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03 September 2020
Against the backdrop of the legal dispute between festival and concert organisers versus SABAM (the Belgian music authors' collecting society) regarding SABAM's tariffs for festivals and concerts being taken to the European level, in two parallel legal proceedings, one pending before the Brussels Court of Appeal and the other before the Antwerp Enterprise Court, the European Commission and the Court of Justice of the European Union (CJEU) have been asked to shine a light on SABAM's tariffs. On 16 July 2020 Advocate General Pitruzzella delivered his opinion in the latter case.(1)
The case before the CJEU (C-372/19) was brought by SABAM against the organisers of Tomorrowland and Wecandance, two well-known Belgian electronic music festivals. Over several years, the parties have been involved in legal proceedings regarding the payment of royalties for the music played at the festivals. SABAM initiated legal proceedings before the Antwerp Enterprise Court seeking the payment of royalties from the festival organisers. The festival organisers contested SABAM's tariff on which the royalties were being calculated, which they deemed to amount to SABAM abusing its dominant position. The Antwerp court decided to stay the proceedings and referred the following question to the CJEU for a preliminary ruling:
Must Article 102 [of the Treaty on the Functioning of the European Union (TFEU)], whether or not read in conjunction with Article 16 of Directive 2014/26/EU on collective management of copyright and related rights and the multi-territorial licensing of rights in musical works for online use in the internal market, be interpreted as meaning that there is abuse of a dominant position if a copyright management company which has a de facto monopoly in a Member State, applies a remuneration model to organisers of musical events for the right to communicate musical works to the public, based among other things on turnover,
1. which uses a flat-rate tariff in tranches, instead of a tariff that takes into account the precise share (making use of advanced technical tools) of the music repertoire protected by the management company played during the event?
2. which makes licence fees dependent on external elements such as, inter alia, the admission price, the price of refreshments, the artistic budget for the performers and the budget for other elements, such as decor?
After analysing CJEU case law on collecting societies' tariffs,(6) the advocate general advised the CJEU to reply to the preliminary question as follows:
Point (a) of the second paragraph of Article 102 [of the] TFEU must be interpreted as meaning that a collective copyright management organisation which has a de facto monopoly in a Member State does not abuse its dominant position by imposing unfair prices solely because it adopts a tariff structure on the basis of which the royalties received for making protected musical works from its repertoire available for communication to the public at festivals are calculated by applying a degressive rate to the revenue from ticket sales or to the artistic budget, without the possibility of deducting costs not directly linked to the service provided by that organisation, and by providing for a system of discounts based on the use of flat-rate tranches to take into account the proportion of musical works actually performed at the festival.
However, it is not excluded that the application of such a tariff structure may lead to unfair prices being imposed, especially when another method exists that enables the musical works actually performed to be identified and quantified more precisely and that method is capable of achieving the same legitimate aim, which is the protection of the interests of authors, composers and publishers of music, without leading to a disproportionate increase in the costs incurred for the management of the contracts and the supervision of the use of musical works protected by copyright. It is for the referring court to assess, in the light of all the circumstances of the case before it, whether those conditions are met and, if so, whether imposing unfair prices is supported by further evidence derived, in particular, from a comparison with the rates applicable in other Member States adjusted using the purchasing power parity index, from a comparison with the fees applied in the past by the same management organisation, or from a comparison with the royalties set by that organisation for similar services.
In short, the advocate general advised that applying a flat-rate tariff in tranches on the basis of the revenue of the receipts from ticket sales or the artistic budget does in principle not constitute an abuse of a dominant position, unless, among other things, there is another method for identifying and quantifying the number of protected works played at the festival more accurately and provided that such a method does not lead to a disproportionate increase in the costs incurred for the management of the contracts and the supervision of the use of musical works played during the festival. The imposition of unfair prices can be confirmed by other indications supported by a geographical comparison (fees applied in other EU member states), a historical comparison (fees applied by the CMO in the past) and an internal comparison (fees applied by the CMO for similar services).
Tomorrowland and Wecandance have referred to DJ Monitor, a Shazam-like music recognition software, as an alternative method for identifying and quantifying the music played at the festivals. SABAM has raised doubts about this software's accuracy and reliability. However, the software is already being used by several other CMOs in other EU member states, including PRS (in the United Kingdom) and SACEM (in France). On DJ Monitor's website, SABAM is also named as a client. If the CJEU follows the advocate general's opinion, it will ultimately be up to the referring court to decide whether DJ Monitor or any similar technological means are a more appropriate method of measuring the music played at the festivals.
The next step in this legal saga (following the Antwerp Enterprise Court in its judgment requesting for the preliminary ruling) is the CJEU's ruling. It remains to be seen whether the CJEU will follow the advocate general's opinion and how the Antwerp Enterprise Court and the Brussels Court of Appeal will apply the CJEU's findings in their proceedings.
For further information on this topic please contact Alexander De Bleeckere or Carmen Verdonck at ALTIUS by telephone (+32 2 426 1414) or email (firstname.lastname@example.org or email@example.com). The ALTIUS website can be accessed at www.altius.com.
(1) For further details please see "EU TO EXAMINE SABAM'S TARIFFS FOR FESTIVALS AND CONCERTS".
(3) Further, the advocate general has made no declaration regarding EU Directive 2014/26/EU (the CMO directive), because the referring court sought clarification only on the concept of 'abuse of dominant position', which does not appear (at least not explicitly) in that directive.
(4) For example, the revenue that is the result of the 'special' experience created and the additional services provided by the organisers before, during and after the festivals (eg, lighting, fireworks and catering).
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