France: French Competition Authority Announces Further Investigation into the Exclusivity Clauses Implemented by Canal Plus Group in Pay TV market

On 16 November 2010, the French Competition Authority (the 'Authority') issued a decision in its investigation on exclusivity clauses in the Pay TV sector. The case was opened in 2007 following complaints from Group AB and RTL 9 to the former Competition Council (the 'Council'). These complaints were eventually withdrawn; however in 2008 the Council received a further complaint by France Telecom and opened ex officio proceedings.

France Telecom argues that the clauses granting exclusivity to the French Pay TV distributor Canal Plus Group ('Canal Plus') for certain Pay TV channels are unlawful. France Telecom also denounces the cumulative effect of such clauses: they are alleged to foreclose the market by preventing competitors, and notably telecom operators, from accessing channels on a wholesale level, thus preventing them from marketing Pay TV offers that are sufficiently attractive to consumers.

In its decision the Authority defines the scope of its investigation. It will examine three types of exclusivity clauses implemented by Canal Plus for the distribution of Pay TV channels:

• Clauses relating to channels "owned" by Canal Plus, i.e. the channels produced by Canal Plus itself;
• Clauses relating to "related channels", i.e. channels produced by firms which were at the time of the complaint minority shareholders of Canal Plus France;
• Clauses in contracts between Canal Plus and independent channels producers which grant exclusivity to Canal Plus for about thirty TV channels.

The Authority will examine whether the combination of these exclusivity provisions creates a foreclosure effect on the market. Although the Authority confirms the existence of a dominant position of Canal Plus on the upstream market for Pay TV linear services, it considers that insufficient evidence has been gathered so far and therefore requests that additional investigation is undertaken before it issues a decision on the merits

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