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Copyright reform against the background of Pay TV and Murphy Pablo Ibanez Colomo London School of Economics & College of Europe

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Page 1: Copyright reform against the background of Pay TV · PDF fileD ] o o / v v ] } v o d Z v ] } u ] ] } v Z Á } µ o } Z Á ] Z À

Copyright reform against the background of Pay TV and Murphy

Pablo Ibanez ColomoLondon School of Economics & College of Europe

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Key points

1. The regulatory framework impacts competition law analysis The copyright system and competition law influence one another

2. EU competition law is enforced by national courts and authorities Lack of action by the Commission does not rule out intervention

3. Primary EU law takes precedence over secondary EU law ‘Freedom of contract’ cannot ignore Article 101 TFEU

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Competition law analysis and the regulatoryframework

• EU Competition law must consider the ‘economic and legal context’of which a practice is part

• The analysis of the legal context behind a practice may shed light onits object and effect

• Counterfactual: This analysis may reveal that the practice is not capable ofrestricting competition that would otherwise have existed

• This may be the case where, for instance, there are no ‘real, concretepossibilities’ for the parties to enter each other’s market

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Competition law analysis and the regulatoryframework

A de facto monopoly precludes competition, even absent the agreement

E.On Ruhrgas

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Competition law analysis and the regulatoryframework

French distributors

France

Export ban into Germany

Miller International

The ban restricts competition that would otherwise have

existed

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Competition law analysis and the regulatoryframework

Canadian distributors

Export ban into France

Canada

Micro Leader

The ban does not restrict competition that would otherwise have existed

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Competition law analysis and the regulatoryframework

UK GreeceSatCab Directive

Under the ‘country of origin’ principle, cross-border competition between satellite broadcasters is possible

FA Premier League (Murphy)

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Competition law analysis and the regulatoryframework

UK GreeceInfoSoc Directive

Under the ‘country of destination’ principle, cross-border competition between online broadcasters is not possible

The Pay TV case

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Competition law analysis and the regulatoryframework

• Under the ‘country of origin’ principle, the case against restrictions tothe cross-border provision of services is compelling

• Any such clauses (including geo-blocking) would be capable of restrictingcompetition that would otherwise have existed

• As a result, these same clauses would in principle be restrictive ofcompetition by object

• In addition, they are unlikely to fulfil the conditions set out in Article 101(3)TFEU

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Competition law analysis and the regulatoryframework

• It is worth going back to the Court’s reasoning in Murphy:• Under the ‘country of origin’ licensees have paid remuneration and are

entitled to broadcast across borders• There is nothing precluding licensors from calculating the remuneration in

light of the potential audience in other Member States• The balance between copyright protection and cross-border access achieved

via harmonisation cannot be upset via legislation or licensing agreements

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Competition law analysis and the regulatoryframework

‘119. However, those statements were made in a context which is notcomparable to that of the main proceedings. In the case which led tothe judgment in Coditel I, the cable television broadcasting companiescommunicated a work to the public without having, in the MemberState of the place of origin of that communication, an authorisationfrom the right holders concerned and without having paidremuneration to them’

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Competition law analysis and the regulatoryframework

‘120. By contrast, in the main proceedings the broadcasters carry outacts of communication to the public while having in the Member Stateof broadcast, which is the Member State of the place of origin of thatcommunication, an authorisation from the right holders concerned andby paying them remuneration – which can, moreover, take account ofthe actual and potential audience in the other Member States’

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Competition law analysis and the regulatoryframework

‘121. Finally, account should be taken of the development of EuropeanUnion law that has resulted, in particular, from the adoption of theTelevision without Frontiers Directive and the Satellite BroadcastingDirective which are intended to ensure the transition from nationalmarkets to a single programme production and distribution market’

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Competition law analysis and the regulatoryframework

‘145. It should be added that while, in principle, Article 101(1) TFEUdoes not apply to agreements which fall within the categories specifiedin Article 101(3) TFEU, clauses of licence agreements such as theclauses at issue in the main proceedings do not meet the requirementslaid down by the latter provision for reasons stated in paragraphs 105to 124 of the present judgment and therefore the possibility of Article101(1) TFEU being inapplicable does not arise’

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Competition law analysis and the regulatoryframework

• By the same token, there were other factors that were deemedirrelevant in the judgment, namely:

• The fact that undermining exclusivity would impact negatively on licensees’willingness to pay for content (the ‘exclusivity premium’) is irrelevant

• EU law does not seek to ensure that right holders obtain the highest possibleremuneration, but only a reasonable one

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Competition law analysis and the regulatoryframework

• Summing up, the adoption of the SatCab Regulation would have consequences for competition law analysis

• Once the ‘country of origin’ principle is introduced, cross-border competition among broadcasters becomes lawful

• Any clauses restricting broadcasters’ ability to offer content across borders would be capable of restricting competition that would otherwise exist

• Murphy becomes the framework to assess the compatibility of such restrictions with Article 101 TFEU

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Key points

1. The regulatory framework impacts competition law analysis The copyright system and competition law influence one another

2. EU competition law is enforced by national courts and authorities Lack of action by the Commission does not rule out intervention

3. Primary EU law takes precedence over secondary EU law ‘Freedom of contract’ cannot ignore Article 101 TFEU

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The enforcement of EU competition law

• EU competition law is also enforced by national courts and authoritiesin accordance with the principles set out in Regulation 1/2003

• Thus, lack of action by the Commission does not preclude intervention at thenational level

• Action at the national level may eventually reach the Court of Justice via apreliminary reference

• In fact, the leading cases on exclusive licensing (Coditel II and Murphy)originated in disputes at the national level

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The enforcement of EU competition law

• Accordingly, hints by the Commission that it does not intend toinvestigate new cases does not rule out intervention

• What is more, intervention at the national level may not be in line with thepreferences of the Commission (e.g. online selective distribution)

• Similarly, the Commission may not adopt a pro-active attitude when cases areopen (e.g. online hotel booking)

• Hints by the Commission, in other words, do not necessarily exclude afinding of infringement, but may delay it

Page 20: Copyright reform against the background of Pay TV · PDF fileD ] o o / v v ] } v o d Z v ] } u ] ] } v Z Á } µ o } Z Á ] Z À

Key points

1. The regulatory framework impacts competition law analysis The copyright system and competition law influence one another

2. EU competition law is enforced by national courts and authorities Lack of action by the Commission does not rule out intervention

3. Primary EU law takes precedence over secondary EU law ‘Freedom of contract’ cannot ignore Article 101 TFEU

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Contractual freedom

‘11. Through the principle of contractual freedom it will be possible tocontinue limiting the exploitation of the rights affected by the principleof country of origin laid down in this Regulation, especially as far ascertain technical means of transmission or certain language versionsare concerned, provided that any such limitations of the exploitation ofthose rights are in compliance with Union law’.

SatCab Proposal

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Contractual freedom

‘16. Whereas the principle of contractual freedom on which thisDirective is based will make it possible to continue limiting theexploitation of these rights, especially as far as certain technical meansof transmission or certain language versions are concerned’

Directive 93/83

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Contractual freedom

‘227. In any event, it must be borne in mind that what is at issue in thepresent case is a decision adopted in application of Article [102 TFEU],a provision of higher rank than [the Software Directive]. The questionin the present case is not so much whether the concept ofinteroperability in the contested decision is consistent with the conceptenvisaged in that directive as whether the Commission correctlydetermined the degree of interoperability that should be attainable inthe light of the objectives of Article [102 TFEU]’.

Case T-201/04, Microsoft


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