Entertainment

EU Drops Cases Against Studios

October 26, 2004 / 10:56 AM EDT / AP

The European Union closed antitrust cases Tuesday against six major Hollywood studios after they agreed to drop clauses in contracts with pay television operators that the EU said keeps the price of films artificially high in Europe.

The questionable clause required the best terms offered to one studio be offered to all.

EU Competition Commissioner Mario Monti said the six that "decided to withdraw the clauses in question" were: Buena Vista International, a subsidiary of The Walt Disney Co.; Warner Bros., a division of Time Warner Inc.; 20th Century Fox, a division of News Corp.; Sony Corp.'s Sony Pictures; Metro-Goldwyn-Mayer Inc. and DreamWorks LLC.

The 2-year-old investigation remains open against two other studios — NBC Universal Inc. and Paramount Pictures Corp. — that "still hold on to the clause," Monti said. Paramount and CBSNews.com are part of Viacom, Inc.

The clauses comes into play when European pay-television operators buy rights to show a studio's movies or television programming.

If it "applies a more favorable condition to one of the studios, then it has to apply it to all the studios," Monti said in Strasbourg, France, where the European Commission met. "We believe these clauses have the effect of aligning the prices of the broadcasting rights."

The EU had readied formal charges early this year, stopping short of accusing the studios of forming an illegal cartel, but held off when some of the studios indicated a willingness to drop the clauses.

Buena Vista International Television said it still believes the clauses are "neither illegal nor anti-competitive," but could actually drive down prices. However, it said that, since Buena Vista had never actually "exercised our rights under such clauses," it was willing to drop them to avoid a "costly debate over redundant terms."

Monti urged the two holdouts to reconsider.

"I am confident that they will reflect on their position, especially after today's announcement," he said. "Certainly our case on them, our investigation on them, goes on."