C-70/10), the 
Court  held  that  “the  injunction  requiring  the  installation  of  the  contested  filtering  system 
involves  monitoring  all  the  electronic  communications  made  through  the  network  of  the  ISP 
concerned in the interests of those rightholders. Moreover, that monitoring has no limitation in 
time, is directed at all future infringements and is intended to protect not only existing works, 
but  also  future  works  that  have  not  yet  been  created  at  the  time  when  the  system  is 
introduced.  Accordingly,  such  an  injunction  would  result  in  a  serious  infringement  of  the 
freedom of the ISP concerned to conduct its business since it would require that ISP to install 
a complicated, costly, permanent computer system at its own expense » (SABAM v. Scarlet, 
C-70/10, para. 47 and 48). Comparable burdensome obligations should not be imposed to the 
service provider under the considered measure.  

 
 
 
 
 
 
 
WHAT  A  POSSIBLE  LEGISLATIVE  INITIATIVE  COULD  LOOK 

LIKE  

After we described how the application of copyright mechanisms and contractual provisions can have 
the  consequence  of  limiting  the  free provision  of services  and  how  the  CJEU has  ruled  in situations 
where these limitations were present, in this second part of the Study, we will make some high-level 
suggestions regarding the contents, structure or possible provisions of a possible legislative measure 
the  Commission  could  envisage  in  order  to  restrict  the  possibilities  for  parties  to  introduce  such 
contractual limitations. 

Since  neither  Article  56  TFEU  nor  competition  law  offer,  in  our  opinion,  a  sufficiently  wide  and 
predictable  basis  to  remedy  the  restrictions  to  the  freedom  to  provide  services  and  ultimately  the 
segmentation of the internal market, the European Commission could consider taking a legal initiative 
in order to ensure that “horizontal” practices (i.e. agreements between private parties) do not impede 
achieving the Treaty’s objectives.  Such horizontal practices cover in particular: 

- 
- 

- 

licenses between the right holders and the distributors; 
contracts between the licensees (distributors) who acquire a multi-territorial or pan-European 
license from the right holders and their customers; 
possibly also practices from stakeholders (regardless of whether such practices translated into 
written contractual provisions or not). 

While  the  Treaty  provisions  on  competition  law  indeed  allow  for  a  direct  action  of  the  Commission 
against undertakings which, through concerted  practices  or agreements, violate EU competition law, 
the Treaty does not give the Commission the possibility to intervene directly against private parties in 
cases of infringements against the Treaty provisions on services: the Commission can only intervene 
against Member States, when their legislation (or administrative rules) violate(s) Article 56.  This does 
however not prevent the Union from enacting legislative provisions, like e.g. a harmonization directive, 
to  achieve  the  goals  of  an  Internal  Market.  As  the  European  Parliament  and  the  Council  have 
recognized, a legislative instrument at Union level can make it possible to achieve a genuine internal 
market for services57. 

a)  Why would a legislative initiative be needed? 

There are various reasons why we think a legislative initiative would be needed.   

The review of the case law (in particular Premier League) indicates that copyright licensing contracts 
sometimes  include  provisions  that  create  ATEs.  This  appears  to  justify  the  adoption  of  a  priori 
measures, on the basis of the fundamental principle of freedom to provide services, as it is not very 
satisfactory to be able to only rely on the  a posteriori intervention of the CJEU or of the competition 
authorities.  

This  is  all  the  more  true  that  the  case  law  of  the  CJEU,  which  distinguishes  between  exclusive 
territorial  protections,  which  are  in  principle  compatible  with  EU  law,  and  absolute  territorial 
exclusivities (ATEs) which are in principle prohibited, does not, as we tried to indicate, offer a crystal 
clear standard for distinguishing prohibited ATEs from acceptable territorial restrictions.  Therefore, the 
need to offer a workable and predictable criterion for assessing the contractual restrictions could justify 
an intervention of the European legislator.  

Furthermore, competition law, as an ex-post remedy, involving lengthy and costly proceedings, could 
be  used  vis-à-vis  agreements  between  rightholders and  service providers  but  only  to  a  more  limited 
extent  vis-à-vis  agreements  between  service  providers  and  users  (i.e.  this  would  require  that  the 
service provider be abusing a dominant position – article 102 TFEU).   

As we have seen, Article 56 TFEU can only be considered as having a very limited horizontal direct 
effect, in specific circumstances, which also leads to legal uncertainty and brings us to conclude that 

57 Communication from the Commission “Europe 2020” – a strategy for smart, sustainable and inclusive growth”, COM(2010) 
2010 final. 

 
 
 
 
 
 
                                                            
Article 56 is not as such a satisfactory or sufficient answer.   

The principle of freedom to provide services, while being one of the basic principles of the Treaty, is 
not a principle that parties to an agreement could easily invoke to obtain that a particular clause (or an 
entire agreement) be declared void or unenforceable on the sole ground that it has a negative impact 
on the freedom to provide services.  On the other hand, competition rules whether in the Treaty or in 
secondary legislation allow to make anti-competitive clauses unenforceable. The differences between 
the  ways  in  which  the  CJEU  will  apply  freedom  of  services  rules  and  competition  rules,  and  the 
remedies in case of breach, are highlighted in Premier League: 

- 

- 

the Court, relying on the freedom to provide services, declared that the provisions of UK law 
(civil and criminal provisions) sanctioning British customers’ infringements had to be declared 
unenforceable: the Court thus targets national (UK) provisions; 
the  Court,  relying  on  competition  law,  eliminated  the  Greek  broadcasters’  contractual 
obligations not to sell to customers in the UK (and considered that those provisions should be 
held null and void). 

