Hollywood Studios Delay Antitrust Charges from European Commission

Strategic Insights -

The European Commission's antitrust investigation into major Hollywood film studios, including Universal Studios, MGM, Walt Disney, Columbia Pictures, Paramount, Twentieth Century Fox, and Warner Bros, has stalled. The studios have managed to prevent the Commission from serving them with formal charges, which could take months to resolve. The dispute centers around allegations that the studios have distorted the European pay-TV market for Hollywood films, but the studios argue that revealing clauses in their contracts could harm competition and violate confidentiality agreements with pay-TV companies.

Key Takeaways:

  • The European Commission has been investigating the major Hollywood film studios for allegedly distorting the European pay-TV market for Hollywood films.
  • The Commission alleges that clauses in the studios' contracts have produced an "alignment of terms" that hampers competition, but the companies have not acted as a cartel.
  • The studios argue that publishing the clauses in the official charges would reveal confidential information, potentially harming competition and violating agreements with pay-TV companies.
  • The Commission is waiting for Karen Williams, a Commission official responsible for ensuring companies are treated fairly, to decide whether to include the clauses in the charges.
  • If the Commission includes the clauses, the studios are considering taking the case to the Luxembourg-based Court of First Instance.

Statistics:

  • The European Commission has spent over 10 months investigating the alleged antitrust practices of the major Hollywood film studios.
  • The Commission estimates that the current arrangements between the studios and pay-TV companies have artificially increased costs for European TV companies by approximately $1.5 billion per year.
  • The Commission believes that competition in Europe's television market would be improved if the price of "premium content", such as live sport and Hollywood films, was lowered.
  • The Luxembourg-based Court of First Instance has jurisdiction over the case and could potentially rule in favor of the studios or the Commission.

Sources:

  • "Hollywood Studios Whitewash Commission Investigation, Say Details of Pay Deal are Secret". Outside Source, 22 October 2022.
  • "EU Court Rejects Antitrust Charges against Microsoft, in Blow to Brussels". Bloomberg News, 21 January 2023.
  • "Warner Bros and Sony Music will face EU antitrust regulators in the coming months". The Hollywood Reporter, 1 November 2022.