ZAiKS and the Polish Filmmakers Association (SFP) infringed the law, ruled the President of the Office of Competition and Consumer Protection. The organisations were fined with the total of over PLN 1.2 million

Each artist is entitled to receive remuneration for the use of his or her work. However, managing and protecting copyright on individual basis is very difficult or even impossible in the era of mass exploitation of artistic output. Therefore, artists’ interests are represented by organisations of collective management of copyright and neighbouring rights. In Poland, these are e.g. the ZAiKS Authors’ Association and the Polish Filmmakers Association. Their activity includes granting permission to use artistic output by commercial users - TV broadcasters, owners of cinemas or libraries, or press publishers who sell or insert CDs to their newspapers or magazines, etc. The organisations collect fees due for using the rights they manage and allocate them between the creators of audiovisual works. The organisations’ operations are financed by artists, commercial users and finally by consumers, as they collect commission to cover the costs of collective management of rights.

In December 2005, upon the request of the Chamber of Press Publishers, UOKiK instituted antitrust proceedings against ZAiKS and the SFP. Information collected during the proceedings confirmed that in order to maximise their profits the organisations had made an agreement fixing uniform rates for using audiovisual works and refused to negotiate the rates with the users of the works. This way ZAiKS and the SFP intended to eliminate competition between each other, to the detriment of the undertakings which use copyright for commercial purposes but, first and foremost, at the expense of the final users - consumers, as the copyright fee they collect is an essential element of the price of a recording on a carrier.

In the course of the proceedings, UOKiK established that the organisations agreed a fee per copy constituting 8% of its price but not less than a fixed rate per carrier (e.g. PLN 2 for a feature film on a DVD).

According to the Office, remuneration payable to an artist should be decided on a case-by-case basis, and the terms and conditions of the agreement under which the right to use the work is granted should follow from the current market situation and take into account the nature and scope of the work’s use. Since ZAiKS and the SFP unilaterally and jointly fixed the rates, undertakings using the works were deprived of the possibility to negotiate them.

According to the information collected by the Office, ZAiKS and the SFP agreed fixed rules for remunerating particular categories of artists. Under the agreement, the film director was to receive 35% of the total rate collected for the particular audiovisual work, the composer - 20% and the cameraman - 10%. Consequently, in practice, artists were supposed to receive the same rates regardless of the costs borne and work put in, or the profit earned by the users of their work.

What is also crucial, the organisations made the arrangements with full awareness that this activity deprived artists of the possibility to choose the organisation which they wanted to entrust with the management of their copyright.

In order to make sure that both parties comply with the agreed terms, ZAiKS and the SFP arranged to regularly exchange information on the collected fees. According to the Office’s findings, the illegal practice has lasted since the end of 2003.

The arrangement made by ZAiKS and the SFP is a regular price fixing agreement under which uniform rates (including minimal prices) were established, which, according to the doctrine and the Polish and EC jurisdiction, is the most grievous and unconditionally prohibited competition restricting practice.

In UOKiK’s view, the practice undertaken by the organisations leads to financial exploitation of the users of cultural goods, and hence, it affects a very wide circle of people. The parties to the agreement were guided by the intention to maximize their revenue and consolidate their market position.

In addition to being ordered to discontinue the practice in question, the undertakings were also charged with fines. The Polish Filmmakers Association was fined PLN 250 thousand and ZAiKS - PLN 1 million. The President of UOKiK has already adopted decisions prohibiting ZAiKS to use competition restricting practices before - one example is the now final decision in the Brathanki music band case. In another decision, also a valid one now, adopted in 2002, the President of the Office found ZAiKS in breach of law by abusing its market position and making the conclusion of a contract subject to publishers’ undertaking certain financial obligations concerning the production of holograms for CDs.

Because the proceedings were simultaneously conducted pursuant to EC competition protection provisions, the draft decision was consulted with the European Commission. This decision is not final - the parties may appeal to the Court of Competition and Consumer Protection.

Further information:
Małgorzata Cieloch, Spokesperson for UOKiK
Pl. Powstańców Warszawy 1, 00-950 Warsaw, Poland
Tel. (+48 22) 827 28 92, 55 60 106, 55 60 430
faks (+48 22) 826 11 86
E-mail: [SCODE]bWNpZWxvY2hAdW9raWsuZ292LnBs[ECODE]