Therefore,  if  the  Commission  wishes  to  prohibit  certain  clauses  in  on-line  copyright  licensing 
agreements between rightholders and distributors (or between distributors and users), for the reason 
that  such  clauses  have  an  adverse  effect  on  the  freedom  of  services  and  on  the  achievement  of  a 
single  market  for  intellectual  property  rights  (in  this  case,  copyright),  one  could  think  mainly  of  two 
instruments  at  the  disposal  of  the  Commission  if  it  wants  to  intervene  on  contractual  clauses:  a 
recommendation or a directive. 

A recommendation? Article 211 of the Treaty establishing the European Community provides that “in 
order to ensure the proper functioning and development of the common market, the Commission may 
(...) formulate recommendations on matters dealt with in this Treaty, if (...) the Commission considers it 
necessary”. 

A recommendation emanates from the Commission, it does not have to be adopted by the Council and 
the Parliament, it is addressed directly to Member States and also to the parties concerned. Although 
it  is  deprived  of  any  binding  character,  it  may  be  the  first  step  towards  more  far-reaching 
harmonization measures. In any case, it is a signal to the market and the stakeholders.  This is e.g. 
illustrated by a precedent in the copyright field: the Commission’s Recommendation of  18 May 2005 
on  collective  cross-border  management  of  copyright  and  related  rights  for  legitimate  online  music 
services (2005/737/EC).  

Apart from recommendations, the Commission sometimes issues “guidelines”.  However, guidelines 
usually give further guidance on how the Commission interprets a pre-existing legal instrument.  In the 
absence  of  such  pre-existing  rules  on  contractual  clauses  for  copyright  contracts,  guidelines  would 
here not the right legal vehicle for intervening. 

A  directive?    Another  option  would  be  to  propose  a  new  directive,  possibly  to  amend  an  existing 
directive  (here,  the  2001/29  InfoSoc  Directive).  Adoption  of  a  directive  would  take  much  more  time 
than a recommendation but it would have a binding character. It would of course have to be adopted 
by the European Parliament and the Council as legislators. 

We  were  not  asked  to  examine  which  instrument  would  be  more  appropriate.  Therefore  we  will  not 
examine this further.   

We have seen that Article 56 TFEU is only to a very limited extent directly applicable horizontally.  This 
in  itself  shows  that  Article  56  as  such  cannot  be  the  only  answer  to  the  problems  identified  in  this 
Study.    There  are  in  addition  various  other  arguments  which  plead  for  a  legislative  initiative 
regarding contractual clauses in licence agreements: 

-  No substantive Article 56 EU case-law on agreements.  We have described the case-law 
on the direct horizontal applicability of Article 56.  We indicated that in both the Laval and the 
Viking cases, the dispute concerned practices of trade unions or demonstrators, to which the 
CJEU  accepted  to  apply  Treaty  provisions  on  the  fundamental  freedoms  (services, 
establishment)58.  As has been said, to our knowledge, no decision has concerned as such a 

58 See also CJEU, Case C-13/76, 14 July 1976, Donà (national practice of a sport organization). 

 
 
 
                                                            
dispute  on  the  contents  of  “strictly  private”  agreements  which  could  have  as  their  effect  to 
limit the free provision (and the free reception) of services, even if parts of the Viking decision 
(as well as of the opinion of the AG) do refer to “acts concluded by private persons”.   

As we indicated previously, the absence of substantive case-law applying Article 56 to existing 
agreements between private parties results in legal uncertainty (would the Court easily accept 
to apply Article 56 TFEU to a contractual clause, and under which conditions?) and in a lack of 
awareness  (and  a  common  ignorance)  of  parties  on  the  possible  impact  of  Article  56  on 
private  agreements.    A  new  legislative  text  would  help  in  avoiding  such  uncertainty  and 
diminishing this lack of awareness. 

-  No  active  role  of  national  judges.    The  ignorance  (mentioned  above)  by  the  parties  and 
possibly their counsels might be aggravated by the fact that national judges are not obliged, of 
their  own  volition,  to  apply  Union  rules  that  have  direct  effect59.    The  CJEU  has  indeed 
accepted  the  domestic  law  principle  of  “judicial  passivity”  in  civil  cases  and  the  concomitant 
rule that in civil suits it is for the parties to take the initiative60.  Arguably, this would likely also 
apply  to  national  legislation  implementing  a  future  directive  on  contractual  clauses.    But  if  a 
national legislation implementing a directive exists, the chances are higher that the parties and 
their counsel will be cognizant of such legislation and take it into account when drafting licence 
clauses.  

-  Large  discretion  of  Member  States.    As  recalled  by  the  Advocate  General  in  the  Viking 
case, “the Court has also recognised that Member States enjoy a margin of discretion when it 
comes  to  the  prevention  of  obstacles  to  freedom  of  movement  arising  from  the  conduct  of 
private actors.  In this regard, the Court has stated that it is ‘not for the Community institutions 
to act in place of the Member States and to prescribe for them the measures which they must 
adopt  and  effectively  apply  in  order  to  safeguard’  the  exercise  of  the  right  to  freedom  of 
movement.  Hence, the provisions on freedom of movement do not always provide a specific 
solution for each case, but merely set certain boundaries within which a conflict between two 
private parties may be resolved.” (para. 50)61. 

As  a  consequence,  the  absence  of  “specific  solutions”  and  the  existence  only  of  “certain 
boundaries”  lead  to  a  certain  lack  of  legal  security  and  possibly  to  an  absence  of 
harmonization, since Member States enjoy “a margin of discretion” and remain free to decide 
the most appropriate solutions. 

-  Large  autonomy  of  parties.    As  recalled  by  the  Advocate  General  in  the  Viking  case,  “the 
finding that certain private actors are subject to the rules on freedom of movement does not 
spell the end of their private autonomy. Nor does it necessarily mean that they must be held to 
exactly  the  same  standards  as  State  authorities.  The  Court  may  apply  different  levels  of 
scrutiny, depending on the source and seriousness of the impediment to the exercise of the 
right  to  freedom  of  movement,  and  on  the  force  and  validity  of  competing  claims  of  private 
autonomy. In other words, private actors may often still do things that public authorities may 
not.” (para 49).  

