Finnish Competition and Consumer Authority: Numerous problems on the copyright market

The ambiguity of the legislation and the complexity of the market serve to fortify the monopoly of the collective management organisations on the market, says the Finnish Competition and Consumer Authority (FCCA) in its report on collective management organisations and the functioning of the copyrighted works market.

As part of the Government’s programme to promote healthy competition, the FCCA investigated the impact of copyright legislation and the operations of collective management organisations on the markets using copyright-protected music and audio-visual content. The report discusses the relationship of four collective management organisations – Teosto, Gramex, Kopiosto and Tuotos – to the users of copyright-protected works, such as TV and radio companies; enterprises in the tourism, hotel and restaurant sectors; and telecommunications operators.

The complexity of copyright legislation, the agreement practices of collective management organisations, and the obscurity of ownership and cash flows pertaining to copyright or components of copyrighted works, make competition law assessment of the status of collective management organisations difficult.  According to the FCCA, ambiguities concerning the concept of ‘author’ should in particular be resolved in an open and transparent way so that the organisations holding a dominant market position on the market would not disrupt the operations of the market by expanding the scope of that concept little by little.

The FCCA questions the necessity and reasonability of certain contractual clauses found in the agreements of collective management organisations. Such questionable clauses include the exclusivity clauses and restrictions on the transfer of rights that appear in agreements signed by authors with collective management organisations. The scope and extent of such clauses should be reassessed.

According to the FCCA, the market for copyright-protected works is a content market, not a technology market or a distribution channel market. Pricing practices that treat competing technologies unequally without objective reason, for instance charging a different licence fee for the use of the same content on TV on the one hand and on mobile phones on the other, are detrimental to the development of the sector.

From the perspective of competition, it is essential to secure that the private copying levy system does not cause market disruption in the consumer retail trade or prevent or obstruct the introduction of more advanced recording devices.

In all, clarity and easy availability of licence pricing information could lower the threshold of entry to the market for new, innovative services, as enterprises would have better potential for estimating the implementation costs of new business ideas.

FCCA report: Collective management and the functioning of the copyrighted works market (in finnish)