On January 30, 2020, The European Commission fined a group of companies belonging to the Comcast Group, including NBCUniversal, €14.327 million for illegally restricting sales of film merchandise products in Europe. The fine already includes a 30% reduction that was awarded for NBCUniversal cooperating with the European Commission beyond what is required by law.
Illegal Restrictions Imposed by NBCUniversal
NBCUniversal imposed restrictions through non-exclusive licensing agreements on where and to whom the sellers could sell the merchandised products featuring the Minions, Jurassic World, Trolls, and other images and characters from popular NBCUniversal films. In particular, the license agreements explicitly banned sales out of the territory and/or to non-allocated customer groups. The licensees were obliged to inform and compensate NBCUniversal if sales were made out of territory or to non-allocated customers. NBCUniversal also imposed restrictions on online sales (one of the hot topics in the EU), including restrictions to sell online, sell in particular territories, or sell only on authorised websites.
The licensees were also required to ensure that their customers comply with the sale restrictions imposed by NBCUniversal. In order to enforce compliance with its restrictions NBCUniversal carried out audits and cancelled or did not renew the license agreements if the restrictions were not respected by a licensee.
These licensing agreements breached Article 101 of the Treaty on the Functioning of the European Union, which prohibits agreements between companies that prevent, restrict, or distort competition within the European Single Market.
Not the Only Big-Name Fined for Similar Restrictions
In June 2017, when the European Commission opened an investigation into restrictions imposed by NBCUniversal, the European Commission also opened investigations into restrictive practices by Nike and Sanrio.
In March 2019, the European Commission fined Nike €12.555 million for restricting sales of merchandising products from some of Europe's best-known football clubs. In particular, Nike imposed restrictions on sales out of the territory. The fine already represents a 40% discount for cooperation with the European Commission during the investigation.
In July 2019, The European Commission fined Sanrio €6.222 million for restrictions imposed concerning products featuring Hello Kitty and other characters owned by the company. Similarly, like the other brand owners, they also imposed restrictions on out-of-territory sales. Sanrio received a 40% discount on its fine.
In addition to fines, the companies are now facing potential damages claims from any person or company affected by their anti-competitive behaviour.
Conclusion
The licensing and distribution policies need to be crafted carefully to avoid potential breaches of EU competition rules. When a company gets it wrong, it might lead to substantial fines.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
