CISAC decision finally out (and likely to orientate reform debate?)

In times when it has become customary to reply to your emails and return calls by close of business time, and even couples may no longer have the time to talk in person, it might feel reassuring to see that there are still things which follow a more relaxed pace.

One example is the handy 184-paragraph decision in Case T-442/08 CISAC v European Commission, which the General Court [formerly the Court of First Instance, as it was still called when the case was filed] published last Friday, after almost 5 years of hearings, reflections and trepidant waiting (see Jeremy's post on The 1709 Blog here).

The Court partially annulled the 2008 Commission's decision (media release here) relating to a proceeding under the then Article 81 EC Treaty and Article 53 of the EEA Agreement, which had been commenced following a statement of objections sent to CISAC [the International Confederation of Societies of Authors and Composers, a non-profit non-governmental organisation which represents, in over a hundred countries, collecting societies] and 24 member European collecting societies at the beginning of 2006 (here). 

But the whole story started a bit earlier than 2006. 

In 2000, RTL Group SA, a radio and television broadcasting group, 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.

General Court fans assembled in excitement
last Friday waiting for 
the CISAC decision to be released

Those many readers with a fancy for all things at the crossroads between copyright, competition and EU law will remember that all this led the Commission to conclude that the national territorial limitations were the result of an anti-competitive concerted practice. As a result, the 24 European collecting societies members of CISAC were prohibited from restricting competition by limiting their ability to offer their services to authors and commercial users outside their domestic territory, pursuant to a model contract for reciprocal representation agreements first drawn up by CISAC in 1936.

However, the decision of the Commission allowed collecting societies to maintain their system of bilateral agreements and to keep their right to set levels of royalty payments due within their domestic territory. In other words, the Commission did not criticise the very existence of CISAC model contract, nor did it question the necessity of cooperation between the collecting societies, provided that such cooperation did not infringe the competition rules.

With this week’s judgment, the General Court annulled the Commission’s decision in respect of the finding of the concerted practice. In particular, when issuing its decision, the Commission did not provide sufficient evidence in respect of the following: 

(1) existence of concertation between the collecting societies as regards the territorial scope of the mandates which they grant each other, and 

Were all those meetings aimed at
concerting anticompetitive practices?

(2) implausibility of 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.

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

This Kat is under the impression that - besides competition-related considerations - much of the judgment followed from the consideration of the Court that

"the structures for collective copyright management in respect of the forms of exploitation covered by the contested decision [of the Commission] originated in the structures used for traditional forms of exploitation, with regard to which the national territorial limitations are not considered by the Commission to constitute an infringement of competition rules."

CISAC was pleased with the outcome of the case. Gadi Oron (CISAC Director of Legal and Public Affairs) commented as follows: 

"The Court accepted that while the Commission only challenged the territorial restrictions with respect to three forms of exploitation - internet, satellite and cable - the CISAC Model Contract and the reciprocal agreements implementing it have been in place years before these technologies developed. The arrival of new technologies cannot automatically turn existing structures for collective management into anti-competitive behaviour.

The Court also accepted that societies have very good reasons to mandate a single society with a local presence in each foreign territory. Among the logical explanations for mandating only one society per territory, the Court acknowledged in particular the need to ensure that the rights of a society's members are properly protected and enforced against infringers. In doing so, the Court adopted CISAC’s arguments that it is perfectly logical for a society to set the borders of its mandates and appoint, for each country, a local society that has the knowledge, expertise and capability to approach users and monitor any unauthorised use in its  market.

Importantly, the Court believed there are legitimate reasons why a society would not want to organise competition over its own rights in a given territory. In doing so, the Court opened the door for the development of new multi-territory licensing models [something is already happening in this respect: see here]."

The CISAC decision calls for further consideration in respect of current EU Commission's reform debates and legislative proposals, particularly as regards: (1) how to mitigate the effects of territoriality of the (currently 27) copyright laws in the EU; (2) how to reduce the fragmentation of the EU copyright market; (3) how to reform collective management of copyright at the EU level, including last year's Proposal for a directive of the European Parliament and of the Council on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online uses in the internal market. 

As the Batman film series might
continue, so will the CISAC saga? 

As readers will remember, the Max Planck Institute was not particularly happy with the proposed directive (Katpost here) and, among other things, held that 

“Disposing of natural monopolies in a two-sided market ..., collecting societies ... should not refuse to grant access to their services to rightholders and users. Hence, it is strongly recommended that the European legislature follows the experience of numerous Member States and proposes an obligation to contract with rightholders ... as well as with users...”

In any case, similarly to rumours about the future of the Batman film series, also the CISAC saga might not be over yet, as it is not to be excluded that the next scene of this exciting blockbuster might be set in the premises of the Court of Justice of the European Union.