Technology,

Media &
Telecommunications.
Data Protection & Freedom of Information

Contents

Asia

Data Protection &

Freedom of Information 1
IT & E-Commerce
12
Media & Broadcasting 23

Google Becomes an Advocate of Privacy

During a UNESCO conference in September on the Internet and ethics,
Peter Fleischer, head of privacy at Google, promoted the adoption of a
unified internationally-applicable set of privacy rules in order to protect
personal data online.
A key reason for this is that the OECDs guidelines (which were adopted in
1980) and the EU Data Protection Directive (which was adopted in 1995)
pre-dated the widespread adoption of the Internet and are now failing to
cope with modern privacy challenges. In their place, he focused on APECs
Privacy Framework suggesting that all countries adopt the Privacy
Framework agreed between Asia Pacific nations and endorsed by APEC
Ministers in November 2004.
International Complexities
Googles new interest for privacy may be surprising at first given its recent
run-in with the Article 29 Working Group, who urged it to shorten the
retention period of personal data in its server logs (such as IP number, web
browser being used, date and time of connections), see Article 29 Working
Party Puts Google Under The Spotlight.
However, the lack of international standards for data protection, particularly
in respect of international data transfers, is a serious concern for Google as
the companys data centres are located all over the world and are subject to
massive data flows. Accordingly, the adoption of global standards could
facilitate the search engines compliance with privacy laws across borders.
Is the APEC Privacy Framework Fit For Purpose?
The choice of the APEC Privacy Framework as an international standard for
data protection will probably be challenged by some. The APEC Privacy
Framework has a set of nine privacy principles:

preventing harm

uses of personal information

Issue 45 1 November 2007

notice

collection limitations

choice

integrity of personal information

access and corrections

security safeguards, and

accountability.

However, this omits a number of key data protection principles from the EU
Data Protection Directive, such as legitimacy, specific restrictions on
sensitive data, registration of data controllers and the appointment of a
national regulator.
Moreover, experts already say that the APEC standards are too lenient and
do not limit data collection to legitimate and specific purpose, nor subject
data flows to an adequate level of protection. Both of these are key issues
when considering Googles data protection practices, in particular with
regard to its recent acquisition of the web advertising network DoubleClick.
In addition, if Spanish and French data protection regulators seem to have
approved the idea of a global set of rules, Alex Trk, president of the French
CNIL, nevertheless pointed out that the harmonization process could be
quite long because of the different approaches to privacy among Europe, the
United States and Asia Pacific nations and the lack of national regulation in
some other countries.
The fact that the APEC Privacy Framework focuses on whether a person is
harmed by a companys privacy practices, rather than on violation of privacy
as a right, will probably be a major sticking point in any move to a global
consensus.
By Elonore Feld, Paris

Belgium
Draft Regulation for Blacklists
Blacklists are widely used in all types of organisations and sector of activity.
Draft regulations have been prepared that will set out strict criteria that must
be met in order for these lists to be legal.
European Position
A generic definition of blacklists is set out in the Article 29 Working Partys
Working Document on Blacklists (WP 65) adopted on 3 October 2002:
a blacklist could be said to consist of the collection and dissemination of
specific information relating to a specific group of persons, which is
compiled to specific criteria according to the kind of blacklist in question,

Issue 45 1 November 2007

which generally implies adverse and prejudicial effects for the individuals
included thereon and which may discriminate against a group of people
by barring them access to a specific service or harming their reputation.
This working document recognised that inclusion in this type of list can have
serious consequences for individuals and that there are clear discrepancies
in the way these files are registered and used in Member States.
Belgium Proposes a Draft Royal Decree
In Belgium, a draft Royal Decree regulating blacklists is currently under
review. Its purpose is to make the processing of such lists subject to much
stricter controls.
The main new conditions imposed by the draft Royal Decree are:

Enhanced notification - A data controller must file a notification with

the Belgian Privacy Commission before starting any wholly or partly
automated data processing operation. However, in the case of
negative lists, such notification is enhanced since the data controller
is required to include specific additional information regarding the
blacklist in the declaration form.

Authorisation - According to the draft Royal Decree, prior

authorisation from the Belgian Privacy Commission would be
required for all external negative lists, i.e. lists shared between
several companies.

Data protection officer - Finally, the data controller must appoint a

data protection officer to supervise the processing of any external
blacklists.

Belgian Privacy Commissions Opinion

The Belgian Privacy Commission has already commented on the draft Royal
Decree in an opinion dated 4 July 2007. Its main concerns are the following:

There is no legal basis to grant the Privacy Commission the power to

participate in the blacklists authorisation process. Moreover, the
financial impact for the Commission of putting such a procedure in
place has not been taken into account.

The designation of a data protection officer should not be limited to

external blacklists but should be extended to all types of blacklists.

Future Developments
Even though the draft Royal Decree may well be amended in light of the
Privacy Commissions concerns, organisations must keep in mind that it is
very likely that the use of blacklists will be strictly regulated in Belgium in the
near future.
By Sylvie Rapoport, Brussels

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United Kingdom
ICO Guidance on Personal Data: Clarification or Further Confusion?
In August 2007, the UK Information Commissioner issued fresh guidance on
the meaning of personal data (the ICOs Guidance). This appears to be an
attempt to reconcile the unorthodox position under English law following the
Durant v Financial Services Authority [2003] EWCA Civ 1746 case with the
Article 29 Working Partys recent opinion on the mainstream EU approach to
the concept of personal data (the Working Partys Opinion).
This article considers how successful this exercise has been and the impact
the ongoing regulatory tension will have in practice.
The issue is timely given that there are ongoing discussions between the
European Commission and the UK Government in relation to various alleged
infringements by the UK relating to the implementation of the Data Protection
Directive. The Commission appears to be concerned both with the core UK
legislative framework, i.e. the Data Protection Act 1998, and also the
subsequent interpretation of that Act by the UK courts. One of the specific
issues, in relation to which the UK appears to be most out of line with other
EU member states, is indeed the scope of the concept of personal data.
English Law - Durant
The definition of personal data was considered in some detail by the Court of
Appeal in Durant. The Court of Appeals conclusions are ably summarised in
a later decision of the High Court, Smith v Lloyds TSB Bank Plc [2005]
EWHC 246:
(a) .. not all information retrieved from a search against an individual's name
or unique identifier is personal data within the 1998 Act, (b) .. mere mention
of an individual in a document held by a data controller does not mean that
the document contains personal data in relation to that individual, (c) ..
whether information is capable of constituting personal data depends on
where it falls in a continuum of relevance or proximity to the data subject, (d)
.. in answering that question it is relevant to consider whether the information
is biographical in a significant sense; and whether it has the putative data
subject as its focus and, finally, (e) .. personal data is information that affects
the privacy of the putative data subject, whether in his personal, business or
professional capacity.

