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European Commissioner Margrethe Vestager Sparks Hope of Softened Stance in Hollywood Anti-Trust Probe

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A speech made Wednesday by Margrethe Vestager, Europe’s powerful anti-trust commissioner, is prompting hope that she may be giving ground in her anti-trust probe of Hollywood studios’ licensing deals with European pay TV operator Sky.

But her comments, while marking what analysts see as a significantly more conciliatory tone, certainly do not mark a total climbdown or end to the investigation.

Both Hollywood’s studios and Europe’s film and TV industries will still want larger clarity going forward on key points concerning their continuing ability to license their product country-by-country in Europe – the backbone of their billion-dollar business there.

Wrapped in a eulogy made in Brussels to the export success of Nordic TV drama, Vestager’s comments come nearly two years after the European Commission, the executive branch of the European Union, launched an investigation into six Hollywood majors’ contracts with Sky in the U.K.

Initiated in July 2015, the probe claimed that the majors and Sky had bilaterally put in place restrictions that prohibited Sky UK from allowing consumers elsewhere in the European Union paid access on request to Sky pay services in the U.K. and Ireland. Vestager sustained at the time that these restrictions could be in breach of European competition rules.

Six studios – Disney, NBCUniversal, Paramount, Sony, Fox and Warner Bros. – attended closed-door hearings with the Commission in January 2016. Paramount settled with the E.U.’s antitrust authorities last July by committing not to enforce clauses in its contracts with Sky in the U.K. that prevented consumers outside the U.K. from accessing its Sky U.K. programming.

Speaking in Brussels yesterday, Vesteger suggested that ‘our only concern is about terms that stops broadcasters responding to requests from potential customers from other countries.”

But the competition commissioner also insisted that such access “doesn’t stop filmmakers and distributors from giving different broadcasters exclusive rights in different countries.”

She added: “Competition law doesn’t say that non-dominant broadcasters are obliged to serve those foreign customers. Our case is only whether Sky UK can be prohibited from doing so by contracts we are looking at.”

Vestager’s speech is “a recognition of reality and positive for the industry,” said Guy Bisson, research director at London-based consultancy Ampere Analysis. He added that “this may be one the first indications that E.U. competition authorities recognise that territorial licensing is an economic model which may need supporting to maintain content investment.”

The Commission’s drive to allow foreign customers to request access to pay TV services in another country in Europe was merely legitimising the gray market for ex-pat audiences. Its impact on studios would be “minimal,” Bisson added.

“Vestager’s remarks are a clear indication that the Commission is anxious to accommodate the interests of European and independent producers,”

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