Third decision imposing a million euro fine on companies holding rights to well-known brands
In a recent decision, the European Commission imposed on NBCUniversal a fine for having restricted licensees from cross-border sales within the EU. The Commission has previously fined Nike and Sanrio in connection with the same investigations. All in all, the fines imposed total an amount corresponding to almost DKK 250 million.
In 2017, the Commission opened investigations into Nike, Sanrio and NBCUniversal. Each of those companies held intellectual property rights to various well-known brands, e.g. FC Barcelona and Manchester United (Nike), HelloKitty (Sanrio), and Minions and Trolls (NBCUniversal). For the purpose of exercising the rights to the brands, the companies enter into licensing agreements allowing the licensees to manufacture and sell merchandise featuring the various brands. However, the Commission suspected the companies of restricting the licensees from selling the merchandise freely within the EU single market and online – in breach of competition rules.
Nike's, Sanrio's and NBCUniversal's licensing agreements contained – to varying degrees – provisions prohibiting the licensees from cross-border sales within the EU. At the same time, they contained an obligation to refer customers from countries other than their "reserved areas" directly to the licensor, or to pay higher royalties to the licensor in case of cross-border sales within the EU. The licensors threatened the licensees with ending their licensing agreements if they did not comply with the provisions or made cross-border sales within the EU.
The Commission's decisions and fines
The Commission found that the agreements were contrary to the competition rules and therefore imposed million euro fines on Nike, Sanrio and NBCUniversal. In determining the level of each fine, the Commission took into account the value of each licensor's sales relating to the infringement, the duration of the infringement, and whether the licensor had been cooperating with the Commission during the investigation.
The Commission's first decision concerned Nike and was published on 25 March 2019. Nike's infringement had been taking place for 13 years, but Nike had been cooperating with the Commission, so the fine was reduced by 40%. The fine imposed on Nike amounted to EUR 12.5 million (approx. DKK 94 million).
On 9 July 2019, the Commission published its decision concerning Sanrio. Sanrio's fine was also reduced by 40% due to cooperation with the Commission. However, since the infringement had "only" taken place for 11 years – and since the value of the sales was lower than the value of Nike's sales – the fine was set at EUR 6.2 million (approx. DKK 47 million).
On 30 January 2020, the Commission published the third fine, namely a fine imposed on NBCUniversal in the amount of EUR 14.3 million (approx. DKK 107 million). The fine was based on the duration of the infringement (6.5 years) and the value of the sales. The Commission reduced the fine by 30% due to NBCUniversal's cooperation with the Commission.
Read the Commission's press release about the fine imposed on Nike
Read the Commission's press release about the fine imposed on NBCUniversal
Read the Commission's press release about the fine imposed on Sanrio
Read the full Commission Decision about the fine imposed on Nike
Read the full Commission Decision about the fine imposed on Sanrio