This narrow approach has been subject to some criticism and it is widely
believed that it is one of the main drivers behind the European Commissions
broader investigation into the UKs implementation of the Data Protection
Directive.
However, the approach is arguably not without its merits, at least from a
pragmatic perspective. In the digital age vast amounts of unstructured
electronic information is generated about individuals and approaching the
definition of personal data in the manner adopted by the Court of Appeal in
Durant increases the likelihood that the Data Protection Act will be focussed
on cases where there is a real risk to an individuals privacy.

Issue 45 1 November 2007

The Working Partys Opinion

In contrast, the Working Partys Opinion on the concept of personal data
(WP 136) takes a very broad approach to this definition so as to prevent any
shadow zones within its scope. The reasoning for this is that any difficulties
raised by a broad definition can be dealt with by applying the other rules
within the Data Protection Directive flexibly and proportionately.
With this in mind, it recommends a four stage approach to interpretation:

Step 1: Is it information? This is interpreted widely and includes both

objective and subjective information.

Step 2: Does it relate to a person? This is one of the more

controversial aspects of the Working Partys Opinion. The restrictive
approach taken by the English Court of Appeal is comprehensively
rejected and replaced with the proposal that information can relate to
a person through its (a) content, (b) purpose or (c) result.

Step 3: Is that person identified or identifiable? This again is

interpreted widely so that the person may be identified directly (e.g.
through a name) or indirectly (e.g. through a combination of factors
recorded about them). Similarly, the concept of being identifiable is
considered broadly.

Step 4: Is the person a living natural person? While less contentious,

the Working Partys Opinion does consider some unusual examples
such as unborn children and frozen embryos.

The Working Partys Opinion is also entirely silent on the issue of filing
systems, a topic of significant debate in the UK, at least following the
decision in Durant.
The ICOs Guidance
It appears that the ICOs Guidance is an attempt by the Information
Commissioner to reconcile the radically different approaches taken by the
Court of Appeal in Durant and by the Working Party in its recent opinion.
However, in both form and substance it is much closer to the Working
Partys Opinion in taking an expansive approach to the definition of personal
data. As the preface to the ICOs Guidance states: We recognised the need
to produce guidance with a greater emphasis on what is covered than what
is not.
The ICOs Guidance is structured around a flowchart, set out in table 1. The
first question considers if the individual is identifiable (broadly comparable to
the Third Element of the Working Partys Opinion), while the remaining
seven questions, making up the bulk of the ICOs Guidance, concentrate on
whether the information relates to the individual (broadly comparable to the
Second Element of the Working Partys Opinion). The ICOs Guidance does
not consider what constitutes information or who are natural living persons in

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any depth (see the First and Fourth Elements of the Working Partys Opinion
respectively).
It seems sensible to focus on whether information relates to an individual
as it is the most difficult and controversial part of the analysis. The ICOs
Guidance transposes the content, purpose and result concepts in the
Second Element of the Working Partys Opinion by considering:

if the information is obviously about the individual (question 3) - i.e.

is the content of the information about the individual;

if the information is used to inform or influence actions or decisions

affecting the individual (question 4) - i.e. the information is collected
with the purpose of affecting an individual; and

if the information impacts or has the potential to impact an individual

(question 8) - i.e. does the information result in an impact on the
individual.

These issues are also interspersed with concepts from Durant, so that it is
also necessary to consider if the information has biographical significance
(question 6) or if the individual is the focus of that information (question 7).
These questions do not feature in the Working Partys Opinion. However,
neither question allows one to conclude that the information is not personal
data, so neither in any way narrows the scope of this definition.
Again, the ICOs Guidance does not look at relevant filing systems. This
will be the subject of further guidance in the near future.
Binding Precedent
The ICOs Guidance does not appear to be particularly loyal to Durant.
Some of the more obvious problems include:

the lack of any link to an individuals privacy. In Durant, Auld LJs

analysis of the term personal data ends by stating In short, it is
information that affects his privacy, whether in his personal or family
life, business or professional capacity. This is not reflected in the
ICOs Guidance;

the treatment of the biographic and focus questions. Both of these

are identified in Durant as notions that may be of assistance when
determining whether information is personal data. While these
questions are part of the ICOs Guidance, neither notion allows one
to conclude that the information is not personal data. This does not
seem to be consistent with Durant;

the examples in the ICOs Guidance. One example considers

personal data in complaint files. If an individual complains that a
request under the Freedom of Information Act 2000 is not being dealt
with properly then the file about that complaint is likely to be personal
data. This again seems to contradict Durant in which Auld LJ stated:

Issue 45 1 November 2007

Just because the investigation of the matter emanated from a

complaint by [Mr Durant] does not, it seems to me, render
information obtained or generated by that investigation, without
more, his personal data.
The status of the ICOs Guidance is therefore somewhat difficult. In England,
the formal interpretation of legislation is the exclusive function of the courts
and in Durant the term personal data was authoritatively construed by a
unanimous decision of the Court of Appeal. Therefore the Information
Commissioner would make an error in law if he acted inconsistently with this
judgment, entitling the court to quash any such decision or order.
The ICOs Guidance will also have little impact on any future decision of the
English courts as, being part of a common law system, they are bound by
stare decisis to follow the precedent set in Durant. This principle binds both
the High Court and, by and large, the Court of Appeal itself, to follow the
decision in Durant.
Clarification or Further Confusion?
The ICOs Guidance follows not only the substance of the Working Partys
Opinion but also its form and, even though it is categorised as Technical
Guidance, it is unlikely to be particularly accessible as a practical guide
even for a professional reader, such as a privacy officer. At 21 pages long it
is twice the size of the Information Commissioners initial guidance on the
definition of personal data (which also managed to cover the definition of
relevant filing systems) and is much less user-friendly than other recent
guidance from the Information Commissioners office.
However, the more important issue is how practitioners should treat the
ICOs Guidance in practice, especially given that an apparent gulf remains
between the approach taken by the Court of Appeal in Durant, on the one
hand, and by the ICO and the Article 29 Working Party, on the other?
While some aspects of the ICOs Guidance may remain largely of academic
interest (such as the example of the estate agent who takes a picture of a
property at the same time as a nearby bank raid) others have quite
significant practical implications, especially when deciding if business
information should be disclosed in response to a subject access request.
Given the legal questions raised by the ICOs Guidance, and the ongoing
dispute between the UK Government and the European Commission over
the concept at the heart of the document, data controllers may be tempted to
treat this latest guidance with caution for the time being.
This article was originally featured in issue 7(9) of World Data Protection
Report
The new guidance is available here.
By Christopher Millard and Peter Church, London

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Table 1 - ICO Guidance

no

Q1. Can a living individual be

identified from the data, or, from the
data and other information in the
possession of, or likely to come into
the possession of, the data controller?

yes
no

Q2. Does the data relate to the

identifiable living individual, whether in
personal or family life, business or
profession?

yes

unsure
Q3. Is the data obviously about a
particular individual?

yes

no
Q4. Is the data linked to an
individual so that it provides particular
information about that individual?

yes

no
Q5. Is the data used, or is it to be
used, to inform or influence actions
or decisions affecting an identifiable
individual?

yes

no
Q6. Does the data have any
biographical significance in relation
to the individual?

yes*

no or unsure
Q7. Does the data focus or
concentrate on the individual as its
central theme rather than on some
other person, or some object,
transaction or event?

yes*

no or unsure
no*

Q8. Does the data impact or have the

potential to impact on an individual,
whether in a personal, family,
business or professional capacity?

