Regulatory arm of EU sent objections in Jan.

CISAC, an international umbrella group for collecting societies, has sent a written response to the European Commission's Statement of Objections concerning questionable anti-competitive activities of the societies.

The competition division of the EC—the regulatory arm of the European Union—sent the objections in January to CISAC and others following complaints filed by European broadcaster RTL Group in 2000 and Music Choice Europe in 2003. Many portions of the document are confidential.

CISAC reports that the objections—which deal only with the transmissions of music via cable, satellite and the Internet—target three clauses of the reciprocal representation agreements signed between authors’ collection societies.

These reciprocal—also called bilateral—agreements were spotlighted by the EC before releasing its Recommendation on Collective Cross-Border Management of Copyright and Related Rights for Legitimate Online Music Services last October.

Under European laws, collecting societies are the only licensing source that can secure the right to reproduce or perform musical compositions. In most EU countries, one society licenses mechanical and performance rights, collects royalties and distributes them to members or to societies in other countries for their members. In other EU countries, these rights are split between two societies.

Most of the societies enter bilateral agreements with societies in other countries, authorizing local licensing and royalty collection for their repertoire. To facilitate these arrangements, the societies have formed alliances -- umbrella organizations such as CISAC and BIEM -- that have prepared model agreements for them to use.

The EC’s earlier report in connection with cross-border management noted that these bilateral agreements include a number of restrictions—such as exclusive representation and defining territories—that do not promote certain fundamental principles of the European community. For example, many societies agree among themselves that they will not accept as a member anyone who is a member of another society or with a nationality of the country where the other society operates. They also often agree that they will only license rights for their country.

In its written response to the objections, CISAC says it emphasized that the agreements "are the cornerstone of relations between authors’ societies, and are partly inspired by a CISAC model contract, which is not mandatory." These contracts allow each authors’ society to operate as a “one-stop-shop” because, through a single license, it can authorize the use of the entire global repertoire, CISAC says.

CISAC notes that in recent years, it voluntarily dropped two of the three clauses that the EC referred to in the objections. CISAC recognizes the right for authors to join societies of their choice, and the model contract no longer provides for certain exclusive representation.

The group also says that it could not consider questioning territorial restrictions "without first seriously studying all possible consequences, notably on creators and cultural diversity." It set out several reasons for retaining territorial restrictions in agreements, including the argument that removing the restrictions would cause a reduction in the remuneration creators receive and, in the long run, would have serious consequences for the diversity of European culture.

CISAC requested a hearing with the Commission to present its response and address the EC's concerns.

BUMA, the Dutch society, broke rank to support the EC's attempt to overhaul the collective licensing system.