The combination of a large autonomy still granted to parties and of the possibility for the Court 
to  apply  “different  levels  of  scrutiny”  (depending  upon  several  factors)  results  in  a  certain 
degree of legal unpredictability: it is difficult to know a priori whether particular clauses in an 
agreement would (or not) be held contrary to Article 56.  A new legislative measure could, on 
the contrary, provide clear rules  and a well defined scope, thereby increasing legal certainty 
and predictability. 

-  De minimis rule.  According to the Advocate General in the Viking case, application of Union 

law on freedom to provide services seems subject to a kind of de minimis rule:  

“(…) in many circumstances private actors simply do not wield enough influence successfully 
to prevent others from enjoying their rights to freedom of movement. The case of an individual 
shopkeeper who refuses to purchase goods from other Member States would not be liable to 
obstruct  the  functioning  of  the  common  market.  The  reason  is  that  suppliers  from  other 
Member  States  would  still  have  the  opportunity  to  market  their  goods  through  alternative 
channels.  Moreover,  the  shopkeeper  would  in  all  likelihood  suffer  from  competition  from 

59 P. MATHIJSEN, A Guide to European Union Law (as amended by the Treaty of Lisbon), Sweet & Maxwell, 2010, p. 45. 
60 CJEU, joined cases C-430/93 and C-431/93, van Schijndel, 1995, E.C.R., I, 4705. 
61 See also the references to case law mentioned by the Advocate General (para. 50). 

 
                                                            
retailers  who  had  fewer  qualms  about  buying  foreign  goods  and  who,  as  a  result,  might  be 
able  to  offer  lower  prices  and  a  larger  choice  to  consumers.  That  prospect  alone  would 
probably be adequate to deter behaviour of this kind. Thus, the market will ‘take care of it’. In 
those circumstances, there is no ground for Community law to intervene”.  “The implication is 
that the rules on freedom of movement apply directly to any private action that is capable of 
effectively restricting others from exercising their right to freedom of movement” (para. 42 and 
43).   

As  a consequence,  this  would  mean  that  Article 56  would  not apply  to  agreements which,  if 
considered in isolation, have little impact on the functioning of the internal market; it leads to 
the introduction, somewhat like in competition law, of economic thresholds (under which Union 
law  would  not  apply).    A  new  legislative  text  of  secondary  legislation  could,  on  the  contrary, 
have  the  advantage  to  apply  to  all  agreements  for  the  on-line  distribution  of  contents, 
regardless  of  their  economic  weight  (much  like  directives  on  consumer  protection  have 
regulated  agreements  with  consumers  regardless  of  the  possible  impact  of  each  such 
agreement, considered individually, on the functioning of the internal market). 

b)  What are the precedents for regulating contractual clauses? 

In the past, the Commission has proposed harmonization directives which have had a certain impact 
on contractual clauses in certain sectors.   

In the field of copyright, there are certain precedents wherein provisions of several directives have 
had  an  impact  on  contractual  clauses  and  have  to  a  certain  extent  limited  the  parties’  freedom  to 
contract.   

Examples include: 

 

the compulsory exceptions for decompilation (art. 6 Software Directive), for the study of the 
computer  program  (art.  5(3)  Software  Directive)  and  for  a  back-up  copy  in  the  Software 
Directive (art. 5(2) Software Directive). 
It  is  provided  that,  in  certain  circumstances,  the  making  of  a  back-up  copy  “may  not  be 
prevented  by  contract”  (art.  5(2)  Software  Directive)  and  that  “any  contractual  provision 
contrary  to  art.  6  or  to  the  exceptions  provided  for  in  Article  ((2)  and  53)  shall  be  null  and 
void”  (art.  8  Software  Directive).    The  legislature  cannot  prevent  the  parties  from  trying  to 
adopt such provisions in their contracts but it can regulate them, in particular deny any effect 
to such clauses that contravene the provisions of the Directive.  

 

the unwaivable remuneration right in the Rental and Lending Rights Directive (art. 5);   

It  is  provided  that  the  author  or  performer  retains  the  right  to  obtain  an  equitable 
remuneration for the rental, even where she has agreed to the transfer or assignment of the 
rental right.  It is explicitly stated that “the right to obtain an equitable remuneration for rental 
right cannot be waived by authors or performers”.   

Where a contract concluded between the author/performer to a phonogram or film producer 
contains  provisions  regarding  the  remuneration  for  the  rental  right,  these  can  be  assessed 
under  the  national  rules  implementing  this  Directive.    Where  this  right  is  transferred  or 
assigned without remuneration or where the remuneration does not prove “equitable”, then 
the contract can be set aside on these points.   

 

If provided in national law, the signing of a contract between a performer and a film producer 
on  the  production  of  a  film  has  the  effect  of  authorising  the  rental  for  which  an  equitable 
remuneration should be paid. (art. 3(6) Rental and Lending Rights Directive). 
Depending on the national provision, the signing of a contract has as a legal effect that the 
rental of the protected subject matter is authorised as well.   

  some provisions in the Term Directive (as amended by Directive 2011/77); 

The initial assignment of rights in return for a one-off payment is related to the distribution of 
sums  set  aside  by  phonogram  producers.    The  performer  may  not  waive  the  annual 
supplementary remuneration (art. 2d). 

As  far  as  the  transitional  measures  are  concerned,  the  effect  of  the  extension  of  the  term 

 
 
 
 
should  be  felt  in  the  contracts  operating  a  transfer  or  assignment  of  the  rights  (art.  10a). 
Moreover, it may be provided in national law that contracts on transfer or assignment on a 
royalty basis can be modified following the initial protection period of 50 years. 