The
information
is not
personal
data

Issue 45 1 November 2007

* Indicates that this is a likely, rather than a definite, conclusion

yes

The
information
is personal
data

Freedom of Information: Widening the Net?

The Government made a series of announcements on 25 October 2007 to
bolster the Freedom of Information Act 2000 (FOIA), enhance openness
and increase public access to information.
These include a proposal to make additional organisations, from both the
public and private sectors, subject to FOIA. It has also abandoned
amendments to the charging regime that would have severely curtailed the
impact of FOIA.
Who is Caught by FOIA?
Under FOIA any person can request information from public authorities. A
public authority is one that is:

listed in Schedule 1. This includes a vast range of public sector and

quasi-public sector bodies from the Financial Services Authority to
Sir John Soane's Museum;

wholly owned by the Crown or a public authority listed in Schedule 1;

or

designated as a public authority by the Secretary of State because

it (a) appears to the Secretary of State to exercise functions of a
public nature, or (b) is providing under a contract made with a
public authority any service whose provision is a function of that
authority (section 5 of FOIA).

Outline of the Consultation

The Government has now issued its long-awaited consultation on the third
limb of this test - whether any additional organisations should be designated
as a public authority.
Such a designation could be a heavy burden for an organisation, both
because it may be obliged to disclose information about its operations and
also in terms of the additional administrative overheads in responding to
requests for information.
Mindful that a designation may be very unpopular, and could be challenged
in the courts, the consultation looks carefully at which organisations are likely
to meet the relevant criteria in section 5. The consultation lists the following
factors as relevant when considering if an organisation exercises functions
of a public nature:

the extent to which that function is publicly funded;

whether the function is underpinned by statute;

if the organisation has extensive or monopolistic powers;

whether it is mandatory for parties to submit to that organisations

jurisdiction; and
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whether the organisation acts for the public benefit or participates in

a significant way, in the affairs of the nation.

The consultation also considers when an organisation is providing under a

contract made with a public authority any service whose provision is a
function of that authority. In looking at this issue it is necessary to look
carefully at the service in question to see if it really is a function of a public
authority (such as running childrens homes) or just a service that is just
used internally by that public authority (such as the supply of stationery or IT
equipment).
The power to make a designation is discretionary, so the consultation goes
on to consider whether it will be appropriate to use this power. Key factors
include the extent to which that organisation is funded by the public and the
potential burden imposed by a designation. In relation to service providers,
the consultation also recognises that there will already be a substantial
degree of accountability arising out of the contract with the public authority.
Who might be Caught?
The consultation does not directly recommend that any organisation or class
of organisation should be designated a public authority under section 5 of
FOIA. However, based on the approach in the consultation, a number of
organisations may well be subject to further scrutiny:

10

organisations performing self-regulatory functions, such as the Law

Society, Institute of Chartered Accountants or Bar Council. Each of
these bodies has extensive powers, exercised in the public good and
it is mandatory to submit to their jurisdiction;

sports regulators such as the Football Association, the Rugby

Football Union or the Lawn Tennis Association. Again, these
organisations clearly have a public role in managing their respective
sports, and it is mandatory to submit to their jurisdiction, giving them
extensive quasi-monopolistic powers. Many also receive significant
public or quasi-public funding. However, it is worth noting that a
previous attempt to judicially review the Football Association failed
indicating that its activities do not entirely fall within the public sphere
(R v Football Association Limited ex parte Football League Limited
[1993] 2 All ER 833.);

major transportation operators such as Network Rail, Metronet or

Tubelines. Network Rail will be particularly alert to this issue given
the recent decision of the Information Tribunal that it does not
perform functions of a public administration and therefore is not
subject to the Environment Information Regulations 2004 (see
Network Rail v Information Commission EA/2006/0061 & 0062);

Issue 45 1 November 2007

PPP and PFI vehicles. In many cases these service providers have
contracts with the Government for the performance of core
Government functions such as the provision of hospitals, schools or
roads. Designation of these entities would also make the application
of FOIA more consistent, as access to information would depend on
the service in question rather than the entity providing that service.

However, it is interesting that there is no reference to the utility companies

exercising functions of a public nature and therefore being designated
under section 5. This may well reflect the fact that, while these organisations
were traditionally state run, they are now fully privatised and, in most cases,
operating in a competitive market place. In these cases, there may be a
stronger argument for the designation of historical records covering periods
that such entities were in public ownership, publicly funded or operated as
monopoly suppliers.
Retreat on Fee Regulations
The Government has also abandoned proposed amendments to the FOIA
charging regime. Under these proposed amendments, a public authority
could have included time spent considering the application of an exemption
and associated public interest test when deciding if the request is too
expensive to respond to (i.e. if the cost of dealing with the request would
exceed the appropriate limit).
This could have led to more sensitive requests, such as the request for the
Attorney Generals advice on the legality of the war in Iraq, being rejected
solely on the basis that it would take too long to determine if the relevant
information is exempt.
The Government received 324 responses to its consultation on the charging
amendments of which 236 were against the proposals. Particularly surprising
was that, of the 118 public authorities that responded, nearly half were
against the amendments to the charging regime or undecided.
A Return to Openness
The freedom of information regime undoubtedly places an additional burden
on public authorities and is sometimes misused. However, in the two and a
half years since it was introduced it has helped to open up the workings of
government. In Gordon Browns words:
Freedom of Information can be inconvenient, at times frustrating and
indeed embarrassing for governments. But Freedom of Information is the
right course because government belongs to the people, not the
politicians.
The consultation is available here.
Responses must be provided by 1 February 2008.
By Richard Cumbley and Peter Church, London

