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Brussels, 14th June 2007

Antitrust: Commission market tests commitments from CISAC and 18 EEA collecting societies concerning reciprocal representation contracts

The European Commission has invited comments from interested parties on commitments proposed by CISAC and 18 collecting societies, designed to meet the concerns raised in the Commission's Statement of Objections of January 2006 (see MEMO/06/63). The concerns are that certain clauses of the CISAC model contract and its implementation at bilateral level by CISAC members in the European Economic Area (EEA) contain anti competitive elements. If the results of the market test were positive, the Commission would adopt a decision under Article 9 of Regulation 1/2003, rendering the commitments legally binding.

The CISAC model contract and its duplicates at bilateral level between collecting societies concern the collective management of copyright for every category of exploitation covered by the public performance right, for example the broadcasting of music in a bar, a night club or via internet. The public performance right enables authors of musical works to authorise or prohibit broadcasts of their works by commercial users such as TV channels and radio stations.

The Commission's Statement of Objections concerns only certain relatively new forms of copyright exploitation, namely the retransmission of music via the internet, satellite and cable networks. As regards these new forms of copyright exploitation, the Commission is concerned that certain clauses of the agreements might infringe the EC Treaty’s ban on restrictive business practices (Article 81). These clauses are:

(i) the membership restrictions which oblige authors to transfer their rights only to their own national collecting society (whatever the subsequent exploitations of the rights)

(ii) the territorial restrictions, which oblige commercial users to obtain a licence only from the domestic collecting society and limited to the domestic territory.

Following detailed discussions, CISAC has undertaken to modify its model contract and 18 EEA collecting societies (representing almost 95% of the copyright licensing market in the EEA) have committed themselves to implement these modifications.

The new contract lifts the membership restrictions and the exclusivity clause, according to which reciprocal representation is done on an exclusive basis for the respective territory of the collecting societies. The parties also agreed, when entering into bilateral contracts, to allow multi territorial licences covering their respective portfolios of rights, provided that each collecting society fulfils an exhaustive list of objective criteria. The list of criteria aims at ensuring, inter alia, that competition among collecting societies would not take place to the detriment of authors' remuneration.

The Commission has invited interested parties to present their comments by 9 July 2007 on the commitments offered by CISAC and 18 EEA collecting societies

The Commission will then assess the comments receive from interested parties. If the assessment concluded that the proposed commitments did indeed solve the competition concerns raised by the restrictive contract clauses, the Commission would adopt a so-called commitments decision under Article 9 of Regulation 1/2003.

Such an Article 9 decision finds that there are no longer grounds for action by the Commission, without concluding whether or not there has been or still is an infringement. However, if commitments given in the context of such a decision are broken, the Commission may impose on the party in question a fine amounting to 10% of the total worldwide turnover without having to prove that there has been an infringement of the antitrust rules.

If the result of the assessment of third parties' observations showed that the commitments offered were not apt to remove the concerns expressed in the Statement of Objections, the Commission could pursue the procedure with a view to adopting a prohibition decision under Article 7 of Regulation 1/2003 requiring CISAC and the collecting societies in the EEA to no longer apply the membership and territorial restrictions.

Details of the proposed commitments have been published in the EU's Official Journal C 128 and are available on the Europa website:

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