 

the  provisions  on  presumption  of  transfer  of  rights  in  several  directives/sectors  (computer 
programs, audiovisual works); 

For example, with regard to authorship, the Software Directive provides that the employer of 
the creator of a computer program will exercise the economic rights in the program created 
by  the  employee  in  the  execution  of  his  duties  or  following  the  employer’s  instructions  – 
unless  the  contract  provides  otherwise  (art.  2(3)  Software  Directive).    Copyright  law  thus 
completes the contracts that do not settle the question of authorship. 

 

the mandatory collective management of rights in the Satellite  and Cable Directive.  

The  Satellite and  Cable Directive honours  the  exclusive  nature  of the  cable  retransmission 
right but regulates its exercise.  The cable retransmission right cannot be exercised by the 
individual right holders, but is entrusted exclusively to collecting societies (with an exception 
for broadcasting organisations). 

Outside of copyright, there are numerous examples of provisions regulating contracts, mainly in the 
area  of  consumer  contracts,  including  consumer  contracts  with  telecom  operators.    Consumer 
protection is probably the area in which directives have had the greatest direct impact on contractual 
clauses.   

c)  What could be the main features of a new legislative initiative? 

The text should be technology-neutral  

The provisions prohibiting or mandating certain contractual clauses would apply to the licenses for the 
online distribution of content. However, the clauses which the text should prohibit or mandate should 
be technology-neutral.   

This neutrality rule means that the clause should apply independently from the technology used or the 
type of distribution (by streaming or by downloading, etc.). It should be neutral in terms of distribution 
channels  (on-demand,  linear,  non-linear)  and  regarding  devices  (computers,  tablets,  smartphones, 
etc.). It could also be that technological mechanisms used today, such as encryption systems or geo-
blocking  devices  or  other  technical  protection  systems,  are  abandoned  tomorrow  and  replaced  by 
other  mechanisms.    It  is  therefore  important  that  the  prohibitions/obligations  be  described  in  a 
sufficiently general and technology-neutral manner. 

The text should be limited to clauses for the on-line distribution of content 

Clauses  in  licence  agreements  are,  as  a  matter  of  principle,  enforceable  under  national  legislation 
because  of  the  general  principles  of  contract  law  in  all  Member  States:  agreements  concluded 
between  parties  who  freely  consented  to  them  are,  as  a  matter  of  principle,  valid  except  if  they  run 
contrary to specific provisions limiting contractual freedom.  There are, in certain Member States (like 
France,  Belgium  and  Germany),  provisions  in  copyright  legislation  which  impose  certain  rules  on 
licence agreements or transfer agreements (like the requirement that the agreement be in writing, be 
sufficiently  detailed,  etc.).    But  these  rules  are  exceptions  to  the  general  principal  of  contractual 
freedom which otherwise prevail.  We are not aware of any such national legislation which would limit 
contractual freedom in licence agreements when the impact of the agreement would be detrimental or 
run contrary to Article 56 TFEU and to the European principle of freedom to provide services.   

It seems unrealistic that the Commission propose limitations to the freedom to conclude contracts in 
general as this would be too far-reaching, so if the Commission were to decide to suggest harmonizing 
legislation  in  the  field  of  licence  agreements  for  the  online  distribution  of  contents,  such  initiative 
should be limited to such scope. Such Union legislation would then be implemented by Member States 
in  their  national  law:  the  national  provisions  would  logically  be  of  the  same  nature  as  the  provisions 
mentioned above (in France, Belgium, Germany) which impose certain rules on certain categories of 
copyright licences.     

 
 
 
 
The text could focus on unsolicited requests or could prohibit ATEs 

Arguably there are two possible ways to draft an instrument dealing with the cross-border provision of 
online services: 

- 

- 

either a provision which starts, as a catch-all clause, by prohibiting limitations to the freedom 
of  services  and  then  lists  examples  of  prohibited  clauses  (such  as  those  on  unsolicited 
customer requests); 
or a  provision  focusing on  clauses which prohibit service  providers  to respond  to  unsolicited 
customer requests. 

Even  if  the  prohibition  to  respond  to  unsolicited  customer  requests  is  the  main  concern  of  the 
Commission,  there  is  merit  in  a catch-all  clause  which  does not  only  target  these clauses  but  which 
contains  a  general  prohibition  of  ATEs  (and  then  lists  examples  of  clauses  which  lead  to  ATEs).  A 
prohibition to respond to unsolicited customer requests is not necessarily the only way to organize an 
ATE.  With a view to having a “future-proof” clause, our preference goes to the first option. 

Under the first option, it would be for the courts to assess contractual clauses at the light of the notion 
of ATEs defined by the CJEU. A general provision referring to ATEs would catch all clauses which are 
contrary to the objectives being pursued. 

The text should respect the freedom to conduct business principle 

We  have  indicated  in  Chapter  IV  of  Part  I  the  extent  to  which  the  principle  to  conduct  a  business 
(Article  16,  Charter)  could  have  a  bearing  on  a  possible  new  legislative  text.    As  explained  in  more 
details in Chapter IV, Part I, the considered measure would have to: 

- 

- 
- 

- 

ensure that end-users benefit from an access to online services across borders and that the 
services are portable ; 
allow for derogations (see hereafter on the derogations we suggest); 
ensure that the service provider (and in consequence the rightholder) can perceive adequate 
remuneration from all uses;  
ensure  that the burden is not put solely on  one  business (the online distributors) to the sole 
advantage of another business (the rightholders).  

The text should distinguish between two types of agreements and make restrictive clauses 

unenforceable 

The text should distinguish two types of agreements:  

- 
- 

agreements between rightholders and service providers; 
agreements between service providers (distributors of content) and end-users. 

