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Competition

BROADCASTING OF SPORTS EVENTS AND COMPETITION LAW

 

 

A.-M. Wachtmeister, chef d'Unité IV/C2

Competition Policy Newsletter 1998 - number 2 - June

 

INTRODUCTION

1. The purpose of this document is to develop an updated approach to the application of competition law to issues arising in the broadcasting of sports events in response to the rapid changes that are taking place. Over the last few years sports broadcasting has become a very important area economically. Sports programmes, and certain sports in particular, are a key ingredient for broadcasters and have driven the development of pay-TV. With increased deregulation and the introduction of new broadcasting technology, broadcasting services are going through continuous and rapid development with major consequences such as an increase in channels and capacity. Digital technology, pay-TV and pay-per-view services, providing additional broadcasting time and capacity, offer to viewers who are prepared to pay for the services, increasing opportunities to view a growing number of sports, either on theme channels or on an event-by-event basis. The new services potentially offer improved picture quality, a choice of perspective of the event and the opportunity to watch the programmes when the viewer wishes to. The importance of sports programming to broadcasters is demonstrated in the corresponding growth of competition (and price) for the acquisition of sports broadcasting rights. In the context of the new services, broadcasting of sports events can no longer be viewed in terms of a mix of programmes.

2. While these developments may indicate a potentially highly competitive market, concerns have been expressed about the consequences on the television landscape of the EU of current practices in the buying, selling and exploitation of broadcasting rights to sports rights. There is now a need for the Commission to examine these practices, many of which have not been considered contentious in the past, and to draw up a general competition policy approach to their assessment. Some Member States have already initiated actions under their domestic competition rules.

3. Broadcasting of sports events is becoming more and more cross-border or international. Television viewers in one Member State are increasingly able to see not only the most important international championships but national championships from other countries. International player and management mobility has generated more interest in sports events taking place in other Member States. The Commission will have to apply the competition rules more and more to horizontal and vertical arrangements relating to the broadcasting rights to sports events.

4. It may be helpful, when considering whether an agreement affects trade between Member States, to consider the following :-

 

 

television programmes are received and seen in a second Member State - this is not in itself sufficient to make community law applicable;

if clubs or teams in one Member State make an agreement amongst themselves to fix prices for broadcasts of their sporting events, such an agreement would probably not be sufficient to make Article 85 of the EC Treaty applicable. It would be applicable if the teams involved came from more than one country, for example, for the World Cup;

there will probably be an effect on trade between Member States if a vendor of rights has sold or is likely to sell to a buyer in another Member State;

if the buyer of the rights is likely to sublicense in other Member States, there will usually be an effect on trade between Member States

5. Similar issues arise under Community competition law and national competition law when assessing agreements and complaints. A common approach to analysing the competition problems would offer a degree of certainty to those concluding broadcasting contracts. It is however not possible to provide an answer to each problem, which could then be applied in each Member State or by the Commission to cross-border cases. The facts, and viewers’ preferences for sports, will be different in each Member State. The solution in one Member State may be different to the solution in another Member State. The effect on trade between Member States of national arrangements will also differ.

6. Many of the issues identified in the following chapters are often inter-related and so cannot be considered in isolation. This analysis is by no means exhaustive and other issues may arise in different circumstances in the future.

7. Exclusivity is an accepted commercial practice in the broadcasting sector. It guarantees the value of a programme, and is particularly important in the case of sports, as a broadcast of a sports event is valuable for only a very short time. Exclusivity for limited periods should not in itself raise competition concerns. However, competition problems may arise. Duration, quantity and upstream and downstream market power need to be examined in order to assess whether the exclusivity seriously restricts competition. A longer period of exclusivity may be appropriate in certain circumstances, for example, for the broadcasting of the Olympic Games, which occur every four years.

8. Exclusivity has also been questioned on grounds not related to competition law, in particular, where it is exercised by pay-TV operators. Article 3A of the new "television without frontiers" Directive, is an important measure addressing exclusive broadcasting rights to sports events which was introduced to ensure that Member States are able, at the national level, to protect the right to information and to provide for wide access by the public to television coverage of events of major importance for society. Such a measure is not aimed at addressing competition problems.. Article 3A may affect the conditions of competition between free-access television and scrambled services.

