On 30 January 2020 the European Commission ("Commission") fined NBCUniversal EUR 14,327,000 for restricting intellectual property licensees from selling licensed merchandise within the EEA to territories and customers beyond those allocated to them.
| what you need to know - key takeaways |
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- Cooperating with Commission investigations can lead to significant reductions in fines. In this instance, NBCUniversal received a reduction of 30% for acknowledging the infringement, providing additional evidence, and waiving certain procedural rights.
- This is the third antitrust decision relating to restrictions in the licensing of merchandise in less than a year, demonstrating the Commission's current focus on removing restrictions undermining the EU Single Market.
- This is also a key example of how issues identified as a result of EU sector inquiries can lead to numerous investigations against specific entities.
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NBCUniversal, which operates film and TV production companies worldwide, licenses the intellectual property rights to the characters in its movies (including Jurassic Park, the Minions, Trolls, and Shrek), for use in film merchandise such as toys, mugs, and clothes.
In June 2017 the Commission initiated an investigation into NBCUniversal's licensing and distribution practices, and on 30 January 2020 it found that certain restrictions imposed by NBCUniversal on licensees constituted an infringement of EU competition law. In particular, NBCUniversal implemented a number of direct measures which restricted out-of-territory sales by licensees, sales beyond allocated customers or customer groups, and online sales. NBCUniversal also required licensees to pass these restrictions onto their customers and implemented a series of measures to indirectly encourage compliance with these restrictions.
The Commission considered that these measures, which were in force for over six and a half years, partitioned the Single Market and prevented licensees in Europe from selling products cross-border and across customer groups, to the detriment of European consumers. As put in a statement by Executive Vice-President Vestager, a "department store in Spain couldn't sell "E.T." pyjamas from a Belgian manufacturer – because that manufacturer was banned from selling into Spain. The extra-terrestrial may have made it all the way to Earth – but he was stopped in Spain because of a contractual restriction." However, NBCUniversal received a reduction in fine of 30% for cooperating with the Commission's investigation.
This investigation followed on from the Commission's sector inquiry into e-commerce markets (which completed in May 2017 and concluded that territorial restrictions were becoming increasingly common). It is the third such Commission decision in less than a year, after fines imposed in 2019 on Nike (EUR 12.5 million) and Sanrio (EUR 6.2 million) for similar cross-border restrictions on the sale of licensed merchandise.
With thanks to Danica Barley of Ashurst for her contribution.
