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Copyright,CompetitionandDevelopment

Reportbythe

MaxPlanckInstituteforIntellectualPropertyandCompetitionLaw,Munich

December2013

Preliminarynote:

The preparation of this Report has been mandated by the World Intellectual PropertyOrganizationtotheMaxPlanckInstituteandhasbeenreleasedinDecember2013.MostoftheinformationthatisprovidedintheReportwascollectedinthesecondhalfof2012andhasonlypartiallybeenupdateduntilsummer2013.

ThisReportisauthoredbyProfessorJosefDrexl,DirectoroftheMaxPlanckInstitute.ManyotherscholarsattheInstitutetookpartintheresearchthatledtothisreport.Theseincludein particularDoreenAntony,Daria Kim andMosesMuchiri, aswell asDrMorBakhoum,FilipeFischmann,DrKayaKkl,JuliaMolestina,DrSylvieNrisson,SouheirNaddePhlix,DrGintarSurblytandDrSilkevonLewinski.

The authorwill be happy to receive comments on the Report. Thesemay relate to anycorrectionsthatareneededregardingthecasescitedintheReportoradditionalcasesthatwould be interesting and that have come upmore recently. It is planned to publish theReport in a revised version in formof abook at a later stage.Comments canbe sent toJosef.Drexl@ip.mpg.de. As regards agency and court decisions, the author would highlyappreciateifthesedecisionsweredeliveredinelectronicform.

StructureofthisDocument:

SummaryoftheReport 2 Report 13 Annex:Questionnaire 277

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SummaryoftheReport

1 Introduction

(1) This text presents a summary of the Report of the Max Planck Institute forIntellectual Property and Competition Law on Copyright, Competition andDevelopment. The Report itself analyses the practice of competition lawjurisdictionsoncopyrightrelatedmarketsaroundtheworld.ThepreparationoftheReportwasmandatedtothe InstitutebyWIPO in2012.Aspartoftheresearch forthisReport,theInstituteconductedasurveyamongcompetitionagenciesbasedonaQuestionnaire, which is annexed to the Report. The bulk of this survey wasconducted between September and December 2012. The Report was draftedbetween JanuaryandAugust2013.This summarydoesnot repeatanyof thecasestudies provided by the Report. Rather, it is designed to give the reader a quickoverviewofthemajorresultsoftheReport.

2 Motivation,ObjectivesandScopeoftheStudy

(2) The Report is motivated by the increasing economic importance of copyrightprotectedworks, includingmostdiverse subjectmatterofprotection ranging fromcultural content, media and information products to more technologybasedcomputer programs, including in emerging economies and developing countries.Growingpopulations insuchcountriesprovidea largebasisofhumanresourcesforcreativityand,atthesametime, leadto largeconsumermarkets.Copyrightrelatedactivity therefore has to be recognised as an important factor of economicdevelopmentaroundtheworldbutalsoandparticularlyinemergingeconomiesanddevelopingcountries.

(3) Theobjectivesof theReportarebasically threefold: (i)TheReportaimsatmakingaccessiblealargebodyofcompetitionlawpracticearoundtheworldasguidanceforcompetition lawenforcers inother jurisdictions. (ii) Italsotriestopromotegeneralknowledge and understanding of how competition law should be applied tocopyrightrelated markets. (iii) The Report is also meant to provide benefits forinternationalcopyrightpolicy.Withitsmarketorientedanalysis,competitionlawcanprovide new insights on how markets for authorised use of copyrightprotectedsubjectmatterworkinthepracticeofdifferentjurisdictions.

(4) TheReportonlycoversmarketsforcopyrightprotectedworks.Thereby,ittakesintoaccountalldifferentmarketsinthedistributionchain,fromthecreationofworksto

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thedistributionofsuchworkstoconsumers.ThisiswhytheReportputsaparticularemphasisonmediadistribution.Mediadistributionalso impactsonother rights inintangible assets such as sports rights, personality rights or trademarks. Suchadjacent issuesarenottaken intoaccount,although,withregardtothedistributionand licensing of sports rights in particular, competition law jurisdictions haveproducedquiteconsiderablecaselawinrecentyears.

(5) The Report covers all different jurisdictions of the world. Whereas in the pastcomparative researchmostlyconcentratedonUSantitrust lawandEUcompetitionlaw, the Report puts its emphasis on the quickly increasing body of caselaw inyounger competition jurisdictions of the emerging economies and developingcountries.Inaddition,itwasnotpossibletoreportonallcasesthathavesofarbeendealtwith.Especiallywith regard to themoreexperienced jurisdictions thiswouldnothavebeenfeasibleandwouldhavechangedthefocusofthestudy.This iswhyUSandEU lawaremostlyreferredtoasthe jurisdictionswherespecific issueshavefirstbeendealtwithandsolvedwithinternationalimpact.Thisissoinparticularwithregardtothespecificsectorofcollectiverightsmanagement.Moreover,theReportputs an additional emphasis on the smaller jurisdictions, including those withinEuropeand theEuropeanUnion,whichareoftenoverlookedandmoredifficult toaccess.NationalexperienceinEUMemberStatesisofincreasingimportanceduetothe decision to decentralise EU competition law enforcement with regard torestrictiveagreementsandabuseofmarketdominanceasof2004.

3 Methodology

(6) The Report is based on two researchmethods, namely, on the abovementionedsurveyandontraditional legalresearchoncaselaw,donemainlybyusingavailableInternet resources. In addition,many contact persons,most at local universities,providedadditional insightsbyanswering theQuestionnaire.Theagenciesofmoreexperienced competition jurisdictions,where access todecisions isnot aproblem,didnotreceivetheQuestionnaire.ManyagenciesandresearchersaroundtheworldputalotofeffortandenthusiasmintopreparingtheiranswerstotheQuestionnaire.However, thecaselaw that theymentionedwasonly takenasan indicationof themost important cases andwas wherever possible crosscheckedwith originalsources. For countries inwhich itwasnotpossible toestablish contactsorwhoseagencies even declined to cooperate,mainly for lack of time and resources, theReport had to rely on publicly available sources.Only in a very few instances didcompetitionlawjurisdictionshavetobecompletelyexcluded.Somejurisdictionsarementionedmorefrequentlythanothers.Thisdoesnotnecessarilyreflecttherelativeamountof caselawavailable in these jurisdictions.Therewere importantpractical

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constraints,suchas lessdeveloped Internet informationand languagebarriers,thathadanimpactontheselectionofthecases.Inseveralinstancesinterestingcasesdidnot enter the Report because accessible information appeared inconsistent, forexample when information in annual reports of the agencies was superficial ortranslatedindeficientEnglish.

4 TheSurveyBasedontheQuestionnaire

(7) The Questionnaire turned out to be a useful tool for collecting information ondifferentjurisdictions.YetitwasonlyafterthesurveywascompletedthatadecisionhadtobemadeonthestructureoftheReport.The latterconsiderablydiffersfromthe structure of the Questionnaire in that it generally follows the logic of thetraditional competition law violations. This decisionwasmade in order to providemoreguidancetolawenforcersindifferentjurisdictions.

(8) Inadditiontothecaselawthatwas identified,thesurveyprovidedaseriesofmostuseful additional insights, including the following: (i) Some of the smaller andyounger jurisdictionsarenotawareofthe importanceofcopyrightrelatedmarketsbecausetheythinkthatcompetitionlawdoesnotapplyduetoexemptionprovisionson intellectualproperty they find in their competition laws. (ii)An extremelyhighnumberof competition law jurisdictions feel anurgentneed tobuildupexpertiseconcerningthe interfaceofIPandcompetition law.This isalsotrue ineconomicallyhighlydevelopedbutsmallerjurisdictionswhereagencieshaveproblemsfindingstaffknowledgeable inbothfields.(iii)Somecompetition jurisdictionsattributedthe lackof practice in part to the fact that copyright law is poorly enforced in theirjurisdiction.Thisisespeciallyconvincinginthefieldofcollectiverightsmanagement.In jurisdictionswhereCMOshavenotyetmanaged tobuildupefficientsystemsoflicensingandmonitoring,userswillnotbringanycomplaintsagainstCMOs.(iv)Manyagenciesfeltaparticularlackofunderstandingandevenincompetenceinthefieldofcollectiverightsmanagementandoftendeclinedtoanswerthesequestions.

5 OntheRelationshipbetweenCopyrightandCompetition

(9) Thepreliminaryquestion thatneeds tobeansweredat the interfaceof intellectualproperty and competition law iswhether there is a fundamental conflictbetweenintellectualpropertyandcompetition law.Many jurisdictionsaroundtheworldthathaveexemptionprovisionsonIPseemtobeinspiredbytheideathatthisquestionistobeanswered in theaffirmative. In contrast, theReport isbasedon themodernunderstanding according to which IP and the competition principle are not in

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inherentconflict.Rather,bothIPlawandcompetitionlawaredesignedtopromoteasystem that creates incentives for dynamic competition for better and diversifiedprocesses and products by excluding competition by imitation and enhancingcompetitionbysubstitution.Accordingly,copyrightlawandcompetitionlawhavetobe understood in the sense of promoting complementary goals (theory ofcomplementarity). Yet conflictsmay arise on the level of application, especiallywhencompetition law isrelieduponto limittheexclusivityofthecopyright.Hence,seen from thismodernperspective, thequestion isnotwhethercompetition lawshouldbeappliedbuthowitshouldbeapplied.Theanswertothelatterquestionrequiresabalancingapproachthattakes intoaccountbothproandanticompetitiveeffectsofthecopyrightoncompetitioninthemarket.

(10) Indeed,inthegeneraldebate,therelationshipofcopyrightlawandcompetitionlawisprimarilyviewed from theperspectiveof this conflictbetween theexclusivityofrightsandfreecompetition.Inthisregard,competition lawplaysarestrictiveroleby limiting theexclusivityof thecopyright. In such instances,competition lawmayprovideforadutytolicense.

(11) Yet theReport isnot limited tocasesof refusal to license.Rather, theReportalsotakesaccountof the proactive roleof competition lawwhich, so far,has largelybeenoverlookedinthegeneraldebateontherelationshipbetweenthetwofieldsoflaw.Copyrightlawisdesignedtoprovidetheauthorofworkswithfairremunerationforhisorher creativework.Yet it isnot theexclusive right in itself thatproducessuch incomebutthewillingnessofconsumerstopay.Thisrequiresthatconsumersactuallyhaveaccesstoworkstheyprefer.Hence,copyright lawessentiallydependsonthe functioningofthedistributionchannelsandofcopyrightrelatedmarketsondifferent levels of distribution. If thesemarkets for authorised use do not workproperly,consumerswillevenbe incitedtoswitch from legalcopiesto illegalones.Competition law plays a crucial role in creating andmaintaining competitive andefficientdistributionmarkets.ThisfunctionismostconvincinglydemonstratedbytheReport.Competitionlawpracticeisabundantwithregardtodistributioncases.Thisismostly due to the fact that,whileworks are usually highly diverse and have thepotential to compete most effectively for consumers, copyrightrelated marketsoftenhavetorelyonthebundlingofworksintheformofattractiverepertoiresandtheuseofcentralisedplatforms for licensinganddistribution.Bothneedsproducethetendencyofmarketpower inthehandsofthe intermediariesthatcontrolsuchrepertoiresandplatforms.Withregardtothisproactiveroleofcompetitionlaw,theReportdemonstrates that competition law shouldnot at allbeunderstood as theenemyof copyright lawbut ratherasamost important toolofamodern,moreholistic copyright policy on the national and international level. The Report evenprovides evidence that competition law can be applied as an element of a betterstrategytofightcopyrightpiracy.