It should, for each type of agreement, describe certain clauses (restricting portability or cross-border 
access) and state that said clauses are prohibited, and then describe the sanction (logically: nullity of 
the clauses and therefore unenforceability).   

As  described  above  (see  Part  I,  Chapter  III,  E.3),  a  specific  legislative  mechanism  having  the  effect 
that a national right (such as the making available right) belonging to copyright is unenforceable when 
it is  in conflict with the freedom to provide services would reinforce and further  develop the ruling in 
Premier League based on freedom to provide services.  

The text should allow for (limited) derogations 

While  the  text  would  hold  certain  restrictive  clauses  to  be  invalid  and  unenforceable,  it  should  also 
allow certain derogations, provided the adequate justifications may be given.   

Such  derogations  could  e.g.  be  possible  (maybe  sometimes  only  for  a  limited  period  of  time,  like  in 

 
 
 
 
 
 
 
 
 
certain block exemption regulations62): 

- 

in agreements between rightholders and service providers:  

A  derogation  could  be  provided  if  the  clause  (otherwise  null  and  void)  is  necessary  in  order  for  the 
copyright holder to receive an appropriate remuneration for the use of the works (in accordance with 
Premier League). 

“Necessary” entails that the derogation should be limited to whatever is necessary for obtaining such 
appropriate  remuneration.    It  contains  a  principle  of  proportionality.    This  is  in  conformity  with  the 
decision in Premier League, where it was stated that intellectual property law is, in principle, capable 
of justifying a restriction to the freedom to provide services, but that such a restriction must, however, 
not go beyond what is necessary and is in fact only allowed to the extent that is required to safeguard 
the specific subject-matter of the concerned intellectual property right (para 108). 

“Appropriate remuneration” is, as the Court described in Premier League, different from “the maximum 
remuneration”.  It will be up to the courts, on a case-by-case basis, to assess where to draw the line.  
According to the Court in Premier League, “the specific subject-matter of the intellectual property does 
not  guarantee  the  right  holders  concerned  the  opportunity  to  demand  the  highest  possible 
remuneration” (para 108).  As indicated above (see Part I, chapter III, E.2), the case law of the CJEU 
indicates  that  the  justification  for  some  territorial  restrictions  relying  on  the  protection  of  intellectual 
property  should  be  scrutinized  at  the  light  of  an  economic  criterion:  some  restrictions  allowing  a 
maximal/excessive remuneration are not justified.  

- 

in agreements between service providers and users: 

We  would  suggest  other  grounds  for  derogation.    It  makes  sense,  we  think,  to  open  some  limited 
possibilities for derogations.  In this context, it is worth remembering that the CJEU in Premier League, 
regarding  ATEs,  does  leave  some  room  for  such  clauses  to  be  considered  as  compatible  with  the 
Treaty63.  The same logic should be followed here. 

We  suggest  three  possible  grounds  for  derogation.    Basically,  the  justifications  can  be  of  a  legal 
nature, of a technical nature or of a financial nature. 

- 

legal  obligations/restrictions,  i.e.  if  it  is  not  allowed  to  provide  access  to  the  works  due  to 
binding legal provisions: 

In  the  absence  of  a  far-reaching  harmonisation  of  the  legal  framework  for  the  provision  of 
content on the Internet, there might be legal provisions in certain Member States which have 
as  a  consequence  that  the  making  available  of  certain  content  is  subject  to  restrictions.    An 
example thereof could be rules on the protection of minors and the prohibition of certain types 
of content (illegal content). 

- 

technical  constraints,  i.e.  if  it  is  impossible  to  provide  access  to  the  works  due  to  technical 
constraints: 

In certain cases, obliging a distributor to make certain content available in other territories than 
the  territories  it  had  intended  to  target  may  raise  technical  difficulties.  To  offer  the  service 

62 See e.g. VBER Guidelines, par. 61.  ATEs present the advantage that the rightholder may maximise its profits by preventing passive sales.  
It could be that a system of absolute territorial restrictions is necessary for new services in order to recoup the investments which have 
been necessary to launch said services.  Prohibiting such restrictions without any exception or limitation may render the provision of 
the services commercially or financially not feasible. The same approach might be justified here. It may seem reasonable to accept the 
principle that temporary derogations are justified to allow the copyright holder to “receive an appropriate remuneration”. 

63 The CJEU, in its Premier League decision, does not completely close any possibility for the mechanisms organized by the 
FAPL.  See indeed par. 142 and 143, which provide as follows: 

“142    Such clauses prohibit the broadcasters from effecting any cross-border provision of services that relates to those 
matches, which enables each broadcaster to be granted absolute territorial exclusivity in the area covered by its licence 
and, thus, all competition between broadcasters in the field of those services to be eliminated.  
143    Also, FAPL and others and MPS have not put forward any circumstance falling within the economic and legal context 
of such clauses that would justify the finding that, despite the considerations set out in the preceding paragraph, 
those clauses are not liable to impair competition and therefore do not have an anticompetitive object. “  

 
 
 
 
 
                                                            
across borders could be impossible due to the characteristics of the network, the capacity of 
servers or some other technical constraints.   

- 

economic constraints, i.e. if the clause, the practice or the abstention is necessary in order for 
the service provider to avoid disproportionate costs: 

In certain cases, obliging a distributor to make certain content available in other territories than 
the  territories  it  had  intended  to  target  or  prohibiting  certain  behaviours/clauses  may  raise 
economic difficulties.   

The legal and the technical constraints (above) have been suggested in terms of impossibility, 
while the economic (financial) constraints are suggested here in terms of (dis)proportionality.  
To  require  that  there  be  a  “financial  impossibility”  would  be  hard  to  verify  and  implement: 
would the distributor have to demonstrate that, if he had to provide the services, he would be 
facing bankruptcy? Or that he would be making a loss? Or no margin of benefit?  Obviously, 
this would go too far. 

