EU steps up complaint against Sky UK, Hollywood studios

Sky's UK operation and six major Hollywood movie studios including 20th Century Fox and Warner Brothers have been accused by the European Union of illegally curbing cross-border access to their pay-TV content.

The European Commission's antitrust complaint also targets Walt Disney, Comcast's NBCUniversal Media, Sony Pictures and Viacom's Paramount Pictures.

The six studios and Sky UK have been sent a statement of objections - a formal step in the Commission’s investigations into suspected violations of EU competition law.

It is taking “the preliminary view” that each of the companies bilaterally agreed to put in place contractual restrictions that prevent Sky UK from allowing EU consumers outside the UK and Ireland from accessing certain services.

The decision by the 28-nation EU’s antitrust watchdog escalates a 2014 investigation into how clauses in the studios’ licensing agreements with EU broadcasters, including Sky UK, may curb the sale of movies and TV programmes outside the broadcasters’ home markets.

The European Commission is keen to abolish what is known as "geo-blocking". It argues that pay-TV services, including online video-on-demand services, that restrict content on a region-by-region basis within the EU for commercial reasons contravene the principles of the single market.

As part of its digital single market strategy adopted in May, it wants the same content to be accessible to all member states. This push to modernise EU copyright rules, which would allow for wider access to online content across the EU, will take place in parallel with this competition investigation, the Commission said.

“European consumers want to watch the pay-TV channels of their choice regardless of where they live or travel in the EU. Our investigation shows that they cannot do this today,” said Margrethe Vestager, the EU Commissioner in charge of competition policy.

Sky UK’s licensing agreements “may be in breach of EU competition rules”, Ms Vestager added in a statement.

Sky Deutschland, Sky Italia, Vivendi’s Canal Plus and Spain’s DTS Distribuidora de Television Digital have not received a statement of objections from the Commission but are still under investigation.

The EU case into so-called absolute territorial protection clauses was originally triggered by a 2011 ruling that the English Premier League’s geographic restrictions limiting where TV channels can show its soccer matches breached competition law.

Sky, a UK-based, pan-European satellite broadcasting company founded by Rupert Murdoch, said in a statement that it is reviewing the EU statement of objections.

Additional reporting: Bloomberg