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6 CompetitionLawProvisionsonIntellectualProperty

(12) Initsfirstanalyticalpart,theReportanalysesIPrelatedprovisionsinthecompetitionlawsofdifferentjurisdictions.Inthisregard,theReportreferstointellectualpropertyrulesingeneral,sincejurisdictionsthatprovideforIPspecificrulesdonotnecessarilyrefer to copyright law in particular or, at best,mention copyright law alongwithotherIPrightssuchaspatents.Onsuchrules,theReportprovidesanamazinglylargespectrumofdifferentapproaches.Whilemany jurisdictionsdonotmention IPatallin their laws, others contain exemption provisions that have led to considerableproblemsinapplyingcompetitionlawtoIPrelatedcases.Yettherearealsolawsthatexplicitly confirm the application of competition law to IP in general or in theframework of individual provisions. At worst, especially in younger jurisdictions,exemptionprovisionsleadtothemisguidedbeliefthatcompetitionlawshouldneverbeappliedtoIPrelatedcases.Moreexperiencedjurisdictionsaretryinghardtoworkaround those rules,usinghighly sophisticated theoriesonhow todefine theexactscope of the exemption. The comparison of approaches of different jurisdictionsdemonstratesthatalltheseattemptscanneverbe fullyconvincing.Rather,what isneededisguidanceonhowcompetitionlawistobeapplied.ProvisionsthatexemptIP from the scope of application of competition law already miss this question.Hence,the insightthatneedstobedrawnfromthisanalysis isthatsuchprovisionsshouldnotbeincludedincompetitionlawsinthefirstplaceandthattheyshouldbedeleted from legislationwhere they have been included. The latter iswhat someagencies recommend. But it is also clear that vested interests can hardly beovercomeinthelegislativeprocessforachievingthisresult.

(13) What ismore important isthereforeguidelinesonhowtoapplycompetition lawtointellectual property. Such guidelines are usually provided by sublaws such asbindingregulationsorguidelinesthatonlyprovideinformationonthefuturepracticeoftheagencies.Withregardtocopyright,theproblemisthatcopyrightrelatedcasesare highly diverse and, therefore, can hardly be generalised. Some jurisdictionsthereforerefrainfromincludingcopyright intheirguidelinesoronlycovercopyrighttosomeextentintheframeworkofguidelinesontransferoftechnology.Guidelinesthatcovercopyrightareusuallymoreabstractand,therefore,donotprovidemuchguidance at all. In this regard, the Report shows how important it is to take intoaccountcasespecificpractice.

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7 TheRoleofCopyrightinMarketDefinition

(14) Thereishardlyanycompetitionlawdecisionthatdoesnotincludeananalysisoftherelevantmarket.Copyrightrelatedcasesdonotmakeanexceptioninthisregard.Inordertogetafullpictureofhowagenciesdefinemarkets insuchcases,thereaderwillhavetotake intoaccountthesubsequentchaptersoftheReport,sincemarketdefinitionpracticallyneverarisesalone,asan isolatedproblem in competition lawcases, but is only a preliminary question to be answered in the framework ofassessing violations of competition law.As a general note, caselaw demonstratesthatmarket definition is extremely difficult in copyrightrelated cases. There areseveralmajor reasons for this. First, where cultural content is concerned, highlysubjective consumer preferences are largely unreliable and weak indicators forassessing demandside substitutability. Second, in media markets in particular,dynamic technological developments make it very difficult to decide whichtechnological distribution networks can be regarded as substitutable. Third,manycopyrightrelated cases requireenforcers to take intoaccount thephenomenonoftwosidedmarkets.For instance, in thenewspaper industry, the readersmarkethas tobe clearlydistinguished from themarketofadvertising.Enforcers thereforeoftenhavetoassesseffectsontwoorevenmoremarketsafterhavingengagedinamostdifficultandextensivedefinitionoftherelevantmarkets.

(15) YettheReporthighlightssomespecificcore issuesrelatingtomarketdefinitionanddominance. Inthisregard, it firststressesthatthecopyright inthe individualwork,despite theexclusivityof the copyright, shouldnot automaticallybeequatedwithmarketdominance in the senseof competition law.What isneeded isa thoroughanalysis of the relevantmarket in the light of the criterion of demandside andsupplysidesubstitutability.Copyrightprotectioncanleadtomarketdominance.Butcopyrightprotected works are rarely must have products for consumers.Exceptionsaresomescientificpublicationsorcomputerprogramsaccesstowhichisessentialduetonetworkeffectsandstandardisation.

(16) Thingsmaychangeconsiderablywhencopyrightedworksare integrated into largerrepertoiresbyintermediariesonwhomotherdownstreamintermediariesdependinorder toenter themarketor to stay in themarket.Examplesareprovidedby themusicpublishingindustry,filmdistributiontocinemasand,maybemostimportantly,bycollectiverightsmanagement.

8 RestrictiveAgreements

(17) Copyrightrelatedmarketsareasmuchaffectedby restrictiveagreementsasotherproductmarkets. The Report provides a relatively large variety of horizontal and

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vertical agreements that have been addressed by competition law enforcers.Especially,thepracticeonhorizontalagreementsdemonstratesthatcopyrightcannotjustifytheformationofpricecartels,agreementsinwhichrightholdersusecopyrightforsharingmarketsormarketforeclosureagreements.

(18) Withregardtoverticalagreements,apartfromexclusivityagreementsregardingthedistribution of works, resaleprice maintenance, especially for books and pressproducts,appearsasthesinglemostimportantissueonwhichjurisdictionsdisagree.Somecompetitionagenciesgrantexemptions tosuchagreements,butat thesametimemayhaveatendencytoconsiderthemasinherentlyanticompetitive.

9 UnilateralConduct(AbuseofDominance)

(19) Mostcompetitionlawcasesrelatetotheapplicationofunilateralconductrules.Thisismostlyduetotheexistenceofmarketdominanceontheintermediarylevelsofthedistributionandlicensingofcopyrightedworks.

(20) Casescanbecategorised indifferentregards.Thetraditionaldistinction isbetweenexploitative and exclusionary conduct. Copyrightrelated markets provide manyexamples inwhich competitionagenciesapplyexcessivepricingprovisions tobothrightholdersanddistributors.The controlof the royalty rates chargedbyCMOs isprobablythemostimportantexampleinthisregard.

(21) The other common distinction relates to the undertakings that engage in anticompetitiveunilateralconduct.Therearecasesinwhichunilateralconductrulesareapplied to rightholdersand those inwhich theyareapplied to intermediariesandotherdistributors.Inthelattercase,unilateralconductmayhavenegativeupstreameffects, harming the interests of rightholders, or negative downstream effects onconsumers. Inallof thesecases,applicationofcompetition lawhas thepurposeofenhancingdistributionof,andaccessto,worksataffordableprices.

(22) Thechapteronunilateralconductalsoaddressestheissueofrefusaltolicense,whichis the singlemost important andmostdebated issue at the interfaceof copyrightprotectionand competition law.Mostdiscussion concerns the caselawof theEU.However, thesecasesmostly relate toatypicalcategoriesofworksor tocomputerprograms.Theanalysisalsocoversexamplesofrefusaltolicensepatents,sinceitcangenerallybeassumedthattherulesofrefusaltolicensewillnotdistinguishbetweendifferent IP rights.The analysisalsodemonstrates that refusaltolicense cases cantakemanydifferent formsand requiredifficultdistinctions. In this regard,casesofabsoluterefusaltolicense,inwhichtherightholderwantstoexcludeacompetitorina productmarket, need to be distinguished from exploitative cases, inwhich therightholderreliesonan injunctionas leveragetoextractexcessiveroyaltyrates. In

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addition,discriminatory refusals to licensehave tobedistinguished from absoluterefusalstolicense.Arelativelynewissue,whichisnowmorediscussedwithregardtorefusalstolicenseapatent,relatestotherequirementsthatapetitionerhastofulfilbeforeheorsheisallowedtousetheprotectedsubjectmatter.

(23) Theanalysisofunilateralrestraintsalsopresentsa largebodyofpracticerelatingtospecific industries.ThedistributionofTVprogrammesthroughplatformsusingverydifferent communication technologies and the distribution of newspapers providemost important insightsontherolecompetition lawcanplay inthese industriesallaroundtheworld.TheTVdistributioncasesalsoprovideanimpressivepictureoftherolethemediasectorplaysinthefieldoftransferofcommunicationtechnologiestoemergingeconomiesanddevelopingcountries.

10 Concentrations(MergerControl)

(24) Competition law jurisdictionsprovideanenormousamountofpracticeonmergersamongrightholdersanddistributorsofworks.YettheroleofIPinsuchmergershassofaronlyreceivedverylittleresearchinterest.

(25) Withregardtoundertakingsinthemediasector,mergercontrollawoftenintersectswithspecificmergercontrolsystemsthataredesignedtoprotectpluralityofopinionand diversity. Given these different objectives, parallel systems of control makesense,foronethingbecausethedifferentobjectivesmayrequiredifferentformsofmarketdefinition.However,thereareotherjurisdictionsthatonlyprovideformergercontrol within the framework of competition law. In those jurisdictions, mergercontrolmayprotectthemorepoliticalobjectivesat least indirectlyandattributetomergercontrolamuchbroaderandfarreachingpoliticalmeaning.Somecompetitionlawstakethebroaderpoliticalperspective intoaccountby loweringthenotificationthresholds formediamergersandnewspapermergers inparticularorproviding forrules according to which the objectives of plurality and diversity are also to beconsideredincasesofmediamergers.

(26) Intellectualproperty rights can come into thepicture atalldifferent stagesof theanalysis ofmerger cases. Theymay have to be taken into account for assessingwhetherthere isaconcentration inthefirstplace,namelyinthespecificcasewhenimportantIPRsareacquiredasessentialassetsofabusiness.Inrarecases,IPRsevenplayaroleinapplyingthenotificationthresholds.IPRsplaythemostimportantroleintheframeworkofassessingtheeffectsofamergeroncompetition.HereIPRsaretypicallyrecognisedasaformofbarrierstomarketentry.Finally,IPRsareconsideredintheframeworkofmergerremedies.CertainmergerscanbeallowedsubjecttotheconditionthatcertainIPRsaredivested.

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(27) Mostmergercasesincopyrightrelatedmarketsareofahorizontalnature.Copyrightownershiphas so farprovedmost important inmergersofmajormusicpublishingcompanies and phonogram producers.Other very problematic horizontalmergersrelatetoplatformprovidersinthemediasector.

(28) Vertical and conglomerate mergers are less likely to harm competition thanhorizontalones.Yethorizontalmergersmayoftenhaveaverticalaspectifanalreadyvertically integrated undertakingmergeswith a competitor. Verticalmergersmayleadtoexclusionaryeffectsoncompetitors,especiallywhenbottleneckdistributionnetworks are involved. Such mergers can nevertheless get clearance subject tobehavioural remedies that guarantee outsiders nondiscriminatory access to thenetwork. Conglomerate mergers of undertakings in adjacent markets have alsobecomerelevantinthemediasector,especiallywhenfirmsactiveindifferentmediamarkets,suchasTVchannelsandnewspaperpublishers,mergewithnegativeresultsontheadvertisingmarket.