 

 

9. Competition rules are neutral with respect to different types of broadcasters and do not provide a legal basis for favouring one category over another. The Court of First Instance (in the EBU Eurovision judgement) has stated that, unless Article 90(2)applies, the Commission would not be justified in giving a preference to television stations merely because they have a public service role, or to publicly owned stations, or to those financed from officially-collected licence fees.

10. Fundamental to consideration of any competition policy implications is the issue of who owns the broadcasting rights to sports events, as witnessed by recent court cases in the Netherlands and Germany concerning rights to national football games.

11. Many sports have now entered the realms of the market economy. Their commercial activities are operated as businesses. The income received from the sale of broadcasting rights is transforming the sports world and widening the gulf between amateurs and professionals. As with any market, commercial practices fall under the scrutiny of the competition rules. Not only competition among participants in a particular sport may be affected by commercial practices but competition among broadcasters may also be affected.

12. Apart from commercial considerations affecting competition, regard may also be had for genuine objectives based on other considerations applicable to sport because of its intrinsic characteristics and importance to society : "Maintaining a balance between clubs by preserving a certain degree of equality and uncertainty as to results" and "encouraging the training of young players" - were two legitimate objectives recognised in the Judgement of the Court in the Bosman case.

13. In the light of these general considerations, this paper now turns to the main legal issues which arise, or may arise, under Community competition law, firstly concerning the provisions for the broadcasting rights to major sports events under Article 3A of the new "television without frontiers" Directive, then with respect to Community competition law..

 

I. Priority for free-access television for the coverage of major sports events

 

1. There are advantages for viewers if important sports rights are broadcast by free-access television, so that consumers are not obliged to make additional payments for decoders, receiving equipment or cable subscription to view such events, in particular, those in which their compatriot sports men and women take part in international events.

2. More generally, concern has arisen, with the growth and development of pay-TV, that viewers are being denied free-access to important national events because large subscription broadcasters have been buying up those rights to develop their own services. It is said that some sporting events are of such national or heritage importance, that they reflect common identity and value, so that broad free access should be given to them. The complaints are from "public interest" or "national heritage" concern, rather than on competition grounds, and a regulatory approach would be necessary to achieve the desired result.

3. Competition law is not the right instrument for achieving cultural or regulatory aims. As confirmed by the Eurovision judgement, competition rules are neutral with respect to different types of broadcasting and in principle, do not provide a legal base for favouring one category of broadcaster over others.

4. Further to an amendment by the European Parliament, the directive modifying directive 89/552/EEC ("television without frontiers") includes a new Article 3A. The purpose of this Article is explained in recital 18 which reads as follows :

"Whereas it is essential that Member States should be able to take measures to protect the right to information and to ensure wide access by the public to television coverage of national or non-national events of major importance for society, such as the Olympic Games, the football World Cup and the European football Championship; whereas to this end Member States retain the right to take measures compatible with Community law aimed at regulating the exercise by broadcasters under their jurisdiction of exclusive broadcasting rights to such events".

5. Article 3A paragraph 3 stipulates, moreover, that Member States shall ensure that broadcasters under their jurisdiction do not exercise the exclusive rights purchased by those broadcasters in such a way that a substantial proportion of the public in another Member State is deprived of the possibility of following events, which are designated by that other Member State, on free television. According to information supplied to the Commission by national delegations to the Contact Committee set up by the Directive, a large majority of Member States intend to notify their measures taken under Article 3A paragraph 1 in the course of 1998. All Member States have indicated timetables for transposition of Article 3A paragraph 3 by the deadline required by the Directive, i.e. 30 December 1998.

6. The procedure laid down in Article 3A paragraph 2 requires the Member States to notify their measures and the Commission to verify their compatibility with Community law within a period of three months. The Commission must seek the opinion of the Committee established by the Directive. Measures taken by Member States in order to guarantee the availability of coverage of certain events must be in accordance inter alia with Article 90 of the Treaty.

 

 

 

II. The relevant market in sports broadcasting cases

 

1. The correct definition of the relevant market will be crucial to the assessment of cases concerning the issues referred to below. In the current climate of quickly evolving broadcasting technology and means of distribution, in particular, the development of pay-TV and pay-per-view, the nature and scope of the markets which are relevant are changing. The geographic market also is becoming more and more international as more cross-border broadcasts of sports are offered.

