Music copyright investigation closed
A Commerce Commission investigation has resulted in a voluntary change of rules in the music copyright industry that will allow for competition to occur, to the benefit of those who purchase licenses for copyrighted music.
The Commission began an investigation in 2009, following a complaint about royalty agreements between owners of music copyright and Phonographic Performance NZ Ltd (PPNZ). The royalty agreements were expressed as being exclusive agreements which meant that persons wishing to purchase licenses for copyrighted music could only deal through PPNZ. This prevented potential purchasers from negotiating on price directly with the owners of the copyrighted music.
The Commission’s investigation identified concerns under section 27 of the Commerce Act and concluded that the removal of any exclusive licenses would have a positive impact on competition for music broadcast licenses.
As a result of the investigation, PPNZ and the
four New Zealand major recording companies (Sony, Warner,
EMI and Universal) have agreed to express their royalty
agreements as being non-exclusive. That will allow direct
negotiation between potential purchasers and the four
companies. It will also have the effect of opening up about
70 per cent of the market to competitive negotiation.
In
addition, the four recording companies have developed and
published protocols outlining their direct dealing
policies.
“The Commission is satisfied that this is a pragmatic solution to the issue. It will allow competition for the sale and purchase of licences. However, it also preserves the efficiency gains that arise from PPNZ being the one point of contact for small users of copyrighted music (such as restaurants and ‘on hold’ background music), instead of having to deal with the large numbers of owners of copyright,” said Kate Morrison, General Manager Enforcement at the Commerce Commission.
The Commission will be taking no further enforcement action as the voluntary resolution to this matter has satisfactorily dealt with the competition concerns raised.
Background
Phonographic Performance NZ Ltd (PPNZ) is
an incorporated joint venture that centrally administers the
licensing of public performance and broadcasting rights for
music and music video recordings on behalf of its clients.
Clients assign their rights to PPNZ to license public
performance and broadcasting of their copyrighted music and
music videos. PPNZ administers the issuing of the licenses
and the payment of license fees to its clients. PPNZ itself
is a not for profit organisation.
The Commerce
Act
Section 27 of the Commerce Act prohibits agreements
between two or more people or businesses that contain
provisions that substantially lessen competition.
Only the courts can decide if the Commerce Act has been breached and set appropriate penalties.
If the court
finds that the Commerce Act has been breached, it
may:
impose pecuniary penalties on businesses that
must not exceed the greater of:
$10 million;
or
either:
three times the value of any commercial gain
or expected commercial gain resulting from the breach; or
if commercial gain is not known, 10 per cent of the
turnover of the business and all of its interconnected
businesses (if any).
Media contact: Allanah
Kalafatelis, Communications Manager
Phone work (04)
924 3708, mobile 021 225 4417
Felicity Connell, Senior
Communications Adviser
Phone work (04) 924 3709, mobile
021 225 4454
Commission media releases can be viewed at www.comcom.govt.nz
ENDS