C-22/79

JUDGME NT OF 25 10. 1979 — CASE 22/79

In Case 22/79

REFERENCE to the Court under Article 177 of the EEC Treaty by the Cour de Cassation of France for a preliminary ruling in the proceedings pending before that court between

Greenwich Film Production , Paris

and

société des AUTEURS, compositeurs et ÉDITEURS de MUSIQUE (SACEM), Paris,

gives the following

JUDGMENT

Facts and Issues

The facts of the case, the course of the I — Facts and procedure procedure and the observations submitted pursuant to Article 20 of the Protocol on the Statute of the Court of 1. The Société des Auteurs, Com­ Justice of the EEC may be summarized positeurs et Éditeurs de Musique (herein­ as follows: after referred to as "SACEM") is a

GREENWICH FILM PRODUCTION v SACEM

private association governed by French right to authorize or prohibit the repro­ law whose principal object is to collect duction of their works in films, intended and distribute royalties payable in respect to be shown in cinemas, for which the of copyright in the public performance works were specially written. It is not and mechanical reproduction of the clear from the file whether that right was works of its members. exercised in the context of the present dispute.

prohibit the public performance and mechanical reproduction of the works of its members and to collect the royalties Mr de Roubaix composed the original payable in respect of the exploitation of music for the film "Adieu l'Ami" and Mr such works. Lai that for the film "Le Passager de la Pluie", whose executive producer is the undertaking Greenwich Film Production (hereinafter referred to as "Greenwich"). In this connexion SACEM collects Those two composers use the same royalties payable in respect of the publisher, namely the Société des projection, distribution or sale of films Éditions Labrador (hereinafter refered to having a sound-track in which the works as "Labrador"), which is itself a member of its members have been incorporated. of SACEM, with which publisher they concluded contracts conserning the assignment and publication of musical works, namely the music composed for The method of collection varies the said films, on 25 June 1968 and depending on whether the public per­ November 1969 respectively. formance of the film in question takes place in so-called "statutory" countries, in which royalties are collected directly from cinema proprietors, or in so-called Those two contracts, the terms of which "non-statutory" countries, in which the are identical, contain, in addition to the producer of the film is usually required usual clauses appearing in such contracts, to pay a certain percentage of the a provision formally reserving SACEM's receipts from the distribution of the film. rights: for as long as one or other of the With regard to the Community the parties to the contracts remains a "non-statutory" countries are all non- member of SACEM the effects of the member coutries. assignment are to be governed by the terms of the agreements concluded by the parties to the contracts and SACEM, as laid down in the latter's documents of However, pursuant to Article 2 (3) of association and general rules, together SACEM's documents of association the with the agreements whereby the parties members are empowered to retain the became members of that body.

payment of the royalties due in respect June 1945 (which article was incorpor­ of copyright for the public performance ated in Decree No 53-704 of 9 August of the two films in question in non- 1953 1). The appellant association main­ statutory countries, that is to say, 3% of tained that, since the membership the price of the sale or hire of the films. agreements in question could not be Since Greenwich did not comply with its relied upon against third parties and request SACEM instituted proceedings since it had accordingly duly acquired against it by a writ of 25 October 1971 the rights of reproduction and public before the Tribunal de Grande Instance, performance in the music for the two Paris.

1 — Article 59a reads as follows:

films, it was not bound to pay any In accordance with Article 20 of the royalties to SACEM. Protocol on the Statute of the Court of Justice of the EEC Greenwich, represented by Robert Saint-Esteben. By a judgment of 7 May 1976 the Cour Advocate of the Cour d'Appel, Paris, d'Appel, Paris, dismissed all Greenwich's SACEM, represented by Georges claims on the view that the dispute Kiejman, Advocate of the Cour d'Appel, between the French undertakings Paris, the Governement of the Italian concerned the pecuniary consequences of Republic, represented by its Ambassador, contracts for the sale or exploitation of Adolfo Maresca, acting as Agent, the sound-track of films performed only assisted by the Avvocato dello Stato, outside the territory of the European Franco Favara, and the Commission of Community, that it was not established the European Communities, represented that the situation created by the by Marie-Jose Jonczy, a member of the contracts was capable of affecting trade Commission's Legal Department, acting between Member States and that there as Agent, submitted written observations. were accordingly no grounds for examining the validity of the membership agreements, upon which SACEM relied Upon hearing the report of the Judge- as against Greenwich, in the light of the Rapporteur and the views of the Community provisions, which were ex­ Advocate General, the Court decided to traneous to the case. The Cour d'Appel open the oral procedure without an consequently upheld the judgment of the inquiry. Tribunal de Grande Instance.

