Territorial restrictions in music licensing infringes existing EU competition law

RTL Group, the European entertainment network, announced that the European […]

August 13, 2008

RTL Group, the European entertainment network, announced that the European Commission today decided that the current system of territorial restrictions in music licensing infringes existing EU competition law.

Today’s decision follows RTL Group’s initial complaint with the European Commission, filed back in November 2000. In its complaint, RTL Group argued that the territorial restrictions in the reciprocal agreements between the 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 − relating to the costs of the administrative services − between the different national collecting societies.

Christian Hauptmann, Deputy General Counsel of RTL Group: “Today’s decision of the European Commission provides an opportunity to develop a future-proof music licensing system. It has always been our goal to ensure that broadcasters and other mass users of music gain access to a multi-territory one-stop shop for the worldwide music repertoire − just as record companies have already known for years. A sound competitive environment will lead to more efficient administration services and lower transaction costs − and this is also to the benefit of composers, authors and users.”

In 1999, RTL Group solicited the German collecting society Gema for a multi-territory rights clearance process for the worldwide repertoire – to no avail, reminds RTL. In November 2000, RTL Group filed a complaint with the European Commission, arguing that the current practice infringed existing EU competition law.

In January 2006, the European Commission issued a “Statement of Objections” against Cisac (the “International Confederation of Societies of Authors and Composers”) and its members within the European Economic Area (EEA), finding that the contractual restrictions among European collecting societies infringe EU Competition rules as they prevent competition in rights administration services.

In March 2007, Cisac presented settlement proposals (“Commitments”) to the European Commission. These Commitments were highly complex and rejected by an overwhelming number of industry stakeholders in July 2007.

Broadcasters are the collecting societies’ most important customer group: their payments constitute between 25 to 35 per cent of the total revenue of the EU collecting societies.

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