 The text should apply without prejudice to competition law 

The purpose of the text would be to ensure that the freedom of services is guaranteed.     

The text, however, should be “without prejudice to the  application of competition law”, at least to the 
extent  it  regulates  clauses  between  rightholders  and  service  providers.  In  certain  cases,  a  more 
differentiated analysis may prove necessary, depending for instance upon the economic strength and 
market shares of parties to an agreement or of a given distributor (in a dominant position or not on the 
relevant  market).    A  market  share  criterion  (including  thresholds,  like  e.g.  in  some  block-exemption 
regulations) should not be included in an instrument based on freedom of services. 

 
 
 
 
 
CONCLUSIONS 

The  purpose  of  the  Study  was  to  examine  whether  it  would  be  justified  and  possible  for  the 
Commission  to  intervene  in  the  sector  of  contractual  clauses  for  the  distribution  of  (copyright) 
protected content on the Internet.   

Today,  there  are  instances  where  portability  and  cross-border  access  issues  arise,  which  are  the 
result of a combination of different factors: territoriality of copyright, contractual clauses organizing the 
territorial restrictions and sometimes technical protection measures ensuring their implementation.  To 
impose by law that all licenses be pan-European would be a disproportionate solution and not a wise 
policy  option.    However,  there  are  other  less  far-reaching  options  which  could  help  eliminating  the 
portability and cross-border access restrictions. 

Competition law is already a way to make some of these clauses in agreements between rightholders 
and  distributors  unenforceable.    Yet  competition  law  can  only  be  enforced  ex  post,  on  a  case-by-
case  basis.    While  competition  law  is  a  useful  tool  to  deal  with  ATEs  in  the  agreements  between 
rightholders and distributors, it can only apply to the agreements between distributors and end-users if 
the distributor  is  in a dominant position and abuses it. In many cases, the application of competition 
law will require that certain market share thresholds are met.  In several sectors, despite the existence 
of Treaty provisions on competition law, it has been considered useful to adopt secondary legislation 
(in particular, block-exemption regulations) or recommendations to apply competition law principles to 
a given sector. Such regulations or recommendations are justified by the need to increase clarity and 
predictability for all stakeholders.   

The  same  reasons  can  be  invoked  to  complement  the  competition-based  approach  by  a  legislative 
instrument which would help to fight ATEs in the copyright contracts.. 

Treaty  provisions  on  the  free  provision  of  services  are  only  in  very  specific  circumstances  directly 
applicable horizontally (i.e. between private parties).  In most situations, these provisions could not or 
not easily be invoked in court against portability or cross-border access issues.  Secondary legislation 
(in  particular,  a  harmonization  directive)  or  a  recommendation  would  thus  be  useful  to  bring  more 
clarity on the way these issues should be dealt with by courts. 

Case law of course exists, both in the field of competition law and free provision of services, and can 
be used as guidance and as a source of law.   

Yet case law is almost by definition fact-specific and often subject to further interpretation.  Also, the 
costs associated with court proceedings act as a brake when the financial stakes of a particular case 
are not sufficiently important.  As explained, it is further accepted that national judges are not obliged  
to  apply  Union  rules  even  where  it  can  be  accepted  that  they  have  direct  effect  (“judicial  passivity” 
principle, accepted by the CJEU). 

Member States enjoy a rather broad margin of discretion when it comes to the prevention of obstacles 
to  freedom  of  movement  arising  from  the  conduct  of  private  actors,  and  the  Treaty  provisions  on 
freedom  of  movement  do  not  provide  specific  solutions  for  each  case  but  merely  set  certain 
boundaries within which a conflict between two private parties may be resolved64.   

The consequences of these various factors are a certain lack of predictability of the legal solution and 
an absence of harmonized answers by national courts. 

Also, both the application of competition law and the application of the rules of freedom of services are 
subject to a “de minimis” rule.  A new legal instrument of secondary legislation could, on the contrary, 
have  the  advantage  of  being  applicable  to  all  agreements  for  the  on-line  distribution  of  contents, 
regardless of their economic weight. 

For the sake of readability and predictability and for more harmonization and uniformity in the way 
the  rules  are  known  and  implemented  by  the  stakeholders,  an  instrument  regulating  contractual 
clauses  so  as  to  prevent  or  limit  portability  and  cross-border  access  restrictions  would  be  justified.  
The instrument could take the form of a non-binding recommendation (maybe as a short-term solution) 

64 See opinion of the Advocate General in the Viking case, mentioned supra in this report. 

 
 
 
                                                            
or of a binding legislative text (the adoption of which would unavoidably take time).  While prohibiting 
the clauses limiting or preventing portability or cross-border access, the instrument should provide for 
a limited number of grounds of derogation, both for agreements with rightholders and for agreements 
with end-users, when it can be demonstrated that certain objective criteria are met and the portability 
or cross-border access limitation can therefore be tolerated. 

There are a number of precedents where a European instrument has regulated contractual practices 
and the contents of agreements, in the field of consumer protection but also, even to a lesser extent, 
in  the  field  of  copyright.    A  new  instrument  on  contractual  clauses  regarding  on-line  distribution  of 
content would be an additional precedent. 

 
 
 
ANNEX 

-  PRESENTATION  OF  CLAUSES 

IN  SOME  SELECTED 

CONTRACTS 

The  following  pages  offer  a  list  of  clauses  contained  in  the  terms  and  conditions  of  several  service 
providers (we relied on the terms and conditions that were available online in November 2013; we do 
not know if they are still applicable). The objective is just to identify some clauses that might point to 
an underlying portability or cross-border access issue. The developments below should not be seen as 
an  assessment  of  the  compatibility  of  those  clauses  with  any  legislation  whatsoever.  The  selected 
provisions are reproduced and briefly commented to illustrate the type of issues which may arise in the 
provision of online services involving copyrighted works.  The comments should only be regarded with 
all  due  precaution,  all  the  more  that  sometimes  the  terms  and  conditions  do  not  mirror  the  services 
which are effectively available and may be more restrictive than the actual offering of services.   

