UOKiK has been looking at the practices of copyright protection organizations for a couple of years now. It has also been monitoring the phonographic market. Consequently, yet another antitrust proceedings have been initiated against ZAIKS (Authors’ Assossiation)

ZAiKS (Authors’ Asociation) protects the copyright, helps to execute it and represents both its members and other persons. The doubts of the President of the Office were raised by the principles according to which non-member authors can renounce ZAIKS services. According to the declaration that they sign, they transfer their proprietary copyright to ZAIKS for five years. Until the end of that period the agreement cannot be terminated, despite giving a notice. In UOKiK’s opinion the practice can make it difficult for the authors to transfer the right to manage their proprietary copyright to other organizations at a convenient time and consequently it can lesser competition.

The proceedings initiated by UOKiK in September 2007 are also conducted on the basis of EC regulations. There is a risk that the activity of the Association affects the EU market, lessening the competition between enterprises from different Member States. If the allegations ZAiKS is facing are confirmed, the Office can impose a fine on the Association of up to 10% of its previous year revenue.

This is not the first time proceedings are undertaken against the Association. In 2004, as a result of proceedings conducted at the request of the Brathanki music band, the President of UOKiK imposed on ZAIKS a fine of PLN 500 thousand for using competition restricting practices. The Association had been demanding that the authors give it exclusive authority to manage the copyright to their works in all aspects of the works exploitation, which was detrimental for the authors. In this way the copyright holders’ freedom of activity was limited - first and foremost the freedom to choose which organization will represent them as regards the different aspects of copyright protection. ZAiKS lodged an appeal against the decision of the President of UOKiK. The decision of the Office was sustained by the Court of Competition and Consumer Protection and the Court of Appeal. At present, the case is being examined by the Supreme Court as a result of a cassation appeal lodged by the Association.

Moreover, in June this year a 2002 decision of the President of UOKiK entered into force. The decision said that ZAiKS had abused its dominant position by consenting to producers’ using the works only if they agreed to cover the cost of producing a hologram.

It is worth mentioning that the Office was also interested in the activity of other joint management organizations. In September 2006 the President of UOKiK initiated three antitrust proceedings against the Union of Polish Art Photographers ZPAF, the Union of Polish Performing Artists’ Associations STOART and the Polish Musical Performing Artists’ Society SAWP. The Office called into question the practice of demanding that the copyright holders entrust the organizations with the protection of their rights in full extent, and not only in relation to selected aspects of exploitation. The President of UOKiK found that ZPAF used such illegal practices. The proceedings against the two other organizations have not finished yet, however SAWP was additionally accused of creating detrimental conditions of renouncing the Association’s services, similarly as it is in the case of ZAiKS.

Moreover, the Office looked closely at the competition on the phonographic market, finding out that its structure is to a large extent oligopolic - the market share of the four largest companies exceeds 75%. Their position is strengthened by the common distribution system, which enables them to sell not only their own musical records, but also those of a couple hundred smaller producers. This way, the four entities control the majority of the market. Moreover, the shape of the retail market is also not favourable to competition, because over 70% of the records distribution takes place first and foremost through specialist chains, home appliance shops and megastores. As a result, if smaller producers want to reach the mass client, they are forced to use the agency of the largest companies.

The Office’s analysis also shows that retail shops can buy products of market leaders only through their distribution houses, and as a result they incur an additional charge of 6% of the value of the purchased goods. Also, awarding some retail chains the exclusive right to pre-release sale of some albums seems unbeneficial for the market. What is also concerning is the fact that despite the significant fall in the volume of music record sales and the dynamic development of digital music, CD prices remain the same.

Additional information:
Małgorzata Cieloch, Spokesperson for UOKiK
Pl. Powstańców Warszawy 1, 00-950 Warszawa
Tel. (+48 22) 827 28 92, 55 60 106, 55 60 314
faks (+48 22) 826 11 86
E-mail [SCODE]bWNpZWxvY2hAdW9raWsuZ292LnBs[ECODE]