NBCUniversial

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“So today’s decision is not just about Minions and dinosaurs and trolls. It’s about consumers and businesses throughout Europe. It shows that the Commission is committed to making every effort, so that the single market – and Europe’s economy – works better for us all.” M. Vestager, EU Commissioner for Competition (Statement of January 30, 2020).

On January 30, 2020 the European Commission (EC) fined NBC Universal, the US film production company that owns the intellectual property rights of films such as Jurassic Park or Minions with €14.3 million for restricting cross-border trade and online sales of merchandising products to its licensees.

As a result of the final report on the e-commerce sector inquiry, the EC opened in June 2017 three separate investigations to determine if the licensing and distribution practices of Nike, Sanrio and NBC Universal breached Article 101 of the Treaty on the Functioning of the European Union (TFEU). Nike and Sanrio investigations ended in March and July 2019 with fines of €12.5 and €6.2 million respectively.

After a two and a half years investigation, the EC found that NBC Universal imposed the following measures on its licensees in their non-exclusive licensing agreements:

  • Restrictions on out-of-territory sales through clauses (i) explicitly prohibiting these sales; (ii) requiring notification of out-of-territory sales to NBC Universal; (iii) requiring payment of revenues generated from out-of-territory sales to NBC Universal; and (iv) limiting the languages used in the merchandising products.
  • Restrictions on sales beyond allocated customers or customer groups through clauses (i) explicitly prohibiting these sales and (ii) requiring payment of revenues generated from these sales to NBC Universal.
  • Restrictions on online sales through clauses (i) prohibiting all online sales or (ii) only allowing online sales on the websites of specific retailers.

According to the EC, NBC Universal also required its licensees not to supply licensed products to customers who could be selling those outside the allocated territories or customer groups.

NBC Universal also implemented measures to encourage compliance with the above sales restrictions. These measures included carrying out audits and the termination or non-renewal of agreements if licensees did not respect the sales restrictions.

NBCUniversal_post
Fuente: Comisión Europea

The EC found that these practices partitioned the EU single market harming European consumers by preventing access to greater and better choice.

However, the fine was finally reduced by 30% because NBC Universal cooperated actively during the investigation by acknowledging the infringement and providing additional evidence.

Additionally, the EC is investigating possible geo-blocking practices in the video game and hotel accommodation sectors. In particular, the EC has launched investigations into Valve Corporation and five other video game publishers for possible restrictions on access to digital content imposed on consumers based on their location or country of residence. The EC is also investigating three tour operators Kuoni, Rewe and Thomas Cook for allegedly discriminating consumers on the basis of nationality or country of residence. The outcome of the present case and the ongoing investigations highlight the interest of the EC in restrictive practices in relation to cross-border sales and their priority in the EU agenda. Therefore, further decisions along the same lines should be expected.

Both the impact of e-commerce on vertical agreements and the need to adapt competition rules to the new digital era are unquestionable. It is to be expected that online sales, platforms and the changes brought about by the digital economy will be at the core of both the consultation and the reform of the Vertical Block Exemption Regulation and its accompanying guidelines, which expire on May 31, 2022.

The European Commission press release is available here.

This post is also available in: Español

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