Hardware levy back on EC chopping block

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BRUSSELS -- The European Commission on Thursday revived plans to overhaul the special levies that are skimmed from the sale of computers, iPods and other gadgets and funneled to artists as compensation for private copying. The resuscitated plan sets the scene for a new battle between artists and electronics firms over the compensation scheme.

EU Internal Market Commissioner Charlie McCreevy said he wants to take a fresh look at all the issues involved in private copying levies, which are only collected by some of the EU's member states.

"There is little coherence between member states as to how they apply these levies," McCreevy said.

A formal consultation period will be open until April 18, and the Commission will then hold an open hearing on the issue in June. McCreevy said he wants to take soundings before deciding whether to scrap the levies outright.

"What is the right level? There are no easy answers," he said.

The levies were introduced in the 1960s on blank tapes but have been extended to everything from computers and MP3 players to DVD recorders and USB cards. The consumer electronics industry complains that they are effectively a hidden tax on their products.

Two years ago, McCreevy launched his first attempt to reform the levies, saying the system was opaque and distorted the EU's single market. However, he was forced to abandon his plan after facing vocal criticism from Europe's artistic community and the French government.

Commission officials say their arguments from two years ago still stand: consumers are often forced to pay copyright fees when they buy PCs or MP3 players, and again when they download music legally online.

"Last time, I suspended the initiative because there was no hope then. Now it should be possible," McCreevy said. "It should be possible to envisage some workable solution that assures the rightsholders of their due compensation and at the same time applying the levies in a way that is commensurate with the loss caused by private copying."

The move was welcomed by the consumer electronics industry, which said that slashing the levies could save hundreds of millions of euros every year for such companies as Apple, Siemens, Nokia and Sony.

"Industry is not advocating for private copy levies to be abolished, but has repeatedly demonstrated that the current system of 'rough justice' is opaque, unfair to consumers and industry, and does not fulfill the stated purpose of fairly remunerating right-holders," said Mark MacGann, director general of EICTA, the organization that represents the information and communications technology and consumer electronics industries in Europe.

McCreevy's new initiative also was applauded by British Liberal Democrat member of the European Parliament Sharon Bowles, who said the levies were outdated, as there is now technology that can ensure copyright owners can get fair royalties.

"Consumers have the right to know what the levy is and how it is spent," she said. "It should not be done as a hidden tax. That is a simple matter of transparency."

Copyright levies are used in 20 out of 27 EU member states and raise about 600 million euros a year ($878 million). But they vary according to the product and the country: a levy on an MP3 player with 160 GB of storage space can be 8 euros ($12) in Austria but 25 euros ($37) in France.



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