11 CollectiveRightsManagement(CMOs)

(29) Collective rightsmanagement constitutes a very specific sectorof competition lawapplicationwith regard to copyright. Competition law problems arise due to themarketdominantpositionofCMOsonthenationallevelinthetwomarketsofrightsmanagement servicesprovided to rightholdersand licensing tousers.Accordingly,CMOs are generally the addressees of unilateral conduct rules. With regard tointernational cooperation among CMOs through reciprocal representationagreements in particular, the rules on restrictive agreements are also relevant.Relatively rarely, competition law enforcers have to deal with mergers affectingcollectiverightsmanagement.

(30) For competition law enforcers, the primary challenge consists in appropriatelyassessingtheprocompetitiveeffectsofcollectiverightsmanagement incontrasttoallegationsthatCMOsconstituteapricecartelamongrightholders.AsthepracticeofUSandEUlawdemonstrates,justificationscanbefoundinthisregard.Therefore,exemptionprovisions in favourofCMOs,asprovided for in some jurisdictions,areneither required nor useful, since they have the tendency to exclude themuchneededcontrolofanticompetitiveconductofCMOsundercompetitionlaw.

(31) TherearemanyjurisdictionsthatprovidefornationalmonopoliesofCMOsaspartoftheircopyright laws.As thecomparisonwithother jurisdictionsshows,such legallyprotected monopolies are not needed, since the economics of collective rightsmanagementalwaysprivileges,andtendstomaintainthemarketdominantpositionof, the incumbents.Quiteon thecontrary, lawsproviding for legalmonopolieswill

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onlyprotect the incumbentwithoutanyguarantee that the incumbent is themoreefficient CMO andwithout sufficient guarantee that sectorspecific regulationwillprovidesufficientcontroloverabuseofdominancebysuchCMOs.

(32) Sectorspecific regulation often provides that CMOs have to be nonprofitorganisations ormembershipbased associations of rightholders. Such restrictionsaredesigned to reduce the riskofabuseofmarketpowerofCMOsvisvis rightholders.However,thisdoesnotsufficientlyrespondtotheneedofpreventinganticompetitiveconductofCMOs. Inaddition,eachof the two requirementsmayalsoundermine theeconomicefficiencyof the firms. Innoway can such requirementsjustifyanexemptionofCMOsfromcompetitionlaw.

(33) SinceCMOsareactiveasintermediariesintwosidedmarkets,competitionlawneedstobeappliedwith regardboth to the service theyprovide to rightholdersand totheir licensingpractices regardingusers.With regard to rightholders inparticular,bothUSlawandEUlawhavedevelopedverystrictregulatoryapproachestoprotecttheir interests.Thisdevelopment isdue in largeparttothe factthatneitherofthetwo jurisdictions provides for sectorspecific regulation in this regard. In theEuropean setting, caselaw also promotes the right of rightholders to choosebetween different national CMOs. Competition law also protects the freedom ofrightholderstoassignpartsofhisorherrightstodifferentCMOsortolicenserightsdirectly to users. The latter is more important than ever since the Internet hasincreased the ability of individual authors tomake autonomous decisions on howtheir rights should be licensed to users and also enables them to organise directlicensing to users. For similar reasonsmany competition law jurisdictions prohibitCMOs from requiring rightholders toassign rightsonanexclusivebasis.The latterprinciple is intensionwiththeobjectiveofcollectiverightsmanagementtoprotectauthorsandperformersfromabuyoutoftheirrightsonthepartoflargeusersandundertakingsofthecopyrightindustrywithsuperiorbargainingpower.

(34) TheReportunearthedanimpressivebodyofpracticeonthecontrolofthelicensingpracticesofCMOsinmanyjurisdictions.Mostimportantly,thisrelatestothecontrolof the feeschargedbyCMOs tousers.Thechargingpolicy isalsoaddressed in theconsent decrees in the United States that constitute the traditional basis of USantitrust regulation of CMOs, although, under general principles,US antitrust lawdoesnotbanunilateralexploitativeconduct.IntheEU,controlofthetariffsofCMOsprovidesamost importantpartofthecaselawofEUcompetition law ingeneralonexcessivepricing.EUpracticehasnotpreventednationaljurisdictionsofEUMemberStates and their national authorities from developing their own techniques forcontrollingthefeesofCMOs.SomecompetitionagencieswithinandoutsidetheEUhoweverdemonstrateconsiderable reluctance tocontrol such tariffs.Thisnotonlyderives from thegeneralhesitationof suchagencies toactasprice regulatorsbut

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alsofromthedifficultiesofapplyingthestandardcostbasedanalysistoassessingtheadequateprice foracopyright licence.Thepracticeoftheexperienced jurisdictionshowever shows that protection can be provided by relying on the tariffs in othercountriesmostly of the same region and in a similar economic situation and byshifting theanalysis from theamount tobepaid to themethodologyaccording towhichthetariffsareset.Somejurisdictionsalsoprovideforadutytolicensetousers,whichmakessensebecauseittransfersbargainingpowerfromtheCMOstousers.

(35) With regard to reciprocal representation agreements among CMOs from differentcountries, the Report highlights the central role of the EU Commission and theEuropean courts as international regulators. This is achieved by alsomaking theinternationalconfederationsofCMOsaddresseesofEUcompetitionlawwithregardtothemodelagreementstheydevelopforlaterbilateraladoptionbetweenindividualCMOs.However,withregardtothemostimportantcurrentissueofhowtoorganisemultiterritorial licensing for online exploitation of works of music, Europeancompetitionlawhassofarfailedtoprovidesatisfactoryresults.

(36) More generally, jurisdictions have to answer the question of how to regulate therelationship between sectorspecific regulation and the application of competitionlaw to CMOs. The Report provides no justification for exempting CMOs from theapplication of competition law. Rather, sectorspecific regulation and competitionlaw should be considered as complementary systems of control. Sectorspecificregulation should adopt competition laworiented approaches by providinginstitutional solutions to the competitive concerns that arise from collective rightsmanagement.Sectorspecificregulatorsandadjudicatorybodiesarebetterequippedtounderstandtheparticularitiesofcollectiverightsmanagementandtoprovideevenexantecontrol,forinstanceofthetariffsofCMOs,wherecompetitionlawagenciescan often only act ex post. The better sectorspecific regulationworks, the fewercomplaintscompetitionagencieswillreceive,andthelesstheywillhavetointervene.In this regard,applicabilityofcompetition law tocollective rightsmanagementcanworkasaseismographforhowwellsectorspecificregulationactuallyworks.Sectorspecificregulatorsaremore likelytobecapturedbyvested interestsand to favouronegroupofinterests,suchasthoseofrightholdersinachievinghighroyaltyrates.Therefore, competition law should be applied as a safeguard against suchinstitutionalfailures.Legislaturescanalso implementmoreinstitutionalcooperationbyprovidingforstandingorrepresentationofcompetitionagenciesinproceedingsofsectorspecificregulation.Such institutionalarrangementsofcooperation,however,donotjustifyanexemptionofcollectiverightsmanagementfromtheapplicationofcompetitionlaw.

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REPORT

TableofContents:

1 Introduction

2 Motivation,ObjectivesandScopeoftheStudy 2.1 Motivation 2.2 Objectives 2.2.1 Guidanceforcompetitionlawapplication 2.2.2 Promotingcompetitionpolicyforcopyrightrelatedmarkets 2.2.3 Promotingnationalandinternationalcopyrightpolicies 2.3 Scope 2.4 Geographicscopeinparticular

3 Methodology

4 TheSurveyandtheQuestionnaire 4.1 Legislation 4.2 Practiceingeneral 4.3 Practiceregardingcopyrightrelatedmarkets 4.4 Marketsforcollectiverightsmanagement 4.5 Traditionalculturalexpressions,expressionoffolklore,especiallyofindigenouspeoples 4.6 Concludingquestions

5 OntheRelationshipbetweenCopyrightandCompetition 5.1 Ontherelationshipofintellectualpropertyandcompetitionlaw 5.2 Transferoftheinnovation/patentparadigmtocopyrightlaw 5.3 Thetwodimensionsoftheroleofcompetitionlawregardingcopyrightrelatedmarkets 5.3.1 Therestrictiveroleofcompetitionlaw 5.3.2 Theproactiveroleofcompetitionlaw

6 CompetitionLawProvisionsonIntellectualProperty 6.1 Exemptionclausesandtheirapplication 6.1.1 GeneralexemptionsofIPfromcompetitionlaw 6.1.2 TheexerciseofIPRsasacriterion 6.1.3 Theeffectsoncompetitionasacriterion 6.1.4 Exemptionsfromindividualprohibitions 6.1.5 Sectorialexemptions:resalepricemaintenanceforbooks 6.1.6 Sectorialexemptions:collectiverightsmanagement 6.1.7 RulesonhowtoapplycompetitionlawstoIPRs 6.1.8 Countrieswithnoexemptionprovisions 6.1.9 Conclusion 6.2 Intellectualpropertyandcopyrightasanelementofanticompetitiveconduct

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6.2.1 Intellectualpropertyasanessentialfacility 6.2.2 Compulsorylicensingregimesaspartofcompetitionlaw 6.2.3 Intellectualpropertyasacauseofmarketentrybarriers 6.2.4 Generalcompetitionlawprovisions

7 TheRoleofCopyrightinMarketDefinition 7.1 Therelationshipbetweentheexclusivityofcopyrightandtheconceptofmarket dominance 7.2 Dominancebasedonrepertoires 7.3 Dominanceinthedistributionchain

8 RestrictiveAgreements 8.1 Horizontalpricecartels 8.2 Bundledmarketingofcopyrightedworks 8.3 Horizontalmarketsharing 8.4 Horizontalagreementswithmarketforeclosureeffectsonoutsiders 8.5 Bidriggingandotheragreementsdistortingpublictenderproceedings 8.6 Resalepricemaintenance 8.7 Exclusive(vertical)distributionagreements 8.8 Otherverticalagreements 8.9 Conclusion

9 UnilateralConduct(AbuseofMarketDominance) 9.1 Marketdominance 9.2 Exploitativeabuse;excessivepricinginparticular 9.3 Refusaltolicense 9.3.1 TheEUstandardonrefusaltolicense 9.3.2 TheUSstandardonrefusaltolicense 9.3.3 RefusaltolicenseinEUMemberStates 9.3.4 Refusaltolicenseinotherjurisdictions 9.3.5 Dutytolicenseasadefenceagainstinfringementclaims 9.4 Refusaltolicensewithoutverticalintegration 9.5 Discriminationbydominantrightholders 9.6 Predatorypricingamongrightholders 9.7 Exclusionaryconductbyrightholdersrestrictingintrabrandcompetition 9.8 MonopolizationwithoutdominancefalseassertionofIPRsandshamlitigation 9.9 Refusaltodealandotherabusesbydominantdistributors 9.9.1 Centralisedlicensingplatforms 9.9.2 Dominantnewspaperdistributors 9.9.3 Dominantcableandotherbroadcastingnetworkoperators 9.9.4 Dominantfilmdistributors 9.10 Exclusivityagreementsbydominantdistributors 9.11 Tyingbydominantdistributors 9.12 Discriminatoryconductofdominantdistributors,includingmarginsqueeze 9.13 Rebateandloyaltysystemsofdominantdistributors

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9.14 Excessivepricingandotherexploitativeabusebydominantdistributors 9.15 Abuserelatingtoservicesthatareneededforfunctioningcopyrightrelatedmarkets 9.16 Controlofdominantcustomers 9.17 Conclusion

