C-7/82

T H E COURT,

composed of: J. Mertens de Wilmars, President, P. Pescatore, A. O'Keeffe and U. Everling (Presidents of Chambers), Lord Mackenzie Stuart, G. Bosco and T. Koopmans, Judges,

Advocate General: G. Reischl Registrar: H. A. Rühi, Principal Administrator

gives the following

JUDGMENT OF 2. 3. 1983 — CASE 7/82

JUDGMENT

The Gesellschaft zur Verwertung von On 25 August 1980 the Commission Leistungsschutzrechten mbH (hereinafter decided to initiate the procedure referred to as 'GVL') is a German Ver- provided for in Regulation No 17 of the wertungsgesellschaft, a company set up Council of. 6 February 1962 (Official to exploit and manage rights which are Journal, English Special Edition 1959- vested pursuant to the German Gesetz 1962, p. 87). By letter of 4 September über Urheberrechte und verwandte 1980 it sent GVL a notice of objections. Schutzrechte [Law on copy- GVL expressed its views on that notice right and related rights] (hereinafter by two letters dated 5 November 1980 referred to as "the Copyright Law") in and 9 January 1981. In accordance with performing artists, manufacturers of Article 19 of Regulation No 17 of the sound recording equipment and Council and the provisions of Regulation videograms, film artists and promoters or No 99/63/EEC of the Commission of of rights assigned to such manufacturers 25 July 1963 (Official Journal, English and promoters. The purpose of GVL is Special Edition 1963-1964, p. 47) GVL therefore to protect "performers' rights", was heard on 12 February 1981. that is to say those rights which arise out of the reproduction of the artist's On 29 October 1981 the Commission creative work. The activities of such adopted the decision at issue (published companies are governed by the German in Official Journal 1981, L 370, p. 49) Gesetz über die Wahrnehmung von which was communicated to GVL on 9 Urheberrechten und verwandten Schutz- November 1981. Article 1 of the decision rechten [Law on the Management of is worded as follows : Copyright and Related Rights] (herein- after referred to as "the Management "GVL's conduct prior to 21 November Law"). 1980, characterized by its failure to conclude management agreements with GVL was created jointly by the Deutsche foreign artists where the latter were not Orchestervereinigung eV, whose regi- resident in Germany, or otherwise to stered office is in Hamburg, which manage performers' rights vested in such represents the interests of performing artists in Germany, constituted, in so far artists, principally musicians, and by the as such artists possessed the nationality

B — Summary of the grounds of the Manufacturers and artists, therefore, decision have an equal interest in the royalty payable in respect of secondary exploitation. As far as the pursuit of such 1. The relevant law claims against parties liable for payment (broadcasting companies, theatres, hotels, restaurants, and the like) is Pursuant to Paragraph 73 et seq. of the concerned, their interests run parallel. A Copyright Law artists enjoy rights conflict of interest occurs only when the similar to copyright. Artists are entitled royalty has been paid and the question under Paragraphs 74, 75 and 76 (1) to arises of the "reasonable share of the ensure that their performances are manufacturer". utilized in public, recorded on visual or sound recordings, reproduced or broad- cast only with their consent (primary Whilst in all Member States artists are exploitation). As a rule, they give such entitled to withhold their consent to consent only on payment of a fee. primary exploitation, a statutory right to payment of a royalty in respect of secondary exploitation exists in only a Moreover, Paragraphs 76 (2) and 77 of few Member States. the Copyright Law confer on artists a statutory right to payment of royalties where a performance which has been Under Article 12 of the International recorded on a visual or sound recording Convention on the Protection of Per- with their consent is subsequently formers, Producers of Phonograms and broadcast or otherwise made public Broadcasting Organizations, made at (secondary exploitation). Artists are also Rome on 26 October 1961 (United entitled pursuant to Paragraph 53 (5) to Nations Treaty Series, Volume 496, p. claim payment of a fee from manufac- 45), contracting States must ensure that turers of reproduction equipment, known users of published sound recordings pay as royalties in respect of equipment. the sound recording manufacturer or the artist, or both, a single, equitable remuneration in respect of broadcasting Where an artist's performance has been or any communication to the public. recorded with his consent on ' visual or sound recordings and the recordings have been published, the artist may no The Rome Convention, however, has not longer prevent the broadcasting or public yet been ratified by all Member States. reproduction of such recordings on the When ratifying the Convention, the strength of his rights as a performer. Federal Republic of Germany expressed a reservation to the effect that, in the case of sound recordings manufactured Pursuant to Paragraph 86 of the by a national of another Contracting Copyright Law, manufacturers of sound State, the extent and duration of the