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IT & E-Commerce
European Union
Court Rules In Microsoft Case
In its 2004 decision, the Commission concluded that Microsoft had
committed two types of abuse which where both related to the dominant
position which it held through Microsoft Windows in the PC operating
systems market: first, the Commission held that Microsoft had failed to
supply its competitors with information necessary for them to allow their
workgroup server operating systems to interoperate with Microsofts
workgroup server and PC operating system; secondly, Microsoft had
engaged in an illegal tie by bundling its Windows Media Player into its
Windows operating system. The Commission imposed a record fine on
Microsoft and imposed two remedies upon the company.
The Interoperability Case
In September 1998, Sun Microsystems called upon Microsoft to disclose all
the information that it required to enable its servers to interoperate natively
with Microsoft systems. Three months later, despite Microsofts offer of
discussions about interoperability, Sun filed a formal complaint with the
Commission alleging that Microsoft was guilty of an abusive refusal to supply
the requested information. At the end of an investigation lasting over five
years, the Commission concluded that Suns complaint was substantially
justified and ordered Microsoft to prepare and license to third parties
complete specifications for the protocols relating to interoperation between
Microsoft Windows PCs and workgroup server operating systems (whether
that interoperation was direct or indirect through Microsoft Windows server
systems).
Although there was a dispute as to whether Microsofts refusal to disclose
the information requested by Sun was actionable, there was no doubt that
Microsoft would not meet the standard of disclosure required by the
Commission. The obligation to disclose was based upon a factual
assessment in which the most important elements were the findings that: (i)
there were two relevant markets, an upstream market for PC operating
systems and a downstream market for workgroup server operating systems
(comprising systems that provided file and print and group and user
administration functionality for servers costing less than $25,000); (ii) not
only was Microsoft admittedly dominant on the upstream market (with a
share in excess of 90%) but it had also become dominant on the
downstream market (with a share that had grown to a level exceeding 60%);

12

Issue 45 1 November 2007

(iii) Microsoft had grown in the downstream market at the expense of rival
suppliers, despite the superior quality of their products, because consumers
attached substantial importance to a high level of interoperability; (iv) without
intervention, other suppliers would be unable to achieve the level of
interoperability required by customers and would be condemned to a
condition of progressive marginalisation. In these circumstances, the
Commission concluded that intervention was justified either on its preferred
basis (that, on an assessment of all the circumstances, the benefits of
ordering Microsoft to supply outweighed the detriments) or on the basis of
the four-part IMS test (namely that (a) disclosure is indispensable to
operation in a downstream market; (b) non-disclosure will result in the
elimination of all competition in the downstream market; (c) non-disclosure
will frustrate the development of a new product and (d) there is no objective
justification for the non-disclosure).
At the heart of a wide-ranging defence that challenged all these assertions,
Microsoft claimed that: (i) the Commissions assessment was at odds with a
market reality characterised by widespread interoperation amongst
heterogeneous software systems; (ii) the mandated disclosure was not
indispensable because there were alternative means available to rivals to
achieve workable interoperability; (iii) the Commission had failed to give due
weight to the successful entry of others such as, most notably, Linux and (iv)
Microsoft was justified in refusing to disclose or license information that
represented the fruit of substantial investment in which it had valuable
intellectual property rights.
Although the Court did not adopt the Commissions preferred legal standard,
it confirmed the Commissions decision on the basis of the four-part IMS test.
In doing so, it stressed that: (i) the heterogeneity to which Microsoft referred
was irrelevant because it lay outside the relevant market correctly identified
by the Commission; (ii) it was essential that, within that market, a Windows
client and server system should communicate with a third-party server as if
the latter were a Windows system; (iii) that level of communication could not
be achieved without the mandated disclosure by Microsoft; (iv) it was
insufficient to show that niche suppliers might survive in competition with
each other if they could not challenge Microsoft; (v) the mandated disclosure
would not threaten Microsofts IPRs because it was limited to the
specifications and did not extend to Microsofts implementation of those
specifications; (vi) new products would be created because third parties
would have to do that to meet customer demand and to avoid infringement
of Microsofts IPRs; and (vii) Microsoft could not rely upon its IPRs to justify
non-disclosure where the first three limbs of the IMS test were satisfied or
upon unparticularised claims of threats to incentives to innovate, especially
where non-disclosure was inconsistent with normal market behaviour and
Microsofts own behaviour at a time when its share of the workgroup server
market was small.

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The Windows Media Player Case

Contrary to the Interoperability Case, the Commissions story of harm and
the underlying facts in the Windows Media Player case are relatively
straightforward. Since the early 1990s, Microsoft had bundled a media player
with Windows to which streaming functionality was added in 1999. Given
that Windows was on more than 90% of all PCs, this guaranteed Microsofts
Windows Media Player ubiquity in the market. According to the Commission,
other forms of distribution, such as downloading, were less efficient and did
not allow rival media players to achieve the same reach. The Commission
took the view that this competitive advantage would ultimately lead to a
tipping of the market and the elimination of competition media player
providers: due to WMPs presence on almost every PC, content providers
would primarily encode their content in a Microsoft-compatible format and
application vendors would write applications primarily for WMP. This, in turn,
would make WMP more attractive to customers and trigger a virtuous circle
which would ultimately lead to a Microsoft monopoly in media players with
streaming functionality. In its support, the Commission pointed to declining
market shares of RealPlayer, the dominant media player at the end of the
1990s, and rising market shares for WMP.
The Commission decided that Microsofts behaviour amounted to an illegal
tie. Microsoft had bundled two separate products, its media player and
Windows, its dominant PC operating system, and deprived customers
(OEMs and end-users) of the choice to obtain Windows without media
player, thereby restricting competition. Microsoft was accordingly ordered to
supply a version of its PC operating system from which media functionality
had been removed.
Microsoft, by contrast, argued that its behaviour did not restrict competition.
Media players were offered for free by the various software vendors and
there were several easy routes to market, for example, downloading. The
open access to the market was evidenced by RealPlayers comparable
presence on PCs. Furthermore, there was no evidence of tipping of the
market: many content providers would provide their content in different
formats and many software vendors would write their applications for
different media players, which would allow the continued existence of
different media players. In particular, the bundling of Windows and WMP
should not be regarded as an illegal tie, as Windows and WMP should not
be regarded as separate products for the analysis of tying and customers
were in no way forced to use WMP, which furthermore was made available
for free.
The Court confirmed the Commissions decision that Microsofts bundling of
Windows and WMP was an illegal tie. According to the Court, PC operating
systems and media players were to be regarded as separate products for

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Issue 45 1 November 2007

the tying analysis because there was demand for standalone media players
and media players had different characteristics from operating systems. As a
result of the bundling, customers were not given the choice to acquire
Windows without simultaneously acquiring WMP and the fact that Microsoft
did not charge for WMP and that customers were not forced to use WMP did
not alter the Courts conclusion. The Court concluded that the bundling with
Windows gave Microsoft an unfair advantage which prevented competition
between RealPlayer and WMP to be decided on the basis of the intrinsic
merits of the two products. Finally, the Court rejected Microsofts efficiency
justification on the basis that those efficiencies could either be obtained
without the illegal tie (by means of OEMs decisions to integrate media
players into their PCs) or could not be taken into account because they are
the direct consequence of the impugned conduct.
Implications
The Microsoft judgment had been touted as the judgment of the decade
rather more because it was perceived to be a test of the Commissions
enforcement credentials than because of its substantive importance for the
future development of Community antitrust policy. Commissioner Kroes
reaction to the judgment betrays the tension that even the Commission feels
about the case, simultaneously describing the Commissions decision as a
landmark which sets an important precedent for dominant firms yet is in
many ways exceptional because it is directed to an instance of superdominance which is rarely observed.
Although the latter observation may seem reassuring, the Courts judgment
does have important implications both for dominant firms (and indeed for
complainants) as well as for the future direction of EC competition policy.
Implications for dominant firms
At a time when the Commission has started a debate about the
modernisation of Article 82 and has incorporated several modernisation
elements into the Microsoft decision, the Court has turned back the clock
and has reaffirmed the old analytical framework of the 1970s: the Microsoft
judgment follows the long tradition of cases from Hoffman La-Roche to
BA/Virgin and Michelin II which favours a formalistic approach in preference
to a specific effects-based analysis and exercises great restraint in the scope
of judicial review. If anything, the Microsoft judgment has further lowered the
thresholds for a finding of abuse.
Form-based analysis: in its Microsoft judgment, the Court reiterated its
statements in Michelin II and BA/Virgin (restated by the Court of Justice in
the latter case) that conduct may be abusive if it is capable of restricting
competition. That implies two questions: what is unrestricted competition and
what level of restrictive capability is required to merit prohibition?

