1 This request for a preliminary ruling concerns the interpretation of Article 102 TFEU.
2 The request has been made in proceedings between OSA, z.s., formerly OSA, z.s., - Ochranný svaz autorský pro práva k dílům hudebním, z.s. (‘OSA’), which is a collective management organisation handling copyright (‘a collective management organisation’) pursuant to Czech law, and the Úřad pro ochranu hospodářské soutěže (Office for the Protection of Competition, Czech Republic) (‘the Czech competition authority’) concerning a decision by which that authority penalised OSA for an infringement of Article 102 TFEU.
3 Article 102 TFEU provides: ‘Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States. Such abuse may, in particular, consist in: (a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions; …’
4 Article 3 of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ 2001 L 167, p. 10), entitled ‘Right of communication to the public of works and right of making available to the public other subject matter’ provides, in paragraph 1 thereof: ‘Member States shall provide authors with the exclusive right to authorise or prohibit any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access them from a place and at a time individually chosen by them.’
5 Paragraph 23 of zákon č. 121/2000 Sb., o právu autorském, o právech souvisejících s právem autorským a o změně některých zákonů (autorský zákon) (Law No 121/2000 on copyright, related rights and amending certain laws (the Law on copyright)), in the version in force until 6 November 2014, guaranteed authors the right to a royalty in return for the use of their works made available to people staying in private rooms by means of television or radio.
6 Paragraph 11 of zákon č. 143/2001 Sb., o ochraně hospodářské soutěže (Law No 143/2001 on the protection of competition), in the version applicable to the dispute in the main proceedings, provides: ‘Abuse of a dominant position to the detriment of other undertakings or consumers shall be prohibited. Abuse of a dominant position shall consist particularly of (a) the direct or indirect imposition of unfair conditions in agreements with other market participants, particularly the imposition of performance which at the time of conclusion of a contract is manifestly disproportionate to the consideration provided, …’
7 It is apparent from the order for reference that OSA is one of the six collective management organisations in the Czech Republic and that it is in a dominant position on the relevant market.
8 By a decision of 18 December 2019, the Czech competition authority found that, during the period from 19 May 2008 and 6 November 2014, OSA had applied to providers of hotel accommodation operating in the Czech Republic, for their use of copyrighted works by means of television and radio receivers, royalties calculated without taking account of the occupancy rate of the hotel establishments concerned, without any objective justification. According to that decision, OSA thus had required the payment of royalties in respect of unoccupied rooms in which no use of such works had taken place.
9 The Czech competition authority took the view that, by that practice, OSA had imposed unfair trading conditions on the national market for the granting of licences for the use of copyrighted works. That authority considered that the practice concerned constituted abuse of a dominant position prohibited by Article 102 TFEU and by the corresponding provisions of Czech competition law. Consequently, it ordered OSA to pay a fine of 10676000 Czech koruny (CZK) (approximately EUR 429000) and prohibited that organisation from engaging in that practice.
10 OSA submitted a complaint against that decision, which the Chairperson of the Czech competition authority rejected by a decision of 23 November 2020.
11 OSA brought an action before the Krajský soud v Brně (Regional Court, Brno, Czech Republic), which is the referring court, against the latter decision.
12 According to that court, it is common ground between the parties in the main proceedings that OSA has, in the Czech Republic, a ‘de facto monopoly’ in the field of the collective management of copyright and that, during the period between 19 May 2008 and 6 November 2014, OSA charged royalties to hotel establishments in return for the broadcasting of protected works by means of television and radio receivers installed in their rooms, whether those rooms were occupied or not. However, those parties disagree on the interpretation of the Court’s case-law on the concept of ‘abuse of a dominant position’ and on the application of that case-law in the dispute in the main proceedings.
13 According to OSA, the Czech competition authority should have examined whether its pricing practice could be regarded as an abusive pricing practice in the light of the criteria set out by the Court in the judgment of 14 February 1978, United Brands and United Brands Continentaal v Commission (27/76, EU:C:1978:22), which were purportedly applied to the specific context of collective management organisations in the judgments of 14 September 2017, Autortiesību un komunicēšanās konsultāciju aģentūra - Latvijas Autoru apvienība (C‑177/16, EU:C:2017:689), and of 25 November 2020, SABAM (C‑372/19, EU:C:2020:959; ‘the judgment in SABAM’).
