EC urged to reject CISAC antitrust settlement

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BRUSSELS — RTL Group, Liberty Global, ProSieben Sat.1 and other top media groups have asked the European Commission to reject royalty collection group CISAC’s offer to settle their ongoing antitrust case.

They said that the proposed plan to reform royalty collection would lead to a “costly, inefficient and fragmented licensing system for music rights.”

In a letter to EC president Jose Manuel Barroso and EU competition commissioner Neelie Kroes, the 27 companies and associations said that CISAC’s plan “would undermine the current system of licensing the global music repertoire as a single package … which would result in regional and national linguistic repertoires either not being played or paid.”

The response from the media groups could represent a devastating blow to the royalty organization. The letter also was signed by SBS Broadcasting, Dutch cable group Multikabel, Austrian broadcaster ORF, commercial television association ACTE, Cable Europe, Deutsche Telekom, France Telecom and Orange.

The companies said the CISAC offer “raises substantial issues as regards application of competition law and internal market rules, cultural diversity and the relationship between smaller and larger representatives of rightsholders.”

They called on the EC — the EU’s antitrust authority — to force CISAC to amend the proposal “to provide for an economically meaningful licensing system, including guarantees that the remedies in this competition case are not undermined by withdrawal of repertoire while they are in effect.”

The signatories warned that the CISAC plans will force them to seek different licenses from different licensors for different forms of exploitation. For example, a TV or radio signal carried by satellite would require different licenses than the same signal carried via digital terrestrial signal.

CISAC’s offer came after the EC found that CISAC was operating a de facto monopoly for collecting societies as it gathered royalties for artists from Internet sites and through satellite and cable broadcasting. In particular, it singled out membership restrictions that oblige authors to transfer their rights only to their own national collecting society.

The CISAC commitments, signed by 18 European authors’ societies, were submitted this year. If accepted, they would grant multiterritorial licenses for performing rights over the Internet, satellite and cable; eliminate the exclusivity clause from its model contract; and allow European creators and publishers to move freely between authors’ societies.

But instead of clearing the commitments, the EC appealed to the entertainment sector and other players involved in copyright for comment on planned changes.

The letter from the media giants will add to the commission’s ongoing efforts to overhaul licensing mechanisms. In October 2005, EU internal market commissioner Charlie McCreevy said the music industry’s growth in Europe was hampered by having to negotiate rights country by country, and recommended more competition between the societies through pan-European licenses.

CISAC communications director Marianne Rollet said she would decline comment on the letter while the EC was examining the proposal.
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