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On 10 July 2007, the EU Commission received a letter from a large group including some of Europe's biggest media groups and telecom companies urging for the rejection of an offer made by EU national royalty-collecting societies to settle an anti-trust case.

The Commission started examining a model contract for public performance rights between the collecting societies members of CISAC (the International Confederation of Societies of Authors and Composers) as a result of a complaint made in 2003 by digital music distribution platform Music Choice Europe.

The complaint concerned the fact that the authors were obliged to transfer their rights only to their own national collecting society and that the users could obtain a license only from the domestic collecting society and limited to the domestic territory.

The Commission considered that "the membership and territorial restrictions multiply and guarantee to collecting societies an absolutely exclusive position on their domestic market."

In February 2006, the Commission sent CISAC a statement of objections, agreeing with Music Choice Europe complaint.

In March 2007, CISAC proposed a set of draft commitments related to membership, territoriality and exclusivity. Its members agreed to allow copyright holders to move freely between different collecting societies, to group up and grant cross-border licenses for music on the internet, over satellite and cable and to delete the exclusivity requirement from their contracts. However, the licenses are subject to a complex system of requirements and limitations, which, CISAC says, is necessary to "ensure that authors and their works do not suffer the effects of a potentially harmful downward spiral in royalty rates".

The letter addressed to EU Commission President José Manuel Barroso and Competition Commissioner Neelie Kroes, signed by companies such as France Telecom, Liberty Global, SBS Broadcasting, Orange, RTL, ProsiebenSat1, Telenet, ORF, Cable Europe, Deutsche Telekom and the German Association of Private Broadcasters and Television Operators, states that the proposal made by CISAC "raise substantial issues as regards application of competition law and internal market rules, cultural diversity, and the relationship between smaller and larger representatives of rights holders".

As the letter reads, the proposals "instead of remedying the consumer harm identified by the European Commission - would undermine the current system of licensing the global music repertoire as a single package and lead to a costly, inefficient and fragmented licensing system for music rights" and would "...lead to the disappearance of many smaller author's rights societies."

"Such fragmentation would result in regional and national linguistic repertoires either not being played or paid. Cultural diversity would suffer immediately and directly," said the letter also suggesting to the Commission that: "The collecting societies amend their proposals 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 letter concludes by stating that in case CISAC does not offer a solution, the Commission should adopt "a decision finding an infringement of EC competition rules."

A final decision from the Commission is expected by the end of the summer. According to EU rules the decision can reject the settlement offer and impose a fine for restrictive business practices, that can reach up to 10 percent of the annual revenue.

Media companies urge Commission to turn down copyright proposal (12.07.2007)
http://www.euractiv.com/en/infosociety/media-companies-urge-commission...

Business urges Brussels to protect cultural diversity (11.07.2007)
http://euobserver.com/19/24457

EDRI-gram: European Commission starts antitrust procedure against CISAC (15.02.2006)
http://www.edri.org/edrigram/number4.3/cisacantitrust