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The equity of general rates applied by collecting societies is an issue that has created much debate in the area of copyright. An example is the judgment of the Court of Justice of the European Union (“CJEU”), for a preliminary ruling on the concept of unequitable price established in article 102 of the Treaty of the Functioning of the European Union (“TFEU”). This is in the context of a fine imposed by the Competition Council of Lithuania to the country’s collecting society for abuse of a dominant position in the application of excessive rates.

The CJEU first considers whether article 102 TFEU is applicable to the rates of collecting societies. In the view of the Court, as the rates applied by a collecting society holding a monopoly are capable of affecting crossborder trade, article 102 TFEU is applicable to the situation at hand. A dominant position in the meaning of that article could consist of demanding an excessive price with no relation to the economic value of the provision made.

The Court then examined how a comparison of rates applied by collecting societies of various Member States can be sufficiently indicative.

The CJEU first analyzed the quantitative criteria of comparison: how many Member States must be considered. The Court’s response is that it is not necessary to compare the rates of all Member States. The comparison of a select number of Member States can be pertinent if the selection is aligned with objective, appropriate and verifiable criteria. The Court identifies consumer habits and other economic or socio-cultural elements as selection criteria that can be used, including GDP per capita and cultural and historical heritage, to be appraised by the national judge.

The second core issue analyzed by the CJEU in its judgment is qualitative: when the comparison of rates applied in the selected Member States is selected homogeneously. The response is to first focus on how the rates are configured, i.e., on verifying whether the rate calculation method is analogous (e.g., if based on the surface area of the shop or service center concerned, or on the time of use of the repertoire). A quick approximation of the main rates available for European  collecting societies is sufficient to reveal that this criterion has clear practical difficulties. However, the CJEU does not stop there. It admits that the national authorities have a certain margin of appreciation, and that there is not one single adequate method. Further still, the Court recovers an example of a relevant comparison, since it takes the focus away from the configuration of the rates themselves and shifts it to the user paying them: resorting to “standards users” and calculating how much a “standard user” should pay in the compared Member States.

Based on these comparisons, the question is whether the collecting society in a dominant position in a Member State imposes rates that are notably higher than those applicable in other Member States, since this would be an indication of abuse of dominant position. The difference must be significant and persistent in time, not temporary or episodic. Yet a difference of some importance and lasting in time is not abuse per se, since the affected collecting society may be able to prove that it is due to market logic. The CJEU refers to two possible explanations: a justified difference in management costs (i.e., not due to inefficient management caused by inadequate administration) and different national regulations applicable to the remuneration in question. In any event, it falls to the national authority to apply this to each situation as it arises.

Authors: Álvaro Bourkaib and Ane Alonso

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