Case C-177/16, Autortiesību un komunicēšanās konsultāciju aģentūra – the dominant position of a copyright collecting society

Where works are protected by copyright their use will often require money being paid to a copyright collecting society. These societies set tariffs and pass on a fraction of the money collected to right holders. The question in this case is whether the Latvian Competition Authority has been correct to fine a collecting society for a breach of a dominant position through the setting of unfair prices.

Background
There is a summary to the backrgound to this dispute on the ‘Aca-Europe’ website and an unofficial translation in English of the questions asked.

Comment
A similar concern about a breach of a dominant position was raised in Case C-351/12, OSA ECLI:EU:C:2014:110; see further, Case C-351/12, OSA – EU copyright law checks in for a long stay at a health spa.

Aspects of competition law and state aid law were also raised in the still-pending collecting society case of Case C-110/15, Nokia Italia – professional-use media equipment and Italian private-copy rules.

Update – 6 June 2016
Questions Referred

According to today’s OJ C200, the Latvian court has asked:

1. Is subparagraph (a) of [the second paragraph] of Article 102 of the Treaty on the Functioning of the European Union applicable to a dispute concerning the rates laid down by a national copyright management organisation if that entity also collects remuneration in respect of works of foreign authors and the rates laid down by it may be a deterrent to the use of those works in the Member State in question?

2. For the purpose of defining the concept of unfair prices used in subparagraph (a) of [the second paragraph] of Article 102 of the Treaty on the Functioning of the European Union, in the context of the management of copyright and related rights, is it appropriate and sufficient — and in which cases — to draw a comparison between the prices (rates) in the market in question and the prices (rates) in neighbouring markets?

3. For the purpose of defining the concept of unfair prices used in subparagraph (a) of [the second paragraph] of Article 102 of the Treaty on the Functioning of the European Union in the context of the management of copyright and related rights, is it appropriate and sufficient to use the purchasing power parity index based on gross domestic product?

4. Must the comparison of rates be made for each separate segment thereof or in relation to the average level of the rates?

5. When must it be considered that the difference in the rates examined in connection with the concept of unfair prices used in subparagraph (a) of [the second paragraph] of Article 102 of the Treaty on the Functioning of the European Union is appreciable, with the result that it is incumbent upon the economic operator enjoying a dominant position to demonstrate that its rates are fair?

6. What information can reasonably be expected from an economic operator to prove the fair nature of the rates for works covered by copyright, within the scope of subparagraph (a) of [the second paragraph] of Article 102 of the Treaty on the Functioning of the European Union, if the cost of those works cannot be determined in the same way as that of products of a material nature? Is it solely a question of the cost of administering the copyright management organisation?

7. In the event of infringement of competition law, is it appropriate to exclude from the business turnover of a copyright management organisation, for the purposes of determining a fine, the remuneration paid to authors by that economic operator?

 

 

Update – 16 November 2016
The French Council of State has made a preliminary reference about the compatibility of a French tax with EU state aid law. Unfortunately, it is not clear whether the French tax connects to French copyright law. If it does, then readers of EU Law Radar who are interested in the Latvian case above might also look at the French reference; see further, Case C-510/16, Carrefour Hypermarchés – at the cross roads between tax and state aid.

Update – 8 January 2017
The Second Chamber will hear this dispute on 8 February 2017.

Update – 16 January 2017
Today’s Official Journal C14/20, indicates a Portugueuse preliminary reference on the relationship between copyright collecting societies and EU competition law; Case C-525/16, MEO — Serviços de Comunicações e Multimédia S.A. v Autoridade da Concorrência. The official translation of the questions asked reads:

1. If, in infringement proceedings, facts concerning the effects of any charging of discriminatory prices by an undertaking in a dominant position in relation to one of the retail undertakings, which prejudice that undertaking with regard to its competitors, are proven or evidenced, in order for that conduct to be characterised as placing at a competitive disadvantage within the meaning of subparagraph (c) of [the second paragraph of] Article 102 TFEU must there have been an additional assessment of the gravity, relevance or importance of those effects on the affected undertaking’s competitive position and/or ability to compete, in particular as regards its capacity to absorb the difference in the costs incurred in the context of the wholesale service?

2. If there is proof or evidence in infringement proceedings that the discriminatory prices charged by an undertaking in a dominant position are of significantly reduced importance for the costs incurred, income obtained and profitability achieved by the affected retail undertaking, is an assessment that there is no evidence of abuse of a dominant position and prohibited practices compatible with an interpretation consistent with subparagraph (c) of [the second paragraph of] Article 102 TFEU and the case-law established in the judgments in British Airways […] and Clearstream? […]

3. Or, on the contrary, is such a circumstance insufficient to preclude the conduct in question from being characterised as abuse of a dominant position and a prohibited practice within the meaning of subparagraph (c) of [the second paragraph of] Article 102 TFEU, that circumstance being of relevance only for the purposes of determining the degree of liability or punishment of the infringing undertaking?

4. Must the phrase thereby placing them at a competitive disadvantage in subparagraph (c) of [the second paragraph of] Article 102 TFEU be interpreted as corresponding to the requirement that the advantage arising from the discrimination must in turn correspond to a minimum percentage of the affected undertaking’s costs structure?

5. Must the phrase thereby placing them at a competitive disadvantage in subparagraph (c) of [the second paragraph of] Article 102 TFEU be interpreted as corresponding to the requirement that the advantage arising from the discrimination must in turn correspond to a minimum difference between the average costs incurred by the competitor undertakings in the wholesale service in question?

6. May the phrase thereby placing them at a competitive disadvantage in subparagraph (c) of [the second paragraph of] Article 102 TFEU be interpreted as corresponding to the requirement that the advantage arising from the discrimination must, in the context of the market and service in question, correspond to values higher than the differences indicated in […] Tables 5, 6 and 7, for the purposes of characterising the conduct as a prohibited practice?

7. If the answer to any of questions (iv) to (vi) is in the affirmative, how must such a minimum threshold of significance for the disadvantage in relation to the costs structure or the average costs incurred by the competitor undertakings in the retail service in question be defined?

8. If such a minimum threshold has been defined, does the failure to meet it in each year enable the presumption in the Clearstream judgment, according to which it must be considered that ‘the application to a trading partner of different prices for equivalent services continuously over a period of five years and by an undertaking having a de facto monopoly on the upstream market could not fail to cause that partner a competitive disadvantage’, […] to be rebutted?