BVI Television (Europe) Inc./SPE Euromovies Investments Inc./Europe Movieco Partners - Film industry

Background

Acquisition by BVI Television (Europe) Inc. (PVI Europe) and SPE Euromovies Investments Inc. (SPE Europe) of joint control of Europe Movieco Partners (Movieco), a newly created company constituting a joint venture.

Assessment

The Commission cleared the operation. The product markets concerned are: (1) the market for the acquisition of broadcasting rights, in particular for films and sporting events, by pay-TV channels and (2) the market for the wholesale supply of films and sport channels through pay TV. The Commission decided that the operation will not lead to the creation or strengthening of a dominant position. The joint venture will have a limited impact on the first market concerned and the entrance of Movieco will increase competition on the demand side. As regards the second market concerned, the Commission found that Movieco cannot be said to be dominant.

The Commission also assessed the operation under Article 2(4) of the Merger Regulation. The markets which could be assessed for the purpose of this article were (i) the neighbouring market of the wholesale supply of basic pay-TV channels to pay-TV operators was considered relevant, and (ii) the market relating to the production of films and the various markets in which the rights for films are acquired, other than for pay TV. The Commission considered there was no scope for co-ordination of the competitive behaviour of Disney and Sony. The parties entered into an agreement which places control of access to most of its films in the hands of the joint venture. Moreover, their position on that market is insignificant and both parties have specifically stated that they retain the option to launch new channels to compete with each other and they remain free to do anything they wish that does not involve a supply of film to other pay-TV channels. Even in relation to pay TV, the parties have specifically retained the option to launch two particular channels and supply them with animated or children’s films. Movieco therefore does not create an incentive for Sony and Disney to co-ordinate their behaviour on these various markets. The operation was therefore cleared.

As ancillary restraints, the parties notified licence agreements which they said represented the parents’ lasting withdrawal from the market in which Movieco partners will operate and constituted a non-compete clause. The Commission, however, did not accept this analysis and decided that this was in effect an exclusive supply agreement. It referred to its Notice regarding restrictions ancillary to concentrations and stated that there does not appear to be a general justification for exclusive supply obligations. In the absence of any exceptional circumstances in this case, such exclusivity was not considered objectively necessary to permit the implementation of a concentration. The clause was therefore considered not directly related and necessary for the implementation of a concentration. It was therefore not covered by the decision. (Case n° COMP/JV.30, Decision of 03/02/00)