14 The referring court considers, however, that the Court has not yet ruled on the question of whether the failure to take into account the occupancy rate of rooms in hotel establishments when calculating the copyright royalties due may constitute abuse of a dominant position within the meaning of Article 102 TFEU.
15 In the first place, that court indicates that the onus is on it to examine the arguments of OSA that the dispute cannot be resolved by merely applying the principles identified in the judgment in SABAM. OSA submits that that judgment concerned the payment of copyright royalties due for works which, although made available, had not been used as part of a festival. According to OSA, while the requirement to pay royalties is unreasonable in such a context, the requirement to pay an annual royalty for the provision of works in rooms in hotel establishments is still reasonable, irrespective of the occupancy rate of that establishment, with the exception of rooms that remain unoccupied throughout year.
16 In the second place, the referring court also notes that the Court in its case-law does not appear to have laid down specific criteria for determining whether the failure to take account of the occupancy rate of rooms in hotel establishments when calculating the copyright royalty due must be assessed, in the light of Article 102 TFEU, as falling within the scope of a practice of excessive pricing, as OSA asserts, or as falling within the scope of a practice imposing ‘unfair trading conditions’, within the meaning of that provision, as the Czech competition authority asserts.
17 If that second hypothesis were to be correct, the referring court considers that it would still be necessary to determine the criteria for establishing whether a trading condition is unfair. In that regard, OSA takes the view that three cumulative criteria must be met. First, that condition must be unrelated to the purpose of the agreement or not necessary for ensuring its expected effect. Second, that condition must cause harm to the other party to the agreement. Third, that condition should be neither appropriate nor fair. The Czech competition authority objects in that regard that neither the European Commission nor the EU Courts have applied those criteria and that it was sufficient, in the present case, to assess whether the trading condition imposed by OSA was justified and proportionate.
18 Similarly, according to the referring court, if the first hypothesis referred to in paragraph 16 above were to be accepted, it would still be necessary to determine whether OSA’s pricing practice can be regarded as contrary to Article 102 TFEU in so far as it imposes excessive prices. The Court’s interpretation would enable it to be clarified whether, and how, the criteria stemming from the judgment of 14 February 1978United Brands and United Brands Continentaal v Commission (27/76, EU:C:1978:22), may be applied in the context of the case before the referring court.
19 In the third place, that court takes the view that, in order to ascertain whether the constituent elements of the infringement referred to in Article 102 TFEU are present, it is necessary to settle the issue of whether the Czech competition authority was required to prove that the pricing practice in cause had had an anticompetitive effect or whether that authority could rely merely on a risk that competition might be distorted.
20 Lastly, in the fourth place, the referring court raises the issue of whether, in order to find an infringement of Article 102 TFEU, it is necessary to prove that OSA’s pricing practice had an appreciable effect on trade between Member States, or whether it is sufficient to show that the possibility of such an effect could be reasonably assumed.
21 In those circumstances, the Krajský soud v Brně (Regional Court, Brno) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling: ‘(1) Can [point (a) of the second paragraph of Article 102 TFEU] be interpreted as meaning that the conduct of a collective management company that has a de facto monopoly in a Member State and charges accommodation facility operators prices for the provision of a licence to make copyrighted works available by means of television and radio receivers located in rooms intended for the accommodation of private guests, which do not take into account the actual occupancy of the individual rooms of the accommodation facilities concerned, amount to an abuse of a dominant position, within the meaning of that article? (2) If the first question [referred] is answered in the affirmative, must such a practice be assessed in terms of (a) the application of unfair trading conditions or (b) the application of excessive prices? [(a)] If the correct standard is the application of unfair trading conditions, what is the specific test to be applied in assessing it? [(b)] If the correct standard is the application of excessive prices, what is the specific test to be applied [in assessing it:] the general “United Brands test” or a particular modified version thereof? (3) In establishing an infringement of [point (a) of the second paragraph of Article 102 TFEU] in relation to the conduct referred to in the first question, is it necessary to prove actual or potential adverse effects on competition (including effects on consumer welfare and the exploitative effects of the dominant entity’s conduct)? (4) In establishing an infringement of [point (a) of the second paragraph of Article 102 TFEU] in relation to the conduct referred to in the first question, is it necessary to prove that the conduct has [an appreciable] effect on trade between EU Member States, or is it sufficient to have a reasonable assumption that such an effect might occur and it is not necessary to examine its actual extent?’
