Notice pursuant to Article 19(3) of Council Regulation No 17 concerning an application for negative clearance or exemption under Article 81(3) of the EC Treaty (Case COMP/C2/38.014 — IFPI "Simulcasting") (Text with EEA relevance)
Date: 2001-08-17
Institutions: European Commission
Subjects: broadcasting, communications industry, investment company, record, trade licence, transmission network

C 231/18

EN

Official Journal of the European Communities

17.8.2001

Notice pursuant to Article 19(3) of Council Regulation No 17 (1) concerning an application for
negative clearance or exemption under Article 81(3) of the EC Treaty

(Case COMP/C2/38.014 (cid:151) IFPI (cid:145)Simulcasting(cid:146))

(2001/C 231/04)

(Text with EEA relevance)

I. THE NOTIFICATION

The collecting societies

(hereinafter

1. On 16 November 2000 the International Federation of the
Phonographic Industry (IFPI) applied to the Commission,
pursuant to Article 4 of Regulation No 17, for negative
for exemption under Article
clearance or, alternatively,
81(3) of the EC Treaty in respect of a model reciprocal
agreement
(cid:145)Reciprocal Agreement(cid:146))
the
between record producers’ collecting societies to facilitate
the grant of international licences to radio and TV broad-
casters who wish to simultaneously transmit via the
Internet sound recordings included in single channel and
original free-to-air broadcasts of radio and/or TV signals in
compliance with the respective regulations on provision of
broadcasting services ((cid:145)simulcasting(cid:146)).

2. On 21 June 2001 IFPI submitted an amended version of
the Reciprocal Agreement. The effect of the amendment is
that simulcasters located in the EEA are able to seek and
obtain a multi-territorial
the
collecting societies established in the EEA to simulcast
into the signatories’ territories.

licence from any one of

3. IFPI submitted the notification on behalf of a number of
collecting societies which administer the broadcast and
public performance
record company
members.

rights of

their

II. THE PARTIES

IFPI

4. IFPI is an international trade association incorporated in
Switzerland and with its principal place of management in
London, whose members comprise a large number of
record and music video producers. On their part,
the
record and music video producers are members of
national collecting societies which administer on their
behalf the copyrights and neighbouring rights of which
they are the legitimate holders.

5. IFPI submits the notification on behalf of

the record
producers’ collecting societies which are party to the
agreement but is not itself party to the agreement, since
it is not mandated to collect revenues on behalf of its
members. IFPI assisted the collecting societies to set up
the arrangements that are the subject of the notification
as the international representative of its record producer
members.

(1) OJ 13, 21.2.1962, p. 204/62.

6. The parties to the originally notified model agreement are
40 record producers’ collecting societies from western and
eastern Europe, Asia, northern and Latin America,
Australia, New Zealand and South Africa. At the date of
notification of
the participating
the amendment, 11 of
societies had signed. IFPI will inform the Commission as
and when further collecting societies sign the amended
agreement.

their

7. The main function of collecting societies is the adminis-
tration of the broadcasting and public performance rights
record producer members. This includes the
of
licensing of copyright in the sound recordings of their
members
that use,
collecting and distributing royalties, monitoring the use
of the copyright material and, where necessary, enforcing
their members rights.

to users, determining tariffs

for

III. PRODUCTS/SERVICES

8. The case concerns the following services:

(a) rights administration services;

(b) licensing of the simulcasting right.

