Swedish Market Court makes ECJ reference about collecting society tariffs for music in television broadcasts

26 March 2007

Henrik Nilsson

The Swedish Market Court, the court of final instance in cases brought under the Competition Act, has for the first time decided to make a reference to the European Court of Justice (ECJ) for a preliminary ruling.

The TV channels Kanal 5 and TV 4 have brought actions before the Market Court, alleging abuse of dominant position by the STIM collecting society. STIM, the Swedish Performing Rights Society, collects on behalf of authors and publishers of music in Sweden. The broadcasters are disputing STIM’s fee model whereby they are charged a percentage of their earnings from advertising and subscriptions for the right to use music in broadcasts. They point out that fees to STIM have risen steeply since 1996 although the use of music in broadcasts has not increased at a corresponding rate. Channel 4 claims that while its share of viewers increased 58 percent during the period, fees to STIM increased 19-fold. The system is also held to be discriminatory as the public service broadcaster is charged a flat fee for its use of music.

STIM has argued that there is nothing inherently illegal with charging fees calculated as a percentage of earnings. It refers to a report on the compensation system and level of fees commissioned by the Danish Ministry for Culture, which found that in all 18 European countries surveyed, compensation was calculated in whole or in part as a percentage of earnings.

The Market Court notes that while collecting society fee models are controversial in many Member States, the ECJ has only tried fee models concerning use of music in discotheques, where the use of music is central to the business. The Market Court reasons that television broadcasting on the other hand generates its income through operations with little or no connection to the contributions made available through STIM.

Source: Market Court decision 20 December 2006 in case A 2/05, (in Swedish only).