10 Concentrations(MergerControl) 10.1 Relationshipwithsectorspecificregulationinthemediasector 10.2 Theconceptofaconcentration 10.3 Notificationthresholds 10.4 Theroleofcopyrightinassessingtheeffectsofthemergeroncompetition 10.4.1 Mergerguidelinesandregulations 10.4.2 Horizontalmergers 10.4.3 Verticalmergers 40.4.4 Conglomeratemergers 40.4.5 MergersregardingCMOs 10.5 Remedies 10.6 Conclusion

11 CollectiveRightsManagementOrganisations(CMOs) 11.1 CMOsasanecessaryevil 11.1.1 WhyCMOsshouldnotbeconsideredunlawfulpricecartels 11.1.2 Theeconomicsofcollectiverightsmanagement 11.1.3 Isthereroomforcrossbordercompetitiontodevelop? 11.1.4 CMOsaslegalmonopoliesinsomestates 11.2 Competitioninthemarketforcollectingrightsmanagementservices 11.2.1 ThecorporatestructureofCMOs 11.2.2 Dutytomanagetherightsofallrightholder 11.2.3 Restrictionsontheeconomicfreedomofrightholdersingeneral 11.2.4 ThescopeofrightsconferredtotheCMO 11.2.5 Restrictionsontherightholdersfreedomtowithdrawtheirrights 11.2.6 TransferofrightstoCMOsonthebasisofexclusivity? 11.3 Competitioninthelicensingmarket 11.3.1 Controlofroyaltyrates 11.3.2 Othercasesofabusetothedisadvantageofusers 11.3.3 Recognitionofadutytolicense? 11.4 Controlofreciprocalrepresentationagreements 11.5 Relationshipbetweensectorspecificregulatorsandcompetitionlawenforcers 11.6 Conclusion

12 GeneralConclusion

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1 Introduction

In 2012, theWorld Intellectual Property Organization (WIPO)mandated theMax PlanckInstituteforIntellectualPropertyandCompetitionLawinMunichtoprepareastudyonthepracticeofcompetitionlawjurisdictionsonCopyright,CompetitionandDevelopment.Thisstudy isbasedona survey thatwas conductedduring the last fourmonthsof2012.ThisReportpresentstheresultsofthissurvey.

The coverageof the study is at the same time limited andbroad.On theonehand, it islimitedtotheapplicationofthelawagainstrestraintsofcompetition(socalledcompetitionlaworantitrustlaw)tocopyrightrelatedmarkets.Itisnotoncopyrightitself,anditdoesnot address issuesofunfair competition,which, in several countries, also fallswithin thejurisdiction of competition agencies. On the other hand, by addressing restraints ofcompetition incopyrightrelatedmarkets,thestudygoesbeyondthe interfaceofcopyrightandcompetitionlaw,i.e.casesinwhichtheexclusivityofcopyrightandtheuseofcopyrightproducesanticompetitiveeffects.Italsoincludesrestraintsofcompetitionthatrelatetothemarketing of copyrighted works, whether those restraints are initiated by rightholders,distributorsorusersofcopyrightedworks.Lastbutnotleast,thestudyanalysesthepracticeof competition law enforcerswith regard to collective rightsmanagement organisations(CMOs,socalledcollectingsocieties).Thereby,italsotakesintoaccounttheinterfacewithspecificregulationofcollectiverightsmanagementbycopyrightlaw.

Ingeographicterms,theReportstrivestoincludeallcompetitionjurisdictionsoftheworld.Hence, despite its title, this Report does not only analyse the practice of youngercompetition jurisdictionsofmostlydevelopingnationsandemergingeconomies.AlthoughoneofthegoalsoftheReportconsistsinprovidingassistancetotheagenciesandcourtsofyoungerjurisdictionsinparticular,youngerjurisdictionscouldalsolearnfromthepracticeofmore experienced jurisdictionswhere, particularly in quantitative terms, practicemay bemore substantialandaccessible.Given itsbroadgeographiccoverage, thisReportmaybehelpful forpolicymakersandcompetition lawenforcersaround theworld, includingeventhose from themostexperienced jurisdictions, suchas theUnitedStatesor theEuropeanUnion.

ThisReport takesa simultaneouslydescriptiveandanalyticalapproach. It isdescriptive inthesensethatitpresentsthecurrentpracticearoundtheworld.Yetthisisnotdonebywayofcountry reports.Rather, thematerial ispresented inananalyticalway,witha focusoncompetitionpolicyissues.Byfollowingthisapproach,theReportavoidstheproblemofnotbeingabletoguaranteecomprehensivenessinthecaselawand,atthesametime,respondsto the need to provide better guidance to competition law policymakers and enforcerswhentheydevelopnationalpoliciesandapplydomesticlawtofuturecases.ThisReportwilllargelyrefrainfromcommentingontheappropriatenessof individualdecisions.Itdoesnot

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aimatevaluatingthepracticeofindividualjurisdictions.Yet,bytakingtheabovementionedanalyticalapproach,theReportcertainlyprovidesguidanceforjurisdictionsintheprocessofdesigningdomestic competition lawpolicies for copyrightrelatedmarkets. In this regard,oneofthevirtuesofthisReportmaywellarisefromitsglobalperspective,whichallowsforintegratingalldifferentaspectsof theapplicationof competition law to copyrightrelatedmarkets,while national jurisdictions only develop gradually and slowly on a casebycasebasisandagainstthespecificbackdropofthedomesticregulatorysystem.Inthisregard,theReportrepresentsthefirstcomprehensiveandglobalanalysisofcompetitionlawasappliedtocopyrightrelatedmarkets,whichcanbeusedbypolicymakersandenforcersaroundtheworld as well as byWIPO itself when it comes to developing its future agenda at theinterfaceofcompetitionlawandintellectualproperty.

2 Motivation,ObjectivesandScopeoftheStudy

2.1 Motivation

Thereasonsforthisstudycanbeexplainedinbotheconomicandlegalterms.

Ineconomicterms,thestudyisareactiontothegrowingimportanceofculturalcontentforthe development of national economies around the world. Internationally, for manydecades,thedebateontheinterfaceofintellectualpropertyhasmostlyfocusedontransferoftechnologyandpatentlaw.However,itistobeacknowledgedthat,giventhevasthumanresources in developing nations, local creativity as a resource of the entertainmentindustryconstitutesamostimportantassetforgrowthanddevelopment.Creativityalsohasthe advantage that it can be easily developed even in the poorest countries,where thecapacity for receiving and further developing technology is rather limited. Also, culturalcontenthas largepotential to appeal to aworldpublic fromwherever such contentmayoriginate.TheIndianmovieindustry,whichisnotlimitedtoBollywood,hasbecomeanAsiansuccessstory.LatinAmericanmusic isthesecondmostpopularworldmusicnexttotheAngloAmericanmainstream.Africanmusicseemstobecatchinguprelativelyquickly.Manyworldrenownedwritersnowadayscomefromdevelopingcountries.Thesoftware industryand academic publishing, using English as a language in particular, rely on knowledgegenerationworldwide.Finally,culturalandcreativecontentcanbedistributedgloballyatpracticallyzerocostviadigitaltechnology.Insum,copyrightrelatedindustriespromisegreatpotential for development for all nations. At the same time, copyrightprotected subjectmatterisoftendistributedglobally.Bothaspectsmaketheapplicationofcompetitionlawtocopyrightrelatedmarketsatrulyinternationaltopic.

Fromalegalperspective,theinternationalisationofcreativeproductionandthedistributionofworkscoincidewithpurelynational,atbestsupranational,systemsofcompetition law.During the last 10 to 20 years, the number of competition law jurisdictions has grown

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enormously.Thisdevelopmentwasmostlytriggeredbyeconomicglobalisationandmarketreform inpracticallyalldevelopingandemergingeconomies.Competition lawcannowbefound inallmajoreconomiesoftheworld,whichalso includetheculturallyveryrichLatinAmericancountries,SouthAfrica,IndiaandChina.Sincethesecountriesalsoprovidealargemarket for the consumption of cultural and creative content, their competition lawenforcersareinneedofguidanceforapplyingtheirnewlawstocopyrightrelatedmarkets;indeed,theyarealreadyproducingconsiderablecaselawthemselves,whichmayalsobeofinterestforpolicymakersinmoreexperiencedjurisdictions.

Whilecopyright law isregulated indetailbythe legislature,competition lawprovisionsarehardlyevercopyrightspecific.Competitionlawinpracticecanonlydeveloponacasebycasebasisandinthenationalcontextdespitetheinternationalisationofcreativeproductionanddistributionofworks.Thisleadstothephenomenonthathardlyany,oronlyaveryfew,competitionlawjurisdictionshavethepotentialtodevelopacriticalvolumeofpracticethatleadstotheemergenceofacoherentandinclusivecompetitionpolicyregardingculturalandcreativecontent.Also,due to the largediversityofsuchcontentand the relatedmarkets,competitionagenciesdonotdevelopspecificpoliciesandagendasforthissector.

Finally,oneofthechallengesofthestudyarisesfromthefactthatnationalcompetitionlawpractice can only be understood and assessed against the background of the domesticregulatoryandinstitutionalsetup.Sectorspecificregulationcomesintothepictureinmanycopyrightrelatedmarkets. Especially audiovisualmedia are the subject of sectorspecificregulationinmostofthecountries;suchregulationisinfluencedbycriteria,suchasthegoalofguaranteeingdiversityandfreedomofexpression,thatusuallyplaynoroleincompetitionlaw. In the frameworkofassessingmediamergers, for instance,competitionagencieswilllookattheimpactontheadvertisingmarket,whilemediaregulatorswillconcentrateontheoutreachof themedia to the audience for assessing the impactof themergeronpublicopinion. The existence or nonexistence of competition law practice regarding CMOs canonly be analysed by also taking into account the existence or nonexistence of specificregulation of collective rights management activities in the framework of copyrightlegislation. In jurisdictions that have establishedworkablemechanisms of controlling thereasonablenessoftheroyaltyratesfixedbyCMOsthroughcopyrighttribunals,forinstance competitionagenciesarehardly likely tobe requested toapplya ruleagainstexcessivepricing as part of their prohibition of abuse of market dominance against CMOs. Andwhether a jurisdiction provides for a legalmonopoly of CMOsmay crucially depend onwhether this jurisdictions copyright law provides for statutory remuneration rightswithmandatoryadministrationbyCMOs.

Also, the study has to take into account the specific national setup of courts andinstitutions. In themost frequent case, competition law is administered by agencies andcopyrightisenforcedbycourtsdecidingonlawsuitsinitiatedbyrightholders.Buttherearealso jurisdictions where private enforcement of competition law is common, and, for

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instance in Latin American states, intellectual property offices play amajor role in theenforcement of copyright law against infringement. Several countries also have createdspecialised courtswith exclusive jurisdiction for competition law inparticular,whichmayprevent general courts from addressing competition law issues when they decide oncopyright infringement.Suchregulatoryand institutionalvariationsadvisecaution intakingthecompetitionlawpracticeofforeignjurisdictionsasguidancefordecidingdomesticcases.

