The European Commission has accused UK pay-TV provider Sky and major US studios of anti-competitive behaviour for blocking access to Sky services in the rest of Europe. The EC sent a statement of objections to Sky and the studios Disney, NBCUniversal, Paramount Pictures, Sony, Twentieth Century Fox and Warner Bros, outlining its concerns about clauses in their content licensing deals that prohibit EU consumers located elsewhere to access, via satellite or online, Sky's pay-TV services available in the UK and Ireland.
The case represents a clear test of the EC's plans to restrict so-called geoblocking, where content licences are limited to specific countries, and reform EU copyright law to allow for cross-border, multi-country distribution of audio and video content. Sky and the studios will have the chance to respond to the EC's allegations before the Commission decides whether to bring formal charges of competition violations.

The EC first launched the investigation into Sky in early 2014. The decision to investigate followed a landmark ruling in 2011 by the EU Court of Justice over the right of a pub owner to use a Sky satellite receiver obtained from the UK to show Premier League football matches in Greece. The court found that there was no justification for the Premier League to limit broadcast rights to national boundaries, when the cost of the rights could just as easily be based on the full or potential audience of a satellite TV provider across EU states.

The Commission's competition investigation centres on contractual restrictions on passive sales outside the licensed territory in agreements between studios and broadcasters. While Sky may choose not to market its services outside the UK and Ireland, consumers may still request its services. EU antitrust rules prohibit the restriction of such passive sales. The Commission's preliminary view is that such clauses in Sky's licensing agreements with the studios restrict Sky UK's ability to accept unsolicited requests for its pay-TV services from consumers in the rest of the EU.

The Commissions suggested as well that Sky may also be limiting its own competition in the UK. Some of its agreements contain clauses requiring the studios to ensure that, in their licensing agreements with broadcasters other than Sky UK, these broadcasters are prevented from making their pay-TV services available in the UK and Ireland. As a result, these clauses grant ‘absolute territorial exclusivity’ to Sky UK and/or other broadcasters, eliminating cross-border competition between pay-TV broadcasters and dividing the internal market. The Commission's preliminary conclusion is that these clauses would constitute a "serious violation" of EU rules prohibiting anti-competitive agreements.

Sky's operations in Germany and Italy, as well as Canal Plus in France and DTS in Spain, could face similar accusations from the EC. The Commission previously outlined concerns about licensing agreements between the film studios and these European broadcasters and said it continues to examine cross-border access to pay-TV services in these countries.

The EC acknowledged that broadcasters may have to take into account rules that go beyond EU competition law, notably national copyright laws, when considering sales to consumers outside their country. Given the growing popularity of online TV and video streaming, the Commission hopes to better align copyright law across the EU in order to allow for cross-border access. As part of its Digital Single Market strategy, it plans to propose new legislation on EU copyright rules as well as review the EU Satellite and Cable Directive