European Commission Fines NBCUniversal €14.3 Million For Restricting Sales Of Film Merchandise Products

The European Commission has fined several companies belonging to Comcast Corporation, including NBCUniversal LLC, (“NBCUniversal”) €14 327 000 for restricting traders from selling licensed merchandise within the European Economic Area (EEA) to territories and customers beyond those allocated to them. These restrictions concerned merchandise products featuring the Minions, Jurassic World and other images and characters from NBCUniversal’s films.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said:”This is the third decision dealing with sales restrictions on licensed products sold across Europe. Universal’s strategy to prevent traders from selling licensed products across customer groups and countries is against EU antitrust rules. Such sales restrictions undermine the very foundations of the EU Single Market and cannot be tolerated.”

Licensed merchandise products are extremely varied (e.g. mugs, bags, clothes, shoes, stationery, toys) but all carry one or more logos or images protected by intellectual property rights, such as copyright or trademarks. Through a licensing agreement, one party (the licensor) allows another party (the licensee) to use one or more of its intellectual property rights in a certain product.

NBCUniversal, is a US company that operates cable and broadcast networks, as well as film and television production companies worldwide. A division of NBCUniversal is in charge of licensing intellectual property rights under NBCUniversal’s brands for the production and sale of products, featuring the Minions, Jurassic World, Trolls and other popular NBCUniversal films.

In June 2017, the Commission opened an antitrust investigation into certain licensing and distribution practices of NBCUniversal to assess whether it illegally restricted traders from selling licensed merchandise freely within the EU Single Market.

The Commission investigation has found that NBCUniversal’s non-exclusive licensing agreements breached EU competition rules:

• NBCUniversal imposed a number of direct measures restricting out-of-territory sales by licensees, such as clauses explicitly prohibiting these sales, obligations to notify out-of-territory sales to NBCUniversal, limitations to the languages used on the merchandise products and obligations to pay to NBCUniversal revenues generated from out-of-territory sales.
• NBCUniversal imposed a number of direct measures restricting sales beyond allocated customers or customer groups, such as clauses explicitly prohibiting these sales and obligations to pay to NBCUniversal revenues generated from sales to non-allocated customer groups.
• NBCUniversal imposed a number of direct measures restricting online sales, such as clauses prohibiting all online sales, clauses prohibiting out-of-territory online sales or clauses only allowing online sales on the websites of specific retailers.
• NBCUniversal obliged licensees to pass on these sales restrictions to their customers, by imposing its licensees not to supply their products to customers who could be selling those outside the licensees’ allocated territories or customer groups.
• NBCUniversal also implemented a series of measures as an indirect way to encourage compliance with the sales restrictions. These measures included carrying out audits and the termination or non-renewal of contracts if licensees did not respect the sales restrictions.

The Commission has concluded that NBCUniversal’s illegal practices, which were in force for more than 6.5 years (from 1 January 2013 until 25 September 2019), partitioned the Single Market and prevented licensees in Europe from selling products cross-border and across customer groups, to the ultimate detriment of European consumers.

NBCUniversal cooperated with the Commission beyond its legal obligation to do so, by acknowledging the infringement, providing additional evidence to the Commission that enabled it to strengthen its ability to prove the infringement, and waiving certain procedural rights resulting in administrative efficiencies.

Therefore, the Commission granted NBCUniversal a 30% fine reduction in return for this cooperation.