2. With the emergence and growing importance of dedicated subscription television sports channels over the last five years, the market is probably no longer only for sport programmes in general, but for some specific sports, for example, for football or for Formula 1 motor racing. Standard market definitions may not apply in all Member States. The markets are not necessarily the same in all Member States, as national preferences differ from State to State.

3. When defining the relevant market, demand substitution is not to be viewed exclusively from the view point of the final consumer, since some of the available services are not offered to the final consumer. In connection with rights to televise sports events, a variety of services can be provided :

owners of broadcasting rights to sports events sell the rights to broadcasters or to sports rights agencies;

the rights can be exclusive or non-exclusive, for live or deferred transmission, or for highlights;

a rights owner or broadcaster may subcontract the production of the signal;

sports rights agencies sell rights to broadcasters;

companies wishing to associate their brand with a particular sport, particularly if it receives television exposure, sponsor competitions, organisers of sports events, clubs, teams or individuals;

broadcasters and/or advertising brokers sell advertising time or sponsorship to companies who want exposure on television during sports programmes;

broadcasters owning sports programmes, or owners of the rights or their agents, license other broadcasters to broadcast the programmes;

broadcasters can contract with cable companies or operators of other means of transmissions to broadcast their channels and sports programmes;

cable companies provide television to householders;

broadcasters transmit sports programmes to viewers;

viewers may exercise a choice by subscribing to a dedicated sports broadcasting service (rather than choosing from a variety of entertainment programmes on traditional advertising or licence fee funded television).

4. Some sports events are more important, and attract the attention of more viewers, than others. A survey in the UK for the BBC on sport on television indicated that 92% of viewers were interested in watching one or more of the major sports events on television. For really important events, there is no satisfactory substitute for live coverage (viewers' interest in most events is short-lived). There is little substitutability between sports for fans. For football supporters, television coverage of athletics or golf is not a satisfactory substitute. There may be little substitutability between different sports for sponsors, whose investment can be vital for the viability of a sport. For broadcasters some sports generate more income from advertising revenue or subscription than others. There may be an element of prestige in broadcasting certain major sports. For them, the importance and interest of a sports event to a large number of viewers determines whether other sports programmes are a satisfactory substitute. Football, the Olympic Games and Formula One racing are the most popular televised sports events world-wide.

5. There is a market for sports rights, whether sold or licensed, and this market may be further sub-divided into the market for rights to specific sports. Broadcasting rights may be for live or deferred full coverage of an entire event, for extracts and for highlights. The value and use of each type of right differs for broadcasters. The conditions of competition for the various types of broadcaster need to be taken into consideration. Conditions for traditional incumbents - terrestrial and/or free-access broadcasters, offering a general programme mix, who are dependent on licence fee or advertising revenue for their funding, are likely to be different from those for the emerging new broadcasting services, pay-TV and pay-per-view, which include dedicated sports channels and which are dependent upon viewers’ subscription fees. A larger proportion of the programming of the new services consists of sports. In the context of sponsors, television advertisers or pay-TV, these factors suggest that it is necessary to define the markets more narrowly, as those for coverage of important events in a particular sport.

6. In the Netherlands, the Decision of the Ministry for Economic Affairs in the KNVB/collective selling of highlights to football games case, the decision defines a separate market for football broadcasting rights.

7. In any event, the guidelines set out in the Commission Notice on Market Definition should be referred to when considering definition of the relevant market.

 

 

III. Exclusivity

 

1. The sale of exclusive rights to broadcast sports events is an accepted commercial practice. For sports organisers, the sale of exclusive rights is a way of ensuring the maximum short-term profitability of the event organised, the price paid for the exclusivity by one broadcaster probably being higher than the sum of the amounts which would be paid by several broadcasters for non-exclusive rights.

2. For the broadcaster, sports programmes are considered as particularly suited to attracting a large number of viewers. For them, it can be said that exclusivity represents :

the only way to guarantee the value of a given sports programme;

the broadcasting company may get more value from the rights if it can sub-license to competitors;

a way to build up audience, in the short as well as in the long term (consolidation of audience base, fostering loyalty, improvement of image);

a substantial increase in advertising or sponsorship revenue as sports programmes are a means of targeting a specific audience, often in large numbers;

a degree of prestige in being the only broadcaster showing a particularly popular sport;

for pay-TV channels, exclusivity of rights to very popular sports events is fundamental in order to attract new subscribers; this is especially true for sports theme channels: persuading viewers with specialised tastes to pay for specialised channels is the only way that many such channels could be financed, since the number of interested viewers would be too small to attract enough advertising revenue; it may also be vital to re-coup investment in infrastructure;

the revenue may be needed by a broadcasting company which wants to invest in cable, decoders and/or satellites.