Also, we only looked at the texts available on the websites, with no regard to quality or pricing issues. 
The  objective  of  this  review  is  not  to  determine  whether  the  selected  clauses  affect  the  provision  of 
online services across the EU. To reach such a conclusion, more factual information would be needed. 
Rather, the survey aims at distinguishing several typical issues that could result from the inclusion of 
this type of clauses in contracts with consumers.  

In particular, we briefly analyze the terms of services (as found online) for the following seven online 
services: GooglePlay, iTunes, Spotify, Deezer, BBC online, Lovefilm and Netflix. 

Google Play terms of service65   (excerpts) 

7. Music on Google Play 

Geographic  Restrictions.  The  Music  Locker  Services  and  Music  Products  are  currently  available  only  in 
some  countries.  You  agree  that  you  will  not  present  any  false,  inaccurate  or  misleading  information  in  an 
effort to misrepresent yourself as a resident of a supported country, and you will not attempt to circumvent 
any restrictions on access to or availability of the Music Locker Services or Music Products. 

9. Movies and TV Shows on Google Play 

Viewing requirements. You agree to watch each Video Product only within territories within which Google 
makes the relevant Video Product available for viewing. You may view Video Products when (1) online, with 
an  internet  connection  and  logged  onto  your  Google  account  or  (2)  offline  and  viewing  from  a  previously 
authorized device. You must be online to authorize a device for viewing Video Products. 

1. 

Concerning the condition of residence 

Regarding  music,  one  possible  interpretation  of  article  7  is  that  end-users  must  be  resident  of  a 
Member  State  where  “the  Music”  is  available  to  have  access  to  the  Music  in  that  Member  State. 
Indeed, Google would not have prohibited any misrepresentation as a resident of a supported country 
if residence was not a requirement to have access to the service.  It is therefore likely that issue 3 is 
involved. 

As far as movies are concerned and pursuant to article 9 of the terms of use, the end-user must be 
located on a territory within which the videos are made available for viewing but there is no condition 
requiring that the end-user must reside in one of those territories.  

2. 

Concerning the absence of a pan-European service 

65  

https://play.google.com/intl/en/about/play-terms.html 

 
 
 
 
 
 
 
 
 
                                                            
 
As for music, article 7 specifies that the service is only available in the supported countries. The list of 
those countries does not include all the Member States.  

Regarding movies, the territories within which the videos are available does not include all the Member 
States.  

Finally  concerning  books,  nothing  is  specified  in  the  terms  of  use  but  according  to  the  country 
availability for apps & digital content page the service is not available in all the Member States.  

iTunes store terms66   (excerpts for the United Kingdom) 

REQUIREMENTS FOR USE OF THE SERVICE 

The  Service  is  available  to  you  only  in  the  United  Kingdom.  You  agree  not  to  use  or  attempt  to  use  the 
Service from outside this location. iTunes may use technologies to verify your compliance. 

REQUIREMENTS FOR USE OF THE STORES 

The  Stores  are  available  to  you  only  in  the  United  Kingdom.  You  agree  not  to  use  or  attempt  to  use  the 
Stores from outside this location. iTunes may use technologies to verify your compliance. 

1.  Concerning the condition of residence 
The terms  and conditions do not impose any condition of residence as long as  the end-users are in 
the territory.  

2.  Concerning the lack of a pan-European service 
iTunes is available in all Member States.  

Spotify terms and conditions of use67  (excerpts for the United Kingdom) 

1. Introduction 

Thanks for choosing Spotify (“Spotify”, “we”, “us”, “our”). By using the Spotify service, websites, or software 
applications  (together,  the  “Spotify  Service”  or  “Service”),  including  by  purchasing  or  receiving  Codes  or 
Limited Offers, you are entering into a binding contract with our local company in your country of residence 
(your “Local Country”) if applicable or the company listed in this chart.  

4. Licence and assignment 

The Spotify Service and the content provided through it are the property of Spotify or Spotify's licensors, and 
we  grant  you  a  limited,  non-exclusive,  revocable  licence  to  make  personal,  non-commercial  use  of  the 
Spotify Service and to receive the media content made available through the Spotify Service in your Local 
Country, based on the Subscription or Trial you have selected (the “Licence”).  

8. User Guidelines 

Spotify respects intellectual property rights and expects you to do the same. This means, for example, that 
the following is not permitted: (…) (f) circumventing of any territorial restrictions applied by Spotify; 

1. 

Concerning the condition of residence 

It  seems  that  if  end-users  are  not  residents  of  a  country  where  a local company  exists,  they  cannot 
enter into a binding agreement with Spotify and therefore have access to the service even when they 

66  

67  

http://www.apple.com/legal/internet-services/itunes/ww/ 

https://www.spotify.com/uk/legal/end-user-agreement/ 

 
 
 
 
 
 
 
 
 
 
 
                                                            
 
are located in a local country where access exists.  

2. 

Concerning the lack of pan-European service 

The service  is  not  available  in  all  the  Member  States  of  the  European  Union (“select  your  country”), 
therefore the Spotify service seem to involve issue 1. 

Terms of use for Deezer services68 (excerpts) 

Terms of Use and Sale Deezer Premium Service 

Article 3 – Terms of Use of the Premium Service 

Access to the Premium Service from a personal computer is only possible through the Site. (…)  

As a subscriber, you can activate the Premium Service on a personal computer (PC or MAC). The Service is 
only accessible from one connection at a time. DEEZER has the technical means to verify the absence of 
multiple simultaneous connections on the same account and therefore detect multiple connections attempt. 