22 By its first and second questions, which it is appropriate to examine together, the referring court asks, in essence, whether point (a) of the second paragraph of Article 102 TFEU must be interpreted as meaning that the fact that a collective management organisation does not take into account the occupancy rate of hotel establishments when calculating the amount of royalties due for the provision of a licence to those establishments to make copyrighted works available constitutes an abuse of a dominant position consisting in either an unfair pricing practice or other unfair trading conditions.
23 It must be recalled, first of all, that, under Article 3(1) of Directive 2001/29, authors have a right which is preventive in nature and which enables them to intervene between possible users of their work and the communication to the public which such users might contemplate making, in order to prohibit such communication (judgment of 20 June 2024, GEMA, C‑135/23, EU:C:2024:526, paragraph 17 and the case-law cited).
24 As regards hotel establishments, the Court has stated that the making available of radio or television sets capable of picking up signals and thus broadcasting protected works in the rooms of those hotel establishments constitutes communication to the public within the meaning of Article 3(1) of that directive, enabling customers to have access to such works, irrespective of whether the latter avail themselves of that opportunity (see, to that effect, judgments of 7 December 2006, SGAE, C‑306/05, EU:C:2006:764, paragraph 43, and of 20 June 2024, GEMA, C‑135/23, EU:C:2024:526, paragraph 33 and the case-law cited).
25 In that regard, the Court has held that, usually, the customers of such an establishment quickly succeed each other and that, as a general rule, a fairly large number of persons are involved, so that they must be considered to be a public (see, to that effect, judgment of 7 December 2006, SGAE, C‑306/05, EU:C:2006:764, paragraph 38).
26 Moreover, the action by the hotel establishment by which it gives access to the broadcast works to its customers must be considered an additional service performed with the aim of obtaining some benefit, the provision of that service having an influence on the hotel’s standing and, therefore, on the prices of rooms (see, to that effect, judgment of 7 December 2006, SGAE, C‑306/05, EU:C:2006:764, paragraph 44).
27 It must be recalled, next, that a collective management organisation which has a monopoly, in the territory of a Member State, over the management of copyright relating to a category of protected works and which makes those works available, in return for the payment of royalties, to economic operators so that those operators may communicate them to the public, must be regarded as an undertaking which has a dominant position in a substantial part of the internal market, within the meaning of Article 102 TFEU (see, to that effect, the judgment in SABAM, paragraphs 26 and 27 and the case-law cited). In the present case, as it was stated in paragraph 7 above, it is not in dispute that OSA has such a dominant position.
28 It must also be observed that, where the allegedly unfair nature of the conduct of such a collective management organisation concerns the level of those royalties, namely the price charged as such, and not other conditions under which those works are made available, that pricing must be assessed in the light of the criteria in relation to excessive prices.
29 Thus, such conduct may constitute abuse prohibited under Article 102 TFEU if, when it fixes the level of those royalties, that organisation charges a price which is excessive in relation to the economic value of the service provided. Whether the royalties are excessive must be assessed in the light of all the circumstances of the case (see, to that effect, the judgment in SABAM, paragraphs 28 and 29 and the case-law cited).
30 In that regard, it is necessary to take account not only of the economic value of the collective management service as such, but also of the nature and scope of the use of the works and of the economic value generated by that use (see, to that effect, the judgment in SABAM, paragraph 30).
31 Although, as it was pointed out in paragraph 24 above, the making available of signals and of radio and television sets in rooms in a hotel establishment constitutes communication to the public, within the meaning of Article 3(1) of Directive 2001/29, without it being important to ascertain whether or not that public, which consists of the customers present in that hotel establishment, chooses to access the works thus made available, it must nevertheless be held, so far as Article 102 TFEU is concerned, that the number of persons of which that public consists is a relevant factor when assessing, first, what the scope is of the potential use of the copyrighted works and, second, what benefit, as referred to in paragraph 26 above, the hotel establishment may derive from the licence it acquires from the collective management organisation. Accordingly, the occupancy rate of the hotel establishments is a fact which must be taken into account for the purposes of evaluating, using a statistical model or on the basis of other criteria, provided that those criteria are objective, stable, readily accessible and verifiable, the scope of the use of the works and the economic value which their use represents and, thus, for the purposes of determining whether the royalties required for the grant of the licences which allow the communication of the works to the public are ‘unfair’ within the meaning of point (a) of the second paragraph of Article 102 TFEU.
