On 12 April 2018 the Brussels Commercial Court ruled that the Belgian Society of Authors, Composers and Publishers (SABAM) had abused its dominant position. SABAM was subsequently ordered to cease and desist its practices.
Since 2017, SABAM had increased its tariffs for concerts and music festivals to 17% for average-sized festivals and 37% for large festivals, with the pricing for small festivals remaining the same. As a result, several festivals and the federation of Flemish music festivals sued SABAM.
The claimants argued that SABAM had abused its dominant position by:
- suddenly and significantly increasing its prices without reason;
- determining its prices based on the festival's total turnover, including turnover relating to activities and costs that were unrelated to music; and
- insufficiently considering the use of music not covered by SABAM (SABAM asked average or large-sized festivals for:
- one-third of the base tariff as soon as one of its intellectual property was used;
- two-thirds if more than one-third of the music concerned its intellectual property; and
- 100% if more than two-thirds of the music concerned its intellectual property).
In its judgment, the Brussels Commercial Court started its analysis by referring to European Court of Justice (ECJ) case law regarding excessive pricing, which states that the imposition of a price which is excessive in relation to the economic value of the service provided constitutes an abuse of dominance in the sense of Article 102 of the Treaty on the Functioning of the European Union and Article IV.2 of the Code of Economic Law. The court subsequently noted in this respect that SABAM had invoked no objective or economical grounds of justification.
The court also did not accept that the price increase following a comparison with tariffs in neighbouring countries was justified.
Moreover, the court held that some features of SABAM's existing pricing practice (not only the price increase since 2017) constituted an abuse of its dominant position. The court considered the following:
- Based on ECJ case law, SABAM should not have imposed significantly different prices depending on whether the festivals were smaller or larger for the sole reason that the larger festivals had more financial means.
- SABAM should not have determined its prices based on the festival's gross turnover minus reservation costs, value-added tax, municipal taxes and costs of public transport – this implies that SABAM was being paid for turnover-generating services that did not concern music (eg security, side entertainment and catering) and was therefore being paid for services that it was not providing.
- SABAM did not correctly quantify the use of its repertoire by not using the available technology to determine the use of its intellectual property. The court asked SABAM to clarify how it determines how much each artist concerned gets paid, to which SABAM was unable to answer. This also did not consider the fact that some artists had asked to be paid directly (instead of through SABAM).
- SABAM's minimum-tariff was calculated on the basis of relevant surface (square metres), number of seats and entrance price, which did not reflect the economic value of SABAM's provided services. Moreover, SABAM had failed to show why such alternative methods of calculation were necessary. The court referred to the application of this minimum tariff in practice resulting, in its view, in excessive prices.
On the basis of its findings, the court ordered SABAM to cease and desist its practices.
It is often difficult to clearly demonstrate an abuse of a dominant position by way of excessive pricing due to the difficulty in determining what constitutes the 'right' price.
Nevertheless, the Brussels Commercial Court seemed to have little doubt that SABAM's price increase constituted an abuse of its dominant position. However, what is more interesting is that the court also considered SABAM's existing practice to constitute an abuse of its dominant position. Although this case concerned a request to cease and desist (and not a damage claim), it could arguably be used as a basis to claim damages from SABAM.
For further information on this topic please contact Koen Platteau or Mathieu Vancaillieat Simmons & Simmons by telephone (+32 2 542 0960) or email ([email protected] or [email protected]). The Simmons & Simmons website can be accessed at www.simmons-simmons.com.
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