Breaking news: CISAC, others, gain partial cancellation of Commission decision

The General Court (Sixth Chamber) of the European Union has just given its keenly-awaited judgment in Case T‑442/08 International Confederation of Societies of Authors and Composers (CISAC), supported by European Broadcasting Union (EBU) v European Commission. According to the Curia media release:

The General Court partially annuls the Commission decision finding anti-competitive conduct on the part of copyright collecting societies

The International Confederation of Societies of Authors and Composers (CISAC) is a non-profit non-governmental organisation which represents, in over a hundred countries, collecting societies managing copyright relating to, inter alia, musical works.

The collecting societies acquire the management of those rights either by direct transfer from the authors or by transmission from another collecting society managing the same categories of rights in another country. They grant exploitation licences to commercial users, such as broadcasting undertakings or organisers of live shows. The prices of those licences are the source of the royalties that the authors receive, after the management expenses of those collecting societies have been deducted.

In 1936, CISAC drew up a model contract for reciprocal representation agreements between its members. That contract serves as a non-binding model for reciprocal representation agreements concluded between its members for the purposes of conferring licences covering public performance rights of musical works. Each collecting society agrees, reciprocally, to confer the rights over its repertoire to all of the other collecting societies for the purposes of their exploitation in the respective territories of those collecting societies. Because of the network created by all of those reciprocal representation agreements, each collecting society can propose a worldwide portfolio of musical works to commercial users, but only for use in its own territory. In 2000, RTL lodged a complaint with the Commission against a member of CISAC concerning its refusal to grant it a Community-wide licence for its music broadcasting activities. In 2003, Music Choice Europe, which provides radio and television broadcasting services on the internet, lodged a second complaint against CISAC concerning its model contract.

By its decision of 16 July 20081, the Commission prohibited 24 European collecting societies from restricting competition, in particular by limiting their ability to offer their services to authors and commercial users outside their domestic territory. The Commission decision, which concerns solely the exploitation of copyright via the internet, satellite and cable retransmission, does not call into question the very existence of reciprocal representation agreements. It does, however, prohibit: - membership clauses: clauses in the model contract which restrict authors’ ability to affiliate freely to the collecting society of their choice;

- exclusivity clauses: clauses in the model contract which have the effect of providing all collecting societies, in the territory in which they are established, with absolute territorial protection vis-à-vis other collecting societies as regards the grant of licences to commercial users;

- a concerted practice which was found to exist between the collecting societies and by which each collecting society limits, in the reciprocal representation agreements, the right to grant licences relating to its repertoire in the territory of another collecting society party to the agreement.

The Commission did not impose fines on the collecting societies but did require that they remove the clauses in question from the model contract and bring an end to the concerted practice. Most of the collecting societies concerned and CISAC brought an action before the General Court of the European Union against the Commission’s decision.

By today’s judgments, the General Court annuls, for CISAC and for 20 of the collecting societies concerned, the Commission’s decision in respect of the finding of the concerted practice [nb At the end of the media release, but not reproduced here, is a list of the outcomes of all 22 actions consolidated in this action, together with a 'scorecard' indicating the outcome. In that respect, the General Court considers that the Commission has not provided sufficient evidence. The Commission, first, did not have documents proving the existence of concertation between the collecting societies as regards the territorial scope of the mandates which they grant each other and, secondly, did not render implausible the applicants’ explanation that the parallel conduct of the collecting societies at issue was not the result of concertation, but rather of the need to fight effectively against the unauthorised use of musical works.

The General Court rejected the applications in so far as they sought the annulment of the Commission decision in respect of the membership and exclusivity clauses.

As regards the Stim case, the General Court rejected all of the arguments put forward by that collecting society, which had not raised in sufficient time the issue of the lack of proof of the concerted practice.