Viacom Inc's Paramount Pictures, Time Warner Inc's Warner Bros and at least five other film studios will be charged with breaching EU antitrust rules, according to people familiar with the situation.
European Competition Commissioner Mario Monti plans to charge Hollywood's largest studios with illegally limiting competition through contracts that commit television broadcasters to offer the same terms to multiple film suppliers, the people said.
The Brussels-based commission aims to boost competition in the US$49.5 billion European pay-TV market by easing access to content, including films such as Die Another Day and professional sports. Monti last month forced Rupert Murdoch's British Sky Broadcasting Group Plc to give competitors access to some English Premier League soccer games.
"The film industry has managed to set high prices" by signing long-term contracts and bundled deals that also include less-popular movies, said Theresa Wise, a media consultant at Accenture Ltd in London. "There's a lack of flexibility in the market."
Sony Corp's Columbia Tristar Motion Pictures, Walt Disney Co, Tracinda Corp's Metro-Goldwyn-Mayer Inc, News Corp's Fox Entertainment Group and Vivendi Universal SA are all under investigation, the people said. The studios will have two months to respond to the EU's charges.
Vivendi spokesman Alain Delrieu said he couldn't immediately comment. News Corp Fox spokeswoman Teri Everett didn't immediately return calls seeking comment. A spokesman for Disney, who declined to be identified, couldn't comment. Columbia Tristar spokeswoman Charlotte Day in London said she couldn't comment.
Spokespeople for MGM, Paramount and Warner Bros would comment or didn't return calls.
EU spokeswoman Amelia Torres declined to comment.
Film companies insert "most-favored nation" clauses into contracts to ensure other studios don't get better deals from television networks. The clauses can cover price and also conditions such as the number of times a film is showed.
A change in how the studios do business in Europe may benefit pay-TV providers such as Sogecable SA, Spain's largest, and reduce prices for consumers.
Action by the EU would be "beneficial to the pay-TV companies," said Mark Jones, an antitrust lawyer at Norton Rose in London. "It helps to liberalize the market in which pay-TV providers purchase their film rights by making it easier for them to agree to deals with a particular studio without having to offer that deal across the board to other studios."
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