adopted with regard to GEMA, the members of SACEM are the same as German counterpart of SACEM. those of which the Commission disap­ proved in the GEMA decision, namely the assignment of all categories of copyright for the whole world. In that decision, of 2 June 1971 (Journal Officiel 1971 L 134, p. 15), as amended by the decision of the Commission of 6 July 1972 (Journal Officiel 1972 L 166, According to Greenwich it was only after the intervention of the Commission p. 22), the Commission considered that it against GEMA and the various similar undertakings in the EEC that SACEM had to modify its documents of "... does not exceed its competence by association at its general meeting on 23 including within its decision the April 1974. assignment of copyright for third countries since the exclusive assignment of such rights to GEMA also prevents the members of that association ... from It also refers to the Fourth Report on Competition, Nos 112 and 113, and to assigning those rights to another per­ the judgment in Case 127/73, BRT v forming right association in the SABAM and Fonior [1974] ECR 313). Community" (p. 22).

GREE NW ICH FILM PRODUCTION v SACEM

outside the Community and void as a of the Community may cancel matter of public policy where it concerns assignments made to SACEM on the exploitation of copyright within the condition that notice is given three Community. months before the end of each year. Likewise, SACEM in no way discourages its members from active participation in In conclusion, Greenwich suggests that other performing right associations or the Court should reply to the question from becoming members of such submitted with a ruling that Article 86 of associations after leaving SACEM, which the Treaty applies to a contract frequently occurs. concluded by an undertaking occupying, in a substantial pan of the Common Market, a dominant position in relation In view of the amendments made to to the exploitation of copyright, in so far SACEM's documents of association the as that contract has as its object or effect procedure initiated on 17 July 1970 by the impairment of the structure of the Commission under Article 3 (1) of competition in the Common Market, Regulation No 17/62 has not been even if the dispute in question concerns continued. the implementation of the said contract outside the Common Market.

SACEM considers that, since there are no specific provisions concerning pre­ SACEM observes first of all that Mr Lai scription, it is necessary to have regard and Mr de Roubaix became members on to the time which has elapsed since the 28 September 1958 and 9 January 1962 occurrence of the infringements. respectively. Ultimately, the argument advanced by Greenwich is intended to call those membership agreements into With reference to Case 127/73 BRT v question on the basis of provisions and case-law which had not come into being SABAM and Fonior (cited above) and the at the time when the agreements were GEMA decision (cited above) SACEM concluded. In 1958, as in 1962, since observes that in those instances the

If it is necessary to establish whether The condition of "affecting trade Article 86 of the Treaty applies to the between Member States" may be implementation on the territory of the understood, on the one hand as a Community of the contracts concerned in criterion whereby it is possible to define the present dispute it must therefore be the respective scope of Community and observed that trade between Member national law on competition. On the States cannot be affected by SACEM's other hand, the word "affect" may imply actions since it does not bind its a value judgment to the effect produced members by terms which prohibit them by the activities in question. The from joining another performing right case-law of the Court establishes that the society (Article 34 of its documents of conduct in question must be capable of association). affecting the pattern of trade between Member States "in such a way that it In the present case the real point at issue might hinder the attainment of the concerns only the case of the objectives of a single market between implementation in non-member countries States" (Case 5/69 Völk v Vervaecke of the said contracts concluded on the [1969] ECR 295 and Case 1/71 Cadillon territory of Member States. v Höss [1971] ECR 351). Article 86 may apply in such a situtation In the GEMA decision the Commission (cf. the above-mentioned Joined Cases 6 in fact considered that the measures & 7/73) but it is a further requirement that the implementation in question imputed to GEMA were of such a kind should be of such a nature as to affect as to affect trade between Member trade between Member States. States, in particular because the conditions which it imposed on its members rendered it "more difficult to The claim for payment of royalties obtain the status of a member in per­ addressed to Greenwich in respect of the forming right associations established in exploitation in so-called "non-statutory" countries of the works of the two other Member States" and "hampered the establishment of a single market for composers in question has not and could the provision of the services of music- not affect the "market" in question. publishers in the Community"(cf. the Furthermore, it is impossible to establish said decision published in Journal a relationship between that claim and the Officiel 1971 L 134, p. 26 at letter D). restrictions on their rights which must not be imposed upon composers by their performing right association. In the context of the relationship between performing right associations In conclusion, SACEM requests the and their members trade between Court of Justice to reply in the following Member States within the meaning of terms to the question submitted: Article 86 of the Treaty is thus affected only in so far as such associations "Article 86 of the Treaty of Rome is not prohibit their members from belonging applicable to the performance in non- to a similar foreign association. This is member countries of contracts concluded the meaning which must be attached to on the territory of a Member State by the "market" or "the competitive parties within the jurisdiction of that structure" in question which is to be State if trade between Member States is

