Italy: The Italian Council Of State (Partially) Confirms SIAE's Abuse Of Its Dominant Position In The Collective Rights Management Market

According to the ICA, the SIAE put in place a unitary and complex exclusionary strategy in the market of collective copyright management by way of imposing constraints in the offer of different services for copyright management services and plagiarism protection services, constraints in the management of rights of authors not registered with the SIAE as well as of obstacles to competitors in the management of repertoires of foreign rights holders.

The abusive conduct therefore concerned three aspects of SIAE's overall activities: the foreign repertoire of protected rights, the protected works communicated online, and the plagiarism protection services.

The alleged unlawful practices put in place by the SIAE relate to the period ranging from 2012 to 2017 (the date of entry into force of the Italian legislative act implementing the so-called "Barnier Directive" on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online use in the internal market).

The contested practice therefore relates to the period prior to the liberalisation of the Italian market of collecting copyright management, in which the SIAE held the legal exclusivity for intermediary activities, however implemented, of protected works. In particular, Article 180 of the Italian copyright law attributed to the SIAE:

1. the granting, on behalf and in the interest of rightholders, of licences and authorisations for the economic exploitation of protected works;
2. the collection of the revenues of such licences and authorisations;
3. the distribution of such revenues among the rightholders.

The SIAE thus contested the ICA allegations affirming that the alleged abusive conducts fell within the scope of application of Article 180 of the Italian copyright law and were therefore lawful.

However, both the Lazio Regional Administrative Court ("TAR Lazio") in first instance and the CdS in last instance, confirmed the ICA decision. The CdS stated that some of the alleged abusive conducts put in place by the SIAE fell outside the objective and subjective scope of application of the statutory exclusive rights recognised to the SIAE by Article 180 of the Italian copyright law until 2017.

In its decision, the CdS agreed with the ICA on the following aspects:

• the absence of an ex lege representation of the SIAE also in relation to non-members: the extension of the SIAE representation also to those authors that have not expressed their will to subscribe to the SIAE constitutes, according to the CdS, an undue compression of the legal sphere of the individual;
• the legal monopoly established under Article 180 of the Italian copyright law does not extend to the protected works of authors that are not domiciled in Italy and for works by foreign authors that have been published abroad for the first time. Consequently, this section of the market is open to competition and the intermediation activities offered by SIAE's competitors shall be deemed lawful.

On the contrary, the CdS upheld SIAE's claims concerning:

• the protected works communicated online, given that SIAE allowed authors to limit the objective scope of its intermediation activities, with the possibility to exclude the online communications of the relevant protected works; and
• the plagiarism protection service, which cannot be considered, as the ICA erroneously did, a supplementary service, but rather a service functional to the management of the protected work, given that the awarding of the intermediation assignment to the SIAE and the filing of the relevant protected work are simultaneous.

In conclusion, even though part of the SIAE claims against the ICA decision have been upheld, the CdS considered that the SIAE had violated Article 102 TFEU:

• by leveraging its legal monopoly under Article 180 of the Italian copyright law and thus extending its dominant position to areas that fell outside the scope of the exclusivity legally recognised to the SIAE;
• by claiming to manage the entire repertoire (present and future) of the registered author, which cannot be justified at the regulatory level being each work a source of autonomous rights of economic use; and
• by not respecting the so-called "individual self-production" and refusing to recognise the individual author's right to exercise his or her rights directly.

The described abusive conducts of the SIAE did not foster competition on the merits and ended up making it more difficult for SIAE's competitors to enter the Italian market in certain areas of the collective rights management sector that were left open to full competition (even prior to the Barnier Directive reform).

In this respect, the CdS rejected SIAE's request for a stay of the proceeding at stake in order to await the decision of the EU Court of Justice ("ECJ") on the question referred for a preliminary ruling by the Rome Tribunal on the compatibility of the new Article 180 of the Italian copyright law with the Barnier Directive. Indeed, the CdS underlined that the ICA decision appealed by SIAE refers to SIAE's extension of its dominant position outside the areas covered by the legal monopoly established under Article 180 of the Italian copyright law (in its pre-reform wording) and not to the compatibility of such legal monopoly with EU law.

The answer of the ECJ will in any case shed light on the remaining open questions of SIAE's future role in the new Italian legislative landscape of collective right management.

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