French Competition Authority seeks to restrict double exclusivity of television content and internet access

03 August 2009

Romain Ferla

On 7 July 2009, the French Competition Authority issued an opinion on the competition concerns raised by exclusive access to TV content granted to some Internet Service Providers (ISPs). This opinion follows the decision of the Paris Commercial court in February 2009, which was overturned on appeal, which considered (and held) that channel Orange Sport’s availability only to households which also had to subscribe to Orange’s internet access offer amounted to illegal tying. This was the first time in France that an ISP had tried to implement the so-called double exclusivity, involving exclusive rights to television content and exclusive rights in relation to the transport and access services to this content via the internet.

The Competition Authority stated in its opinion issued that: although the double exclusivity may favour the entry of ISPs in a French pay-TV market dominated by Vivendi/Canal+ and, hence, be pro-competitive in this respect, the double exclusivity remains questionable for three reasons:

  • there are other ways to encourage operators to invest in the purchase of audiovisual content, which are less damaging for competition;

  • it is illogical to compensate the lack of competition on the upstream market by promoting an economic model which may have a foreclosure effect in the downstream market; and

  • most importantly, this dual exclusivity entails serious risks for competition and for the consumers on the high speed and very high speed internet markets. Indeed, the double exclusivity is restrictive for the consumer, who can no longer have access to all the attractive content or is obligated to pay much more for universal access to content; therefore, it runs the risk of destabilising the broadband market at the expense of competing operators and could lead, in the longer term to the emergence of a duopoly between Orange and Vivendi/Canal+.

The Competition Authority therefore recommends:

  • that exclusivity of transport and access remains strictly limited in time (one or two years) and scope (limited to genuine technical or commercial innovations);

  • the promotion of self-distribution, which would enable ISPs to control the commercial relationship with the customer and consumers to access every attractive content without being held hostage by one ISP; and

  • the regulation of the wholesale pay-TV channels market, with a clear wholesale must-offer obligation imposed on dominant operators on the pay TV market. This clearly aims at Canal+, leader of the French pay-TV.

This opinion comes after British regulator Ofcom recommended in June that Pay-TV giant British broadcaster BSkyB wholesale its premium content to its competitors.

Source:

Opinion of the French Competition Authority No 09-A-42 of July 7, 2009