The Italian Government observes that the In general, the fact that an assignment of important point in the present dispute is title to exploit a right extends to the the territorial aspect of the performance whole world does not in itself constitute of the contract between the two sufficient evidence of an abuse. The composers and SACEM. essentially unitary nature of the world market and the rapidity of trade in cultural material may thus render useful, if not indispensable, management by a The Italian Government considers that single "undertaking" of the various the question submitted by the Cour de Cassation should be amended as follows: possible uses of such cultural "material". Does the conclusion of a contract which, inter alia, prohibits composers from assigning to third parties rights in the The Italian Government suggests that the Court should rule that the insertion in a exploitation of their works not only within the territory of the European contract relating to copyright Community but also outside such management services of a provision territory constitute evidence of a which prevents a composer from "dominant position" within the assigning directly to third parties rights European Common Market? to exploit works in all countries of the world does not in itself constitute evidence of abuse of a dominant position, even though the association in In Case 127/73 (BRT v SABAM and question does occupy such a position. Fonior, cited above) the Court properly ruled that the "decisive market" in deciding whether contracts of this nature are compatible with Article 86 of the The Commission first of all provides a Treaty is the particular market in services short account of the procedure which it relating to the management of instituted against SACEM. copyrights. In relation to that particular market the author or composer constitutes a consumer of the "service" In the course of that procedure SACEM even if he is the "assignor" of title to very quickly agreed to remove from its exploit such rights. In the said judgment documents of association all discrimi­ the Court also took a positive view of nation by reason of nationality, all con­ the role and activity of "performing right tractual ties of excessive duration and all associations". measures which might prevent withdrawal by a member, either wholly or in part. In the present case the fact that the rights are exploited exclusively on markets outside the Community may be The Commission explains that it has of importance, not in establishing the altered its point of view somewhat with territorial scope of the rule on regard to the extent to which an competition in question, but solely as association such as SACEM might bind evidence of an abuse on the domestic its members without giving rise to an

abuse within the meaning of Article 86 such rights by categories amongst of the Treaty. In fact it considered that several performing right membership of a performing right associations; association constitutes protection for composers against the economic pressures of certain consumers of (c) to withdraw from SACEM the music. 1 The Commission thus exploitation of certain categories considered that the links between such of rights following due notice at associations and composers were the end of each year (decision of reasonable where, under the rules of 2 June 1971) or on the expiry of such associations, composers are a period of three years (decision empowered to restrict the assignment of of 6 July 1972). their copyrights in all their works to certain categories or forms of exploitation and for a certain duration. The Commission considers that the fact that SACEM remits to composers the This point of view was set out in the royalties payable in respect of the per­ formance of their musical works does procedure against GEMA which culmi­ not constitute and has never constituted nated in the two decisions of 2 June 1971 (Journal Officiel 1971, L 134, p. abuse of a dominant position within the 15) and of 6 July 1972 (Journal Officiel meaning of Article 86 of the Treaty. 1972. L 166, p. 22) which laid down the basic principles in accordance with which SACEM amended its documents of association on June 1973 and June 1974. In the event of the disputed conduct of SACEM being considered to constitute Those principles are the following: an abuse within the meaning of Article 86 of the Treaty, the Commission states that, having regard to the number and — The total abolition of all discrimi­ variety of the situations conceivable in nation on the basis of nationality; relation to that provision, it is difficult to imagine that the authors of the Treaty could have laid down, in a provision — Freedom for members: similar to Article 85 (2), the civil consequences of breaches of the prohibition laid down in Article 86. (a) to assign to SACEM or to Community law entrusts to the national another performing right court the task of settling the civil association all or part of their consequences of such breaches on the copyrights for countries in which basis of the letter and spirit of Article 86 SACEM does not operate and of the relevant provisions of national directly; law or of private international law. It considers that this is the solution put (b) to assign to SACEM their rights forward by the Court of Justice in the above-mentioned Case 127/73 when it for countries in which SACEM operates directly or to divide ruled that "if abusive practices are exposed, it is for the national court to decide whether and to what extent they affect the interests of authors or third 1 — This point of vie w was upheld In the Court in its judgment in the above-me ntion ed Case 127/73 parties concerned, with a view to

In conclusion the Commission considers III — Oral procedure that the reply to be given to the Cour de At the hearing on 11 September 1979 Cassation might be worded as follows: Greenwich, represented by R. Saint- Esteben and B. Jouanneau, Advocates of "The fact that an undertaking entrusted the Cour d'Appel, Paris, SACEM, with the exploitation of copyrights and represented by G. Kiejman and O. occupying a dominant position within Carmet, Advocates of the Cour d'Appel, the meaning of Article 86 requires of its Paris, and the Commission of the members the exclusive assignment of all European Communities, represented by their rights for the whole world may Marie-José Jonczy, a member of the constitute an abuse in so far as such Legal Department of the Commission, obligations are not absolutely necessary acting as Agent, presented oral for the attainment of its object and thus argument. encroach unfairly upon a member's The Advocate General delivered his freedom to exercise his copyright. opinion at the sitting on 4 October 1979.

