German Federal Cartel Office fines broadcasters for encryption of digital free television broadcasts and other unlawful joint practices

On 28 December 2012 the German Federal Cartel Office (Bundeskartellamt) imposed fines of approx. € 55 million on Pro7Sat1 and RTL, two major German TV broadcasting groups, and two individuals involved.

These TV broadcasting groups and two managers were accused of illicit coordination as they introduced encryption for their digital free TV programs and charged access fees for certain digital TV programs from 2005/06 until 2010. They planned to use technical measures, for instance anti-ad blockers and copy protection functions, to restrict the options for viewers to use the program signals. Cable, satellite and IPTV transmissions paths were covered by their agreements. These practices carried on up until May 2010 when the Cartel Office searched these companies and in many networks, were carried on even longer.

Apart from fines of approx. € 55 million the parties involved gave a binding commitment to offer their major standard-definition (SD) programs without encryption from 2013 for at least 10 years. This commitment includes cable, satellite and IPTV transmissions paths. However, it excludes high-definition (HD) programs which can be expected to become the standard method for TV reception in the next few years. Accordingly the broadcasting groups lose the right to charge cable network operators and operators of other transmission paths fees for broadcasting in SD. Furthermore the implementation of signal protection restrictions will be eliminated. In a merger case (Liberty Global/Kabel Baden-Württemberg) similar commitments to give up basic encryption as of January 2013 paved the way for a clearance decision by the Cartel Office.

The broadcasting groups have agreed to have the proceedings terminated by this settlement and would not appeal to the Düsseldorf Higher Regional Court. However, Kabel Deutschland, Germany’s largest cable operator, has lodged a complaint to the Düsseldorf Higher Regional Court against this decision because it seeks to introduce basic encryption jointly with the other broadcasting groups. [Nicole Daniel]