This study also fills a gap in scholarly writing and economic theory at the interface ofcompetitionlawandintellectualproperty.Researchonthistopichasonthewholefollowedthe innovation/patent paradigm. At best, in publications on IP and competition law,copyrightlawplaysamarginalrole.1Suchliteratureandresearchgenerallyconcentratesontheanalysisofcompetitionlawpracticeinthedifferentfieldsoftechnology,andthenoftenmakesgeneralisationsonintellectualpropertyatlarge.Andevenwherethedevelopmentofthe lawatthe interfaceof IPandcompetition law isdrivenbycopyrightcases,suchastheapplicationofEUcompetition lawtorefusalto license,2suchcasesareusuallydiscussed inthelightoftheinnovationparadigm.Thereisquitesomelegalandeconomicliteraturethatfocusesontheeconomicsandapplicationofcompetitionlawtospecificsubmarketsfortheproductionanddistributionofculturalandcreativecontent.Yet,there isno literaturethatwouldassesstheapplicationofcompetitionlawtocopyrightrelatedmarketsingeneral.

In sum, these preliminary considerations underline the fact that the study onwhich thisReportisbasedisnotonlyverytimelybutalsoverychallengingandunique.Forcompetitionlawenforcers theapproachof thestudymayalsoappearasveryunusual,sincecasesareanalysed in the light of the categories of competition law. Thereby, the caselaw is notcategorisedalongthe linesofdifferent intellectualpropertyrightsbut intermsofdifferentkindsofrestraints,namely,bydistinguishingbetween(1)restrictiveagreements(collusion),(2)unilateralconductand(3)concentrations.Nordocompetition lawenforcersattributeaparticularroletoculturalandcreativecontent.Whatmattersmoretothemistodefinetheproductmarketcorrectly.Inthisregardtheuniquenessofcopyrightisbrokenupbyalargediversityofdifferentcategoriesofworksandofthedifferentdownstreammarketsinwhichsuchworksaredistributed.Hence, fromacompetition lawperspective,acaseonmarketdominanceinthesoftwareindustrywhichischaracterisedbynetworkeffectshasverylittletodowithamediamerger.Thefactthatallcopyrightrelatedmarketsaretakentogetherinthis studymay thereforebeattributed to the specific initiativeofWIPOasan intellectualpropertyorganisation.Indeed,oneofthemajorreasonsforconductingthisstudy istofind

1 See, for instance, Christian Handke, Paul Stepan and Ruth Towse, Development of economics incopyrightin:JosefDrexl(ed),ResearchHandbookonIntellectualPropertyandCompetitionLaw,EdwardElgar,Cheltenham,UKandNorthampton,MA,2008,pp373402.2 SeethemostimportanttwocasesonrefusaltolicensedecidedbytheEuropeanCourtofJustice(ECJ)thatarebothcopyrightcases:JoinedCasesC241/91andC242/91RTEandITPvCommission(Magill)[1995]ECRI743;CaseC418/01IMSHealth[2004]ECRI5039.

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out what competition law can contribute to copyright policy from an internationalperspective.

2.2 Objectives

Thestudyand,hence,thisReportpursueanumberofdifferentgoals.

2.2.1 Guidanceforcompetitionlawapplication

TheReport ismeantto informcompetition lawenforcersonthepracticearoundtheworldas a source of inspiration and guidancewhen they apply their own laws. This guidancefunctionalsoexplains the structureof theanalysisbelow.Competition lawenforcersdealwith cases according to the concepts that characterise competition law by focusing ondifferentformsofrestraintsrestrictiveagreements,unilateralconductandconcentrationand,withintheseforms,onmorespecificrestraintsandtheoriesofharm.Itisclearthatthiswayofpresenting thepracticewill fail toprovide comprehensive analysesof the currentsituation in individualcountries.Yet it isheldthat it ismore importantforcompetition lawenforcerstohaveimmediateaccesstotheproblemstheyhavetosolve,whereastheywouldfeelaconsiderablelackoforientationiftheReportconsistedonlyofacollectionofcountryreports.Also,country reportswouldonlydescribe thesituationas itpresents itselfat thetimeofwritingandwouldquicklybecomeoutdated.

2.2.2 Promotingcompetitionpolicyforcopyrightrelatedmarkets

Beyond informingcompetition lawenforcersaboutpracticeelsewhere,thecomprehensiveanalysisofthepracticeworldwide isalsomeanttopromoteknowledgeandunderstandingof how competition law should be applied. The comparative approach will highlightdifferences between jurisdictions and approaches and help practitioners to understandwhichapproachesarebestsuitedforfurtherdevelopingnationalcompetitionpolicies.

2.3.3 Promotingnationalandinternationalcopyrightpolicies

Whilethefirsttwoobjectivesfocusondomesticcompetition lawenforcersasusersofthisReport,theReportisalsointendedtopromoteabetterunderstandingofcompetitionpolicyamongpolicymakersresponsible forcopyright law.Traditionally,andstilltoday,copyrightspecialists tend toseea tensionbetweencopyrightandcompetition law.This isbasedonthe conceptof copyright as an exclusive right that restricts competition at least to someextent.ThisReport,however,willdemonstratethatthereisanadditional,andmaybemoreimportant, dimension of competition law that enhances the incentive mechanism ofcopyrightbykeepingandmakingcopyrightrelatedmarketsmoreefficient.Thisfunctionhasbeen largely overlooked in current debates on copyright issues on the national andinternationallevel.

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2.3 Scope

Toconductthestudy,itwasmostimportanttohaveaclearunderstandingofhowtodefineitsscope.Thedecisionsmadeinthisregardcertainlyneedsomeexplanation.

Firstofall,copyrightisonlyoneofseveralformsofintellectualproperty.Theconcentrationof the studyon copyrightmay riskmissing important casesonother intellectualpropertyrights (IPRs) that provide precedents for copyright cases. For instance, jurisdictionsmaydeveloppracticeon refusal to licenseasanabuseofmarketdominance in thecontextofpatentrelated cases that also has relevance for copyrightrelated cases. Similarly, from acompetition lawperspective,theclearanceofamergeramongmusicpublishersunderthecondition that they outsource a number of copyrightsmay not be any different from asimilarconditionimposedonmergingpharmaceuticalfirmstosellcertainpatents.Still,alsoasamatterofpracticality,thisstudyonlypursuestoinformonthecopyrightrelatedcases,whichwill not exclude taking account of patentrelated caseswhere this appears useful.Such caseswill enter theReport inparticular if there areno copyrightrelated cases in agiven jurisdiction and if these cases serve as indicators on how enforcers will decidecopyrightrelatedcasesinthefuture.

Copyright coversa largevarietyof culturaland creative subjectmatterofprotection.Thedifferent categories of works that are known from copyright legislation also serve asguidancefordefiningthescopeofthestudy.Whilethestudystrivestoincludeallcopyrightrelatedmarkets, itnevertheless focuseson such subjectmatter forwhich all jurisdictionswouldgenerallyprovideprotection.Inapositivesense,this includes literaryworks(fiction,scientificandacademicwriting,newspaperarticles),music,films,computerprograms,visualarts (paintings, sculptures,works of architecture). In a negative sense, the grey zones ofwhatcanbeprotected,andisonlyprotectedbythecopyrightlawofsomejurisdictions,willnotbeconsidered.This isespecially thecase forworksofappliedartsat the intersectionwithdesign law. From a competition lawperspective thisexcludes the important areaofprotection for spareparts, especially formotor vehicles,whichhasproducedquite somecaselawat the intersectionof intellectualpropertyand competition law.3Spareparts forcarsmaynotbeprotectedatallbysomejurisdictions;otherjurisdictionsmayprovidedesignprotection,whileyetothersmayalsoaccordcopyrightprotection.

Intermsofcompetition law,specificsubjectmatterofcopyrightprotectionmayconstitutethebasisforthedefinitionofarelevantmarket.However,copyrightedworksareintangiblegoodsandenter intomanyproductsthataresold indownstreamproductmarkets.This is

3 SeethetwoearlycasesoftheECJ:Case53/87CICRAvRenault[1988]ECR6039,Case238/87VolvovVeng[1988]ECR6211.Thesetwocases,however,constitutedprecedentswhichwereconsideredbytheECJinthecopyrightcasesofMagillandIMSHealth,supran.2,forfurtherdevelopingEuropeanprinciplesonrefusaltolicense.

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why the analysis in this Report is not limited to the (licensing) markets for copyrightprotectedsubjectmatter,butalso includesmarketsforfollowonproducts.For instance, itdoes not suffice to concentrate on themarket for copyright licences formusicalworks.Musiccan indeedbebroughttoconsumersbya largevarietyofproducts, includingDVDs,onlinedownloads,films,broadcasts(buildingonavarietyofdifferenttechnologiessuchasanalogue terrestrial broadcasts, cable, satellite or the Internet) or other forms of publicperformances such as in concert halls, night clubs and restaurants or supermarkets.Consequently,theanalysiswilllookatalargevarietyofindustries,includingthefilm,mediaandpublishingindustry,withtheirdifferentmarketplayersondifferentlevelsofproductionanddistribution.

Yet this study will not necessarily cover all competition law cases that relate to theseindustries. For instance, themany cases that several competition law jurisdictions haveproducedwith regard to the broadcasting rights of sports events footballmatches inparticularwillbeleftoutsidethisstudy.4Whileitistruethatbroadcastersmaytypicallybeprotectedbyacopyrightrelatedneighbouringrightwiththebroadcastingentityastheoriginal rightholder, sports events as such are not protected by copyright.5 At best, thetransmission of sports events leads to a concomitant transmission of copyrightedworks,suchasmusicoremblems,whichshouldnotbemixedupwiththesportingeventassuch.Many jurisdictionshavegatheredquiteabodyofcompetition lawpracticewith regard tothequestionofwhetherthe licensingofthebroadcastingrights forthematchesof leaguesportscanbecentralisedinthehandsofthenationalandinternationalsportsassociations.6Forsuchcases,intellectualpropertymayonlycomeintoplaytotheextentthatnationallawshaverecognisedspecificexploitationrightsforsportsevents.7Yet,withregardtodecisionson centralised licensingof thebroadcasting rights for footballmatches, thequestionmay4 In this regard, the recent judgmentof theECJon thecrossborder satellite transmissionof footballmatcheshasattractedmostinterest:JoinedCasesC403/08andC423/08FootballAssociationPremierLeagueandKarenMurphy[2011]ECRI0000(notyetofficiallyreported).Amongthenumerousjurisdictionsthatdealtwith centralized grantofbroadcasting rightsof footballmatches are also younger jurisdictionsofemergingeconomies suchasTunisia.SeeDecisionNo.61126of22April2010 (reportedby theTunisianCompetitionCouncil). The case was taken up by the Competition Council on its own motion, which categorized thecentralizedgrantofthebroadcastingrightsthroughtheTunisianFootballFederationtotheNationalTelevisionCorporationarestrictiveagreementinthesenseofArticle5oftheCompetitionAct.5 ConfirmedbytheECJinFootballAssociationPremierLeague,supran.4,para.98.6 See, for instance, the twoDecisions of the European Commission on centralised sale of theUEFAfootballmatchesandofmatchesoftheGermannationalfootballleague:Commissiondecisionof23July2003,Case 37398 Joint selling of the commercial rights of theUEFA Champions league [2003]OJNo. L 291/25;Commissiondecisionof19January2005,Case37214JointsellingofthemediarightstotheGermanBundesliga[2005]OJNo.L134/46.7 Sucharightcanbefound,forinstance,intheFrenchCodedusport.ArticlesL3311throughL3315oftheCodedusport,whichprovidesforanexclusiverightofaudiovisualexploitationofthesportsassociations.Entitlementoftheassociationmattersforcompetitionlawassessment.Inthisregard,centrallicensingofthematches cannot be considered a cartel among the individual sports clubs, since the central entity theassociation is vestedwithanoriginalentitlement rather thanbeingentrustedwith the licensingof rightsbelongingtoitsmembers.