IV. THE NOTIFIED AGREEMENT

Scope

the

9. Digital technology and the worldwide web have enabled
broadcasters, who traditionally operate on a national or
regional basis under limited territorial licences, to exploit
globally
administered by the
collecting societies by simulcasting their programming
Internet.
onto the
According to the parties,
is
intended to facilitate the grant of a multi-territorial
licence for this activity.

the Reciprocal Agreement

digital network of

sound recordings

global

the

10. Collecting societies traditionally have the right to grant
licences for exploitation of sound recordings in their
own national
to
territory only. Therefore,
simulcast, given that it involves transmission of signals
in a number of
is not covered by existing
licences granted by collecting societies to broadcasters.
According to the parties,
is
therefore intended to facilitate the creation of a new
category of licence.

the Reciprocal Agreement

territories,

the right

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Official Journal of the European Communities

C 231/19

11. The notified Reciprocal Agreement is intended to establish
administration and
effective
a framework to ensure
rights
in the face of global
protection of producers’
the same time it will enable
Internet exploitation. At
licences covering
collecting societies to grant
all the territories in which the local producers’ collecting
society is a party to the Reciprocal Agreement. In this way,
simulcasters will have a simple alternative to obtaining a
licence from the local society in every country in which
transmissions are accessed, although this
their Internet
latter approach will still be available to them.

(cid:145)one-stop(cid:146)

12. The Reciprocal Agreement is intended to operate for an
experimental period of one year only, after which its
nature,
reviewed. The
amended version of the agreement entered into force on
1 June 2001 and will end on 31 May 2002.

scope and operation will be

Content

13. The Reciprocal Agreement provides for each participating
collecting society to grant
to the other participating
societies the right (in respect of its members’ repertoire)
to authorise simulcasting, or to claim equitable remun-
eration in its territory (as appropriate) on a non-exclusive
basis. Each party to the Reciprocal Agreement will enter
into bilateral contracts individually and separately with
each other party in terms following the model of
the
Reciprocal Agreement.

14. More specifically, the Reciprocal Agreement will enable

each participating collecting society:

(a)

in the case of an exclusive right, to authorise, whether
in its own name or in the name of the right owner
concerned, simulcasting of sound recordings in the
repertoire of the other contracting party and where
claiming equitable remuneration, to collect all remun-
eration, to receive all sums due as indemnification or
damages and to give due and valid receipt for the
aforementioned collections;

(b) to collect all

licence fees required in return for the
authorisations, and to receive all sums due as indem-
nification or damages for unauthorised simulcasts;

(c)

to commence and pursue (in full cooperation with the
other collecting society parties to the agreement) either
in its own name or in that of
the rights holder
concerned, upon request and with explicit consent,
any legal action against any person or corporate
body and any administrative or other
authority
responsible for an illegal simulcast.

negotiated between the user and the collecting societies
and will
to be
charged. The calculation of an appropriate royalty level
is therefore a matter for each individual collecting society.

include the level of

royalty or

tariff

16. The Reciprocal Agreement determines that any disputes
between participating collecting societies and broadcasters
relating to royalties will be subject to national arbitration
procedures where such exist. In circumstances where the
national arbitration system does not exist or is unlikely to
be effective, the parties will refer to a forum for inter-
national arbitration, such as the WIPO Arbitration and
Media Centre.

The amendment

17. Under

the originally notified agreement, a collecting
society was empowered to grant an international simul-
casting licence only to broadcasting stations whose
signals originated in its territory. This meant that broad-
in the EEA were required to approach the
casters
producer’s collecting society in their own Member State
in order
to be granted a multi-territory simulcasting
licence.

18. Following discussions with the Commission, on 21 June
2001 IFPI notified to the Commission an amendment to
the Reciprocal Agreement such that broadcasters whose
signals originate in the EEA will be able to approach any
EEA collecting society established in the EEA in order to
seek and obtain a multi-territorial simulcasting licence.

