Action brought on 24 September 2008 - Säveltäjäin Tekijänoikeustoimisto Teosto v Commission

(Case T-401/08)

Language of the case: Finnish

Parties

Applicant: Säveltäjäin Tekijänoikeustoimisto Teosto (Helsinki, Finland) (represented by: H. Pokela, lawyer)

Defendant: Commission of the European Communities

Form of order sought

annul Decision K(2008)3435 final of the Commission of 16 July 2008 in Case COMP/C2/38.698-CISAC in its entirety , and

order the Commission to pay Teoston's costs.

Pleas in law and main arguments

The applicant seeks the annulment of Commission Decision K(2008) 3435 final (Case COMP/C2/38.698 CISAC) of 16 July 2008, according to which the undertakings mentioned therein have infringed Article 81 of the EC Treaty and Article 53 of the EEA Agreement by using in their reciprocal agreements membership restrictions contained in the International Confederation of Societies of Authors and Composers model contract ('the CISAC model contract') or by applying those membership restrictions in practice.

The Commission did not state sufficient reasons for its decision. In its decision, the Commission did not analyse the points of departure and the particular features of the various authors' associations which differed from one another. The Commission incorrectly considered that the reasons for this situation are restrictions on competition when it is a result of natural market development. Teostso has described to the Commission the nature of its business environment and the special circumstances relating to the music market in Finland, but the Commission made no mention of them at all in its decision. Since the Commission did not take account of the rationale for the way in which Teosto operated in the prevailing circumstances, Teosto considers that the grounds for the decision are not clear from the Commission's reasoning.

The Commission states that authors' associations whose membership conditions infringe Article 81(1) have done so either by including conditions in the agreement which are considered by the Commission to be prohibited or by continuing to apply such conditions despite the fact that they have been removed from the contracts. The Commission failed to specify by which of those two methods it considers that Teosto infringed Article 81(1). Further the decision does not indicate the grounds on which the Commission considered that Teosto had actually applied the membership conditions. There is an error of law in the decision because the Commission should be able to state more precisely what kind of infringements it considers the addressee of the decision to have committed and on what grounds.

The Commission's reasoning is contradictory as regards to the alleged coordination of regional restrictions.

The Commission has incorrectly applied Article 81 EC. Teosto has not infringed Article 81(1) by applying the membership conditions similar to those in Article 11(II) of the CISAC model contract, as the Commission claims. Teosta has not applied membership conditions considered to be prohibited by the Commission. The object of the membership conditions was not to restrict competition nor have they had such an effect.

Teosto has not infringed Article 81(1) by coordinating regional restrictions on licensing rights as the Commission claims. The regional restrictions were not the result of coordination. The object of the regional limits was not to restrict competition nor did they have such an effect. Restricting a mandate to a particular area, even if the national territory of a party to the agreement, is not prohibited. Such a practice has been permitted and, in Teosto's view, is the most logical solution, based on normal market conditions.

Teosto has not infringed Article 81(1) by applying exclusivity clauses similar to those in 1(I) and (II) of the CISAC's model contract. The exclusivity clause is competition neutral as its object was not to restrict competition nor did it have such an effect. Teosto did not apply an exclusivity clause; the extension of the regional scope of its own operations and the mandates granted to the parties to the contract have been dictated by the reasons of normal market logic.

If Teosto were to be considered to have infringed the prohibition in Article 81(1) in some way, the practice would however be authorised on the basis of Article 81(3). The present system and in particular that contained in the mandates' regional limits produce significant advantages in terms of efficiency, which benefit consumers without eliminating competition and without going further than necessary in order to achieve efficiency advantages.

The Commission has exceeded the limits of its competence by requiring the authors' associations to renegotiate the contracts. The Commission cannot order effective measures to change a practice which is not contrary to Article 81.

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