3. Despite the very large amounts paid by broadcasters for exclusive rights to the most popular sporting events, the purchases are still profitable as long as the acquisition price is outweighed by advertising or sponsorship revenue or subscription fees. Different types of broadcasters, as defined by their method of financing (licence-fee, advertising revenue, subscription etc) are be subject to differing constraints upon their ability to bid for sports rights.

4. In the CODITEL II decision, the ECJ held that exclusive licences of performing rights did not per se infringe Article 85(1), even though they conferred absolute territorial protection and might prevent transmission into a neighbouring State. The Advocate General had observed that since performing rights affect the supply of services rather than goods and the doctrine of exhaustion was excluded by Coditel (1), such exclusive licences would confer absolute territorial protection. The ECJ concluded that the exercise of those rights may come within the prohibition of Article 85(1) where, regard having been had to the specific characteristics of that market, there are economic or legal circumstances the effect of which is to restrict distribution to an appreciable degree. Certain parallels could be drawn with the granting of exclusive licences for broadcasting rights to sports events, which concern allowing a third party access to land or property or to the participants for filming purposes

5. Agreements for exclusivity may fall within the scope of Article 85(1) if they lead to foreclosure. Duration should not be excessive in length or scope. It is not possible to state what the maximum duration should be, as much will depend on individual circumstances. The effects of an exclusive licence will depend on market definition. The market power of the seller and the acquirer and whether the downstream market is likely to be foreclosed need to be assessed. The cumulative effect of the acquisition of the right may strengthen an already strong position of a broadcaster because it adds to an already attractive portfolio of sports rights. The existence of a sublicensing policy cannot, in itself, alter the need for an individual exemption in circumstances where exclusivity is caught under Article 85(1).

6. Under current practices, the exclusivity granted can vary significantly. It can apply to the live broadcasting of an entire event; to a deferred transmission of an entire event, or for short clips for use in sports programmes. (For the purposes of news reporting, it is the general practice, often enshrined in national legislation, for short clips of an event to be made available to all broadcasters on a non-exclusive basis). It can also be limited to exploitation by any of the different broadcasting modalities - in the clear broadcasting, pay-TV or pay-per-view. Exclusivity for all means of exploitation can be granted to a single operator, who either exploits some of the rights himself and withdraws the remainder from the market, or who is prepared to sub-licence other broadcasters on a live, deferred or highlight basis, according to the different modalities. Alternatively, the right to broadcast through only one modality can be granted only to one operator. Exclusivity can also be granted to a number of operators each exploiting a particular modality. The more forms of exclusive exploitation that are granted to other broadcasters for a particular right or rights the more the strength of each form of exclusivity is diluted, because there is an element of competition for viewers between the various modalities.

7. There are circumstances when a long period of exclusivity may be justified, for example to assist a new entrant becoming established in the market (the "new entrant" rationale) and in particular, a new entrant introducing new and expensive technology who needs a long period of exclusivity in order to recover large investment costs. "Introducing these new technologies may require exclusive access to particular forms of sufficiently attractive content in order to drive penetration and consumer investment into new reception equipment". When considering the introduction of commercially new, high-risk and potentially pro-competitive services as justification for the granting of an exemption for a long period of exclusivity, a balancing needs to be carried out under Article 85(3). This is particularly relevant when the party is already powerful or the partners to an agreement or a joint venture are already part of large, powerful groups.

 

 

IVII. Collective selling

 

1. The broadcasting rights to matches or competitions are often marketed centrally, or sold in exclusive bundled form, by a league or association representing the clubs or participants. At the national level, this practice has being challenged under national cartel law by competition authorities in The Netherlands, the UK and most recently in Germany, where the Bundesgerichtsof concluded that the central marketing of broadcasting rights to European Cup football matches by the national football association was a cartel for which exemption was not justified. If there exists an inter-state trade effect, it will be necessary to examine whether the collective selling of rights to broadcasting matches or to series of events or competitions results is an agreement restrictive of competition contrary to Article 85(1) of the EC Treaty and the Commission will have to examine whether the criteria for exemption could nevertheless be met by the arrangements.