Decision

1 By a judgment of 12 December 1978, which was received at the Court on 5 February 1979, the Cour de Cassation of France referred to the Court, pursuant to Article 177 of the EEC Treaty, a question on the interpretation of Article 86 of that Treaty.

JUDGMENT OF 25. 10. 1979 — CASE 22/79

2 That question was raised in the course of proceedings between the Société des Auteurs, Compositeurs et Éditeurs de Musique (SACEM), on the one hand, and the Société Anonyme Greenwich Film Production and the Société des Éditions Labrador, on the other.

5 On the basis of those findings of fact the Tribunal ordered Greenwich to pay the sums due to SACEM in respect of the public performance of the music for the two films in question in the "non-statutory countries". It appointed an expert to ascertain the exact amount of such sums. The Tribunal

GREE NW ICH FIL M PRODUCTION v SACEM

considered with regard to the third-party claim that Labrador must reimburse to Greenwich the "publisher's" share of the sums which Greenwich was bound to pay to SACEM.

6 Greenwich appealed against that judgment on the ground that SACEM's conduct, in paricular its requirement that the two composers, in accordance with its documents of association in force at the time, should execute a general assignment of all categories of rights throughout the entire world, constitutes an abuse of a dominant position on the market. Such conduct must accordingly be considered to be prohibited under Article 86 of the EEC Treaty and also under Article 59a of the French Order of 30 June 1945.

7 The Cour d'Appel dismissed the complaint based on infringement of Article 59a of the Order of 30 June 1945 on the grounds that no proof or evidence had been provided that SACEM's activities have (or had) as their object or could have (or could have had) as their effect to impede the operation of the market and that "decisions and judgments issued in European matters but not concerning SACEM are clearly of no assistance" in the application of French domestic law.

10 It is clear from the foregoing that at the present stage of the procedure the courts seised of the substance of the matter have not considered the question whether, for the purposes of Article 86 of the Treaty, SACEM may be considered to be an indertaking abusing a dominant position within the Common Market or in a substantial part of it. However, the question submitted by the Cour de Cassation cannot be answered unless it is assumed that that condition is fulfilled. It will be for the French courts subsequently to establish whether in the present action this is in fact the case. If abusive practices are exposed, it is also for such courts to decide whether and to what extent they affect the interests of authors or third parties concerned, with a view to deciding the consequences with regard to the validity and effect of the contracts in dispute or of certain of their provisions.

11 The reply to the question thus defined may be discerned in the previous decisions of the Court of Justice. The Court of Justice, in deciding whether trade between Member States may be affected by the abuse of a dominant position in the market in question, has taken the view that it must take into consideration the consequences for the effective competitive structure in the Common Market, adding that there is no reason to distinguish between production intended for sale within the Common Market and that intended for export (judgment of 6 March 1974 in Joined Cases 6 and 7/73 Istituto Chemioterapico Italiano and Commercial Solvents Corporation v Commission [1974] ECR 223). There is no reason to restrict that interpretation to trade in goods and not to apply it to the provision of services such as the management of copyrights.

Costs

14 The costs incurred by the Government of the Italian Republic and by the Commission of the European Communities, which have submitted obser­ vations to the Court, are not recoverable. Since these proceedings are, in so far as the parties to the main action are concerned in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court.

On those grounds,

THE COURT,

in answer to the questions referred to it by the Cour de Cassation of France by a judgment of 12 December 1978, hereby rules:

Where an association exploiting composers' copyrights is to be regarded as an undertaking abusing a dominant position within the Common Market or in a substantial part of it, the fact that such abuse, in certain

Registrar President

OPINION OF MR ADVOCATE GENERAL WARNER DELIVERED ON 4 OCTOBER 1979

My Lords, The first is the Société des Auteurs, Compositeurs et Éditeurs de Musique, or This case comes to the Court by way of "SACEM", which is the French a reference for a preliminary ruling by equivalent of the Belgian "SABAM", of the Cour de Cassation of France. the German "GEMA" and of the British Performing Right Society. It too has its The appellant before that Court is a head office in Paris. company called Greenwich Film Production, which, despite its name, is a The second respondent is the Société des French company, having its head office Éditions Labrador, which is a music in Paris. Its business is, as its name publisher, also carrying on business in indicates, that of producing films. I shall Paris. I shall call it "Labrador". Labrador call it "Greenwich". is closely associated with a firm called There are two respondents. "Les Éditions Francis Dreyfus", which is