Swedish television broadcasting companies, Kanal 5 and TV4, sought an injunction from the Swedish Market Court, on the grounds that STIM (the Swedish Copyright Management Organization) was abusing its dominant position when applying a remuneration model based on a percentage of the broadcaster’s advertising revenues.

Kanal 5 and TV4 objected to the fact that STIM imposed a licence fee corresponding to a percentage of their revenue when by contrast the public service channel Sveriges Television paid a lump sum agreed in advance. The broadcasters also claimed there was no link between their advertising revenues and the value of the licensed background music.

The Market Court requested a preliminary ruling from the ECJ concerning the interpretation of Article 82 EC (abuse of dominant position).

The ECJ found that a copyright management organisation with a dominant position in a substantial part of the EU does not abuse that position where it applies a remuneration model according to which the amount of the royalties corresponds partly to the revenue of those channels, provided that that part is proportionate to the quantity of relevant musical works broadcast. However, this is not the case if another method enables the use of those works and the audience to be identified more precisely, without resulting in a disproportionate increase in the costs incurred for the management of contracts and the supervision of the use.

The ECJ held that Article 82 is to be interpreted as meaning that by calculating the royalties in a different manner according to whether the companies concerned are commercial companies or public service undertakings is likely to exploit in an abusive manner the copyright management company’s dominant position if it applies dissimilar conditions to equivalent services and if as a result it places them at a competitive disadvantage. However it may be possible to objectively justify such an approach, if for example, the reason for applying different models is that the broadcasters are differently funded.

The Swedish Marketing Court will now continue its proceedings in the light of the preliminary ruling from the ECJ.