2. Before considering the question of the applicability of Community competition law, the ownership of rights needs to be taken into account as there is a danger that commercial agreements may collapse in a dispute about ownership, as has been witnessed in the Netherlands. The question of who owns the rights to broadcast any given event (or series of events) is not one which can be answered by competition law. It is a question governed by the applicable national law. The recent German and Dutch court cases have suggested that in the arrangements they examined in those Member States, the football clubs are primarily the owners of the broadcasting rights to football matches.

3. As ever larger sums are paid for exclusive rights, it is likely that disputes about ownership and the exercise of those rights will increase. Leagues or associations at both the national and international level are increasingly assuming the control and sale of broadcasting rights to individual events or matches by change to their constitutions or rules. The question of who owns the rights has to be determined under national law. Criteria under national law for determining ownership of broadcasting rights are different in different Member States. Ownership can be based on various considerations, such the ownership of land, "the arena rights" or who takes the commercial risk in staging an event. Circumstances relating to the organisational structure of each sport will have a bearing on determining ownership; these are likely to be different for team sports such as football and rugby; series in which a number of teams or individuals compete at several locations; and events where there is one organiser but where a number of individuals take part, such as marathons, or tennis tournaments. It may be necessary for rights belonging to a number of contributors to the sport to be transferred to the organiser responsible for the game or competition.

4. When considering collective selling or "central marketing" arrangements, it may be relevant to recall:

the competitive situation in each circumstance has to be evaluated, in order to avoid approving cartel-like arrangements which could be contrary to Article 85(1), particularly when the participants are capable of concluding their own contracts with broadcasters;

those assuming responsibility for selling the rights on behalf of individual participants or events may enjoy a position of market power, either already held as a result of a regulatory or supervisory function, or gained as a result of the acquisition of a large number of rights. If the acquisition, exercise or exploitation of those rights is abused, Article 86 is likely to be applicable;

the conditions for international events may be different to those for national events;

collective selling of broadcasting rights entails providing a bundle of rights, which may or may not be capable of being competitors to each other. The product may therefore be different to a product supplied by a single rights holder.

 

5. Up until now, collective selling of broadcasting rights by national leagues has been left by the Commission to be dealt with under national competition law. No agreements for collective selling had been notified to the Commission, and it was not clear whether there was a significant affect on trade between Member States arising from some of the arrangements which have been made so far. The Commission is currently examining collective selling arrangements for international motor sports.

6. If a competition authority does not permit collective selling of sports rights for national events, a greater number of separate rights will be available to broadcasters. Collective selling or central marketing can be the source of other competition issues related to the broadcasting of sports events.

7. Collective selling arrangements, if they cannot be shown not to be a restriction of competition, are likely to affect the functioning of the market, because they permit only periodic transactions, restrict output and bundle the products offered. Collective selling can facilitate other restrictive practices, such as granting a long duration of exclusivity, giving preferential treatment to one set of rights at the expense of another, or the denying of the rights to other broadcasters. It could result in the hindering of the development of other sports or participants in the sport, which as a consequence of preferential treatment for some classes of participants, were not able to obtain satisfactory television exposure or attract sponsors. Such restrictions on output could in turn slow down the development of new broadcasting technologies at the national and cross-border levels. The terms of the agreements will affect the price broadcasters are willing to pay for the rights. Whether the resulting restraints on competition are indispensable to the functioning of the market would depend on all the circumstances.

8. Before it could be said whether such arrangements fulfil the criteria for exemption under Article 85(3), a thorough examination is required, first, of the extent of any restrictions of competition under Article 85(1) that arise for the individual parties concerned. Such restrictive agreements must Secondly, such restrictions must be counter-balanced by meet the four criteria for exemption of Article 85(3). The fulfilment of these criteria should not be based on purely commercial considerations. The special characteristics of the sport in question have to be taken into account. These could include, for example, the need to ensure "solidarity" between weaker and stronger participants or the training of young players, which could only be achieved through redistribution of revenue from the sale of broadcasting rights. Such aims would have to be a genuine and material part of the objectives and ones which could not be achievable under less restrictive arrangements.