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As to the first question, in both parts of the case the Court emphasised the
importance that it attaches to competition based on the intrinsic merits of the
rival products undistorted by any advantage that a dominant firm may derive
from its operations in another market. If the advantage is large enough (as
the Court clearly deemed Microsofts dominance in the PC operating system
market to be), it may have to be shared with rivals. So, in the WMP case, the
Court made it clear that the Commissions detailed analysis into the effects
of Microsofts bundling of Windows and WMP, while correct, was not
required for a finding of abuse, nor was there any need to demonstrate
consumer harm.
As to the second question, the Court stressed (reiterating the position stated
in Tetra Pak II) that the Commission is not required to wait until competitors
have exited the market before it intervenes. It is sufficient that such exit may
be anticipated. The level of certainty that is required was effectively left
open.
Limited judicial review: in merger cases, the Court has repeatedly intervened
even in the context of complex appraisals and has assessed whether the
evidence put forward by the Commission was factually accurate, reliable and
consistent and whether it was capable of substantiating the conclusions
drawn from it. In cases of abuse of dominance, by contrast, the Court has
regularly emphasised that the complex appraisals by the Commission are
subject only to a limited review by the Court. The Microsoft judgment
confirms this bifurcated approach of the Court in competition cases. While
paying lip service to the standard and burden of proof developed in merger
cases, the Court repeatedly highlights the Commissions margin of discretion
in complex economic and technical appraisals and the limited role of review
of the Court in checking whether the relevant rules of procedure and on
stating reasons have been complied with, whether the facts have been
accurately stated and whether there has been any manifest error of
assessment or a misuse of power.
Lowering of thresholds to establish an abuse: following the logic of the
framework described above, the Courts treatment of the legal standards
applicable to the specific abuses at issue in this case may effectively have
lowered the thresholds required to establish an abuse. In the context of the
interoperability case, the four-fold IMS standard was applied in such a way
that, once it was established that the upstream IPR was indispensable to
downstream operations, little more needed to be proved to justify a
compulsory licence unless a contrary objective justification could be
established by the dominant firm: in particular, the content of the new
product test was starkly reduced from its inception in Magill (where the Court
referred to a new product for which there was established consumer
demand) to Microsoft (where it was sufficient to believe that consumer

16

Issue 45 1 November 2007

demand and the need to design around Microsofts IPRs would ensure that
rivals implementations constituted new products). As far as tying is
concerned, the judgment follows in the footsteps of earlier cases, although
the Courts interpretation of the separate product test raises the question to
what extent in future essential facility cases, such as Bronner, may be
caught by the tying prohibition.
What changes for firms with significant market shares as a result of the
Microsoft judgment? In terms of the law, the answer is: not much; the effect
may be rather that the prospect of change that they had anticipated has
been set back. They will continue to struggle to find safe harbours for
unilateral behaviour in the light of sweeping prohibitions derived from
extreme cases. In particular, firms with market shares in excess of 80% face
the threat that any exploitation of a commercial advantage that defends or
enhances their market position could be regarded as abusive. Indeed,
Commissioner Kroes stated in the aftermath of the Microsoft judgment that
she would like to see a significant drop in Microsofts market share in PC
operating systems and that such a drop would be a way of measuring the
success of her antitrust policy.
Implications for EU competition policy
Modernisation: the impact of the Microsoft judgment on the Commissions
plans for modernisation of the rules for dominant firms is hard to predict. It
may be tempting for the Commission not to pursue any longer a broad
restatement of Article 82s scope, given that the Court has recently endorsed
per se rules in three of the four broad areas of abuse of dominance
(predatory pricing, rebates/discounts and tying) and has expanded the scope
of the rules in the fourth area (refusal to supply).
On the other hand, the underlying policy reasons for reform are as valid as
ever, and probably even more so after the Microsoft judgment. The policy
regarding dominant firms is an anachronism of the early years of EC
competition law, at odds with modern economic thinking. It is inconsistent
with the remainder of EC competition policy, in terms of policy goals and
policy approach. The legal structure does not work because it relies upon
broad sweeping prohibitions, which capture many efficient business
practices, without either a proper assessment of competitive harm or the
counterbalance of a well-developed theory of objective justification. As a
result, the law has become more unpredictable.
The Commission may feel that a more sophisticated exercise of their
prosecutorial discretion will provide a satisfactory cure for these ills.
Commissioner Kroes was at pains to stress that she was committed to a
stable, fair and restrained regulatory environment. Welcome though that is,
regrettably, it does not provide a sufficient substitute for a clearly-stated and
well-founded policy for Article 82. Aside from the unavoidable vagaries of
enforcement policy, the Commission no longer has a monopoly over the

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application of Article 82. National competition authorities and courts have

parallel powers under either Article 82 itself or their national analogues. It is
important for those jurisdictions as well as the proper administration of the
Commissions own jurisdiction that these issues should be addressed.
US/EU divergence: the current line of abuse of dominance cases seems to
have set the EU institutions on a direct collision course with the US
regulators. Thomas OBarnett, the head of the antitrust division at the
Department of Justice, took the view that the judgment may have the
unfortunate consequence of harming consumers by chilling innovation and
discouraging competition which in turn triggered a strong rebuke from
Commissioner Kroes who said that it was unacceptable that a representative
of the US judiciary should criticise a court of law outside his jurisdiction. As
the European Commission becomes increasingly the global forum of choice
against dominance firms, often US companies (Qualcomm, Intel and Apple
are currently all in the dock), the tensions between the EU and US could well
increase.
Timing: It took almost nine years from the time Sun Microsystems
complained to the European Commission on 10 December 1998 to the time
the CFI issued its judgment on 17 September 2007: aeons in the fast moving
world of IT. At the time of Suns complaint, Steve Jobs iPod, which would
transform the music industry, had not yet seen the light of day and nor had
anyone heard of YouTube or Facebook. The industry has moved on over the
last 10 years, oblivious to the antitrust battle before the European
institutions, and the markets seem to have found their own solutions to the
competition concerns: new web-based applications are likely to do more for
competition than compulsory licensing of interface information ever will and a
range of new and innovative media players such as Adobes Flash Player
have entered the market without the help of Windows. If antitrust authorities
want to play any meaningful role in high-tech industries, the administrative
and judicial process has to move significantly faster.
Conclusions
Overall, the Microsoft judgment is unlikely to be the last word on the rules
regarding dominant firms. The current status of the law is not tenable. The
Court, which has been a driving force in modernising other areas of
competition law, such as the law on restrictive agreements and EU merger
control, has missed an important opportunity to bring Article 82 into the 21st
century.
By Bill Allan and Christian Ahlborn, London