32 In that regard, nothing permits the inference that, in situations involving hotel establishments, the case-law recalled and set out by the Court in paragraphs 30 and 41 of the judgment in SABAM - according to which the consideration due for the communication to the public of protected works, which is represented by the royalty set by the collective management organisation, must be analysed in the light of the nature and scope of the use of those works, and the value of the use of those works in trade, which is inter alia dependent on the actual number of persons who enjoy those works - is of no relevance.
33 Thus, it cannot in principle be accepted that a collective management organisation may require from hotel establishments royalties which do not take into account the fact that a significant proportion of the rooms in such establishments is inaccessible to the customers, because, for example, of a seasonal reduction in the activity of such an establishment, partial closure for renovation or an exceptional situation such as a health crisis.
34 More generally, the royalty applied by that organisation, while it may be based on a flat rate, must take account, at the very least, of an estimation of the number of works protected by copyright actually used (see, to that effect, the judgment in SABAM, paragraph 50).
35 It is in the light of all the circumstances of the case, including the availability and reliability of the data in relation to the occupancy rate of the hotel establishments, and the technological tools in existence (see, to that effect, judgment in SABAM, paragraph 55), that it is for the referring court to assess whether it was possible for OSA, without it entailing a disproportionate increase in the expenses incurred by it for the purposes of the management of its agreements with the users of the protected works and the monitoring of the use of the copyrighted works, to take into account, in setting the royalties, the foreseeable occupancy rate in the hotel establishments.
36 It therefore cannot be ruled out that the method applied by OSA to calculate the royalties, which did not take into account the occupancy rate of the hotel establishments, must be classified as ‘abuse’ within the meaning of Article 102 TFEU. If a method for calculation of the royalties which took account of that occupancy rate could be used at a reasonable cost and entailed a substantial reduction in the amount of the royalties, the use of the current method for calculating those royalties could be regarded as leading to unfair prices, within the meaning of point (a) of the second paragraph of Article 102 TFEU.
37 The foregoing finding is without prejudice to the obligation, on the referring court, to take account of any other factor which is also relevant for the purposes of assessing whether or not the level of the royalties is fair. Such factors may support or invalidate any indicia of a potential abuse of a dominant position which may stem from a failure to take into account the occupancy rate of hotel establishments.
38 Thus, it follows from settled case-law that, when a collective management organisation imposes a level of royalties which is appreciably higher than those charged in other Member States, and where a comparison of the royalty levels has been made on a consistent basis, that difference must be regarded as indicative of an abuse of a dominant position. In that regard, it is appropriate to compare its rates with those applicable in neighbouring Member States as well as with those applicable in other Member States adjusted in accordance with the purchasing power parity index, provided that the reference Member States have been selected in accordance with objective, appropriate and verifiable criteria and that the comparisons are made on a consistent basis (see, to that effect, judgment of 14 September 2017, Autortiesību un komunicēšanās konsultāciju aģentūra - Latvijas Autoru apvienība, C‑177/16, EU:C:2017:689, paragraphs 38 and 51).
39 Lastly, as regards the issue of whether, as OSA claims, the assessment of whether the prices charged by a collective management organisation are excessive requires ascertaining whether the difference between the cost actually incurred by that organisation and the price actually charged is excessive, it is sufficient to observe that, according to the Court’s case-law, recourse to that comparison between the prices and the costs is not mandatory in that assessment, and there are other methods by which it may be determined whether the prices charged are excessive (see, to that effect, judgments of 14 September 2017, Autortiesību un komunicēšanās konsultāciju aģentūra - Latvijas Autoru apvienība, C‑177/16, EU:C:2017:689, paragraphs 36 and 37, and in SABAM, paragraph 31).
40 Therefore, the answer to the first two questions is that point (a) of the second paragraph of Article 102 TFEU must be interpreted as meaning that the fact that a collective management organisation does not take into account the occupancy rate of hotel establishments when calculating the amount of royalties due for the provision of a licence to those establishments to make copyrighted works available may, depending on all the relevant circumstances, contribute to the finding of an abuse of a dominant position consisting in the application of unfair prices, subject to ascertaining whether the level of those royalties is excessive in relation to the nature and scope of the use of those works, and the economic value generated by that use.
