The European Commission closed antitrust cases Oct. 26 against six major Hollywood studios after they agreed to drop clauses in contracts with pay television operators that the EU claimed artificially
(The Hollywood Reporter, AP) -- The European Commission closed antitrust cases Oct. 26 against six major Hollywood studios after they agreed to drop clauses in contracts with pay television operators that the EU claimed artificially inflated film prices.
NBC Universal remained adamant that its dealings with European pay TV operators are "appropriate and lawful."
European Competition commissioner Mario Monti said an investigation was dropped against Time Warner Inc., Sony Corp.'s Columbia TriStar Motion Pictures, Tracinda Corp.'s MGM Inc., Fox Entertainment Group Inc., the Walt Disney Co. and DreamWorks SKG. NBC Universal and Paramount were not included in the agreement.
Monti clarified that the studios had agreed to remove "most-favored nation" clauses that allegedly illegally limit competition through contracts that commit television broadcasters to offer the same terms to multiple film suppliers. Film companies insert "most-favored nation" clauses into contracts to ensure that other studios don't get better deals from content buyers.
"I invite Paramount and NBC Universal to follow this reasonable path as soon as possible," Monti said during a news conference. "I am confident they will reflect on their position, especially after today's announcement."
But a statement issued by NBC Universal indicated that it is still very much at odds with Monti.
"It is our belief that the provisions in our agreements with pay TV operators are appropriate and lawful," it said. "We regret that the commission does not share our view. These consensual provisions have been utilized by studios and platforms alike to facilitate the negotiation of complex licensing agreements. We will continue to give this issue serious consideration."
20th Century Fox Television Distribution also spoke out concerning Monti's announcement.
Peter Levinsohn, president of worldwide pay television and digital media at 20th Century Fox Television Distribution, said, "We're pleased that the European Commission has closed its investigation into MFNs in pay TV agreements. As the commission acknowledged in its statement, we do not believe that our output agreements have any anti-competitive effects and clearly do not think that they are in breach of any applicable EC competition law."
Paramount International Television declined comment, as did other Hollywood studios involved in the case. Spokespeople at Disney or DreamWorks could not be immediately reached.
The Brussels-based commission aims to boost competition in the $49.5 billion European pay TV market by easing access to content, including films. The EU is concerned that the most-favored-nation clauses covering broadcast rights to movies may lead to price harmonization in the industry, a type of cartel.
Monti has cracked down on cartels and other abuses of antitrust rules. Since he became competition commissioner five years ago, Monti's department has levied more than 4.6 billion euros ($5.9 billion) in fines. Companies found guilty of EU antitrust violations face fines of as much as 10% of sales. The commission typically opts for less.