18

Issue 45 1 November 2007

Belgium
Court Orders ISP to Take Anti-P2P Action
On 29 June 2007, a new milestone was set in the legal battle over peer-topeer (P2P) file sharing. In a highly controversial ruling, the Brussels Court
of First Instance ordered an internet service provider (ISP) to implement
technical measures restricting its customers use of P2P software.
The decision follows an earlier decision, given by the same court in
November 2004, which established that copyright infringements were taking
place. However, that decision did not immediately impose any measures and
instead the judge ordered an expert to draft a report on whether restricting
P2P traffic is technically feasible.
Origins of the Action
The Belgian Society of Authors, Composers and Publishers (SABAM)
launched proceedings against the Belgian ISP, Scarlet (formerly Tiscali),
alleging that it was knowingly permitting P2P file sharing on its network.
The aim of the action was to obtain an order against Scarlet, as a third party
intermediary, to take proactive measures preventing the use of P2P
networks for committing copyright infringements. The law of 30 June 1994
relating to copyright and neighbouring rights (LAR) allows a judge to
impose such measures suspending activities infringing copyrights in
summary proceeding.
First Judgment - Finding of Copyright Infringements
In the action, Scarlet defended itself against SABAMs claim by first
contesting whether it was possible to make such an order against a third
party. The judge, however, agreed with SABAM on the basis that that
Copyright in the Information Society Directive (2001/29/EC) explicitly
provides for such a cause of action. While this Directive had not been
implemented under Belgian law at that time, it had acquired direct effect as
the date for implementation had passed.
Secondly, Scarlet argued that even if an order could be issued against a
third party, it would not be possible to do so against Scarlet unless it had
committed a wrong. As an ISP, Scarlet relied on the Belgium implementation
of the E-Commerce Directive (2000/31/EC) - the law of 11 March 2003
relating to certain legal aspects of information society services
(eCommerce Act). However, the court decided that this immunity only
protects ISPs from liability for the content of transmissions; it does not
prevent a finding of copyright infringements or the issuance of an order
aimed at ending them.

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Thirdly, Scarlet alleged that SABAM had not demonstrated that its customers
were actually infringing copyright. This proved to be an unsustainable
argument in light of the use of P2P file sharing, and was rejected.
In light of these findings, the judge considered whether to impose measures
to terminate these infringements. However, as this is primarily a technical
issue he designated an expert to determine how this goal could be achieved.
Second Judgment - Imposition of Remediation Measures on Scarlet
According to the experts report, only one technical solution was available to
filter P2P traffic, though he considered the cost of applying it to Scarlets
network to be quite high and doubted the durability of such a solution.
However, in light of the earlier decision in 2004, the court made a further
judgment on 29 June 2007 ordering Scarlet to apply these measures. This
was on the basis that various Internet giants are already using this solution
and the cost was not considered prohibitive (around 0.5 per month per
customer).
The court came to this decision despite the argument that it would be an
infringement of the eCommerce Act, which states no general obligation can
be imposed on an ISP to monitor transmitted data. The judge dismissed this
argument on the basis that the E-Commerce Directive should not prevent an
obligation to implement technical surveillance instruments. The judge also
dismissed the argument that this would be a prohibited use of personal data
by Scarlet, as Scarlets customer contracts to provide a sufficient basis for
such processing of personal data.
An Appeal is Lodged
Scarlet appealed against this ruling on 6 September 2007 on the basis that it
would force it to infringe the right of privacy of its customers. Scarlet also
highlighted that it is no longer appropriate to treat all P2P file sharing as
illegal when more and more legal content providers distribute via this
technology.
Since it obtained judgment against Scarlet, SABAM has been threatening
other ISPs with legal action. Over the summer, it contacted a number of
them in order to try to agree a negotiated solution, but on the 12 September
2007 the Belgian ISPs Association ruled out any such compromise.
Consequently, this judgment will continue to be the leading case for future
developments over the use of P2P technology. Clearly the outcome of this
case will be decisive for the landscape of internet service provision in
Belgium, and possibly abroad.
By Guillaume Couneson, Brussels

20

Issue 45 1 November 2007

United Kingdom
Government Responds to Report on Personal Internet Security
The internet is an increasingly important part of our society underpinning not
only global economic activity but also cultural and social behaviour.
However, the growth of this online environment raises a number of risks for
individuals such as becoming the victim of internet fraud, identity theft or loss
of reputation. These risks can be particularly difficult to manage given the
technological and jurisdictional hurdles to law enforcement on the internet.
In light of these risks, the House of Lords Science and Technology
Committee launched an inquiry into safety on the internet and published a
report entitled Personal Internet Security in August 2007. The report
contained a number of wide reaching proposals to improve internet security
by amending the law, raising public awareness and restructuring
enforcement activity.
The Government has now responded to the proposals in the report. While
agreeing that the welfare of users of the internet is increasingly important, it
does not believe that the public has lost confidence in using the internet and
is not intending to adopt all of the recommendations in the report.
Two particular areas of interest are the proposals for a notice of breach law
and the removal of the mere conduit exemption.
Notice of Breach
One of the key proposals made in the report was that a data security breach
notification law should be introduced in the United Kingdom - i.e. a law
requiring businesses to tell either its regulators or their customers if there is
an unauthorised disclosure of their customers personal information. This
type of law would not only provide greater visibility about the level of threat
posed by data breaches but would also provide a incentive for businesses
for ensure they keep their customers data secure.
The Governments response acknowledges that the introduction of this type
of law in other jurisdictions (most notably the US) is an interesting
development. However, the Government is less convinced that it would lead
to an immediate improvement in the protection of personal information. A
number of factors lead to this conclusion:

the introduction of similar laws in other jurisdictions may have

desensitised consumers to security issues and undermined
confidence in the internet;

other jurisdictions, such as the US, do not have general data

protection laws so there is a greater need for this type of market lead
protection; and

Technology,
Media & Telecommunications

in certain circumstances notifying consumers of the security breach

might not be appropriate (for example, it might highlight the value of
the data that has been lost).

