EC Competition Law

Case Note: IFPI Simulcasting Exemption

Jane Lambert

2 Nov 2002

Last updated 22 Dec 2005

"Simulcasting" is transmission of radio or TV programmes over the internet at the same time as they go out on air. It is a technology that enables national and local stations to broadcast to the world. Playing a sound recording on air requires the licence of the of the owner of the copyright in the recording. To facilitate such licensing, record companies have established collecting societies in various countries around the world which grant licences to broadcasters and others for their respective territories. Phonographic Performance Ltd, for instance, grants such licences in the UK. Territorial licences met the needs of broadcasters and copyright owners when broadcasting was confined to the reception areas of terrestrial or cable broadcasts, but simulcasting requires a licence for every country in which the programme may be received.

Proposed Reciprocal Simulcasting Licence

To facilitate simulcasting, collecting societies that belong to the International Federation of the Phonographic Industry ("IFPI") have negotiated an agreement whereby each member authorizes the others to license simulcasting of its repertoire. By that arrangement a broadcaster may obtain a worldwide simulcasting licence from its nearest sound recording performance collecting society without having to negotiate with all the others. The agreement provides for collection and distribution of licence fees and worldwide administration of the applicable intellectual property rights.

Notification

The agreement was first notified to the Commission by IFPI on 16 November 2000. Modifications to the agreement were also notified in June 2001 and May 2002. IFPI is not party to the agreements but assisted the national collecting societies to set up the notified arrangements. It applied for negative clearance or, alternatively, an exemption under art. 81 (3) EEC.

Decision

The Commission granted an exemption for the modified simulcasting agreement on 8 October 2002. Art. 1 of the decision provides that it will take effect from 22 May 2002 to 31 Dec 2004. The reason for the limited time span is that the agreement is intended to operate for an experimental period after which it will be reviewed.

Reasons

At paragraph 84 of the recitals to its decision, the Commission considered the agreement to be justified by "the need to respond to increasing competitive pressure and to a changing market driven by globalization, the speed of technological progress and the generally more dynamic nature of markets." In its view, the agreement presented a number of pro-competitive elements which could significantly contribute to technical and economic progress in the field of collective management of copyright and neighbouring rights.

Addressees

The decision is addressed to the sound recording collecting societies of the 15 member states. It is also addressed to similar organizations in three states that have applied to EC membership (Czech Republic, Estonia and Poland) as well as collecting societies in Asia, South America and the Pacific. Collecting Societies for such major music producers as the USA, Canada, Japan and Australia are not yet party to the agreement although they are represented in IFPI.

 

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