Over the next two months, the Court will hear from 22 collecting societies and CISAC, the organisation which brings together all of the groups, as they try to persuade the judges to overturn a 2008 antitrust decision by the European Commission.
In its decision, the Commission told 24 collecting societies across the EU to end practices in their contracts that limit a collecting society to acting only within its own domestic market, effectively preventing them from offering EU-wide services.
The EU’s antitrust watchdog launched an investigation into the way collecting societies operate after receiving complaints from broadcaster RTL and online music provider Music Choice. RTL said it had asked the Commission to intervene after failing to persuade German collecting society Gema to sign a multi-territory rights clearance process for the worldwide repertoire of its clients’ music.
RTL argued that the territorial restrictions in bilateral deals between national collecting societies conflict with the key principle of a European single market: forcing European broadcasters to only deal with their national collecting society prevents any competition between different national collecting societies over the costs they charge for administrative services.
Companies that provide consumers with music say that the requirement to negotiate licensing deals with collecting societies on a territory by territory basis makes it expensive and time consuming for them to do business in Europe.
The first hearing is brought by French collecting society SACEM and will be held on Wednesday. The last cases will be heard on November 16. All the collecting societies except the Belgian and Dutch have challenged the Commission’s decision. The Spanish challenge was lodged outside the deadline and rejected as inadmissible.
The Court is expected to hand down its decision early next year.
Although the companies that brought the original complaint are not parties to the dispute, RTL is an intervener in the proceedings in support of the Commission’s position.
Previous Commission-led attempts to overhaul the way that collecting societies operate have failed. In 2007 it tried to resolve the present legal case after CISAC and 18 collecting societies offered formal commitments to reform their practices, but during a consultation phase, broadcasters, content providers and some collecting societies said that the proposed commitments would still make it difficult for a commercial user to obtain a pan-European licence.
In April last year, the Commission held a public hearing on the governance of collective rights management in the EU.
Since then, EU IP officials have pledged to reform the rules on collecting societies, saying that streamlining copyright licensing and revenue distribution is one of the most important challenges for them to address.
The Commission planned to present a proposal to create a legal framework for multi-territorial collective management of copyright, in particular in the music sector, by the end of this year. It has now revised its self-imposed deadline and says it will issue a proposal in the first half of next year, a move that hints at the difficulties involved in reaching a deal to which all the parties can agree.