Article 10 – Territory 

The subscription to the Service is reserved to physical person, living in the effective country and owning a 
credit card produced by a bank established in this country. 

Terms of Use and Sale Deezer Premium + Service 

Article 3 –Use of the Premium + Service 

As a subscriber, you can activate the Service on a personal computer (PC or MAC) and a compatible mobile 
phone registered with the Service. The Service is only accessible from one connection at a time (personal 
computer or compatible mobile phone registered). DEEZER has the technical means to verify the absence of 
multiple simultaneous connections on the same account and therefore detect multiple connections attempt. 

Article 6 – Terms of Access to the Service 

The Subscriber declares living in the effective country and owning a credit card issued by a bank established 
in this country. 

Article 10 – Territory 

The subscription to the Service is reserved to physical person, living in the effective country and owning a 
credit card produced by a bank established in his country. 

Article 11 – Disclaimer of Warranties 

The Subscriber declares being informed of the confines and limitations of the internet network. 
As  a  result,  DEEZER  disclaims  liability  for  the  dysfunction  of  the  Service  access,  the  opening  and 
consultation  velocity  of  the  Site  pages,  the  listening  velocity  of  the  tracks,  the  temporary  or  final 
inaccessibility of the Service, and the fraudulent use by third parties of the information provided on the Site. 
Content access rules69 

According to his own local country area, the end-user will access to the content that Deezer dealed with the 
local rights holders. 

1. 

Concerning the condition of residence 

Access in a country is subject to a condition of residence and effective link with that country, through 
the criteria of the credit card.  

2. 

Concerning the countries where the services is offered 

Deezer is available in all the Member States of the European Union.  

68  
http://www.deezer.com/en/legal/cgu.php 
69 http://developers.deezer.com/guidelines#content-access 

 
 
 
 
 
                                                            
 
Terms of use of BBC online services70 

3.2 How you may NOT use BBC Online Services 

  3.2.1If you are outside the UK 

You  may  not  access,  view  and/or  listen  to  certain  parts  of  BBC  Content  (such  as  video  or  live  television 
services) using BBC  Online  Services if you are outside the UK, although you may, in accordance with the 
Terms, access and view bbc.co.uk or other websites and listen to some (but not all) BBC radio content. The 
types of BBC Content that may be available outside the UK will usually depend on the BBC's agreements 
with the persons who own rights in such content. 

1. 

Concerning the condition of residence 

There  is  no  condition  of  residence  or  link  with  the  United  Kingdom  identified  as  long  as  you  are 
physically  located  inside  the  UK  (arguably,  the  IP  address  will  determine  whether  the  end-user  is 
located in the UK). 

2. 

Concerning the lack of pan-European service 

The service is in principle not available outside the United Kingdom to residents of other countries.  

LoveFilm terms & conditions71  

2.1 Minimum Criteria 

To become a Member of LOVEFiLM or use or purchase any of the LOVEFiLM Products and Services, as a 
minimum: (…) you must live in the United Kingdom (including Northern Ireland); and (…) 

11.2 Certain conditions affecting gift subscriptions 

(…) Recipients of gift subscriptions must be at least 18 years old, residents of the United Kingdom and will 
require a valid address and debit/credit card to verify their age. 
12.7 Restrictions 

You acknowledge all intellectual property and other rights in the Films that you stream and watch are owned 
by us or our licensors. To enforce those rights, we stream Films to you using technology that protects digital 
information and limits your ability to watch the Film in accordance with certain usage rules established by us 
and/or our  licensors  (whether  in  these Terms  and  Conditions  and/or  on  the  relevant  pages of  the  Website 
and/or displayed on a Device). Accordingly, you undertake that: (...) 

you  will  not  stream  or  attempt  to  stream  Films  from  anywhere  outside  the  United  Kingdom,  the  Channel 
Islands or the Isle of Mann or to use any technology to obscure or disguise your location. You acknowledge 
that we may use technologies to verify your location. 

1. 

Concerning the condition of residence 

Access to the service is subject to a condition of residence in the United Kingdom.  

2. 

Concerning the lack of pan-European service 

The service can only be used from inside the United Kingdom. 

Netflix terms of use72   (excerpts) 

70 http://www.bbc.co.uk/terms/personal.shtml 

71 http://www.lovefilm.com/info/terms_and_conditions.html#privacy  

 
 
 
 
 
 
 
 
 
 
                                                            
6. Netflix Service 

c. You may view a movie or TV show through the Netflix service only in geographic locations where we offer 
our service and have licensed such movie or TV show. The content that may be available to watch will vary 
by geographic location. Netflix will use technologies to verify your geographic location. YOU MAY WATCH 
ON UP TO SIX UNIQUE AUTHORIZED NETFLIX READY DEVICES AND THE NUMBER OF DEVICES ON 
WHICH YOU MAY SIMULTANEOUSLY WATCH IS LIMITED. Go to the change plan information in the "Your 
Account"  page  to  see  the  number  of  devices  on  which  you  may  simultaneously  watch.  The  number  of 
devices  available  for  use  and  the  simultaneous  streams  may  change  from  time  to  time  at  our  discretion 
without notice. 

f. The availability of movies & TV shows to watch will change from time to time, and from country to country. 

1. 

Concerning the condition of residence 

No condition of residence is identified, but the service is only provided in certain Member States.  

2. 

Concerning the lack of pan-European service 
Netflix is not available in all the Member States (at least not in Belgium).  

72 https://signup.netflix.com/TermsOfUse  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                                                                                                                                                          
European Commission 

REPORT ON CONTRACTUAL CLAUSES 
FOR THE ONLINE DISTRIBUTION OF CONTENT 
Luxembourg, Publications Office of the European Union 

2014 – 47 pages  

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