Television Broadcasting Rights in Connection with Sporting Events

Date 30 nov. 2011
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On 4 October 2011, the European Court of Justice decided in a case concerning sale of transmission rights to English football matches. Licensing systems which give radio and television companies a geographically exclusive right to transmission in the individual member states, and which prohibit television viewers from watching such television broadcasts by help of a decoder card has been found to be in conflict with EU law by the European Court of Justice.


The Court of Justice did not decide in the national dispute, but contributed based on a preliminary ruling instead. The national court thus still has to decide in the case.

 

The case in brief

Football Association Premier League Limited (hereinafter ”FAPL”), which represents the television broadcast rights of the 20 Premier League clubs and which administrates the broadcasting rights to the English Premier League has granted the television company BSkyB Ltd. (hereinafter ”SKY”) the exclusive rights to show Premier League matches in Great Britain through a license agreement (hereinafter “License Agreement”). In addition, in the License Agreement, Sky agrees to prevent citizens of other countries than Britain from receiving the broadcasting signal. 


Subsequently, SKY has used its exclusive rights to redistribute the matches to British pub owners who have subsequently shown the Premier League matches in their pubs directly to the British population against a considerable payment. In practice, exclusivity has been secured by the fact that SKY – in accordance with the License Agreement - has encrypted the satellite signal and has only delivered it encrypted to those who have subscribed to the service. The English pub owners were only able to show the matches if they had a decoder card to the signal. Persons outside Britain have not been able to get a decoder card. Similar geographically exclusive sublicenses have been granted to a number of television and radio companies around Europe, among these the Greek television and radio company NetMed Hellas.


Subsequently, instead of buying the signal from SKY, some pub owners have, used imported decoder cards, including those which have been delivered by the Greek radio and television company to  subscribers in Greece that wish to follow the  Premier League matches. These decoder cards and the matching decoder box have been sold to some British pub owners for a price that is considerably lower than the price which SKY demands. The commentary on the broadcast is in English despite the fact that the broadcasting signal is Greek which is the reason why it has been used by a British pub owner. By using the Greek signal the pub owner saved presumably DKK 50,000 a year.

 

Legal basis

EU Competition Law

It follows from the Treaty on the Functioning of the European Union (hereinafter “TFEU”) article 101, subsection 1, that agreements between companies, agreements within groups of companies and all kinds of co-ordinated practice which may influence on trading between member states, and which has as its purpose or consequence to prevent, limit or distort competition in the inner market is inconsistent with the inner market and therefore prohibited.


Freedom of services

Due to TFEU, article 56, it is prohibited to introduce restrictions which prevent free circulation of services between the member states. It is decisive whether the restriction is suitable to exclude the circulation, implies major disadvantages for the circulation or makes the practise of business from other member states less attractive.


The restriction will only be accepted within EU law provided that a number of conditions are met, among these, that the restriction must be objectively reasoned and proportional.


The Court of Justice’s Decision

EU Competition Law

The court decided that within the boundaries of competition law it is lawful for a rights holder (FAPL) to grant an exclusive broadcasting right to transmit a protected creation to a single licensee (SKY) from one or several member states for a limited period of time.  


However, the License Agreement did contain clauses which in reality ensured geographical exclusivity due to the fact that SKY was not allowed to provide decoders giving access to the football games to citizens of other member states.

In this way, the License Agreement prevented any cross-border provision of services and thereby removed or at least limited the competition between radio and television companies within Europe.  


Freedom of services

In connection herewith, the EU Court of Justice evaluated national legislation and considered whether it was compatible with TFEU, article 56.


The court acknowledged that despite the fact that citizens of other member states were prevented from receiving the signal for the Premier League matches as result of the License Agreement - which according to the court’s considerations constituted a restriction of competition - national legislation maintained the restriction by granting the agreement a legal protection in that lack of compliance could lead to civil and economic sanctions.


Based on the above, the court concluded that the legislation in question which prohibits sale or use of foreign decoder cards was in conflict with the freedom of services and since neither the consideration for protection of intellectual property rights nor the wish to promote the presence of spectators on football stadiums to a sufficient extent constituted legitimate purposes which could justify the restriction, the legislation was found to be in conflict with TFEU, article 56.


Copyright

In addition, the court emphasised that FAPL could not prevent  parallel import of decoder boxes and cards because of their copyright to the British Premier League matches whereas a sporting event such as a football match is not a copyright protected work. Only the opening video sequence, the Premier League anthem, recordings of highlights from the matches and certain kinds of graphics could be protected by copyright and consent from the rights owner is required before such work may be distributed to the public.


The reproduction of the broadcastings, which the decoder boxes’ fragmentary representations where technically expressions of, could not be prevented according to the copyright neighbouring rights – which, in Denmark, are implemented by Section 69 of the Copyright Act on signal rights (only concerns the broadcastings as technical signals, not the content of the broadcastings), among others.

 

Future implications

The decision of the EU Court of Justice goes against the interests of the rights holder, and it must be expected to be of considerable importance to owners of rights to other sporting events within the European Union as well. The sale of exclusive television broadcasting rights will potentially be eroded, regardless of the branch of sport.


The consequences will be noticeable for all the parties in the case. First and foremost for the ultimate rights owner, FAPL, which at the latest negotiation of the television agreement sold the rights for approximately DKK 28bn, and which at the renegotiation must expect to receive a lower price. In addition, SKY will have to adapt to another kind of competition on the market with more competitors having considerably lower prices. Finally, in a wider perspective, the decision will affect the Premier League clubs which get a significant part of their earnings from television rights.


Contrary hereto, it is possible that the rights owners may call on the copyright loophole which is expressed by the Court of Justice as they – based on the fact that the copyright protection of certain works in connection with broadcasting of a football match is acknowledged, including the anthem and the highlights – may specifically prevent the use of foreign decoder boxes and cards. By adding a considerable number of protected works to the live transmissions of the matches, it is possible that consent must be given by the rights owners before the matches may be broadcasted to the public (“transmission to the public” cf. the Directive on Copyright), including the British population in pubs. However, the matches themselves are not protected by copyright.



If you have any questions or require additional information on the EU Court of Justice’s decision, please contact Attorney Christoffer Galbo (cga@mwblaw.dk), Attorney Henrik Syskind Pedersen (hsp@mwblaw.dk) or Junior Associate Mattias Vilhelm Warnøe Nielsen (mvn@mwblaw.dk).

 

The above does not constitute legal counselling and Moalem Weitemeyer Bendtsen does not warrant the accuracy of the information. With the above text, Moalem Weitemeyer Bendtsen has not assumed responsibility of any kind as a consequence of a reader’s use of the above as a basis of decisions or considerations.