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Prohibition of territorial exclusivity in audiovisual sector : a contradiction between the European DSM strategy and the European Audiovisual Model
E. Scaramozzino

In the “EFADs Position Paper on the Proposed Sat Cab Regulation”(1) the European Film Agency Directors (EFADs) took position against Article 2 in the Proposal for a Regulation on certain online transmissions of broadcasting organisations and retransmissions of television and radio programmes (2). The EFADs oppose to the application of the principle of country of origine to ancillary online services in its current form and request its deletion. They consider that the value of rights in the audiovisual sector is not respected by the extension of the principle of Country Of Origin (COO) to broadcasters’ ancillary online services. It could undermine territorial exclusivity. For European independent companies, territorial exclusivity is a precondition for the financing, distribution, and marketing of European works. Any erosion or elimination of territoriality and contractual freedom would have serious negative consequences for the creation and circulation of cultural diverse works across the EU. Catch-up services are increasingly used by consumers to access content. These rights, which are negotiated at the same time as linear services, are sometimes not monetised and the online rights are often sold at no extra cost. It is doubtful that this will change under a proposal which will undermine the bargaining power of producers, sales agents and distributors. In a situation where broadcasters would be able to get the rights to all 28 EU Member States by default, the right holders will be in a weaker negotiating position.

The EFADs are concerned by the link between this proposal and the Commission’s DG Competition investigations, such as the one into cross-border access to pay-TV content (Case AT. 40023). In that case, which is always under process, the Commission sent a Statement of Objections (SO) in July 2015 setting out its preliminary view that certain clauses in film licensing contracts for pay-TV between the 6 major US studios and Sky UK breach EU antitrust rules. These contested clauses (a) required Sky UK to block access to US studios\\\' films through its online pay-TV services (so-called \\\"geo-blocking\\\") or through its satellite pay-TV services to consumers outside its licensed territory (UK and Ireland) and (b) required the major to ensure that broadcasters outside the UK and Ireland are prevented from making their pay-TV services available in the UK and Ireland. The Commission considers that such clauses restrict the ability of broadcasters to accept unsolicited requests (so-called \\\"passive sales\\\") for their pay-TV services from consumers located outside their licensed territory. The Commission had concerns that this may eliminate cross-border competition between pay-TV broadcasters and partition the EU\\\'s Single Market along national borders. In July 2016, the Commission accepted the commitments offered by Paramount, by which the studio withdraws the contractual obligations assessed as restrictions of competition (Decision pursuant to Article 9(1) of Regulation (EC) No 1/2003) (3). The commitments will apply throughout the EEA for a period of five years and cover both standard pay-TV services and, to the extent that they are included in film licensing contracts for pay-TV with a broadcaster, subscription video-on-demand services as well. The commitments cover both online services and satellite broadcast services.

This position could have a consequence on contractual practices by forbidding the use of contractual clauses that allow the introduction of geo-filtering. The impact of this case will not be restricted to the relationship between Sky UK and the studios but will also directly affect the licensing practices of Europe’s independent audiovisual companies and have a contagious effect across all platforms and media, regardless of the specific modes of distribution concerned. Therefore, the combination of an extension of the Country of Origin principle and prohibition of contractual clauses could lead to the elimination of territorial exclusive licensing.

This extension of the COO principle and the Case AT 40023 could broaden the audiovisual right as a derogation of the copyright, particularly the right of communication to the public (article 3 of the InfoSoc directive) in the aim of DSM achievement, without considering that in restraining the exercise of the copyright, the UE jeopardizes its own European audiovisual policy’s objectives. This “package”, which would prohibit the territorial exclusivity, could be risked for the European audiovisual model, and the cultural diversity in audiovisual sector in EU.

(1) Position Paper on the Proposed Sat Cab Regulation Why the EFADs strongly opposes Article 2 in the Proposal for a Regulation on certain online transmissions of broadcasting organisations and retransmissions of television and radio programmes , 21 November 2016
(2) Proposal for a Regulation of the European Parliament and of the Council, 14.9.2016 COM(2016) 594 final, laying down rules on the exercise of copyright and related rights applicable to certain online transmissions of broadcasting organisations and retransmissions of television and radio programmes
(3) CASE AT 40023- Cross-border access to pay-TV Decision Article 9 Regulation (EC) 1/2003
(4) directive 2001/29/EC of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society OJ; 22.06.2001 L 167

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