EU accuses U.S. movie studios of antitrust violations
The European Union is going after Mickey Mouse.
The EU's antitrust arm Thursday accused six major U.S. film studios and a British television firm of improperly blocking viewer access to movies and other media content.
Escalating an investigation that began in January 2014, the European Commission filed formal charges known as a statement of objections against the Disney, NBCUniversal, Paramount Pictures, Sony, Twentieth Century Fox and Warner Brothers studios, along with broadcaster Sky UK.
The commission alleged the companies improperly restricted viewers on Europe's mainland from watching pay TV services available in the United Kingdom and Ireland.
"European consumers want to watch the pay-TV channels of their choice regardless of where they live or travel in the EU," said Margrethe Vestager, the EU's commissioner for competition.
"Our investigation shows that they cannot do this today, also because licensing agreements between the major film studios and Sky UK do not allow consumers in other EU countries to access Sky's UK and Irish pay-TV services, via satellite or online," Vestager said.
The investigation focuses on licensing contract clauses that require Sky UK to block access to films through its online pay-TV services — a procedure known as "geo-blocking" — or through its satellite pay-TV services to all European consumers outside the U.K. and Ireland.
Conversely, the commission also said some contracts required studios to ensure their licensing deals with European broadcasters other than Sky UK blocked those firms from making their pay-TV services available in the U.K. and Ireland.
The Commission is also examining licensing agreements between the studios and France's Canal Plus, Sky Italia, Sky Deutschland and Spain's DTS.
EU antitrust rules bar restrictions on so called-called passive sales — transactions in response to demands from customers not solicited by the seller.
The rules stem from a 2011 EU Court of Justice ruling that focused in part on broadcasts of English Premier League football matches. The court ruled that licensing provisions that block satellite broadcasters from providing broadcasts to viewers outside the companies' territories give them exclusivity that eliminates market competition.
The new antitrust charges mark an interim step in the investigation process that enables the companies to respond to the EU objections.
Under EU regulations, the companies could face fines as high as 10% of their most recent global annual sales if the allegations ultimately are upheld.
Confirming it had received the statement of objections, Sky UK said "we will consider this and respond in due course."
NBC Universal said "we will have the opportunity to formally respond to the statement and are communicating constructively with the European Commission."
Warner Brothers said it was cooperating with the EU, 20th Century Fox and Paramount declined to comment and Sony did not respond to a message seeking comment.
Disney called the commission's analysis "destructive of consumer value" and said it would "oppose the proposed action vigorously."
U.S. movie studios have been selling exclusive territorial licensing rights to their films and other content "for longer than there's been a EU," said Neil Begley, a Moody's senior financial analyst who covers the studios and other media organizations.
Enabling viewers in other European nations to gain access to Sky UK's transmissions of movies "would undermine the studios' rights to sell that content in those other countries," Begley said.
The latest EU probe follows the recent launches of other antitrust investigations into U.S. chipmaker Qualcomm, Google, MasterCard, Amazon and Russian energy giant Gazprom.
Contributing: Kaja Whitehouse
Follow Paste BN reporter Kevin McCoy on Twitter: @kmccoynyc.