The President of the Office of Competition and Consumer Protection imposed a fine of 500 thousand zloty on the Authors’ Association ZAiKS for restricting the statutory freedom of authors to exercise their copyright to musical compositions. The practices were found by Cezary Banasiński to be restrictive to competition.

The antimonopoly proceedings were initiated on the request of members of the musical band “Brathanki”, who accused ZAiKS of practices restricting competition. In their opinion, such practices include the condition imposed by the Association that they can take under protection compositions as long as receive an exclusive right for the public performance thereof, recording and broadcast on the radio and television.

The development of technology causes, that enforcement of copyright to musical compositions by individual authors becomes impossible or unprofitable in many areas, such as broadcast on the radio and TV or public performance. The same composition may be broadcast simultaneously in many media or performed publicly at various places. Therefore, the need for specialised entities that would collectively manage and protect copyright. On behalf of authors, they grant licenses to use their compositions and collect relevant royalties. ZAiKS is the largest organisation of this type. Managing copyrights of over 8 000 Polish authors, musical publishers and over 2.5 foreign authors and composers, to over 14 million compositions (over 96 percent of the world resources), ZAiKS holds an unquestionable dominant market position.

As it was found out by UOKiK Branch Office in Warsaw, which is involved in the proceedings, authors who have their compositions protected by ZAiKS, are forced to transfer also the exclusive right to licence the copyright management to public performance and recording. The Association would not accept a situation where the author selects the field of exploitation to be entrusted to be managed by ZAiKS and which, to another organisation. Thus, the author may not - without the intervention of the Association - exercise his/her rights in specific areas of exploitation and may not, for instance, decide independently on the terms his/her compositions are used in music albums.

In the opinion of the President of the Office, such practices of the Association constitute an abuse of its dominant position. ZAiKS, using its market advantage to compel authors to provide with exclusivity to manage rights to public performance and reproduction of compositions, restricts the authors’ rights  to free operations - primarily the freedom of choice which organisation is to represent them and in what spheres relating to copyright protection. Furthermore, the antimonopoly law (both the Act on competition and consumer protection and Article 82 of the Treaty on European Community), prohibits that the dominant entity conditions a contract with the other party on acceptance by the party of an obligation not related to the subject of the contract. In the opinion of the President of the Office, it is impossible to defend a thesis that efficient protection of copyright to musical compositions depends on transfer to ZAiKS rights to manage it in all spheres of exploitation. In opinion of UOKiK, such practices constitute an abuse of dominant position.

At the beginning of 2004, the Association partly discontinued such practices in relation to those authors, who entrust it their rights and are not members of the Association. Since 1 January, there has been a possibility for such persons to entrust ZAiKS the management of copyright either in all spheres of exploitation, or with the exclusion of so-called rights to mechanical recordings. However, authors who are not members of the Association have to authorise ZAiKS to exclusively manage their rights in the sphere of public performance.

It is worth stressing, that the position of the President of the Office in this issue coincides with European jurisdiction. The European Commission has underlined numerous times that collective management of copyright should be as little restrictive for authors as possible. In its decisions concerning the German organisation GEMA, the Commission considered it unjustifiable that authors were not permitted to transfer only rights to some spheres of exploitation for management.

In view of the above, the President of UOKiK considered the described practices by ZAiKS as abuse of its dominant market position and thus infringing the antimonopoly law. A fine of 500 thousand zloty was imposed on the Association. When determining the amount of the fine, it was considered that it should perform both a repressive function (it should reflect the extent of the infringement) as well a preventive function (prevent anticompetition practices in the future). There was also another important circumstance. In effect of restricting by ZAiKS of a choice of freedom to select various organisations to manage specific spheres of copyright, development of competition has been slowed down in that market. Efficient functioning in this sphere is of fundamental importance to the development of modern economy, which to a large extent is based on the use of intellectual property.

The decision may be appealed to the Court of Competition and Consumer Protection.

Additional information:
Elżbieta Anders, Spokesperson of UOKiK
International Relations and Communication Department
Office of Competition and Consumer Protection
Pl. Powstańców Warszawy 1, 00-950 Warsaw
Ph.: (+48 22) 827 28 92, 55 60 106, 55 60 314
E-mail: [SCODE]ZWFuZGVyc0B1b2tpay5nb3YucGw=[ECODE]