Originally, the EU had no role un sporting affairs, and there was no need for it. However, the Lisbon Treaty has given the EU a new competence on sport. Sport is one of the areas where the Member States should have exclusive competence but the Union supposedly provides support or co-ordination. The EU has now competence for co-ordinating sports policies.
Moreover, the Commission has been stressing, “sport activity is subject to the application of EU law” as “competition law and Internal Market provisions apply to sport in so far as it constitutes an economic activity.” According to Commission “sport has certain specific characteristics” however “it cannot be construed so as to justify a general exemption from the application of EU law.” Obviously, the Commission, and ultimately the ECJ, decide whether sporting rules are compatible with EU law.
In fact, there is already a case concerning TV rights at the ECJ. The Advocate General Kokott has recently delivered her opinion in Case C403/08 Football Association Premier League Ltd and Others v QC Leisure and Others and Case C429/08 Karen Murphy v Media Protection Services Ltd. The preliminary reference cases concern whether territorial exclusivity agreements relating to the transmission of football matches are contrary to EU law.
The Premier League exploits the copyright for the live transmission of its football matches. It sells exclusive TV rights to broadcasters on a territory-byterritory basis, which are granted for three years. In order to preserve this exclusivity, licensees must prevent their broadcasts from being able to be watched outside their respective broadcasting areas. They are, therefore, required to transmit their satellite signal in encrypted form to subscribers within their allocated territory. Then, subscribers can decrypt the signal using a decoder card.
However, this exclusivity has been circumvented as foreign decoder cards have been used in the UK to access foreign satellite transmissions of live Premier League football matches. Undertakings have been importing decoder cards from Greece into the UK and sell them to pubs at better prices than the UK’s broadcasters. The Premier League complained that the use of such cards in the UK constitutes an infringement of its rights under the provisions of national law intended to implement Directive 98/84 on the legal protection of services based on, or consisting of, conditional access and of the copyright law. Obviously, the Premier League wants to stop such practice through a judicial ruling, but if the ECJ upholds the opinion of the Advocate General, this will not be achieved but the opposite.
According to the Advocate General (AG), measures to enforce exclusive broadcasting rights infringe the European Union’s fundamental freedoms and competition law. The AG considers that territorial exclusivity agreements relating to the transmission of football matches are incompatible with EU law. Hence, it is not possible to forbid the live transmission of Premier League football matches in pubs by means of foreign decoder cards.
The High Court has to decide the cases in accordance with the ECJ’s decision, which is binding on it as well as on other national courts before which a similar case is raised. It should be borne in mind that the Advocate General’s opinion is not binding, but if the ECJ decides to follow it, such a ruling would have far reaching consequences for the Premier League and Sky, which would, probably, see a loss of income. The Premier League would no longer be able to sell TV rights on a territorial exclusivity basis. In fact, if the ECJ follows the advice of the AG, such ruling would have an impact on the way TV sports rights are sold within the EU, as undertakings providing decoder cards may broadcast football matches being filmed in any Member State’s league.
According to the AG the utilisation of services from other Member States would be prevented if there is an enforcement of rights to satellite programmes on the basis of which the rights-holders can prohibit third parties from watching and showing those programmes in other Member States. In fact, she stressed “This impairment of freedom to provide services is particularly intensive as the rights in question not only render the exercise of freedom to provide services more difficult, but also have the effect of partitioning the internal market into quite separate national markets.” Consequently, the AG concluded that there is “a serious impairment of freedom to provide services.”
The AG recalled that any restriction to the freedom to provide services is only acceptable if it pursues “a legitimate objective compatible with the Treaty and is justified by overriding reasons of public interest.” Under the Treaty and according to the Court’s case law, restrictions might be justified on grounds of public policy, public security, public health and overriding reasons in the general interest. The AG considered whether the “Protection of industrial and commercial property” could justify the restriction to the freedom to provide services in the present case. However, it can only justify restrictions, which are necessary to protect rights that constitute the specific subject-matter of such property.
The AG noted that the economic exploitation of the transmission of football matches through the charge for the decoder cards is not undermined by the use of Greek decoder cards, as charges were paid for those cards. She noted that the “charges are not as high as the charges imposed in the United Kingdom,”, but “it forms part of the logic of the internal market that price differences between different Member States should be offset by trade.” She pointed out that the “marketing the broadcasting rights on a territorially exclusive basis amounts to profiting from the elimination of the internal market.” Consequently, the AG concluded, “that a partitioning of the internal market for the reception of satellite broadcasts is not necessary in order to protect the specific subject-matter of the rights to live football transmissions.”
In the proceedings the Premier League argued that the importation of decoder cards would make it impossible to enforce closed periods – “a window of two-and-ahalf hours during which no football matches are to be transmitted.” However, according to the AG the specific subject matter of the rights to the closed periods for live transmissions do not justify a partitioning of the internal market.
The AG concluded, therefore, “that freedom to provide services under Article 56 TFEU precludes provisions which prohibit, on grounds of protection of intellectual property, the use of conditional access devices for encrypted satellite television in a Member State which have been placed on the market in another Member State with the consent of the holder of the rights to the broadcast.” According to AG “An individual agreement to use decoder cards only for domestic or private use also does not affect that conclusion.” Hence, the AG’s opinion also applies to home viewers of live matches, but “the Member State in question may, none the less, in principle set out rights which allow authors to object to the communication of their works in pubs.”
The Premier League should decide how to sells its TV rights in the UK, this is a domestic issue, and consequently Brussels should not interfere. The Premier League reacted to the AG’s opinion by saying “Our initial view is that it is not compatible with the existing body of EU case law and would damage the interests of broadcasters and viewers of Premier League football across the EU,” Moreover, they said “If the European Commission wants to create a pan-European licensing model for sports, film and music then it must go through the proper consultative and legislative processes to change the law rather than attempting to force through legislative changes via the courts.” In fact, one could conclude from the European Commission’s Communication “Developing the European Dimension in Sport”, recently adopted, that the Commission has that in mind. The Commission is set to focus its attention on sport-related intellectual property rights and TV rights.
According to the Premier League “The ECJ is there to enforce the law, not change it.” However, it is noteworthy that the Treaties as well as secondary EU legislation have been amended to incorporate ECJ’s rulings.