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On 12 April 2013, the EU General Court (GC) handed down its judgments in the appeals brought by the International Confederation of Societies of Authors and Composers (CISAC) and 21 of its member collecting society associations against an earlier decision of the European Commission finding that they had engaged in anti-competitive conduct (see VBB on Competition Law, Volume 2008, No. 7, available at www.vbb.com).
National collecting societies are entrusted with the tasks of copyright management and the granting of copyright licences to commercial users (e.g., TV channels and radio stations) on behalf of authors of musical works. CISAC members all entered bilaterally with each other into so-called "reciprocal representation" agreements (RRAs) based on the CISAC model contract, which governs the collective management of music copyright for every category of exploitation. In July 2008, the Commission found that membership and territoriality clauses contained in RRAs infringed Article 101 TFEU.
More specifically, the Commission considered that certain membership and territorial clauses restrict competition by limiting the ability of the individual collecting societies to offer their services to authors and commercial users. Consequently, the Commission's decision prohibited: (i) membership restrictions obliging authors to transfer their rights only to their own national collecting society; (ii) exclusivity clauses, by which a collecting society authorises another to administer its repertoire in a given territory on an exclusive basis; and (iii) a concerted practice among all collecting societies according to which these limit their mandates in respect of the domestic territory of the other collecting societies. The Commission's decision required the collecting societies to end these infringements by modifying their agreements and practices but did not impose fines. CISAC (which was not an addressee of the decision) and the collecting societies appealed the decision before the GC.
In all except one of its judgments, the GC largely followed the same reasoning and much of the focus was on the existence of an alleged concerted practice with regard to national territorial limitations. In particular, the GC examined the evidentiary value of the elements put forward by the Commission to prove the existence of a concerted practice without relying exclusively on parallel conduct of the collecting societies. For instance, the GC held that the mere fact that collecting societies met in the context of activities managed by CISAC and that there was a certain amount of cooperation between them did not constitute, as such, evidence of a prohibited concertation. Since these meetings were necessary to deal collectively with issues in no way related to competition law infringements, the Commission could not presume that the object of these meetings was to focus on anti-competitive practices. Accordingly, the Commission had not proved that the CISAC meetings concerned restrictions of competition relating to national territorial limitations. The GC also noted that the discussions on the model contract did not expressly provide for national territorial limitations, but merely invited the collecting societies to define the territorial scope of the mandates they granted each other in RRAs.
Next, the GC referred to the Santiago Agreement, which concerned the exploitation of copyright via the internet and would have enabled collecting societies to agree to grant global licenses covering all territories for all repertoires, but only to users established in their national territories. The collecting societies did not renew this agreement after the Commission formally expressed concerns that it was not in line with competition law. Here, the GC dismissed the Commission's argument that the return to national territorial limitations by all of the collecting societies was proof of concertation. In the absence of evidence that these had acted in concert for that purpose, the return to national territorial limitations did not demonstrate the existence of concertation, but could be regarded as being the natural result of the non-renewal of the Santiago Agreement. The fact that collecting societies returned to the status quo ante did not prove in itself that they had acted in concert for that purpose. In particular, the collecting societies could not suspend all forms of cooperation between them concerning forms of exploitation relating to new technologies while they were striving to find - bilaterally or multilaterally - alternatives to the Santiago Agreement in accordance with competition law.
Quite importantly too, the Commission had not, according to the GC, specified at which point exactly the infringement had supposedly began. Therefore, the GC held that neither the existence of the Santiago Agreement nor the circumstances in which the agreement came to an end could provide evidence of concertation relating to national territorial limitations.
The GC then examined arguments around the Sydney Agreement through which the collecting societies, in 1987, had inserted into the model contract a clause providing that the collecting society established in the country from which the signals carrying the programmes to the Satellite was authorised in certain circumstances to grant licenses covering the entire footprint of the satellite. Here, the GC held that the Sydney Agreement was not relevant for the present purposes as it had a different scope and had already become obsolete before the administrative procedure which led to the adoption of the contested decision. Therefore, the GC found that the Sydney Agreement did not constitute a document that was capable of proving concertation with regard to national territorial limitations.
Finally, on the alleged historical link between the exclusivity clause and the national territorial limitations, the GC concluded that the fact that the Commission had proven the existence of anti-competitive conduct as regards the exclusivity clause did not mean that it had also shown the existence of anti-competitive conduct as regards the national territorial limitations. Taking into account collective copyright management and the traditional structures which did not suddenly become obsolete with the arrival of new technologies, the mere fact that, after deletion of the exclusivity clause, the collecting societies did not quickly modify the national territorial limitations could show that those limitations were explained by reasons other than the continuation, in another form, of the exclusivity.
The GC concluded that the Commission had not adduced sufficient evidence to the requisite legal standard to establish the existence of a concerted practice between the collecting societies to fix the national territorial limitations. In addition, the GC also considered whether the Commission had provided sufficient evidence to render implausible the explanations of the collecting societies' parallel conduct other than the existence of concertation. In this respect, the GC noted that it was not argued by the Commission that national territorial limitations in RRAs could not arise from normal market conditions, but rather that a concerted practice arose because all the RRAs contained such a limitation. Nor was it disputed that national territorial limitations were rational for traditional forms of exploitation. CISAC justified these, among others, through the need for a local presence to ensure the effectiveness of the fight against the unauthorised use of musical works.
The GC rejected all of the Commission's arguments aimed at rendering CISAC's position implausible. For instance, the GC found that the Commission had failed to explain sufficiently how collecting societies could be expected to cooperate on a wide range of issues such as monitoring and enforcement of authorised/unauthorised uses once they were in full competition with each other. The GC also found that the Commission had not demonstrated that the technical solutions to allow the monitoring of uses and users outside the territory of the collecting society for the types of exploitation covered by the decision contradicted the reasoning of the societies. Nor were the examples of various other licensing models put forward by the Commission (e.g., Nordic and Baltic Cooperation model, Simulcasting and Webcasting agreements, CELAS) deemed relevant.
In view of all the above, the GC annulled the Commission decision insofar as it had not proved to a sufficient legal standard the existence of a concerted practice relating to the national territorial limitations, since it had neither demonstrated that the collecting societies acted in concert, nor provided evidence rendering implausible the collecting societies' explanations for their parallel conduct. In contrast, the GC dismissed the pleas in a limited number of appeals in relation to membership and exclusivity clauses.
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