The decision in the CISAC case, concerning the operation of CISAC-member collecting societies in Europe was announced in July. The case concerned specific agreements between national collecting societies for three forms of exploitation (satellite broadcasting, on-line or Internet distribution and cable retransmission) of public performance rights concerning music, in particular to ensure that they are not used to create artificial barriers to the provision of music across borders. The Commission decision requires termination of a “membership” clause in agreements, so as to give the copyright owners more freedom in determining which collecting society manages their copyright, and an “exclusivity clause”, and a concerted practice consisting in the limitation of the scope of their reciprocal mandates to their respective domestic territories.

The case was opened after the European Commission received formal complaints from the broadcaster RTL, and Music Choice, a UK on-line music provider, as well as approaches by other companies. The companies had a common problem that they had to negotiate with 24 different collecting societies to obtain multi-territorial licences. These collecting societies are internationally associated in CISAC (International Confederation of Societies of Authors and Composers), which covers predominately musical works. The decision of the Commission is addressed to the 24 collecting societies in the EEA (other than Bulgaria and Romania which acceded to the EU only after the Statement of Objections was issued in February 2006).

CISAC is a non-governmental, non-profit making organisation (headquartered in Paris) and does not issue any licences, and in particular no cross-border licences. Rather, its mission is to strengthen and develop the international network of the copyright societies by means of reciprocal agreements. Therefore, CISAC has significant influence on the terms and conditions of the international reciprocal agreements between collecting societies.

The Commission sent its statement of objections to CISAC and its EEA collecting society members in February 2006. The statement of objections concerned parts of the CISAC model contract, and its implementation at a bilateral level by CISAC members in the EEA. The Commission considered that certain aspects of the agreements might infringe Article 81. In 2007 the Commission sought to resolve the case amicably when formal commitments were offered by CISAC and 18 collecting societies. If this had been successful the Commission therefore could have adopted a so-called commitments decision under Article 9 of Regulation 1/2003. However feedback from interested parties at this stage was negative, and some broadcasters and content providers felt the commitments made would not allow a commercial user to obtain a pan-European licence. Therefore the Commission pursued the adoption of a prohibition decision under Article 7 of Regulation 1/2003.

The decision adopted on 16 July 2008 (press release IP/08/1165) aims to ensure that specific agreements between collecting societies are not used to create artificial barriers to the provision of music across borders. The decision prohibits two separate terms in the agreements between the CISAC-collecting societies and one concerted practice.

First, the CISAC members are not allowed in the future to apply the membership clause. Removal of this requirement will mean that music authors (composers and lyricists) will be able to choose which collecting society manages their copyright and collects their royalties.

Second, the decision states that the collecting societies cannot confer exclusive rights to each other in their reciprocal representation agreements. Exclusivity clauses were present in the reciprocal representation contracts of 17 of the collecting societies, by which one collecting society gives another collecting society the exclusive right to administer its repertoire.

Third, the CISAC Decision clearly states that the granting of a licence limited to a certain territory even to the domestic territory, is not restrictive of competition and recognises that a licensor is entitled to limit a licence to a particular territory without infringing Article 81(1). However, the CISAC Decision takes issue with the coordinated approach (i.e. concerted practice to use Article 81 jargon) by all EEA CISAC members as regards the delineation of the scope of their respective mandates. The Commission considered this concerted practice among all collecting societies resulted in segmentation of the market on a national basis.

The Commission has not imposed a fine on the collecting societies. This is because the societies have successfully argued that a fine would penalise the authors and composers that they represent, and secondly they have shown a willingness to address the Commission’s concerns during the process. However, the Commission has requested that all existing reciprocal representation agreements are reviewed within 120 days, so as to give an opportunity to the collecting societies to negotiate and eventually agree on a territorial scope of their mandates not limited to their domestic territory.

It therefore appears that the Commission is not concerned about the notion of collecting societies, and there are a very large number of collecting societies outside CISAC across Europe, but the way that they operate territorially. However, this existing territorial approach is understandable as copyright has grown up as a system of national rights, with differences in emphasis across Europe, from economic rights in UK and moral rights in Civil Law countries such as Italy and France.

ECSA, the European Composer and Songwriter Alliance which represents 36 organisations of composers and songwriters in 25 European countries has criticised the Commission’s decision. They believe that this will affect musicians’ revenues by destroying the present system which allows their societies to collect royalties cross-border. It is also disappointed that the Commission has presented this decision as helpful to composers. ECSA warns that this is an attack on cultural diversity, primarily benefitting multinational rights users, and argues that it will most severely affect small and medium sized businesses and individual writers. It also believes that small collecting societies may no longer be viable and access to the market place may disappear for independent publishers and their writers.

A decision at the end of August 2008 by the Dutch court in Haarlem has granted a preliminary injunction prohibiting BUMA from granting any further licences for the online sale of the repertoire of works administered by the UK Performing Rights Society (PRS), extending beyond the territory of The Netherlands. (The PRS was represented in the case by Bird & Bird). BUMA had granted a licence for the territory of the entire European Union to beatport.com. In its defence BUMA attempted to rely on the CISAC decision, but this was rejected by the judge who said that the CISAC Decision did not rule the individual reciprocal representation agreements between societies as such, including their territorial limitation to the national territory, to be contrary to Article 81. The Dutch judge ruled further that even if the territorial limitation in the agreement is invalid, BUMA still has no right to license the PRS repertoire beyond the territory of The Netherlands.

Source: Case COMP/38698 – CISAC (Commission Decision 16 July 2008) IP/08/1165 Brussels, 16 July 2008