41 By its third question, the referring court asks, in essence, whether point (a) of the second paragraph of Article 102 TFEU must be interpreted as meaning that the finding of abuse of a dominant position requires that a competition authority establish that the practice concerned produces an actual effect on competition, in particular on consumer welfare.
42 It is settled case-law that Article 102 TFEU seeks to sanction not only practices likely to cause direct harm to consumers but also those which cause them harm indirectly by undermining an effective structure of competition (judgment of 12 May 2022, Servizio Elettrico Nazionale and Others, C‑377/20, EU:C:2022:379, paragraph 44 and the case-law cited).
43 Therefore, a competition authority discharges its burden of proof if it shows that a practice of an undertaking in a dominant position could impair, by using resources or means other than those governing normal competition, an effective competition structure, without it being necessary for that authority to prove that that practice may also cause direct harm to consumers. The dominant undertaking concerned may nevertheless escape the prohibition laid down in Article 102 TFEU by showing that the exclusionary effect that could result from the practice at issue is counterbalanced or even outweighed by positive effects for consumers (see, to that effect, judgments of 12 May 2022, Servizio Elettrico Nazionale and Others, C‑377/20, EU:C:2022:379, paragraph 47, and of 21 December 2023, European Superleague Company, C‑333/21, EU:C:2023:1011, paragraph 202).
44 Consequently, the answer to the third question is that point (a) of the second paragraph of Article 102 TFEU must be interpreted as meaning that the finding of abuse of a dominant position is substantiated to the requisite legal standard where it is established that the practice concerned is capable of impairing an effective competition structure, without it being necessary to prove that that practice may also cause direct harm to consumers.
45 By its fourth question, the referring court asks, in essence, whether point (a) of the second paragraph of Article 102 TFEU must be interpreted as meaning that a competition authority is required to prove that an abuse has an appreciable effect on trade between Member States.
46 In that regard, it follows from well-established case-law of the Court that the interpretation and application of the condition relating to effects on trade between Member States contained in Articles 101 TFEU and 102 TFEU must be based on the purpose of that condition, which is to define, in the context of the law governing competition, the boundary between the areas respectively covered by EU law and the law of the Member States. Thus, EU law covers any agreement or any practice which is capable of constituting a threat to freedom of trade between Member States in a manner which might harm the attainment on the objectives of a single market between the Member States, in particular by sealing off national markets or by affecting the structure of competition within the internal market (judgment of 14 September 2017, Autortiesību un komunicēšanās konsultāciju aģentūra - Latvijas Autoru apvienība, C‑177/16, EU:C:2017:689, paragraph 26 and the case-law cited).
47 If an agreement, decision or practice is to be capable of affecting trade between Member States, it must be possible to foresee with a sufficient degree of probability, on the basis of a set of objective factors of law or of fact, that they may have an influence, direct or indirect, actual or potential, on the pattern of trade between Member States in such a way as to cause concern that they might hinder the attainment of a single market between Member States. Moreover, that influence must not be insignificant (judgment of 14 September 2017, Autortiesību un komunicēšanās konsultāciju aģentūra - Latvijas Autoru apvienība, C‑177/16, EU:C:2017:689, paragraph 27 and the case-law cited).
48 The Court has already recognised that rates charged by a collective management organisation that holds a monopoly are capable of affecting cross-border trade, with the result that Article 102 TFEU is applicable to such a situation. Trade between Member States may be affected by the rates charged by a collective management organisation which has a monopoly in its Member State and which, in addition to managing the rights of rightsholders who are nationals of that State, also manages in that State the rights of foreign rightsholders (judgment of 14 September 2017, Autortiesību un komunicēšanās konsultāciju aģentūra - Latvijas Autoru apvienība, C‑177/16, EU:C:2017:689, paragraphs 28 and 29).
49 Therefore, the answer to the fourth question is that point (a) of the second paragraph of Article 102 TFEU must be interpreted as meaning that a competition authority is required to prove that an abuse has an appreciable effect on trade between Member States. Where the pricing policy of a collective management organisation is classified as an abuse, it is sufficient, in order to prove that trade between Member States may be appreciably affected by that abuse, to establish that that collective management organisation manages not only the rights of rightsholders who are nationals of the Member State in which it has a monopoly, but also those of rightsholders of other Member States.
50 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.