Gleiss Lutz obtains EU merger control clearance for online music licensing joint venture of three of Europe’s leading collecting societies
Gleiss Lutz has successfully represented the British, Swedish and German collecting societies PRS for Music Limited (PRSfM), Föreningen Svenska Tonsättares Internationella Musikbyrå u.p.a. (STIM) and Gesellschaft für musikalische Aufführungs- und mechanische Vervielfältigungsrechte (GEMA) in merger control proceedings before the European Commission (EC). The case concerned the creation of a joint venture of the three collecting societies for the purpose of licensing copyrights in musical works to digital service providers (DSPs) active in the European Economic Area (EEA). It constitutes the first time the EC has assessed a concentration among collecting societies on the basis of the European merger regulation.
Collecting societies manage the copyrights of their members which comprise of writers and publishers of musical works. They grant licences to users of copyright-protected works and redistribute the royalties collected from the exploitation of these works.
DSPs (such as music download or streaming services) need licences delivered by collecting societies and other rightsholders in order to be able to lawfully offer their services to consumers. The joint venture will allow DSPs active in more than one EEA-country to obtain access to the combined repertoires of PRSfM, STIM and GEMA (and potentially also the repertoires of other collecting societies and publishers) on the basis of one single licence covering all countries in which the DSP is or intends to be active. The joint venture therefore constitutes a significant step towards a truly pan-European online market for musical works.
In January 2015, the EC opened an in-depth investigation into the proposed transaction. The EC was concerned that the combination of the music repertoires currently controlled by PRSfM, STIM and GEMA could increase the market power of the joint venture and result in higher prices and worsened commercial conditions for DSPs in the EEA. The EC also raised concerns that the transaction may reduce competition in the EEA for certain licensing and copyright administration services provided to major music publishers. It considered that the proposed transaction would reduce the number of meaningful market players for the provision of such services from four to two.
Today, the EC has cleared the transaction on the basis of commitments voluntarily submitted by the parties. The commitments are in line with the aims and the vision of the joint venture project to facilitate a well-functioning multi-territory online market.
Gleiss Lutz advised comprehensively on all competition law aspects of the creation of the joint venture and represented all three parties in the proceedings before the EC.
The case was handled by Dr. Ingo Brinker (partner, antitrust, Munich), Dr. Christian von Köckritz (counsel, antitrust, Brussels), Dr. Harald Weiß (antitrust, Brussels) and Daniela Mariotti (antitrust, Munich).