OSA and Article 102 TFEU: a way of attacking excessive collecting society fees?

Fellow 1709er Eleonora is far too modest to mention it, but she has just had a Current Intelligence note published online in the Oxford University Press publication, Journal of European Competition Law & Practice (JECLAP).  It's "OSA (the Czech Spa case): Article 102 TFEU as a Means to Attack Excessive Copyright Fees of Collecting Societies?" and it will appear in the print version of JECLAP at (2015) 6 (2): 96-97.

The case in question is Case C-351/12 OSA – Ochranný svaz autorský pro práva k dílům hudebním o.s. v Léčebné lázně Mariánské Lázně a.s., 27 February 2014 and Eleonora's abstract reads as follows:

Even where national law reserves collective management of rights to a certain collecting society, this does not exclude application of competition law rules, notably Article 102 of the Treaty on the Functioning of the European Union (TFEU): a collecting society may be found to abuse its dominant position if in a particular Member State it imposes fees that are appreciably higher than those charged in other Member States, or imposes a price that is excessive in relation to the economic value of the service provided.

OSA ruling: no Czech exemption from health-spa music royalty payments

Today was the day that the Court of Justice of the European Union (CJEU) gave judgment in Case C‑351/12, OSA – Ochranný svaz autorský pro práva k dílům hudebním o.s. v Léčebné lázně Mariánské Lázně a.s., a reference for a preliminary issue from a Czech court, the Krajský soud v Plzni. This case has already been eloquently and elegantly explained by Eleonora on the IPKat weblog, here, so I shall content myself with reproducing the Cura press release and adding the occasional comment. According to the press release:

A spa which transmits protected musical works to its guests by means of devices located in their bedrooms must pay copyright fees

The territorial monopoly granted to copyright collecting societies is not contrary to the freedom to provide services

OSA, a copyright collecting society, holds the exclusive right in the Czech Republic to collect fees, on behalf of authors, for the use of their musical works. The company Léčebné lázně Mariánské Lázně, which manages a spa, installed radio and television sets in the bedrooms of that establishment in order to make works managed by OSA available to its guests. However, Léčebné lázně Mariánské Lázně did not enter into a licence agreement with OSA and refused to pay fees to it on the ground that, under the Czech legislation, health establishments may freely transmit protected works. OSA, being of the view that the national legislation is contrary to the EU Copyright Directive, brought an action before the Czech courts claiming that Léčebné lázně Mariánské Lázně should be ordered to pay fees for having made protected works available to its guests.

The Krajský soud v Plzni (Plzeň Regional Court, Czech Republic) asked the Court of Justice whether the Czech legislation under which health establishments are exempt from the payment of copyright fees is in accordance with the directive, inasmuch as that directive does not provide for an exemption of that kind. The Czech court also wishes to know whether OSA’s monopoly over the collection of fees in the Czech Republic is compatible with the freedom to provide services and with competition law.

By its judgment delivered today, the Court points out, first, that by transmitting protected works by means of television and radio sets located in the bedrooms of its guests, a spa carries out a communication to the public of those works. Such a communication must be authorised by the authors, who must, in principle, receive adequate compensation.

In that respect, the Court notes that the directive does not exempt a spa from the payment of fees where it transmits protected works to its guests. Consequently, the exemption laid down by the Czech legislation does not comply with the directive [It's difficult to see how the CJEU could have credibly reached any other conclusion on this point].

Secondly, the Court notes that the territorial monopoly granted to OSA constitutes a restriction on the freedom to provide services inasmuch as it does not allow users of protected works to choose the services of a collecting society established in another Member State. The Court emphasises however that the restriction in question is justified, since that system is appropriate and necessary for attaining the objective of the effective management of intellectual property rights. As EU law stands at present, there is no other method allowing the same level of copyright protection [despite dreams that have been entertained from time to time of a "perfect world" in which competing collecting societies continue to undercut each other until the copyright owners are assured of the closest sum to zero that the market will allow them ...]. The Court therefore concludes that the monopoly granted by the Czech legislation to OSA is compatible with the freedom to provide services.

The Court notes, however, that the imposition by a national copyright collecting society of fees which are appreciably higher than those charged in other Member States or the imposition of prices which are excessive in relation to the economic value of the service provided is indicative of an abuse of a dominant position [this is an interesting topic: "appreciably higher" can be measured in percentage terms or absolute terms, obtaining quite different results -- and "excessive in relation to the economic value of the service provided" is a phrase that screams "litigate me!"]. Nevertheless, it is for the Czech court to examine whether such a situation exists in the present case.