EC Seeks To Lock-In Music Publishers And Collecting Societies Over Rebates

by Ulrika Lomas, for LawAndTax-News.com, Brussels

06 October 2006

The European Commission announced on Wednesday that it has made legally binding under EC Treaty competition rules the commitments given by the five major music publishers (BMG, EMI, Sony, Universal and Warner) and thirteen European collecting societies (AEPI, AustroMechana, GEMA, MCPS, MCPSI, NCB, SABAM, SDRM, SGAE, SIAE, SPA, STEMRA, SUISA), all signatories of the Cannes Extension Agreement, regarding Central Licensing Agreements.

The commitments ensure that record producers can continue to receive rebates from collecting societies on royalties paid in the context of Central Licensing Agreements. These rebates are currently the only form of price competition among collecting societies.

Under a Central Licensing Agreement, a record company can obtain a copyright license for the combined repertoires of all the collecting societies and covering the whole of the EEA or part thereof, from any collecting society within the EEA.

The commitments also ensure that potential entry by collecting societies in the music publishing or record production markets is not impeded. The Commission had been concerned that two clauses of the Cannes Extension Agreement may have violated the EC Treaty’s ban on cartels and restrictive business practices (Article 81) but has now closed the case in the light of the commitments.

This decision ends the proceedings concerning the Cannes Extension Agreement. However, if the parties to the Agreement were to break their commitments, the Commission could impose a fine of up to 10% of their total turnover without having to prove any violation of the EC Treaty’s competition rules.

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