Sky UK and six U.S. film studios found themselves on the receiving end of a Statement of Objections from the European Commission Thursday regarding contractual restrictions in place that may have breached antitrust laws.

According to the Commission's preliminary position, Sky UK has a bilateral agreement with Warner Bros., Twentieth Century Fox, Sony, Paramount Pictures, NBCUniversal and Disney to restrict access to pay-TV services offered in Ireland and the UK. If the restrictions were not in place, Sky UK can freely decide to sell its services on whatever commercial grounds it chooses to, taking into consideration regulatory framework which include pertinent copyright laws.

But just because Sky UK and the U.S. film studios received a Statement of Objections does not mean that the parties are guilty as the Commission is still investigating the issue. But should the investigation reveal that the Commission's preliminary position is correct, then the parties involved have broken EU antitrust rules that prohibit anti-competitive arrangements.

According to Margrethe Vestager, competition policy EU commissioner, consumers in Europe seek to use pay-TV services of their choice without worrying about where they access the services.

"Our investigation shows that they cannot do this today," she said, adding that part of the reason is that the arrangement between Sky UK and the film studios prevents consumers not from Ireland and the UK from accessing Irish and UK pay-TV services.

The Commission's investigation was launched in January 2014. So far, clauses within licensing agreements have been identified to contain strict requirements stating that Sky UK must block access to films for consumers outside of licensed territories via its satellite or online pay-TV services.

On the other hand, some agreements also have clauses requiring the film studios to guarantee that pay-TV services from other broadcasters will not be made available in Ireland and the UK, granting "absolute territorial exclusivity" to Sky UK.

Because of the surge in antitrust investigations, the Commission will be proposing that copyright laws in the EU be modernized and that the EU Satellite and Cable Directive be reviewed. The directive was adopted in May as part of the Commission's Digital Single Market Strategy.

Previously, the Commission also raised concerns about licensing agreements involving other major broadcasters in Europe like Spain's DTS, Germany's Sky Deutschland, Italy's Sky Italia and France's Canal Plus.

Photo: Ricardo Diaz | Flickr

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