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A coalition of large media companies in the broadband and online TV markets have urged the Commission to reject the terms under which collecting societies have proposed to share benefits of online music, saying that the proposed deal would stifle competition and harm cultural diversity.
Following a 2003 complaint from digital music distribution platform Music Choice Europe
, the Commission examined a model contract for public performance rights between collecting societies that are members of CISAC, the International Confederation of Societies of Authors and Composers.
The complaint concerned clauses in the proposed contract and bilateral agreements modelled upon it, according to which:
In February 2006, the Commission sent a statement of objections to CISAC and its European members, in which it agreed with the tenor of the Music Choice complaint.
CISAC brings together more than 200 collecting societies from around the world. In the European Economic Area, it has 24 members, which, as trustees of copyright holders, collect royalty payments from individuals and groups who perform the music in public spaces, including the internet.
In March 2007, CISAC proposed a set of draft commitments
in order to set a deadline to the Commission's proceedings. Essentially, these commitments were:
The Commission decided, on 14 June 2006, to market-test the commitments
.
On 10 July 2007, however, the Commission received a letter signed by companies
including France Telecom
, Liberty Global
, SBS Broadcasting
, Orange
, RTL
, ProsiebenSat1
, Telenet
, ORF
, Cable Europe
, Deutsche Telekom
and by the German Association of Private Broadcasters and Television Operators (VPRT
). The letter, which is addressed to EU Commission President José Manuel Barroso and Competition Commissioner Neelie Kroes, urges the Commission not to accept settlement proposals from CISAC which, the signatories say, "raise substantial issues as regards application of competition law and internal market rules, cultural diversity, and the relationship between smaller and larger representatives of rightsholders".
The signatory companies say that "the settlement porposals - 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." They also state: "The proposed remedies woud...lead to the disappearance of many smaller author's rights societies."
The letter goes on to suggest that the Commission: "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 companies conclude: "If CISAC cannot offer such a solution, the Commission must adopt a decision finding an infringement of EC competition rules."