Broadcaster’s UK arm and studios such as Disney and Paramount alleged to have struck anti-competitive deals under EU rules

The European commission has accused Sky and six Hollywood studios of putting up anti-competitive barriers that restrict consumers from watching the films and TV shows of their choice. The commission, which has sweeping powers to stop anti-competitive practices, accuses Britain’s biggest pay-TV broadcaster and major film-makers of creating bilateral agreements that mean consumers outside the UK and Ireland cannot get access to Sky’s full range of programming.



If upheld, the charges could change the way subscription television services are paid for and watched throughout the European Union. With pay-TV stations largely operating within national boundaries, there are potential big repercussions for a market of more than 500 million consumers if they are allowed to buy content from any EU broadcaster, regardless of where they live.

The commission has sent a statement of objections – a list of formal charges – to Sky UK and the six studios: Disney, whose recent hits include Maleficent; Fast & Furious maker NBC Universal; Paramount Pictures, which owns the Transformers franchise; Sony, the studio behind the Spider-Man series; Twentieth Century Fox, whose TV hits include Modern Family; and Warner Brothers, owner of the Harry Potter franchise.



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The investigation was opened by Margrethe Vestager, the European commissioner in charge of competition, who is already making a name for herself with antitrust investigations into Google and the Russian state energy company Gazprom. “European consumers want to watch the pay-TV channel of their choice regardless of where they live or travel in the EU,” Vestager said in a statement.



“Our investigation shows that they cannot do this today, also because licensing arrangements between the major film studios and Sky UK do not allow consumers in other EU countries to access Sky’s UK and Irish pay-TV services, via satellite and online. We believe this may be in breach of EU competition rules. The studios and Sky UK now have the chance to respond to our concerns.”



If the commission decides that EU antitrust laws have been infringed, the companies could, in theory, be fined as much as 10% of their annual turnover.

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A bigger goal for regulators in Brussels is ensuring that European consumers are able to watch TV from any part of the continent. The latest investigation challenges the right of Hollywood studios to sell TV shows and films separately in different European states, a practice at odds with the EU’s vision of a borderless market for content.



In May, the commission unveiled its plan for a digital single market, a single regulatory framework for the internet across Europe. The idea is that any creative content, whether film, music or television, should be equally available across the EU. If the plan comes to fruition, in future, consumers could watch BBC iPlayer from any part of Europe and not be stung by charges for using their mobile abroad.

The head of the commission, Jean-Claude Juncker, also hopes to help build European cross-national media champions to take on Hollywood, as well as challenging digital giants such as Google and Facebook.



The EU’s competition investigations have been running on a separate track. The latest investigation began in January 2014, and similar cases are under way against Canal Plus of France, Sky Italia of Italy, Sky Deutschland of Germany and DTS of Spain. “We continue to examine cross-border access to pay-TV services in these member states,” the commission said.

These investigations have exposed the use of “geo blocking”, the practice of restricting access to content based on geographical location. The latest investigation found clauses requiring Sky to block access to films through its online or satellite pay TV services to consumers outside the UK and Ireland using geo-blocking.

In a statement, Sky acknowledged receipt of the commission’s objections. “The European commission is examining cross-border access to pay-TV services across a number of member states. As part of its ongoing enquiry, we have received a statement setting out the commission’s preliminary views. We will consider this and respond in due course.” The six studios did not immediately comment.



By taking on six big Hollywood names, the commission risks raising hackles in Washington, where there is already suspicion about EU trade regulation. US-based firms, especially tech companies, have been a particular target for Vestager amid concerns that firms across the Atlantic are distorting the EU’s single market.

Sky and the Hollywood studios now have the right to respond. The investigation is open-ended with no legal deadline for completion and similar cases have stretched over several years.