 

 

 

 

 

 

IV. Sublicensing

 

1. If an agreement involving exclusivity for rights gives the parties the possibility of eliminating competition in respect of a substantial part of the products or services in question, a possible remedy could be to require them to share with third parties the rights or advantages they have obtained. This may be particularly relevant when the owner of important rights is also their exploiter in a vertical joint venture with a broadcaster. Sublicensing could therefore be necessary in order to comply with Art. 85(3)(b) as a means of reducing the anti-competitive affect of exclusivity or of joint buying of sports rights. For certain events, such as the Olympics, sublicensing may be the only fair and competitive way to deal with exclusivity. Before considering arrangements for sublicensing under competition law, it should first be established whether the exclusivity is justified.

2. Sublicensing should not be regarded as a solution to all the competition issues which arise. In most cases it will be necessary and sufficient to deal with, for example, exclusivity which is of an excessive duration or scope. To be effective, the value of sublicensing will depend on the terms on which sublicenses are granted. These should be known, as far as possible, in advance, because the value of the exclusive rights to the company obtaining them depends on any duty to sublicence which it may have. The terms of sublicences should be transparent. They should be non-discriminatory as between licensees in each category. Where the price of the sublicences is unregulated, this may result in prices at monopoly levels and it is not desirable for a competition authority to allow the broadcaster to obtain exclusive rights and then charge other broadcasters monopoly prices. Another adverse consequence could be that of excluding small-scale entry. "Terms" must deal with payment, access to unedited material, embargoes on live transmission or on transmission at popular times, and subject matter (interest and importance of the games or events sublicensed). There should be provision for settlement of disputes. There may be different categories of sublicences. The advantages obtained by the parties in comparison with the sublicense must be proportionate, so that sublicences are of real value to the licensees : the owner of the exclusive rights may not keep all the valuable rights for itself.

3. The Commission will not fix the terms of sublicences, and may not find it easy to ensure that the terms are reasonable. In summary, encouraging sublicensing is not by itself either a satisfactory or a convenient way of solving the competition problems of sports broadcasting.

 

 

VI. Collective purchasing by broadcasting companies

 

1. Broadcasting companies sometimes join together to acquire the right to broadcast sports events. Whether this kind of collective buying falls under Article 85(1), and in what circumstances it fulfils the requirements of Article 85(3), depends on all the circumstances. For example, whether such arrangements are anti-competitive will depend, inter alia, on whether the parties are found to be important competitors with a strong position in the relevant market, and the scope and duration of the exclusive rights purchased. In particular, c Collective purchasing will not raise competition problems if no one member of the group alone would have the resources to bid successfully for any of the rights in question, or where a number of small broadcasters come together which each, individually, have no possibility of acquiring the rights in question. , as no restriction of competition would occur

2. Where collective purchasing is caught under Article 85(1), exemption can be envisaged if its purpose is pro-competitive, for example, by maintaining a broadcasting sector with limited resources facing the big four broadcasters, BSkyB, Canal Plus, Bertelsmann and Kirch, on the market for the procurement of broadcasting rights, or for events of major national public importance, such as the Olympic games.

3. The removal of joint selling arrangements will minimise the need for collective purchasing.

 

 

IV. Priority for free-access television

 

1. There are advantages for viewers if important sports rights are broadcast by free-access television, so that consumers are not obliged to make additional payments for decoders, receiving equipment or cable subscription to view such events, in particular, those in which their compatriot sports men and women take part in international events.

2. More generally, concern has arisen, with the growth and development of pay-TV, that viewers are being denied free-access to important national events because large subscription broadcasters have been buying up those rights to develop their own services. It is said that some sporting events are of such national or heritage importance, that they reflect common identity and value, so that broad free access should be given to them. The complaints are from "public interest" or "national heritage" concern, rather than on competition grounds, and a regulatory approach would be necessary to achieve the desired result.

3. Competition law is not the right instrument for achieving cultural or regulatory aims. As confirmed by the Eurovision judgement, competition rules are neutral with respect to different types of broadcasting and in principle, do not provide a legal base for favouring one category of broadcaster over others.

