Germany's arbitration tribunal ruled yesterday (Dec. 9) in favor of authors society GEMA in its conflict with the IFPI on royalty rates.

Germany's arbitration tribunal ruled yesterday (Dec. 9) in favor of authors society GEMA in its conflict with the IFPI on royalty rates.

As previously reported, the German chapter of the IFPI in January applied for the mechanical royalty rate to be slashed to 5.6% from 9.009% of the PPD (published price to dealers).

During oral proceedings before Germany's Patents and Trademarks Office in Munich, the tribunal said yesterday it saw no justification for the major decrease.

The tribunal also suggested the introduction of a smaller reduction to the rate suggested by the IFPI. The parties have until Feb. 24, 2005 to make submissions. In the absence of a settlement being reached, a final decision would be brought down by March 2005.

Since the dispute began, the difference between the previously agreed-upon mechanical rate and the new rate has been held in escrow by the record companies until a final agreement is reached. Despite GEMA's protests, IFPI has refused to reduce the amount being paid into the independent trustee.

In a statement, GEMA says it has been left with no alternative but to proceed with an application to the German Federal Cartel Office. IFPI Germany did not comment on the meeting.