Conditional access, confiscation and piracy: why Commission and Council are at loggerheads

"Open sesame!" An early case
of conditional access

Last Friday, in the course of his Fantasies, the IPKat drew the attention of his readers to the forthcoming action before the Court of Justice of the European Union in Case C-137/12 European Commission v Council of the European Union -- which he termed 'the battle of the Euro-titans'.  The action seemed to him to be not entirely unconnected with intellectual property.  He is delighted to be able to tell his readers that, thanks to the kind efforts of Stephen Vousden, he has some further information for them:

"Facts

Pay-TV channels are often encrypted. A viewer will need a decoder card to decrypt the programme-carrying signals. The use of decoder cards is in part already regulated by EU legislation; for example, in 1998 the EC created Directive 98/84 on the legal protection of services based on, or consisting of, conditional access. However, in 2001 the Council of Europe passed its own similarly-named Convention (ETS No. 178), Article 12 of which expressly allows the EU to sign the Convention.

A decade later, the EU Council decided that the EU should sign up (Council Decision 2011/853/EU). However, the Council's Decision proved controversial. The Council took the view that the EU Commission could not sign the Convention on the basis of the Commission's exclusive competence because, in the Council's view, this was a 'mixed agreement'.

The EU Council's position is explained in more detail in a letter written by the Dutch Ministry of Education, Culture and Science to the Dutch Parliament dated 22 December 2011. According to the letter, the Member States felt that the EU Commission could sign the Convention in its entirety, save for Article 6 of the Convention. Article 6 concerns the adoption of measures for the confiscation of materials used for piracy. This Article allows not only administrative law to be used but also criminal law. As such, Article 6 of the Convention is more detailed than the corresponding provision of the EU Directive.

The Dutch Ministry's letter explains that the EU's signature of the Convention would be the first time that the EU would accede to the criminal law part of a multilateral treaty. This makes it politically sensitive. The Ministry's letter goes on to say that, since the EU has not exercised its internal competence in the area covered by Article 6 of the Convention, the Member States retain and remain competent in the area. Accordingly, the Member States should sign Article 6 of the Convention. Given that Member States would need to adjust their domestic legislation, the correct basis for the Council's Decision was Article 114 TFEU, which relates to the internal market. The Council's Decision should not be based on Article 207, which relates to external trade.

Pleas in law and main arguments

In March 2012, the EU Commission brought an action against the EU Council seeking to annul the Council's Decision. According to the Curia website:

By its first plea, the Commission claims that Article 114 TFEU is not an appropriate legal basis for the adoption of the contested decision. According to the applicant, the decision should have been based on Article 207(4) TFEU which authorises the Council to conclude international agreements in the field of the common commercial policy, as defined in Article 207(1) TFEU. The present convention does not aim to 'improve the functioning of the internal market', its principal objective being to 'facilitate' or 'promote' the provision of services based on conditional access between the European Union and other European countries. It would have a direct and immediate effect on the provision of services based on conditional access and on the trade in illicit devices and on the services relating to those devices. Consequently, the convention falls within the scope of the common commercial policy.

By its second plea, the applicant claims that the European Union's exclusive external competence (Article 2(1) and 3(1) and (2) TFEU) has been infringed because the Council considered that the conclusion of the convention did not fall within the European Union's exclusive competence whereas the convention falls within the common commercial policy or, in any case, that the conclusion of the convention is capable of affecting common rules or of altering their scope".

A katpat is hereby awarded to Stephen for his efforts.