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European Commission opens in-depth investigation into collecting society joint venture

By | Published on Friday 16 January 2015


The European Commission announced on Wednesday that it has opened an “in-depth investigation” into the previously reported joint venture between three of Europe’s biggest song-right collecting societies, Germany’s GEMA, Sweden’s STIM and the UK’s PRS For Music.

The three societies announced an alliance last June, expanding on an existing partnership between PRS and STIM built around the International Copyright Enterprise, or ICE. The rights organisations, which each represent a large collective of songwriters and publishers, said the new joint venture would make it easier for pan-European digital services to licence publishing rights (a big chunk of which are still licensed to digital services via the collective licensing system), and would make the management and distribution of royalties more efficient.

The EC wants the music publishing sector to make cross-border licensing more simple, but it also wants the collecting societies of Europe to compete more, both for members and licensees. So an arrangement that sees three of the biggest societies in essence competing less will raise concerns in some quarters of the Commission, even if it’s being done to achieve another of the EC’s objectives.

Announcing that it was launching an in-depth investigation into the alliance, the Commission said earlier this week: “[Our] preliminary investigation indicated that the combination of the music repertoires currently controlled by each of PRSfM, STIM and GEMA could result in higher prices and worsened commercial conditions for digital service providers in the European Economic Area. This could lead, ultimately, to higher prices and less choice for European consumers of digital music”.

The Commission also noted that while the major music publishers were now licensing the ‘mechanical’ element of the song copyright to streaming services directly, they then employed the services of a collecting society to manage royalty collection day-to-day. Commissioners fear that the PRS/STIM/GEMA alliance will also reduce competition in the market for this kind of rights administration.

The EC now has until the end of May to investigate in more detail the proposed joint venture and to consider whether it is inline with European merger regulations. The Commission notes this week’s decision does not “prejudge the outcome of the investigation”, while PRS said that the instigation of the in-depth review was simply a “procedural step”. Though the move will seemingly delay the planned launch of the alliance, which the three participating societies had hoped could get underway early this year.

PRS said in a statement: “The collective rights management organisations behind the venture are confident that their vision for a new licensing and processing hub will benefit the market and look forward to providing the European Commission with further analysis and market data”.

Meanwhile PRS boss Robert Ashcroft added: “Given the complexity of the multi-territory digital market place and the scale and scope of the ground breaking solution that we are bringing to the table, it is understandable that our joint venture is subject to an in-depth assessment. We will continue to co-operate fully with the European Commission and look forward to a successful resolution of the process”.