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wellbeaskedwhether suchdecisionshave relevance for copyrightrelatedmarketswhencopyright holders organise centralised licensing schemes through CMOs, for instance and, thereby, restrain competition. This, however, does not advocate a comprehensiveassessmentofthisspecificcaselawonsportsrightsinthisReport.Inanycase,competitionlawenforcersmay findprecedents inmanydifferent fieldsofcompetition lawapplicationwhen they decide cases on copyrightrelated markets. Centralised licensing of thebroadcastingrightsforsportseventsmayjustbeone,howeverimportant,example.

2.4 Geographicscopeinparticular

Inadditiontodefiningthekindofcasesthatthestudyshouldcover,thereisalsotheneedtodefineitsgeographicalscope.Firstofall,therewasaclearinterestinfindingoutaboutthenascentcaselaw intheoftenvery large jurisdictionsoftheemergingeconomies, includingChina, India,Brazil,Mexico, SouthAfricaandRussia.While those countriesarenowadayseconomicallyextremely important, theconceptof the studymade it important to includethepracticeofmoreexperiencedcompetitionjurisdictionsaswell.Thereasonsarebasicallytwofold: first, thepractice in these latter jurisdictionsmayprovide important insights thatcanhelpthemanyyoungerjurisdictionstodesigntheirownpoliciesandtodecideindividualcases. Second, the markets of the experienced jurisdictions are important distributionmarkets for works from developing and emerging economies. In the framework of thesurvey,italsobecameapparentthatitwasnotpossibletoincludeallimportantcasesofthemoreexperiencedjurisdictionssuchastheUSandtheEU,butalsoFrance,GermanyortheUK. The EU and theUS are chiefly, and practically exclusively, taken into account as thejurisdictionsthatfirstdeveloped importantprinciplesonspecific issues.Hence,withregardtothesejurisdictionstheReportdoesnotseektoprovideafullpictureofthepracticethere.

Adifferentyetrelatedquestionwaswhetherthesizeoftheeconomyshouldmatterforthedecisionwhetheraspecificjurisdictionshouldbeincludedinthestudyornot.Thisquestionwasanswered inthenegativeonce itbecameapparentthat,althoughsmaller jurisdictionsmaybelesslikelytohavecases,manyofthempresentedextremelyinterestingcases.Thisismostly due to the fact that despite economic globalisation many markets for culturalproductsarestillhighlynationalincharacter.ThisistrueformostTVmarketsandespeciallynewspapermarkets. Therefore, smaller jurisdictions are evenmore likely tohave todealwith high levels of concentration. In contrast, larger jurisdictions aremore likely to seecartellike behaviour among local economic players that strive to prevent works fromoutsidefromenteringthelocalordomesticmarket.8Hence,theReportwillpresentcaselawfrom alldifferent kindsof jurisdictions,moreor lesseconomicallydeveloped jurisdictionsandsmallerandlargerones.

8 Anexample isprovidedbytheregional film industries in Indiathatcolludedto limitaccess forbothBollywoodfilmsproducedinHindiorEnglishandfilmsfromabroadtolocalcinemas.Seeat8.4,below.

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Special consideration has to be given to the situation within the European Union. TheEuropeanCommissionand theEuropeancourts themselveshaveproducedaconsiderablevolumeofcasesrelatingtocopyrightrelatedmarkets.Thisincludesveryinterestingcasesonrefusal to license and on CMOs in particular. Yet competition law enforcement throughnationalagenciesremainshighlyrelevant,andmayevenbemorerelevantnowthanitwas10yearsago.Thereare several reasons for this: first,with theentry into forceof the socalled Implementation RegulationNo. 1/2003 on 1May 2004,9 the national competitionagenciesarenowalsoobligedtoapplyEUcompetition law.Therefore, it isnow less likelythat theCommissionwill intervene ifnationalcompetitionagenciespickupcases thatarelimited tonational circumstances, suchas cases relating to the controlofnationalCMOs,although EU competition law is applicable. For the purposes of this Report, it does notmatter whether national agencies apply national or European competition law. Second,duringthe last10to20years,manyEUMemberStateshaveexperienceda largewaveofliberalisation inthevery importantbroadcastingmarkets.While,previously,manyMemberStatesprovidedforlegalmonopoliesforpublicbroadcasters,manyprivatemediaoperatorshavenowemergedintheaudiovisualfield.Inaddition,technologicalprogresshasledtotheemergence of new technologies that allow formultiple ways to distribute broadcastingsignalsincludingcable,satelliteanddigitaltransmissionovertheInternet.Inaddition,theserviceproviderstothemediacompaniesarenolongerexclusivelypublicutilitiesbutoftenprivatecompaniesthatprovidemultipletelecommunicationservicesforthedistributionofworks. The related media and telecommunication markets have hence become morecompetitive. But, at the same time, the conduct of the undertakings in these marketsproduces competition caselaw. Since thesemarkets are also predominantly national inscope,thesecasesarelargelydealtwithbynationalagenciesandcourts.Third,competitionlaw issuescanalsoarisebeforenationalcourts,either informof independentcompetitionlawclaimsorasincidentalissuesintheframeworkofcopyrightinfringementproceedings.

3 Methodology

This study builds on a large casefindingmission thatwas conductedwith regard to thedifferentcompetition law jurisdictionsof theworld.Thismissionwasundertakenwith thehelpofateamofresearchersattheMaxPlanck InstituteandwascofundedbyWIPOandtheMaxPlanckSociety.Thismissionwasforthemostpartimplementedduringthelastfourmonthsof2012.

Varioustoolswereusedtogathertherelevantinformation:

9 Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules oncompetitionlaiddowninArticles81and82oftheTreaty,[2003]OJNo.L1/1.

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Firstandforemost,theMaxPlanckInstitutepreparedaQuestionnaire,whichwasdiscussedand sharedwithWIPObefore itsdistribution.ThisQuestionnairewasconceived in suchawayastocapturetheperspectiveofcompetitionagencies.Yet,theQuestionnairewassentnotonlytomanyoftheagenciesbutalsotoanumberofcompetitionlawscholarsabroad,whoeitherrespondedtotheQuestionnairethemselvesorhelpedthe Institutetoestablishcontactswith the agencies and sometimes even cooperatedwith representatives of theagenciesinrespondingtotheQuestionnaire.

The Questionnaire, which is attached as an Annex to this Report, was not used for alljurisdictions. Itprovedtobemost importantforthose jurisdictionswheretheagenciesdidnotprovideenoughinformationontheirwebsites,orfromwherenoinformationisavailableinlanguagesspokenbymembersoftheInstitutesresearchteam.Fromtheverybeginning,severaljurisdictionswereexcludedfromthissurveybasedontheQuestionnaireinthelightoftheenormousvolumeofpracticeandduetothefactthattheirpracticeisveryaccessible.Butalso inthesecases,theresearchteamwasabletoenter intocontactwithcompetitionlaw scholars in the respective countries to provide information and to crosscheck theinformationthatwasotherwiseassembledbytheresearchteam.

In no instance did the research team rely exclusively on the responses provided by thecompetitionagencies. Indeed, theresearch teamscreened thewebsitesofallcompetitionagenciesoftheworldforrelevantmaterial insearchofrelevantdecisionsorat leastpressreleases.Thisworkprovedmost important intheanalysisoftheagenciesresponses,sinceinmany instances theresponses led to inconsistencieswith the Institutesownanalysisofthe cases foundon the Internet.Hence,once the responsesweredelivered, the researchteamoftensentadditionalquestionsforclarification,andinsomeinstancesevenconductedphoneinterviewswiththeresourcepersonsattheagencies.Indeed,itwasinitiallyplannedtohavemoreofthesephoneinterviews.However,inanumberofcases,ittookalotoftimeandefforttoenter intocontactwiththeagenciesandtoconvincethemtorespondtotheQuestionnaire.Also,duetolimitedhumanresourcesandthecomplexitiesoftheissuesdealtwith, many agencies were in need of more time than expected to respond to theQuestionnaire.ManyoftheresponsesonlyarrivedinDecember2012,whennotimewaslefttoconductadditionalinterviews.

Depending on the individual jurisdiction, the survey based on the Questionnaire, bothquantitativelyandqualitatively,producedverydifferentresults.Ingeneralterms,thissurveywas extremely important for the study, although it is by far not the only source ofinformation on which this Report relies. The Institute is indeed very grateful to all thecompetition law agencies that agreed to participate in the survey. Many of themparticipatedwithgreatenthusiasm,andonlyaveryfewdeclinedtosendresponsesforgoodreasons.Evenmorerarely,itwasnotatallpossibletoestablishcontactswiththeagency.Inall the instanceswhere the research teamdidnotgetany response from theagencies, it

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tried to rely as best it could on the available sources and contactswith competition lawscholarsintheindividualcountries.

ThisReportrefrainsfromspecifyingwhichcountryspecificinformationcontainedwithinitismoreor less reliable. Inany instance,due to theneed to limit itsvolume, theReportcanonlypresentaselectionof interestingandvaluablecases.Hence,thegratitudeoftheMaxPlanckInstitutegoestoallthecompetitionagenciesthatparticipatedinthesurveyandthemany scholars who helped to provide information, without mentioning these personsindividually.YetthePakistaniagencydeservestobementionedinparticular,sinceitwasthisagency thatagreedatan initialpilotstageof thesurvey toprovide its responses to theQuestionnaireandtherebyhelpedtoimprovetheQuestionnaireconsiderably.

4 TheSurveyBasedontheQuestionnaire

ThepurposeoftheQuestionnaireandthesurveywastocollect informationaboutpracticewithafocusonthepracticeofthecompetitionagencies.Forthepurposeofconductingthesurvey, the structureof theQuestionnaireworkedwell,but italsobecame clear that thestructure of the analysis in this Report would have to be different from that of theQuestionnaire.Hence,beforeentering intothedetailedanalysisofthedata,thissectionoftheReportwillexplainthebackgroundandthegeneralresultsofthesurveybasedonthequestions.ItwilltherebyfollowthestructureoftheQuestionnaire.

4.1 Legislation

ThequestionsunderNo.1relatedtothecurrentsituationofthelegislation.Inthiscontext,itwasof interest inparticularwhether the individual competition laws containprovisionsthataddressissuesofintellectualpropertyorevencopyrightinparticular.Whilemostofthestatutoryprovisionswereaccessibleover the Internet, itwasstill important toget furtherinformationonhowthecompetitionagenciesandthecourtsdealwithsuchprovisions.

Indeed, already with regard to legislation, the survey provided a broad variety ofapproaches.Attheoneextreme,therearejurisdictionsthathavegeneralclausesexemptingintellectualpropertyor theuseof intellectualproperty rights from the applicationof thecompetition law. At the other end of the spectrum,many national laws do not addressintellectualpropertyatall, thus leaving thequestionofapplicabilityofcompetition law tointellectualpropertytothepractice.Inbetweenthetwoextremes,thereareafewlawsthataddress intellectual property in the context of formulating specific prohibitions, such asessentialfacility provisions that mention intellectual property as one subcategory ofessentialfacilities.Yetevenwithregardtothefirstgroupofjurisdictionsitbecameapparentthat themore experienced jurisdictions among them preferred a narrow reading of the

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exemption provisionswith the clear objective of protecting competition also in cases inwhichintellectualpropertyrightsareinvolved.

