WRITTEN QUESTION E-3995/00

by Helmuth Markov (GUE/NGL) to the Commission

(21 December 2000)

Subject: VIKH application for the issuing of a GEMA individual exemption certificate

On 26 March 1999, a grievance procedure was submitted to the Commission against the Gesellschaft für musikalische Aufführungs- und mechanische Vervielfältigungsrechte (Society for Musical Performing Rights and Mechanical Reproduction Rights) (GEMA) and it appears that the matter has still not been taken into hand.

On 13 January 2000 the Verband innovativer Kfz-Unternehmer und Handelsvertreter e.V. (Association of Innovative Motor Vehicle Manufacturers and Trade Representatives) (abbr. VIKH) called for the issuing of a copy of the individual exemption documentation or the granting of an individual exemption concerning the GEMA, which the complainant has still not received.

1. On what grounds have the above-mentioned complaints and the request for individual exemption documentation not been dealt with and the documentation not been forwarded?

2. Does the Commission share the complainant's view that unlike music which is played for financial gain (as is the case with radio stations, discotheques, opera-houses, theatres, live bands, etc.), music which is played in restaurants, car dealers, or hairdressing establishments is not subject to the payment of royalty fees to GEMA? (According to Commission Decision 71/224, the playing of music is only subject to copyright royalties if it is played with a view to earning money.)

3. Furthermore, does the Commission share the complainant's view that the GEMA requires a compulsory individual exemption for its contracts with the above undertakings?

4. Would GEMA contracts with these undertakings (hairdressers, restaurants though not for use in a discotheque or similar and car dealers, to create atmosphere in the salesroom) be eligible for authorisation?

Answer given by Mr Monti on behalf of the Commission

(7 March 2001)

1. By letter dated 26 March 1999 the VIKH has alleged that the collection of royalties by Gema for the playing of background music, either in the form of recorded music or broadcasting in a restaurant infringes competition law. By letter dated 27 April 1999, the Competition Directorate-General

informed the VIKH, that it saw no reason to initiate proceedings under the competition rules laid down in the EC Treaty. It stated that the collection of royalties by GEMA for the audio reproduction of works protected by copyright related rights in restaurants does not in itself represent an infringement of these provisions. VIKH's letter of 26 March 1999 does not provide any indication that the calculation of the fees infringed these provisions. Nor does VIKH's letter of 19 September 2000 contain, according to a preliminary view of the Competition Directorate-General, any new information that might justify the initiation of proceedings. The VIKH was also informed of this.

After the Commission Decision of 2 June 1971 in the GEMA case (71/224), GEMA's statutes were amended on a number of occasions. Following these amendments the Commission adopted a negative clearance decision on 4 December 1981 (82/204). The Commission did not find it necessary to grant an individual exemption.

2. The Commission does not share VIKH's view that music played in restaurants is not subject to the payment of royalty fees to GEMA. As in the examples mentioned by way of comparison by the Honourable Member, playing of music in restaurants is an exploitation having commercial character.

The GEMA Decision (71/224) does not deal with this question. However, rightholders or holders of related rights, such as broadcasters, should receive royalties (remuneration) for music played in an establishment whose principal purpose/activity is commercial in nature. This remuneration is provided for not only in national law of the Member States but also in international convention law (Article 11bis of the Berne Convention for the Protection of Literary and Artistic Works and Article 12 of the Rome Convention for the protection of performers, producers of phonograms and broadcasting organisations). Community law and especially Article 8 of Council Directive 92/100/EEC of 19 November 1992, on rental right and lending right and on certain rights related to copyright in the field of intellectual property(1) is in accordance with international law and with the Community international commitments. Furthermore, the World Trade Organisation-TRIPs Agreement incorporating Article 11bis of the Berne Convention does not allow exemptions from paying royalties or obtaining the right holder's permission for small establishments that play broadcast music (such as restaurants, car dealers or hairdressing establishments, for example).

3. and 4. Contracts with undertakings such as those mentioned by the Honourable Member do not necessarily require an individual exemption. Such contracts do not automatically fall within the scope of the Community competition rules if they are confined solely to the use of the copyright for valuable consideration. However, if because of an unjustified level of copyright fees that had an appreciable effect on trade between Member States, such contracts represented an abuse of a dominant position within the meaning of Article 82 (ex Article 86) of the EC Treaty, they would be prohibited and this infringement would not be exemptable. The Commission is however not in the possession of information that would justify such a conclusion.

(1) OJ L 346, 27.11.1992.