The European Commission has accused Sky and some of Hollywood’s biggest studios of breaking competition rules by restricting the ability of EU citizens to access pay-TV services regardless of their country of residence.
Broadcast rights to films are usually sold to a single pay-TV broadcaster in each EU nation, a restriction which Sky has used to become the UK’s biggest pay-TV provider of films, offering the latest blockbusters long before rival services such as Netflix can buy ‘secondary’ rights to them.
As well as retailing its Sky Movies channels to its own customers, Sky also wholesales the channels to rivals Virgin Media, TalkTalk and BT and retails them contract free via its NOW TV streaming brand.
However the Commission claims that clauses in Sky’s contracts with film giants Disney, NBCUniversal, Paramount Pictures, Sony, Twentieth Century Fox and Warner Bros are still restricting access to the films.
This is because Sky is barred from accepting orders for its channels from customers based outside the UK and Ireland and, it’s claimed, because “some agreements also contain clauses requiring studios to ensure that, in their licensing agreements with broadcasters other than Sky UK, these broadcasters are prevented from making their pay-TV services available in the UK and Ireland.”
In a statement the Commission said the effect of these restrictions was to “grant ‘absolute territorial exclusivity’ to Sky UK and/or other broadcasters.”
“They eliminate cross-border competition between pay-TV broadcasters and partition the internal market along national borders. The Commission’s preliminary conclusion is that, in the absence of convincing justification, the clauses would constitute a serious violation of EU rules that prohibit anticompetitive agreements.”
All seven companies have been issued a “Statement of Objections” setting out the EC’s position and requesting a response to the allegations.
Margrethe Vestager, the EU Commissioner in charge of competition policy, said: “European consumers want to watch the pay-TV channels of their choice regardless of where they live or travel in the EU.
“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.
“We believe that this may be in breach of EU competition rules. The studios and Sky UK now have the chance to respond to our concerns.”
Commenting on the Commission’s claims a Sky spokesperson said: “The European Commission is examining cross border access to Pay-TV services across a number of member states.
“As part of its ongoing inquiry, we have received a statement setting out the commission’s preliminary views. We will consider this and respond in due course.”