Copyright is practically never addressed in specific provisions. A considerable number ofjurisdictionshaveadoptedspecificregulationsorguidelinesthatdealwithcertainaspectsofintellectualproperty froma competition lawperspective.What is typicalabout such subrulesisthattheyfocusmoreontrademarks,namely,trademarklicencesintheframeworkofverticaldistributionagreementssuchasfranchisingagreements,10oronagreementsthataretechnologyoriented such as technology transfer agreements11 or researchanddevelopment (R&D) agreements.12 Copyright issuesmay be covered by such rules to theextent thatespecially technology transfer rules also apply to software copyright licences.Thisisso,forinstance,inthecaseoftheEuropeantechnologytransferrules.13However,intheTechnologyTransferGuidelines, theEuropeanCommissionalsoexplicitlystates that itwillnotapplyEuropeantechnologytransferrulestoothercopyrightlicences,includingthosethatdealwiththeperformanceorthereproductionandsaleofworks.14Incontrast,the IPLicensing Guidelines of the US antitrust agencies also apply to copyright licensing ingeneral.15Similarly,intheEuropeanGuidancePaperonAbuseofMarketDominance,whichamongotherthingscoversthespecificconductofrefusalto license,nodistinction ismade

10 See, for instance, the European Vertical Agreements Block Exemption Regulation and the VerticalAgreementsGuidelines:CommissionRegulation330/2010of20April2010ontheapplicationofArticle101(3)of theTreatyon theFunctioningof theEuropeanUnion tocategoriesofverticalagreementsandconcertedpractices,[2010]OJNo.L102/1;CommissionnoticeGuidelinesonverticalrestraints,[2010]OJNo.C130/1.11 See,forinstance,theEuropeanTechnologyTransferBlockExemptionRegulationandtheTechnologyTransferGuidelines:CommissionRegulation (EC)No772/2004of27April2004on theapplicationofArticle81(3) of the Treaty to categories of technology transfer agreements, [2004]OJNo. L 123/11; CommissionNoticeGuidelinesontheapplicationofArticle81oftheECTreatytotechnologytransferagreements,[2004]OJNo.C101/2.12 See, for instance, the European R&D Block Exemption Regulation: Commission Regulation No1217/2010of14December2010ontheapplicationofArticle101(3)oftheTreatyonthe functioningoftheEuropean Union to categories of research and development agreements, [2010] OJ No. L 335/36. R&DagreementsarealsodealtwithintheHorizontalAgreementsGuidelines:CommunicationfromtheCommissionGuidelines on the applicability ofArticle 101 of the Treaty on the Functioning of the EuropeanUnion tohorizontalcooperationagreements,[2011]OJNo.C11/1,chapter3.13 SeeArticle1(1)(b)oftheEUTechnologyTransferBER(supran.11).14 TechnologyTransferGuidelines(supran.11),para.52.15 SeeUSDepartmentofJusticeandUSFederalTradeCommission,AntitrustGuidelinesfortheLicensingof Intellectual Property, April 6, 1995, para. 1.0, available at:http://www.justice.gov/atr/public/guidelines/0558.htm#t1.

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betweentherefusaltolicensepatentsandcopyrights,16whichisobviouslyexplainedbythefactthatmostimportantrefusaltolicensecasesunderEUlawrelatetocopyright.17

Insum,thesurveydemonstratesthatcompetition lawenforcersgeneralapplycompetitionlawtocopyrightrelatedcases.Wheretherearegeneralexemptionrules,theserulestendtobe interpreted inanarrowsense inordertoallowan individualassessmentoftheproandanticompetitiveeffectsof thecase.Yet someyounger jurisdictions inparticularhintedatsuchgeneralexemptionprovisionstoexplainwhytheyhavenothadanycopyrightrelatedcases.

The assessment of IPrelated casesmay be spelled outmore specifically in subrules regulationsandguidelines.Bothwithregardtothegeneralexemptionrulesandthemorespecific ruleson the assessmentof IPrelated cases, thereexists a tendency todealwithcopyright the sameway aswithpatent law.Or toput itdifferently: there seems tobe ageneralassumptionthatthepatentandinnovationparadigmcanalsoguidetheapplicationof competition law to copyrightrelated cases. This general assumptionwill be tested infurtherdetailinthisReport(at5.2,below).Onlywheretherulesbecomeverydetailedandfocused,suchas inthecaseoftheEuropeantechnologytransferrules,do legislaturesandagenciesseemtohesitatetoovergeneralisethepatentandinnovationparadigm.

4.2 Practiceingeneral

ThequestionsunderNo.2weredesigned toproduceageneralpictureof thepracticeofcompetition lawconcerning intellectualpropertyandcopyright, includingcopyrightrelatedmarkets. Thereby, these questions also addressed the institutional dimension, namely towhatextentthere isalsoan interfaceofenforcementregardingcopyrightandcompetitionlaw.

Inmostjurisdictions,thesituationischaracterisedbyafocusonadministrativeenforcementof competition law through competition agencies andprivate enforcementof intellectualpropertythroughthecourts.However,therearealsoimportantexceptions,suchasinmanyLatinAmericancountriesandsomeAsiancountries,where IPofficessometimesalsohaveadministrativeenforcementpower.Insomeveryfewinstances,suchasinPeru(INDECOPI),thecompetitionagencyandtheIPagencyareevendivisionsofthesamegovernmentbody.

Onequestion(Q2.4)waswhetherIP infringementcourtscouldalsodecideoncompetitionlaw issues. A footnote explained that such an issue can particularly appear when the16 CommunicationfromtheCommission:GuidanceonitsenforcementprioritiesinapplyingArticle82oftheECTreatytoabusiveexclusionaryconductbydominantundertakings,[2009]OJNo.C45/7.17 SeetheabovecitedMagillandtheIMSHealthcase,supran.2.InitsGuidancePaper,theCommissionreliesspecificallyonthesetwodecisionsinthecontextofrefusaltolicenseatlarge.GuidancePaper,supran.16,para.78(footnote4).

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defendant tries torelyoncompetition lawasadefenceagainst the infringementclaimbyarguingthattherewasnoviolationofcopyrightlawsincetherightholderwasunderadutyto licenseasamatterofcompetition law.Thisquestionofwhethersuchadefencemaybebrought at all and, if so, under which conditions, has recently attracted considerableattention in some European countries. However, these cases typically relate to patentlitigations.18Despite the explanatory footnote,many competition agencies seemed to bepuzzledby thisquestion,most likelybecause theymaynotbe sufficiently familiarwith IPinfringement proceedings.What needs to be highlighted in this regard is that exclusivejurisdiction of competition agencies and specialised competition courts can make itimpossible for infringement courts to apply competition law in such circumstances notwithstanding thepossibility for the infringementcourt tostayproceedingsand towaitforadecisionofthecompetitionagenciesandcourts.

Anotherquestion(Q2.6)requiredtheagenciestoprovidethedecisionsoftheirjurisdictiontoIPrelated,notonlycopyrightrelated,cases.Itwasimportanttoincludethisquestionsoastodiscoverdecisionsregardingother IPRsthathavetobeconsideredasprecedents forcopyrightrelatedcases.

Yet, quite understandably, another question created problems for the agencies. On thequestion(Q2.8)relatingtotheimpactofthedecisiononthemarket,manyagencieshadtoreport that they simply do notmonitor how themarket develops after the agency hashandeddownitsdecision.

Most instructiveand importantaretheagenciesresponsestothequestionrelatingtotheinstitutionalchallengestheyencounteredwhendealingwithIPrelatedcases(Q2.9).Here,averyhighnumberof agencies and resourcepersons reportedon the lackofexpertswhoknowenoughabouttheinterfaceofcompetitionandintellectualpropertyintheircountriesand evenmore so among the staff of the agencies. Such responses came not only fromyounger, less experienced jurisdictions of developing and emerging economies, but alsofrom economically and academically highly developed but smaller jurisdictions such asSweden or Switzerland. This challenge is explained by the enormous complexities thatcharacterisecasesrelatingtoIPrelatedmarkets.ItalsoconfirmsthatthisReportcanbeveryusefulforalljurisdictionsoftheworld.

The last subquestion relating to the reasons for a lack of copyrightrelated cases alsoproduced important insights (Q 2.10). Simply asking the question demonstrates theassumptionthatmanyjurisdictionswillnotprovidemuchpracticeorevennopracticeatall.Thisassumptiondidnotholdtrueforalljurisdictions.Forinstance,withinaveryfewyears,18 See, inparticular,the judgmentoftheGermanFederalSupremeCourt(Bundesgerichtshof)of6May2009,CaseKZR39/06,OrangeBookStandard,(2010)41IntlRev.IP&Comp.L.369(Englishtranslation).Atthebeginningof2013,aGerman courtquestioned the conformityof this caselawwithEU competition lawbyreferringtotheECJquestionsregardingarefusalto licenseastandardessentialpatentatFRANDterms.SeeCaseC170/13HuaweiTechnologies.

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the Competition Commission of India (CCI) has produced an impressive number of casesrelatingtothefilm industrybutalsoothercopyright industriessuchasscientificpublishingandthesoftwareindustry,arecordthatcanhardlybefoundinmoreexperiencedandwellestablishedcompetitionjurisdictions.

Indeed,thevolumeofpracticeandalsothekindsofcasesdealtwithare largely influencedbythespecificitiesof individual jurisdictions. In jurisdictionswithnoorvery littlepractice,the resourcepersonsoften explained thisby institutional constraints, such as the lackofstaff that knows about IP or the need to concentrate onmore important cases. Amostimportantexplanationcamefromsomedevelopingandemergingeconomies,namely,thatcopyrightrelated caseswill not arise before the agencies as long as the enforcement ofcopyright remainsweak. This sounds quite intuitive and convincing. Yet the respect andenforcementofcopyrightmaywell improve inmanycountries inthenotsodistantfuture.Hence,even these jurisdictions couldexperiencemoreof these cases very soon.Also, asdemonstrated by the experience in other comparable jurisdictions, low levels ofenforcementdonotnecessarilypreventcopyrightrelatedindustriesnotablyinthemusic,filmandmediasector fromdeveloping,whichconsequentlycangiverisetocompetitionlaw cases. Yet, with regard to collective rightsmanagement, it is to be noted that theassumptioniscertainlycorrectthatcompetitionagencieswillnotbeaskedtocontrolCMOsaslongasCMOsstillneedtobebuiltupasefficientorganisationsforcopyrightenforcementand licensing.ThisexplainswhymostCMOrelatedcasesare stillprovidedbyEU lawandEuropeanjurisdictions.

Amostworryingexplanationforalackofpracticewasprovidedforsomejurisdictionswhereresourcepersonsreferredtogeneralexemptionclausespreventingenforcersfromapplyingcompetition law to IPrelated cases. As can be seen from the experience of otherjurisdictions, such rules are usually not applied as absolute exemptions. Rather, whenimportant IPrelated cases appear, the agencies and courts either prefer a very narrowreadingofsuchprovisionsorevenseemtoignorethem.Hence,suchexemptionprovisionscanhaveacounterproductiveeffect inyounger jurisdictionsbyprovidingenforcerseitherwithwrongguidanceorwithareadilyavailablejustificationforshyingawayfromcomplexIPcasesforwhichtheydonothavesufficientexpertise.

