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Distribution agreement between Canal Digital A/S and TV2 Zulu A/S

28. april 2004

3/1120-0301-0277/MVN/FI The Council meeting 28. april 2004

On the 5 may 2003 Canal Digital A/S notified a distribution agreement to the Danish Competition Authority. The agreement gives Canal Digtial A/S an exclusive right to distribute TV2 Zulu A/S by satellite direct to home. The agreement runs for 3 years from the 1 January 2003 to the 1 January 2006

The parties have requested that the Competition Authority certifies that the agreement does not come under the prohibition of section 6 (1) or give an individual exemption under section 8 (1).

The Competition Authority finds that the agreement contains several clauses that potential could restrict competition. The agreement is exclusive for 3 years, Zulu demands that channel is distributed in Canal Digitals local package, Canal Digital pays a “marketing contribution” to TV2 Denmark, Canal Digital cannot run commercials for other advertising financed television channels on TV2 or TV2 Zulu and finally the agreement contains a most-favoured-nation clause.

The Competition Authority finds under the current competition situation on the market that the 3 year exclusivity does not restrict the competition in such a way that the clause would be prohibited under section 6 (1) of the Competition Act.

Furthermore, the parties have declared that they will change the clauses in the agreement concerning the restriction on commercials for other advertising financed television channels and the most-favoured-nation clause. The future the agreement will instead only refer to TV2’s standard conditions. On this background the Competition Authority does not find it necessary to take further action in connection with these provisions.

Finally the Competition Authority finds that the decision whether the provision concerning the placement of Zulu in Canal Digital local package falls under the prohibition in section 6 (1) of the Competition Act or not, should await the Competition Authority’s upcoming thorough investigation of this specific matter.