ANTITRUST: EU COMMISSION FINES NBC UNIVERSAL EURO 14.3 FOR RESTRICTING SALES OF MERCHANDISE PRODUCTS
Several companies belonging to Comcast Corporation, including the film major NbcUniversal, have been fined €14.3 million by the European Commission for restricting merchandising sales of products related to films such as Minions, Jurassic World and Trolls within the European market.
The EU Commission’s investigation phase:
In June 2017, the Commission launched an antitrust investigation regarding certain licensing and distribution practices of NbcUniversal to assess whether it had unlawfully prevented licensees and distributors from selling freely, within the EU single market, NbcUniversal brand products for the production and sale, including Minions, Jurassic World, Trolls and other NbcUniversal films.
EU Commission’s investigation found that NbcUniversal’s non-exclusive licence agreements infringed EU competition rules because they contained, in particular, clauses limiting out-of-territory sales to allocated customers, as well as online sales, with the obligation to pay the revenues of those sales to the licensor. NbcUniversal also obliged licensees to impose these sales restrictions to their customers, encouraging compliance with the same, also through audits that could lead to the termination or non-renewal of licence agreements.
The Commission concluded that NbcUniversal’s illegal practices, which have been in place for more than 6 and a half years (from 1 January 2013 to 25 September 2019), have partitioned the Single Market and prevented licensees in Europe from selling products across borders and between customer groups, to the ultimate detriment of European consumers. Executive Vice President in charge of competition Margrethe Vestager said: “These restrictions meant that shops could not freely choose which products to order from different European distributors. A department store in Spain could not sell pyjamas with E.T. because the Belgian manufacturer of those pyjamas was prohibited from selling in Spain. The extra-terrestrial had managed to reach Earth but was stopped in Spain due to a contractual restriction. Meanwhile, a teenager in Sweden could not buy a T-shirt with the character from the film “The Big Lebowski” online. Thus, because of these restrictions, consumers lost the possibility to choose, maybe even at lower prices”.
Vestager noted that the Commission’s 2017 investigation into e-commerce markets found that territorial restrictions had increased both in contracts for the sale of consumer goods online and in contracts for the licensing of digital products. For this reason, fighting against such anti-competitive restrictions has become a priority for the Commission.
Indeed, as stated by Vestager, the total amount of fines that the Commission has imposed on companies for creating barriers to cross-border trade in the single market amounts to EUR 184 million since May 2017 (only last year there have been two significant convictions against two major companies for EUR 12.5 million and EUR 6.2 million).
This operation is linked to other EU Commission’s activities, such as those to monitor effective compliance with the Geoblocking Regulation (EU) 2018/302, which aims to remove unjustified geographical restrictions on online shopping.
The cooperation of NbcUniversal:
It must be acknowledged that NbcUniversal cooperated with the Commission, beyond its legal obligations, by acknowledging the infringement and providing additional evidence to complete the investigation and waiving certain procedural rights which led to administrative efficiencies.
The fine was calculated on the basis of the Commission’s 2006 Guidelines (see https://ec.europa.eu/commission/presscorner/detail/en/IP_06_857) taking into account, in particular, the value of sales relating to the infringement, its gravity and duration. However, the cooperation of NbcUniversal resulted in a 30% reduction of the fine, which was then set at €14,327,000.00.
Action for damages
Without prejudice to the sanction of the European Commission, there remains the right for all persons affected by the conduct of NbcUniversal to claim damages before national courts. The Commission has in fact recalled that, according to the case law of the Court of Justice and Council Regulation No. 1/2003, a Commission decision constitutes binding proof that the conduct took place and was unlawful.
The described developments demonstrate once again the value of a system of continuous verification of contract assets, especially with regard to licensing agreements, so that European legislation protecting competition in the free market as well as the recent geoblocking regulation is respected.
Margherita Stucchi and Tankred Thiem