Kanal 5 v STIM: ECJ clarifies law on Art. 82 and royalties charged by collecting societies

In C-52/07 Kanal 5 and or v STIM, the ECJ was asked to provide judicial assistance on the approach by national courts to the compatibility of methods of levying charges employed by collecting societies against public and commercial television broadcasting companies with regard to the playing of musical copyright works. A Swedish collecting society, STIM, which had a de facto monopoly in the market of making available music protected by copyright for television broadcasts. It charged, following negotiation, a flat rate for the public state-owned television company (SVT) but for commercial television broadcasting companies, it charged a rate based upon the revenue of the company and the amount of music broadcast.

In proceedings brought by the commercial television companies that such practices were contrary to Art.82, the Swedish court referred a number of questions to the ECJ about the validity of STIM's fees with Art.82. In a well-pitched judgment, the ECJ referred back to the general principles of Art.82 and the "discotheque" cases of Basset and Tournier where the ECJ had approved royalties charged by French collecting societies based upon the revenue of the discotheques.

The ECJ held that it was appropriate for STIM to charge according to the revenue of the companies provided that (i) the charge was proportionate to the amount of music works protected by copyright actually broadcast or likely to be broadcast (ii) there was not another method which permitted more accurately the audience to be identified and the level of use of the works which did not result in a disproportionate increase in the administrative and supervision costs.

The ECJ also held that the difference of approach of STIM to charging public and commercial television companies might amount to a discriminatory practice under ARt.82(c) (applying dissimilar conditions to equivalent transactions) and such was a matter for the national court. However, it said that the national court must consider

• the fact that SVT does not have advertising revenue or subscription charge revenue.
• whether SVT competed with Kanal 5
• whether there was objective justification for such practices, in particular whether such could arise from the task and method of financing of public  service undertakings

For further discussion, see para 11-101 (excessive royalties and Art.82), para 11-095 (unfair prices and Art.82) and generally on collecting societies and Art.81, see para 8-218.