Advocate General opinion in the FAPL/Murphy case
On 3 February 2011, Advocate General Kokott handed down an opinion on the extent to which the Premier League can require its licensed broadcasters in the EU to prevent their broadcasts from being viewed outside their licensed area.
AG Kokott concluded that the measures adopted by the Premier League had the effect of partitioning the EU into separate national markets and therefore constituted a serious infringement of the EU rules on freedom to provide services and the EU competition rules.
If the final judgment (which is expected within the next twelve months) upholds the opinion, it could have significant implications for the Premier League's licensing strategy.
Background
The Football Association Premier League Ltd (FAPL) is responsible for the marketing of the English football premier league (EPL). Its practice has been to grant broadcasters in the EU the exclusive right to broadcast live games within their own country, accompanied by a requirement that they should prevent their broadcasts from being shown outside their allocated territory (to protect the exclusivity granted to other broadcasters). In the case of satellite transmissions, broadcasters are therefore required to encrypt their signals, so that they can only be received and viewed using a decoder card, and to prevent the decoder cards being supplied outside of their own territory.
Typically, broadcasters in those countries where the demand for live EPL matches is the greatest (such as the UK) are prepared to pay the highest prices for the live broadcasting rights. The Greek broadcaster Nova, on the other hand, typically pays a lower fee on the basis that Greece sees a lesser demand for EPL matches – and therefore tends to charge lower rates to its subscribers.
In the present case, publican Karen Murphy purchased a subscription to Nova which allowed her to screen live EPL matches in her Red, White and Blue Portsmouth pub at a lower price than she would otherwise have had to pay to the UK broadcasters Sky and ESPN. She was subsequently prosecuted and fined, it being held that only Sky/ESPN broadcasts can be shown in the UK. Ms Murphy appealed to the UK High Court, raising a number of issues of EU law, which the court decided to refer for resolution to the Court of Justice of the European Union, Europe's highest court.
In Court of Justice cases, before final judgment is delivered, the Advocate General issues an opinion to assist the court in its deliberations.
Freedom to provide services
AG Kokott held that provisions prohibiting the use of satellite decoder devices, which have been placed on the market in one EU country with the consent of the rights holder, in order to view broadcasts in another EU country, were detrimental to the long standing objective of creating a single European market. Such provisions were considered to segment the EU along national boundaries and to impair the freedom to provide services, one of the fundamental tenets of European law. AG Kokott considered that "The possibility, demanded by the FAPL, of marketing the broadcasting rights on a territorially exclusive basis amounts to profiting from the elimination of the internal market."
She also held that "there is no specific right to charge different prices for a work in each Member State. Rather, it forms part of the logic of the internal market that price differences between different Member States should be offset by trade."
AG Kokott noted that, under EU law, a restriction on a fundamental freedom is justified only if it pursues a legitimate objective or is justified by overriding reasons of public interest – and only then if it does not go beyond what is necessary to achieve it.
Having reviewed the possible justifications in this case, she considered that the partitioning of the internal market for the reception of satellite broadcasts was not necessary in order to protect the specific subject matter of the intellectual property rights to live football transmissions. However, she did accept that the protection of 'closed periods', when EPL matches cannot be shown live, might be a possible justification for the restriction, on the basis that their purpose is to protect attendance at and participation in lower league football - although it would have to be shown that the measures were appropriate and proportionate to this purpose (the implication being that this might be difficult in practice). Ultimately, this would be an issue for the High Court to determine.
AG Kokott also held that it was possible for national law to allow holders of rights in certain types of content (such as music) to object to it being played in a pub, provided that the restriction on the freedom to provide services arising from the exercise of this right was not disproportionate. Proportionality was to be assessed in light of the amount of the programme being broadcast that was accounted for by the content in question. In this case, the relevant content was the Premier League musical anthem and it would be for the High Court to determine how important the anthem was to the whole of the programme being broadcast.
Competition law
AG Kokott also considered whether the FAPL's licensing arrangements were contrary to Article 101(1) of the Treaty on the Functioning of the European Union, the prohibition on anti-competitive agreements.
AG Kokott held that, where a rights holder enters into a series of exclusive territorial licences, whereby the broadcaster is licensed to broadcast the programme content only within its own territory, and the licences include a contractual obligation requiring the broadcaster to prevent the use of its satellite decoder cards outside of the licensed territory, such licences infringe Article 101(1).
Furthermore, she held that, because licences of this kind have the same effect as agreements to prevent parallel imports, they are to be regarded as having the object of restricting competition. Accordingly, it is not necessary to show that they have any actual anticompetitive effects.
Similar to the position taken in respect of the restriction on the freedom to provide services, AG Kokott noted that it may be necessary to consider whether the agreements are capable of being justified under Article 101(3), which provides an exemption from the prohibition under Article 101(1), although, again, this would be a matter for the High Court to determine.
Implications
Whilst the AG's opinion is non-binding, in most cases the AG's opinion tends to be followed by the Court of Justice.
If the AG's opinion were to be followed in this case, the FAPL may have to rethink the licensing strategy for its broadcasting rights in the EU. In particular, on the basis that the FAPL would be unable to guarantee absolute territorial exclusivity to broadcasters, there may be concerns that it may not be able to attract the same level of bids when it comes to the auction of its broadcasting rights.
One option that the FAPL may consider is selling the rights only in a limited number of EU countries, where the demand for live EPL matches is highest, and where price differences between different national broadcasters may not be sufficiently great to encourage subscribers to purchase subscriptions outside of their own country. However, this may lead to the EPL not being available to viewers in a number of EU countries.
Alternatively, the FAPL may decide not to provide English commentary versions on a pan-European basis, thereby making the purchase of subscriptions outside of the UK less attractive to UK viewers.
However, with the judgments of the Court of Justice and the High Court still to come, there is still plenty to play for before the final whistle blows.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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