European Court rules on televising football matches13.10.2011, 20:45
Rando Maisvee, attorney-at-law in Law Office Eversheds Ots & Co, and lawyer Kaarel Berg write that football matches, the great sports events passionately anticipated by fans, have always been watched in a company. Recently, however, sale of licenses for TV broadcasts of football matches has been causing as intense disputes as football itself.
Lately (04.10.2011) the European Court of Justice took a significant decision in the Premier League case. The ultimate impact of the decision will be revealed in the nearest future, but already today it is obvious that it will have wider implications on the TV business as a whole.
Origin of the dispute
At the beginning of 1990s the English First Division clubs decided to abandon the First Division and set up a new league – the Premier League (PL); this league was supposed to function independently in order to earn higher revenues and achieve economic autonomy. This decision proved to be justified – within the nearly twenty years the PL has been enjoying ever increasing popularity and revenues; e.g. during the 2008−2009 season the turnover of the league were approximately 1.25 billion euros.
In the United Kingdom has PL sold the exclusive license for broadcasting Premiership matches to Sky TV, and the prices charged by Sky depend on whether matches are viewed publicly or at home. At the same time in other countries broadcasts to clients of paid TV channels are much cheaper, while being virtually free if shown via public TV channels. Therefore PL is interested to ensure that such channels cannot be watched in locations other than those where the broadcasting rights were sold to, and thus the TV signal is encoded. This, in turn, has forced pub owners, incl. Karen Murphy, who have opted not to pay Sky’s nearly 1000 pound monthly fees, to look for less expensive solutions – i.e. use foreign decoder cards.
Ms. Murphy, who used for demonstrating English league football matches satellite equipment and decoder cards licensed to be used exclusively in Greece, was convicted by the national courts for copyright and patent right violations. Furthermore, the organiser of the matches filed actions against the companies providing such equipment and cards.
Judgements of the European Court of Justice
In the preliminary ruling procedure the European Court of Justice responded to questions posed by national courts regarding the legislation of the European Union governing protection of intellectual property rights and competition law.
First, sale of such cards and decoders from one Member States to another should be regarded as provision of services, inasmuch as the core objective of the sale is, nevertheless, rendering of telecommunication services. At the same time Article 56 of the Treaty on the Functioning of the European Union (TFEU) stipulates that any restrictions of the freedom to provide services have to be abolished. Imposing of any restrictions requires sound justification. PL found that the restriction is justified under the legislation governing protection of intellectual property. The court, however, came to the conclusion that although every match is unique, it is nevertheless played by certain rules, which do not leave much room for freedom of creation in the meaning of the Copyright Directive. And it rather found that only certain aspects of the broadcasts - logos, anthems, etc. could be copyrightable.
However, national laws, which impose bans on importing, selling and using in a Member State foreign decoding equipment intended to be used for watching football matches broadcasted by TV companies of that other Member States, are indeed contrary to Article 56 of TFEU. At the same time this does not rule out adoption of national laws permitting organisations holding sports events to license TV broadcastings and charge relevant fees. Provided that this fee is reasonably matching the value of the service, i.e. the amount of the fee depends on the number of audience, charging of the fee is indeed compliant with the EU law. This leads to the conclusion that due to smaller audiences it would be unreasonable in Estonia to charge a fee, similar to that charged in the United Kingdom.
Secondly, the ban on restricting free competition set forth in Article 101 of TFEU also has a bearing in resolving the dispute. The European Court of Justice explained that the contract between the organiser of the events and the broadcasting organisation, which confines the broadcasting rights within national borders and prohibits delivery of decoding equipment to another country, serves the purpose of limiting free competition. Should economic and legal circumstances lead to the conclusion that such contract cannot damage free competition, one could maintain that the agreement is in line with Article 101 of TFEU, and is therefore valid. Inasmuch as the circumstances of the PL judgement did not rule out distorting competition, the license agreements were prohibited. In Estonia concluding such an agreement could have given rise to criminal liability.
As the European Court of Justice has found that restricting free movement of telecommunication services in the manner described above was contrary to the freedom to provide services and the principles of free competition, the fees charged for live broadcasts of Premiership matches, as well as for other similar TV broadcasts can change as well. Furthermore, it is possible that sports events could be broadcasted within the EU without the above described restrictions.
Rando Maisvee, attorney-at-law
Kaarel Berg, lawyer
Law Office Eversheds Ots & Co