4. Further to an amendment by the European Parliament, the directive modifying directive 89/552/EEC ("television without frontiers") includes a new Article 3A. The purpose of this Article is explained in recital 18 which reads as follows :

"Whereas it is essential that Member States should be able to take measures to protect the right to information and to ensure wide access by the public to television coverage of national or non-national events of major importance for society, such as the Olympic Games, the football World Cup and the European football Championship; whereas to this end Member States retain the right to take measures compatible with Community law aimed at regulating the exercise by broadcasters under their jurisdiction of exclusive broadcasting rights to such events".

5. Article 3A paragraph 3 stipulates, moreover, that Member States shall ensure that broadcasters under their jurisdiction do not exercise the exclusive rights purchased by those broadcasters in such a way that a substantial proportion of the public in another Member State is deprived of the possibility of following events, which are designated by that other Member State, on free television. According to information supplied to the Commission by national delegations to the Contact Committee set up by the Directive, a large majority of Member States intend to notify their measures taken under Article 3A paragraph 1 in the course of 1998. All Member States have indicated timetables for transposition of Article 3A paragraph 3 by the deadline required by the Directive, i.e. 30 December 1998.

6. The procedure laid down in Article 3A paragraph 2 requires the Member States to notify their measures and the Commission to verify their compatibility with Community law within a period of three months. The Commission must seek the opinion of the Committee established by the Directive. Measures taken by Member States in order to guarantee the availability of coverage of certain events must be in accordance inter alia with Article 90 of the Treaty, and in particular with the principle of proportionality.

 

 

* * *

 

This paper only intends to lay down some broad lines identified to date for the application of competition law in a sector in which the structure and economics are very complex and which is the subject of continuous and very rapid developments. Practice in relation to Articles 85 and 86 will be developed by the Commission on a case-by-case basis., within the framework of specific cases.

 

 

 

 

 

Footnotes:

- For aspects other than those related to competition law, see the Communication from Mr Oreja to the Commission entitled "Exclusive Rights for TV Broadcasting of Major (sports) Events" (SEC(97) 174 final.

- The High Court of Amsterdam verdict of 8 November 1996 (on Feyenoord's appeal against the President of the Utrecht court's previous verdict) was that the television rights in principle belong to the home team and that the statutes of the KNVB are too general to be interpreted as an assignment of the broadcasting rights to the KNVB.

- Decision of the Bundesgerichtshof 11 December 1997 in case Deutscher Fußball-Bund, UFA Film and ISPR v Bundeskartellamt took the view that teams are the natural owners of the broadcasting rights in the games in question, but left open the question of whether associations may also have a claim to ownership in different circumstances.

- C-415/93, 15 December 1995

-

- Joined Cases T-528/93, T-542/93, T-543/93 and T-546/93, judgement of the Court of First Instance of 11 July 1996

- Directive 97/36/EC of the European Parliament and of the Council of 30 June 1997 amending Council Directive 89/552/EEC on the co-ordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities (OJ No L202/60 of 30.7.1997)

- Convergence within the media industry, and between media, information technology and/or telecommunications - Prospective for competition and competition policy - Report to DGIV prepared by London Economics

- Decision of 23 December 1997

- OJ C 372, 9 December 1997

- Case 262/81

- Convergence within the media industry, and between media, information and technology and/or telecommunications - Prospective for competition and competition policy - Report to DG IV prepared by London Economics

- The Ministry for Economic Affairs took the view on 6 November 1996 that the collective selling by the KNVB to Sport 7 of the broadcasting rights to matches was a cartel. On 28 December 1997 the Ministry issued a decision that the collective selling of highlights of soccer games was a restriction of competition but gave it a temporary and transitional exemption, on the basis of public interest considerations, in order not to disrepute the market.

-Hearing of the Restrictive Practices Court in January 1999 of the collective selling by the Premier League of broadcasting rights to the clubs’ matches

- Decision of the Bundesgerichtshof 11 December 1997 in case Deutscher Fußball-Bund, UFA Film and ISPR v Bundeskartellamt

- Joined Cases T-528/93, T-542/93, T-543/93 and T-546/93, judgement of the Court of First Instance of 11 July 1996

- Directive 97/36/EC of the European Parliament and of the Council of 30 June 1997 amending Council Directive 89/552/EEC on the co-ordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities (OJ No L202/60 of 30.7.1997)

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