While this issue remains on the Governments watch list, and European
proposals to introduce this requirement in the communications sector
remain, there is no indication that the Government will introduce a notice of
breach law of its own volition in the immediate future.
Removal of the Mere Conduit Exemption for ISPs
The report also recommended that the mere conduit exemption should be
removed once an ISP has detected or been notified that a machine on their
network is sending out spam or viruses. The removal of this exemption could
potentially make ISPs liable for any damage to third parties resulting from a
failure immediately to isolate the affected machine.
This suggestion was also rejected by the Government, mainly because it
arises out of the E-Commerce Directive (2000/31/EC) and therefore must be
implemented by the United Kingdom. Moreover, from a practical perspective,
an ISP will want to take action against compromised machines in any event
to protect its own network and normally include this right in their terms and
conditions.
The report is available here and the Governments response is available
here.
By Peter Church, London

22

Issue 45 1 November 2007

Media & Broadcasting

Czech Republic
New Digital Television Laws Proposed
Experimental digital terrestrial television (DTT) was launched in the Czech
Republic back in May 2000. Seven years later, the move from analogue to
digital still lacks momentum, the rules for the licensing and operation of DTT
are confused and the network infrastructure remains underdeveloped.
Despite strong interest in DTT among broadcasters and consumers alike,
the digital boom is being held back by an inadequate legal framework. This
is expected to change with the introduction of new legislation to improve
legal certainty and confidence in the sector by setting out clear and
transparent rules of play.
The Digital Packet
In September 2007, the Chamber of Deputies of the Czech Republic passed
the long-awaited packet of amendments to Czech media law to permit a full
launch of DTT in the Czech Republic.
The core of the so-called Digital Packet amends the two laws setting out
the framework for digital broadcasting:

the Electronic Communications Act (Act No. 127/2005 Coll., on

Electronic Communications and Amendment to Certain Acts); and

the Broadcasting Act (Act No. 231/2001 Coll., on Provision of Radio

and Television Broadcasting and Amendment to Certain Acts).

Licensing Procedure for Broadcasters

Prospective DTT broadcasters will no longer need to compete for licences in
an open tender. Licences for DTT broadcasting now will be issued to any
applicant who can meet a set of qualifying conditions. However, DTT
broadcasting based on licences acquired under these relaxed conditions will
be possible only after the digital switchover, which will take place on 10
October 2010 at the earliest and could be delayed until 31 December 2012.
The licence itself will, nevertheless, no longer automatically guarantee the
allocation of a particular radio frequency. Instead, it will be the responsibility
of the broadcaster to team up with one of the DTT network operators.
Following the licence award, a DTT channel must be launched within 360
days or the licence will expire.
Regulation of Network Operators
DTT network operators will be required to publish a reference offer. This
offer must be public (e.g. available on their websites) and set out detailed
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Media & Telecommunications

terms on which they are prepared to provide services to DTT broadcasters.

The reference offer, and any subsequent changes, must become effective
not earlier than one month following their publication. DTT network operators
will also have to publicise information about any free capacity in their
network and the scope and structure of the network capacity that is in use.
The Digital Package establishes a set of minimum requirements for DTT
networks. They must enable the broadcast of at least four channels in PAL
standard (720x576 resolution) or better. Since this requirement applies to all
types of network, some fear that it will hinder the launch of digital TV on
mobile phones, where a lower 352x288 resolution is more appropriate.
The Digital Package also requires that network operators conclude a
contract for the provision of services with every DTT broadcaster who
demands contractual terms: (i) that comply with the reference offer for that
network operator; (ii) that correspond to the technical parameters of the
network; (iii) that will not damage the integrity of the network; and (iv) that
offer a price equal to or greater than the cost-oriented price. This is, of
course, subject to the network operator having sufficient capacity on its
network to carry that channel.
In the event that negotiations between the network operator and broadcaster
break down, the Czech Telecommunication Office can step in to resolve the
dispute at the request of either of the parties involved.
Original Broadcasters Given Priority over Retransmission Broadcasters
Retransmission broadcasters (i.e. broadcasters who do not create their own
material but instead rebroadcast other channels or substantial parts of other
channels) will no longer be limited to cable and satellite networks and will
also be able to use DTT.
However, for public policy reasons, their access to DTT will be limited in
order to promote original broadcasters (i.e. those who create new material
themselves). Retransmission broadcasters will be obliged to surrender their
DTT transmission capacity to any original broadcasters who have concluded
a contract for DTT services with the same network operator. The
retransmission broadcasters must surrender their transmission capacity
within 90 days of the receipt of notice from the original broadcaster,
otherwise the retransmission broadcasters registration may be terminated
eventually.
Must-Carry Obligation for Cable and Mobile
Network operators providing DTT broadcasting services for mobile phones
and retransmission broadcasters operating on cable networks will be
required to include, as a part of their minimum subscriber package, all freeto-air national DTT channels. This obligation will, however, expire after the
digital switchover.
This part of the Digital Package was particularly controversial. Some argue
that this requirement is too onerous and unduly restricts the commercial

24

Issue 45 1 November 2007

freedom of the cable and mobile operators. On the other hand, the mustcarry obligation is only temporary and, as a consequence, it will ensure a
level playing field for all broadcasters, who will all get access to the same
share of the audience.
Compensatory Licences for Existing Broadcasters
When the new law comes into force, the two commercial broadcasters (Nova
and Prima), as well as the public service broadcaster (Czech Television) with
its four channels, will have their licences reconfirmed. Nova and Prima will
also have their licences prolonged by eight years, until 2025 and 2026
respectively.
On top of that, Nova and Prima will be able to receive an additional
compensatory broadcast licence up until digital switchover provided they:

comply with the digital switchover date announced by the government;

and

hand back their analogue licences in accordance with the schedule to

be announced by the government.

Therefore the compensatory licences are both an incentive for Nova and
Prima to comply with the digital switchover conditions and also a
compensation for their voluntary surrender of their analogue licences, which
are necessary to free-up spectrum for the digital switchover.
Six other broadcasters can also claim compensatory licences: Febio TV,
Ocko, RTA, TV Barrandov, TV Pohoda and Z1. These broadcasters have
also formerly received standard licences for DTT broadcasting, though the
licence award has been appealed. The Digital Packet provides for the
termination of these pending licensing proceedings. As a temporary
measure, the six broadcasters will receive the compensatory licences which
will enable them to launch DTT broadcasts in the same network as originally
anticipated under their appealed licences. Their compensatory licences will
also expire after the digital switchover. As regards the period after the digital
switchover, the six broadcasters will be able to apply for regular DTT
licences under the new licensing procedure introduced by the Digital Packet.
The final reason for the award of the compensatory licences is to improve
the content available on DTT. Currently, there are not enough attractive
programmes to persuade the television viewers to switch to DTT. Therefore,
the short-term grant of extra compensatory licences should make the
programme choice richer and more appealing.
After the digital switchover the compensatory licences should no longer be
needed as there will be sufficient competition among new broadcasters to
drive up the standard of the channels.
Final Approval by the Senate
Recently, the Digital Packet has been also approved by the Senate, which
gave it the green light without any further ado. If ratification by the President
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Media & Telecommunications

is also forthcoming, the Digital Packet could enter into force as early as 1
January 2008.
However, this is not the last step on the road to digitalisation by any means.
The Digital Packet will be followed soon by additional technical amendments
which are necessary for the adjustment of the legal framework in order that
DTT can be fully rolled out.
By Zuzana Viktorinov, Prague