19. The relevant provision (a new sub-paragraph under Article
3.1. (cid:151) (cid:145)reciprocal authorisation to administer(cid:146)) reads as
follows:

Notwithstanding the provisions of the previous paragraph,
each contracting party agrees that the right referred to in
Article 2 for simulcasting in and into its own territory is
conferred on a non-exclusive basis on any contracting party
established in the European Economic Area (EEA) with
regard
signals
those
originate in the EEA. For
the avoidance of doubt, any
broadcasting station whose signals originate in the EEA
entitled to approach any contracting
shall
party
its multi-territorial
simulcast licence.

therefore be
established in the EEA for

stations whose

broadcasting

to

V. ARGUMENTS OF THE PARTIES

20. According to the parties,

the aims of

the Reciprocal

Agreement are:

Commercial terms

15. The Reciprocal Agreement does not deal with any
commercial terms. These will need to be independently

(cid:151) to provide a basis for the legal exploitation of sound
the world and to create a

recordings
throughout
culture of legality on the Internet,

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Official Journal of the European Communities

17.8.2001

(cid:151) to offer the most effective and efficient way to allow
exploitation of producers’ rights on a global or multi-
territorial basis,

(cid:151) to offer a flexible solution that can adapt to the market

as it develops,

(cid:151) to ensure that producers retain their individual rights
with regard to electronic delivery. Mandates granted to
societies should therefore remain non-exclusive,

(cid:151) to create a market place that encourages broadcasters
to exploit their signals via the Internet on the basis of
necessary and legitimate licences,

(cid:151) to minimise administration costs both for collecting

societies and users, and

(cid:151) to provide a valuable service to simulcasters in the
form of a one-stop global or multi-territorial licence.

21. Simulcasting involves the transmission of a signal

between

collecting

to
In the absence of
audiences on a cross-border basis.
reciprocal
societies,
agreements
simulcasters would be obliged to contact the collecting
society or right-holder in every territory in which users
access their service and obtain a licence. This would
impose a significant administrative and economic burden
and could lead to the widespread
on simulcasters
(and therefore infringement) of copyright.
non-respect
Inherent
therefore,
in
according to the parties, a substantial
the exploitation of sound recordings over the Internet
which clearly promotes technical and economic progress.
The arrangements avoid the necessity for a multiplicity of
lengthy negotiations by users with each
individual
collecting society since the reciprocal framework reduces
transaction costs
to the
creation of an EEA-wide market
the licensing of
simulcast transmissions.

significantly and contributes

improvement

reciprocal

licensing

the

for

in

is

the

22. According to the parties, the amendment to the Reciprocal
increasing the
effect of
Agreement has
since it
pro-competitive nature of
encourages competition between producers’
collecting
societies in the EEA. Broadcasters whose signals originate
in an EEA Member State are now able to approach any
EEA-based collecting society for the simulcast licence.

further
the arrangements,

23. The parties also underline the fact

that Community’s
competition law serves the essential goal of creating and
sustaining a single market. The Reciprocal Agreement will
enable EEA broadcasters not only to obtain a one-stop
to enable
licence of
legitimate simulcasting of their signals but also to obtain
such licence from the EEA collecting society of
their
choice. This will allow for competition between EEA
societies to grant these new multi-territorial licences and
furthering the single market goal.

the necessary bundle of

rights

licences

simulcast

24. As regards the distinction between those societies in terri-
tories within the EEA, who will be able to issue inter-
national
to any simulcaster whose
signal originates within the EEA, and those societies
outside the EEA, who will only be able to license users
whose signals originate in their own territory, the parties
the distinction is based on the harmonised
say that
regimes of copyright
that operate in the EEA and in
particular the fact that many territories outside the EEA
do not provide the same level of copyright protection
and/or do not have legal systems and procedures in
place which would allow effective enforcement of
IP
certainty and copyright protection are
rights. Legal
crucial
licensing
features without which the reciprocal
system would not work. The protection that the reciprocal
arrangements
indispensable in the fight
against piracy and will contribute to the expansion of
the industry’s programme of
investment, marketing of
new digital
formats and more efficient and effective
distribution methods with the subsequent accrual of
benefits
for consumers. The creation of a legitimate
marketplace for simulcasting will stimulate competition
to the benefit of consumers who will get easier and
wider access to a range of music, while ensuring that
right holders and artists are properly remunerated.