Ontheotherhand,manyagenciesstressedtheimportanceofcompetitionlawenforcementin thecopyright fielddespite the fact thatpracticemaybe limitedso far.Thiswasmostlyexplainedbythegrowingimportanceofcertainculturalindustriesinindividualcountriesorthe high level of concentration in rather isolated small nationalmarkets. Some resourcepersonsalsoreferredtothegrowingnumberofcomplaintsthatreachtheagency,suchasabouttheconductofdomesticCMOsinparticular.

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4.3 Practiceregardingcopyrightrelatedmarkets

Forthesurveyand,hence,theReport,thethirdblockofquestionswasconsideredas,andintheend turnedout tobe,most important.UnderNo.3, theQuestionnaire requested theagenciesandtheotherresourcepersonstoreportandanalyse inmoredetailtherelevantcasesfromacompetitionlawperspective.

In a preliminary note to No. 3, the Questionnaire listed the different copyrightrelatedmarkets thatcouldandshouldbeconsidered.Thiswasvery important,since theresourcepersons,especiallyat theagencies,maynotnecessarilyhaveaclearunderstandingof thedifferent categories of copyrighted works. At the same time, the preliminary note alsoclarified that informationwas sought not onlywith regard to the upstreammarkets forcopyrightlicencesbutalsowithregardtodownstreamproductanddistributionmarkets.

Thequestionsthemselvesthenconsistedoftwogroups:thefirstthreesubquestionsrelatedto general features of the different markets, namely, how important they are for thenational economy, how concentrated they are andwhether there exists, such as in thebroadcastingsector,specificregulation.

Theanswersproducedwithregardtotheimportanceofcertainindustriesvariedextremelyamong jurisdictions.Whatseemsmost important in this regardare two findings: first, therelativeimportanceofthecopyrightindustriesascomparedtoothersectors,aswellastheimportance of individual copyrightrelated industries, apart maybe from the softwareindustry, is not dependent on the level of economic development but often on culturalspecificitiesof the given jurisdiction. For instance, in India and Egypt, the film industry isnowadaysofveryhighimportanceforthenationaleconomy,whilethismaynotbethecaseatall for the largemajorityofEuropeancountriesorCanadaandAustralia.Yet,countriesevenofthesameregionmayhavedevelopedtheirpeculiarstrengths inspecificsectorsofcreativity.For instance,Columbia isknownformusic,whileChilemaybemorefamousforfiction.Also,Swedenhas inrecentyearsdevelopedasanexportingcountryforfiction,notleastcrimestoriesandrelatedTVproductions,whilethetraditionallyverysuccessfulmusicbusinesshasmostlyemigratedabroad for tax reasons.Second, the specific importanceoftheindustrymayhaveanimpactonthevolumeofpracticeajurisdictiondevelopsinagivensector.Yetaperhapsevenmoreimportantfactorforthisisthelevelofconcentration.Manyofthecasesreportedfromthecopyrightrelatedmarketsarisefromthemediasector,whichin the majority of jurisdictions is characterised by a very high level of concentration.Whether thegiven country isalso a very importantproduction site foraudiovisualworksdoes not matter in this regard. In general, what can be seen from the survey is thatcompetition enforcers should have an eye especially on the distribution of cultural andcreativecontent inthemediaandpublishingsector.For instance,theHellenicCompetitionCommissiondiscoveredaveryhigh levelofconcentrationonthewholesale levelofforeigneducationalbooks,whichplay amajor role inuniversityeducation in the country. In thismarket, the twomajor firmswere found tohaveacombinedmarket sharebetween55.8

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and61.7%.19Similarly, inGreecethereareonlytwocompaniesthatcontrolthemarketforthedistributionofnewspapers.20 Ingeneral, theBulgariancompetitionagencydisplayedahighawarenessofcompetitionproblemsincopyrightrelatedmarkets.Thisisdemonstratedinparticularby the fact that it is currently conducting a sector inquiry in thenewspapermarket.21

The second group of questions serves to provide information on the individual casesregardingcopyrightrelatedmarkets.TheanalysisofthesecasesconstitutesamajorpartofthisReport.Whatdeservestobereportedhereisthatmostcasesbeforetheagencieswereinitiatedbyprivateinformantsandcomplainants.Thisseemstoholdtrueespeciallyforcasesthat were directed against CMOs, but also other dominant undertakings. The questionregardingtheirenforcementpriorities(Q3.11)wasrejectedbyalargenumberofagencies,whicharguedthattheyareunderanobligationtoenforcethe lawagainstallrestraintsofcompetition.Thismaybeexplainedbyamostlyreactiveapproachofmanyagenciesthatdonotnecessarily search forcases,but investigatecasesbasedoncomplaints.Thisdoesnotrule out the possibility that such complaintsmay lead to a series of important decisionsregardingvery similarcases.Thishasprobablyhappened in India,where theCompetitionCommissionhasrecentlydecidedaseriesofcasesregardingthepracticeofseveralregionalfilm business associations that restricted the access of outside film producers to localcinemas and imposed unreasonable conditions on the exploitation of films, such asunreasonablylongholdbackperiodsfortheexploitationoffilmsintheformofDVDs.22

4.4 Marketsforcollectiverightsmanagement

Asexpected,theQuestionsunderNo.4relatingtocollectiverightsmanagementweremostchallenging for the competition agencies.Whilemany jurisdictions turnedout tohave anunexpectedlyhighnumberofcasesrelatingtoCMOs,manyagenciessawthemselvesunable19 SeePress releaseof4November2008,CaseHCC452/V2009,ApollonS.A.andEfstathiadisGroup,availableat:http://www.epant.gr/news_dedails.php?LangOen&id=89&nid=178.TheCommissionreportedthemarketshare in itsresponse to theQuestionnaire.The twodistributorshadconcludedexclusivedistributionagreementswiththepublishers.20 HellenicCompetitionCommission, judgments inCases252/III/2003and519/VI/2011,Argos SAandEuropiSA(reportedbytheCommission).21 The Croatian competition agency has also prepared a study, not available in English, on theconcentration inthenewspaper industryandstatesthat it isobservingthedevelopmentofconcentration inthisindustry.However,thisstudywasnotconductedintheframeworkofafullsectorinquiry.22 Onthemostimportantcasesinthisregard,towhichlatercasesrefer,see:OrderoftheCompetitionCommission of India of 16 February 2012, CasesNo. 25, 41, 45, 47, 48, 50 and 69 of 2010, Reliance BigEntertainment Ltd. v Karnataka Film Chamber of Commerce, available at:http://www.cci.gov.in/May2011/OrderOfCommission/252010%20%28Majority%20Order%29%20feb%202012.pdf;OrderoftheCompetitionCommissionofIndiaof16February 2012, Cases No. 52 and 56 of 2010, Eros Int'l Ltd v Central Circuit Cine & Others, available at:http://www.cci.gov.in/May2011/OrderOfCommission/CaseNo52and56of2010MainOrder.pdf.

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or insufficiently capable to answer all the questions. Indeed, these questionswere alsodesigned to provide information on specific regulation of CMOs in the framework ofcopyright law. While most competition agencies were aware of the existence or nonexistenceofsuch regulation, theystillwarned that theiranswersmightnotbesufficientlyreliable and therefore often referred to other government bodies, such as general IPagenciesthatfulfilasupervisoryfunctionregardingCMOs.

In order to improve the study and the Reportwith regard to CMOs, in a few cases theQuestionnairewasalsosenttosuchagenciesorto lawscholarsknowledgeable inthisfieldintherespectivejurisdictions.

Insubstance,manycompetitionagenciesprovedtohaveonlyaverysuperficialideaofwhatthecompetitionrelatedproblemsof themarkets forcollective rightmanagementservicesare.ThisbecamemostobviousfromtheanswersgiventothequestionofwhetherspecificregulationofCMOscontainsrulesthattakeintoaccountthegoalofprotectingcompetition.

It is very clear that thisReport could furtherbe developed and improvedwith regard tospecificregulationofCMOsthroughcopyrightlaw.Yet,forpreparingthisstudy,atleasttherelevant legalprovisionswere taken into account. This,however,doesnotprove that alljurisdictionsthatprovideforsuchregulationalso implementtheserules inaveryeffectiveway.YetdeepeningthestudywithregardtospecificregulationofCMOsintheframeworkofcopyrightlawwouldhavepartiallyredirectedthestudyandtheReport.TheReportaimstoprovide guidance for the application of competition law only; it is not about reformingsectorspecificnationalregulatorysystemsregardingCMOs.

Despitethislimitation,itisnotpossibletoanalysethepracticeofindividualjurisdictionsoncollectiverightsmanagementwithouttakingintoaccounttheexistenceornonexistenceofspecific regulation.According to the resultsof thesurvey,practicallyall jurisdictionsapplycompetition law to CMOs.23 Still, it seems that competition agencies aremore likely toreceive complaints on alleged violations of competition law by CMOs if there is no orinsufficient regulation of CMOs through copyright law. For instance, a jurisdiction thatprovidesforspecialjudicialproceduresforthecontrolofthecopyrightroyaltiesimposedbyCMOsonuserswillshieldthecompetitionagencyfromreceivingcomplaintsofusersallegingthatCMOs imposeexcessivepricesandtherebyabusetheirmarketdominance intermsofcompetition law.Conversely, the surveyproducedevidence that in jurisdictionswherenosuch mechanisms exist, the competition agencies are regularly confronted with suchcomplaints. A very clear example of this phenomenon is provided by Turkey, where inabsence of special regulation of the royalty rates under copyright law, the competition

23 Yet there are jurisdictionswith sectorspecific exemptions. This is the case, for instance, inRussia,wherethecopyrightlawexplicitlyexemptsCMOsthathavebeenaccreditedfortheadministrationofrightsofpersonswhohavenotconcludedacontractwith theCMO from theapplicationoftheCompetitionAct.SeeArticle1244(3)(3)oftheRussianCivilCode.

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agency has frequently been requested to act against the royalty rates imposed by thecollectingsocietyandhasalwaysrejectedsuchclaimssince itfound itselfunabletodefinecriteriaforthereasonablenessoftheroyalties(seeat11.3,below).Yet,eveninjurisdictionswherespecialisedmechanismsofcontrolexist,thecompetitionagencymaycome intofillcertaingaps.ThisisillustratedbytheAustralianexampleinparticular(seeat11.5,below).

Thisveryshortanalysisalready leadstoavery importantconclusion.Specificregulationofthe activityofCMOsunder copyright lawon theonehand and controlofCMOs throughcompetitionlawontheotherhandneedtobeconsideredastwocomplementaryelementsof an integrated regulatory system. In this regard, competition law plays amajor role incomplementinginsufficientregulationbyfillinggapsleftbysectorspecificregulation.Itisno surprise thatespeciallyUS antitrust law and EU competition lawhaveproducedmostvaluableinsightsinthecontrolofCMOsthroughcompetitionlaw,sincespecificregulationofCMOsexistsneitherintheUSnoronthelevelofEuropeanlaw.Itwasonlyin2012thattheEuropeanCommissionfinallyproposedaDirectivethatwouldpartiallyharmonisethelawoftheMemberStatesoncollectiverightsmanagement.24Atthesametime,specialregulationof CMOs as part of copyright law can provide amore effectivemeans of control and amechanismforsolvingdisputes,especiallyasregardsthecontrolofexcessiveroyaltyrates.Hence,specialregulationofCMOsmaygenerallybethebetterway forward forregulatingCMOs. But special regulation of CMOs should be in conformity with competition lawprinciples. Hence, in the framework of reforming sectorspecific regulation of CMOs,legislaturesarewelladvisedtolookintothecaselawofthosejurisdictionsthathaveappliedand continue to apply competition laws t