Germany
A Split Licence Award for DVB-H Mobile Television
The German telecommunications and broadcasting regulators have recently
awarded spectrum and broadcasting licences to pave the way for the roll-out
of DVB-H (Digital Video Broadcasting - Handheld) mobile television in
Germany. It is estimated that this service should be launched in the first
urban areas before the European Football Championship in 2008.
Federal and State Licensing
In Germany, there is a constitutional separation between
telecommunications law (which is regulated at federal level) and media law
(which is regulated at state level). This means that the tender for the
necessary authorisations for DVB-H had to be carried out by both the
Federal Network Agency and the State Media Authorities.
The Federal Network Agency awarded the rights to use the relevant DVB-H
frequencies for the actual transmission of mobile television whereas the
State Media Authorities awarded the broadcast licences entitling the owner
to operate a programme platform for mobile TV (i.e., the right to aggregate
and bundle content and to transmit that content over the frequencies
awarded by the Federal Network Agency).
Spectrum Award
On 8 October 2007, the Federal Network Agency awarded the frequency
rights for the transmission of DVB-H signals in Germany to T-Systems Media
& Broadcast, a subsidiary of Deutsche Telekom AG.
T-Systems Media & Broadcast already has almost exclusive rights over the
DVB-T (Digital Video Broadcasting - Terrestrial) network in Germany and
also provided the transmission network for the first DVB-H trials in Germany
during the Fifa World Cup 2006. Regardless of the fact that this could lead to
limited competition in the digital television market, the regulator decided that
T-Systems Media & Broadcast demonstrated the best technical capability in
its bid and also guaranteed greater geographical coverage.
Broadcast Licence Award

26

Issue 45 1 November 2007

The State Media Authorities followed suit on 16 October 2007, indicating that
they intended to grant the broadcasting license for the operation of the DVBH platform to Mobile 3.0, a joint venture between Mobiles Fernsehen
Deutschland (MFD) and Neva Media.
Neva Media is backed by publishing houses Hubert Burda Media and
Holtzbrinck as well as media managers Paulus Neef, Bernd Curanz and
Christiane zu Salm, among others. The biggest single shareholder of MFD is
South African media and technology company Naspers, which has already
established DVB-H broadcasting networks in several African countries. MFD
also operates the first German mobile TV platform, known as watcha,
which is provided using DMB (Digital Multimedia Broadcasting). This was
launched in June 2006 and is currently available in 16 urban areas and
distributed by mobile service providers.
According to the State Media Authorities, Mobile 3.0 now has until 9
November 2007 to present a plan for the allocation of the available capacity
to television broadcasters, including a regional offer, as well as for the
allocation of the four available radio slots.
If Mobile 3.0 is then granted the licence, several TV channels and other
content providers will have to make arrangements with Mobile 3.0 as the
content platform operator.
Commentary
The proposed award of the broadcasting licence for the DVB-H platform to
Mobile 3.0 is a set-back for mobile operators T-Mobile, Vodafone and O2
who set up a joint venture for the provision of mobile TV earlier this year and
jointly bid for the broadcasting licence.
It is likely that Mobile 3.0 and T-Systems Media & Broadcast will now have to
enter into negotiations over how to actually set up a transmission
infrastructure for mobile television in Germany. Mobile 3.0 will also have to
enter into negotiations with the mobile network operators and mobile service
providers in Germany in order to establish a distribution network and obtain
access to end customers.
By Christoph Enaux and Karen Sokoll, Berlin
The Return of Media Mogul Leo Kirch
The Munich media entrepreneur, Leo Kirch, will be in charge of licensing the
national television rights for the football Bundesliga for the period 2009 to
2015. These football rights will be tendered early next year by the German
Football League (DFL).
Auction of Rights
DFL has appointed Sirius, a newly established agency and subsidiary of Leo
Kirch's KF 15 GmbH, to organise the auction of these rights for the next two
licensing periods starting in spring 2008. Each of these licence periods will
run for three years. Sirius has guaranteed DFL a minimum revenue of 3
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Media & Telecommunications

billion for this period, approximately 20 per cent more than the football clubs
receive at present.
For the international licensing of the rights, DFL will establish a foreign
subsidiary for the first time. DFL expects to generate revenues of
approximately 460 million for the period from 2009 to 2015.
Production Joint Venture
Moreover, DFL has set up a joint venture production company between
Sirius and DFL, in which Sirius will hold 51% of the shares. This joint venture
will be responsible for the production of television footage of the football
games (including pay-TV live transmission). All pay-TV providers will
therefore be provided with the same pre-produced television footage.
This move has been criticised by some members of DFL as well as various
television broadcasters. However, it has been introduced to ensure that
smaller cable operators or other broadcasters will be able to bid for the
necessary rights without having to invest large amounts in the production of
the footage.
Return of the Mogul

Berlin
Linklaters LLP
Rankestrae 21
10789 Berlin
Postfach 30 18 50
10746 Berlin
Tel: (+49) 30 21496-0
Fax: (+49) 30 21496-100

The new agreement with Kirch is a major development for the German
sports rights market. Kirch was involved in one of the greatest failures in the
history of the German economy when his media group became insolvent in
2002. Before the insolvency, he was one of the most important players in the
German sports and television market. The Kirch Group included, amongst
others, the pay-TV provider Premiere as well as the TV channels that now
belong to ProSiebenSat.1 Media AG.

Brussels
Linklaters LLP
Rue Brederode 13
B - 1000 Brussels
Tel: (+32) 2 501 94 11
Fax: (+32) 2 501 94 94

His return is now likely to make it more expensive for Premiere to win back
the pay-TV rights for the football league.

London
Linklaters LLP
One Silk Street
London EC2Y 8HQ
Tel: (+44) 20 7456 2000
Fax: (+44) 20 7456 2222

By Christoph Enaux and Karen Sokoll, Berlin

Editor: Peter Church Email: peter.church@linklaters.com

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Linklaters LLP is a limited liability partnership registered in England and Wales with registered number OC326345. The
term partner in relation to Linklaters LLP is used to refer to a member of Linklaters LLP or an employee or consultant of
Linklaters LLP or any of its affiliated firms or entities with equivalent standing and qualifications. A list of the names of the
members of Linklaters LLP together with a list of those non-members who are designated as partners and their
professional qualifications is open to inspection at its registered office, One Silk Street, London EC2Y 8HQ or on
www.linklaters.com and such persons are either solicitors, registered foreign lawyers or European lawyers

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