1. European Digital Single Market and Geo-Blocking
ITECHLAW2016, Madrid, 10 November 2016
Alfonso Lamadrid de Pablo, Garrigues, Brussels

2. Geo-blocking
“Deep in my heart, I hate geoblocking. It is old-fashioned and it is not fair. We do not have to use these instruments in the 21st century.” Commissioner Andrus Ansip

3. Geo-blocked…

4. background
DG Comp’s Issues Paper on Geo-blocking practices in e-commerce (March 2015)
Preliminary Report on the E-Commerce Sector Enquiry (15 September 2016)
includes examination of geo-blocking
Ongoing Commission Pay-TV investigation
Commission looking into clauses in licensing agreements between Hollywood studios and pay TV operators preventing operators from providing offline and satellite services to satisfy unsolicited requests from viewers in other Member States
Paramount commitment decision
Commission legislative proposal addressing geo-blocking
addresses geo-blocking and other forms of discrimination based on customers' nationality, place of residence or place of establishment
Draft regulation aimed at ensuring cross-border portability of online content services

5. Pay-TV investigation
“US film studios typically license audio-visual content, such as films, to a single pay-TV broadcaster in each Member State (or combined for a few Member States with a common language). The Commission's investigation, which was opened in January 2014, identified clauses in licensing agreements between the six film studios and Sky UK which require Sky UK to block access to films through its online pay-TV services (so-called "geo-blocking") or through its satellite pay-TV services to consumers outside its licensed territory (UK and Ireland).”
Commission sends Statement of Objections on cross-border provision of pay-TV services available in UK and Ireland (23 July 2015)

6. Tangible vs intangible goods (I)
Competition law has a role to play in addressing geo-blocking issues
It can address some practices…
But not others: the underlying regulatory framework can be responsible for lack of cross-border access
In dealing with geo-blocking, impossible to ignore the distinction between tangible and intangible goods.
Tangible (private) good: rivalrous in use, e.g. a DVD, a book
Intangible (public) good: non-rivalrous in use, e.g. a TV broadcast, Netflix

7. Tangible vs intangible goods (II)
“A cinematographic film belongs to the category of literary and artistic works made available to the public by performances which may be infinitely repeated. In this respect the problems involved in the observance of copyright in relation to the requirements of the treaty are not the same as those which arise in connexion with literary and artistic works the placing of which at the disposal of the public is inseparable from the circulation of the material form of the works, as in the case of books or records .”
Case 62/79, Coditel I, para. 12

8. Regulatory framework
Difference between tangible and intangible goods reflected in way IP law treats the two.
Arts. 4(1) and 4(2) InfoSoc Directive 2001/29/EC
IPRs incorporated in a tangible good  author has right to authorise or prohibit distribution
Right of distribution exhausted at EU level when good first placed on market by author or with his consent
Arts. 3(1) and 3(3) InfoSoc Directive 2001/29/EC
Exhaustion doctrine does not apply to intangible (copyright protected) works
IP exploited in intangible form comprises right to authorise or prohibit every single (not just the first) communication to the public
As Copyright Law stands, rights holders may geo-block access to non-tangible copyright protected goods.

9. Reform of infosoc directive
19th IBA Competition Conference, EU Competition Commissioner Margrethe Vestager stated:
‘If such [geo-blocking] clauses did not exist, broadcasters would no longer be contractually prevented from responding to unsolicited requests coming from consumers from other countries. At the same time, broadcasters also have to take account of the applicable regulatory framework, such as, for online services, relevant national copyright laws. These aspects may need to be tackled by changes to copyright rules, for example as part of the copyright initiatives included in the Commission’s Digital Single Market Strategy’.
Commission considering rage of reform options, e.g.:
Application of ‘country of origin’ (rather than ‘country of destination’) principle – act of communication to the public takes place in emission state only
Allowing temporary portability of online subscriptions

10. Role of competition law in tackling geo-blocking (I)
IP incorporated in tangible good (e.g. agreement requiring distributors to block access to websites)  If exhaustion, agreement restricting parallel trade vs Article 101(1) TFEU
IP exploited in intangible manner (e.g. licensing agreement mandating licensees to block access to website)  if cross border competition precluded by regulatory framework, but not by the agreement, is there a competition law infringement?

11. Role of competition law in tackling geo-blocking (II)
Agreement aimed at partitioning internal market in principle restrictive of competition by object
“139. None the less, regarding the territorial limitations upon exercise of such a right, it is to be pointed out that, in accordance with the Court’s case-law, an agreement which might tend to restore the divisions between national markets is liable to frustrate the Treaty’s objective of achieving the integration of those markets through the establishment of a single market. Thus, agreements which are aimed at partitioning national markets according to national borders or make the interpenetration of national markets more difficult must be regarded, in principle, as agreements whose object is to restrict competition within the meaning of Article 101(1) TFEU”
Joined Cases C-403/08 and C-429/08, Murphy

12. Role of competition law in tackling geo-blocking (III)
‘140. Since that case-law is fully applicable to the field of the cross-border provision of broadcasting services, as follows inter alia from paragraphs 118 to 121 of the present judgment, it must be held that, where a licence agreement is designed to prohibit or limit the cross- border provision of broadcasting services, it is deemed to have as its object the restriction of competition, unless other circumstances falling within its economic and legal context justify the finding that such an agreement is not liable to impair competition’.
Joined Cases C-403/08 and C-429/08, Murphy

13. Role of competition law in tackling geo-blocking (IV)
Restriction of competition can only be established if counterfactual taken into account
Does agreement restrict competition that would have existed in their absence?
Are there ‘real concrete possibilities’ for competition in absence of agreement?
‘86. In order to determine whether an undertaking is a potential competitor in a market, the Commission is required to determine whether, if the agreement at issue had not applied, there would have been real concrete possibilities for it to enter that market and to compete with established undertakings. Such a demonstration must not be based on a mere hypothesis, but must be supported by evidence or an analysis of the structures of the relevant market. Accordingly, an undertaking cannot be described as a potential competitor if its entry into a market is not an economically viable strategy […]’
Case T‑360/09, E.ON Ruhrgas AG v Commission

14. Role of competition law in tackling geo-blocking (V)
‘15. However, the mere fact that the owner of the copyright in a film has granted to a sole licensee the exclusive right to exhibit that film in the territory of a Member State and, consequently to prohibit, during a specified period, its showing by others, is not sufficient to justify the finding that such contract must be regarded as the purpose, the means or the result of an agreement, decision or concerted practice prohibited by the Treaty’.
Case 262/81, Coditel II
[confirmed in Joined cases C-403/08 and C-429/08, Murphy, para 137]

15. Insofar as they remain within the scope of the right of communication to the public, licensing agreements are not restrictive of competition