represents

is

that

25. Technology allowing for simulcasting has been available
since the end of 1995. Since then, a growing number of
broadcasters has embraced this technology and started to
make their programming available over
the Internet,
simultaneously with the analogue terrestrial broadcasting
of the same programming. This technology is currently
used by over 5 000 broadcasters worldwide, 1 800 of
which are located in Europe. The parties underline the
the Commission has acknowledged in the
fact
guidelines on the applicability of Article 81 to horizontal
cooperation agreements (1)
to
respond to a (cid:145)changing market place driven by global-
isation,
technological progress and the
generally more dynamic nature of markets(cid:146) (2). The
represents an attempt by the
Reciprocal Agreement
sound
licensing
provide
to which simulcasting technology
framework pursuant
can be used legitimately.
fills a vacuum, making
It
available a licensing facility that previously did not exist.

companies need

the speed of

recording

industry

that

to

a

(1) Commission notice (cid:145)Guidelines on the applicability of Article 81 to

horizontal cooperation agreements(cid:146) (OJ C 3, 6.1.2001, p. 2).

(2) Paragraph 1.1.2.

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Official Journal of the European Communities

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26. According to the parties, the facilitation of a one-stop shop
global
licence for the benefit of both rights holders and
rights users is pro-competitive. Whilst the establishment of
the Reciprocal Agreement will require a degree of coop-
eration between the societies, it will not be replacing any
existing activities, since it is geared to the development of
an entirely new licensing facility.

European Commission
Directorate-General for Competition
Anti-trust Registry
Rue Joseph II/Josef II-straat 70
Office 0/28
B-1000 Brussels.

VI. CONCLUSION

On the basis of the above, the Commission intends to take a
favourable view in respect of the notified agreement. Before
adopting a favourable opinion, the Commission invites third
the
parties to send their observations within six weeks of
publication
(Miguel.Mendes-
Pereira@cec.eu.int), by fax ((32-2) 295 01 28) or by mail,
quoting the reference Case COMP/C2/38.014 (cid:151) IFPI, to:

e-mail

notice

this

by

of

its observations contain business
If a party considers that
secrets,
indicate the passages which in its opinion
it must
ought not to be disclosed on the ground that they contain
business secrets or other confidential material, and state the
reasons. If the Commission does not receive a request with
reasons it will assume that the observations do not contain
any confidential information.

Renotification of a previously notified concentration

(Case COMP/M.2510 (cid:151) Cendant/Galileo)

(2001/C 231/05)

(Text with EEA relevance)

1.
On 5 July 2001 the Commission received a notification of a proposed concentration pursuant to
Article 4 of Council Regulation (EEC) No 4064/89 (1), as last amended by Regulation (EC) No 1310/97 (2),
by which the undertaking Cendant Corp., USA, acquires, within the meaning of Article 3(1)(b) of the
Regulation, control of the whole of the undertaking Galileo International Inc., USA, by way of exchange of
shares.

2.
This notification has been declared incomplete on 21 March 2001. The undertakings concerned have
now provided the further information required. The notification became complete within the meaning of
Article 10(1) of Regulation (EEC) No 4064/89 on 22 March 2001. Accordingly, the notification became
effective on 22 March 2001.

The Commission invites interested third parties to submit

3.
proposed operation.

their possible observations on the

Observations must reach the Commission not later than 10 days following the date of this publication.
Observations can be sent by fax (No (32-2) 296 43 01 or 296 72 44) or by post, under reference
COMP/M.2510 (cid:151) Cendant/Galileo, to:

European Commission,
Directorate-General for Competition,
Directorate B (cid:151) Merger Task Force,
Rue Joseph II/Jozef II-straat 70,
B-1000 Brussels.

(1) OJ L 395, 30.12.1989, p. 1; corrigendum: OJ L 257, 21.9.1990, p. 13.
(2) OJ L 180, 9.7.1997, p. 1; corrigendum: OJ L 40, 13.2.1998, p. 17.