| What you need to know - key takeaways |
- An abuse can be established when a company which is dominant in a particular market, reserves an activity on a neighbouring market where it is not dominant.
- While dominant firms are free to make changes to their business models, changes which negatively impact on competitors and/or third parties can amount to an abuse and need to be objectively justifiable.
- When the FCA voices competition concerns in a preliminary assessment, the undertaking concerned may offer commitments in order to bring the procedure to an end before any infringement is ascertained (Article L. 464-2 of the French Code de commerce).
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In order to receive linear broadcasts of GCP, subscribers must have a decoder. Previously, subscribers were able to rent decoders from GCP or purchase them in a retail outlet from an authorised third-party decoder manufacturer. In order to access content with those decoders labelled "Canal Ready", GCP provided subscribers with a card to be inserted in the decoder ("card only" systems).
However, due to piracy issues affecting third-party decoders, GCP had decided to terminate its partnerships with third-party decoder manufacturers and stop marketing card only systems. Subscribers were thereby deprived of being able to choose alternative decoders, which may be cheaper or may offer different features.
According to the preliminary assessment of the FCA, GCP's decision to terminate its partnerships with third-party decoder manufacturers may amount to an abuse of dominant position. In particular, the FCA noted that an abuse can be established where an undertaking holding a dominant position on a particular market reserves activity on a neighbouring but separate market to itself. While GCP argued its conduct was justified because of content security, the FCA considered the conduct was disproportionate to the objectives pursued.
In response to the competition concerns, GCP has made a commitment to allow its subscribers to access both its linear and non-linear satellite programmes via third-party decoders, provided that they download a "Software Access Module" called "MyCanal" which will be designed, inspected and updated directly by GCP. In addition, GCP has undertaken not to oppose the use of this module by any third-party manufacturer as long as the decoder's operating system is identical to the one used to create the module.
The FCA found that these commitments correctly addressed its competition concerns and therefore decided to make them binding until 31 December 2021.
It is worth noting that, in practice, such commitments not only address the competition concerns but also provide certain improvements to the position of pay-TV subscribers in France. Firstly, the commitments expand the accessibility of non-linear programmes. Secondly, the commitments encourage competition on the downstream market since decoder manufacturers no longer need a partnership with GCP to market a decoder capable of receiving GCP's satellite programmes.
Moreover, the decision is a reminder that dominant firms should consider the potential impact on competition before making any significant changes to their business models and commercial strategies. Where those changes do impact on competition, the firm will need to ensure that there is a legitimate reason for those changes that can be objectively justified.
With thanks to Adèle Azzi of Ashurst for her contribution.