Under Paragraph 1 of the Management 2. GVL's conduct towards foreign artists Law, any person who exploits rights of use, rights of consent or rights to payment of royalties pursuant to the GVL is the only company set up to Copyright Law on behalf of several exploit performers' rights which is copyright holders or owners of similar engaged in the management of rights rights for their collective benefit requires arising from secondary exploitation. official authorization, irrespective of Other comparable companies manage whether he acts in his own name or on other types of copyright or similar rights. behalf of another person. Such author- ization is granted where certain basic pre-conditions relating to the pursuit of Prior to 21 November 1980 GVL refused this activity are satisfied. to conclude management agreements with foreign artists having no residence in Germany, irrespective of whether or The Management Law does not confer a not they were artists from Member legal monopoly on companies set up to States of the European Economic exploit and manage performers' rights. Community, or otherwise to manage Under it the establishment of their performers' rights in Germany. "competing" companies of this kind is GVL does not deny, in that connection, perfectly possible in law. that foreign artists are entitled to the payment of royalties in respect of secondary exploitation in Germany. Companies of the kind described above, However, it used to point out to foreign authorized under the Management Law, artists who sought to conclude a

GVL v COMMISSION

Following the adoption by GVL of this Declare void the Commission's decision new policy, royalties collected in respect of 29 October 1981 relating to a of broadcasting, public performance, hire proceeding under Article 86 of the EEC and reproduction are distributed among Treaty (IV/29.839 — GVL); artists in proportion to the income earned by them during the financial year in question from primary exploitation on Order the defendant to pay the costs. the domestic, that is German, market (Article 2, paragraph 4a of the new The Commission, the defendant in the articles of association). It is now no case, contends that the Court should: longer necessary for the fee payable in respect of primary exploitation to be paid in Germany, and even a fee paid abroad Dismiss the application; serves, after notification by the artist, as a basis for calculation where part of the Order the applicant to pay the costs. fee may be attributed to exploitation of the performance in Germany. In that event, the foreign artist participates in the distribution of the royalties in pro- III — S u b m i s s i o n s and argu- portion to that part of the fee. m e n t s of t h e p a r t i e s

C — Procedure 1. First submission: infringement of essential procedural requirements in the course of the administrative procedure On the basis of the above findings the Commission took the view that GVL's The applicant claims first that it was refusal to enter into commercial relations impossible to tell from the notice of with foreign artists who were not objections whether or not the artists who

2. Second submission: lack of competence For those reasons GVL maintains that on the part of the Commission there are several errors of fact in the decision at issue. Thus, for example, the Commission does not state why it is in The applicant argues that the Com- practice impossible for artists themselves mission does not have the power to to assert their rights (paragraph 20 of the adopt a decision once the infringement decision). In fact it is not at all has been terminated and points out that impossible for foreign artists to make it extended its offer to manage the rights agreements with visual and sound in question to the nationals of the other recording manufacturers abroad as a Member States by modifying its standard result of which they would also share in contract accordingly by a decision of its the rights of secondary exploitation. This general meeting of 21 November 1980. is particularly so in the case of those States in which artists have no rights on secondary exploitation, even in the The applicant claims that, from a legal national context, except indirectly point of view, Article 3 of Regulation through such agreements. No 17 only authorizes the Commission to take action in order to bring to an end the applicant's previous conduct. In the The defendant replies that in its notice of notice of objections the infringement in objections it used the term "foreign question was described as the refusal to artists" and that it even expressly conclude management agreements with observed that GVL made no distinction nationals of other Member States not between nationals of other Member resident in Germany. Once the applicant States and nationals of non-member put an end to that conduct the procedure countries. It states that the decision at intended to bring about that termination issue does not contain any finding in had achieved its object. relation to an infringement of Article 86 of the Treaty which was not included in the notice of objections. Furthermore the It follows from Article 89 (2) of the decision reproduces in detail the case put Treaty that a Commission decision forward by GVL (paragraphs 37 to 41) declaring the existence of an and examines it very closely (paragraphs infringement may only be taken if that

infringement has not been brought to an it to put an end to such infringement end. Likewise according to the applicant, (Articles 3 (1), 15 (2) and 16); Article 3 of Regulation No 17 does not provide for the making of such a finding except, incidentally, as a part of a (2) A decision requiring an undertaking decision designed to bring about the to bring an infringement to an end termination of the infringement. That but without imposing a fine or regulation contains no independent periodic penalty payments; power to adopt a decision to "record" an infringement which is already at an end. (3) A decision imposing a fine in respect of an infringement without, how- ever, requiring such infringement to Furthermore there is from the legal point be brought to an end because it no of view no longer any interest in longer exists in its original form or recording a past infringement since the because such a requirement is not applicant is prepared to offer, upon necessary for other reasons in the request, the possibility of participating in case in question; such a decision may the royalties system, even retroactively. contain in an appropriate case a requirement that no measures may be taken having the same effect as The defendant states in its defence that it the infringement, so as to eliminate has the impression, on reading the all doubt (Articles 3 (1) and 15 (2)); application, that GVL has, in fact, still not completely terminated the infringe- ment in question, contrary to what is (4) A decision declaring, after a pre- stated in paragraph 71 of the decision at liminary examination, that Article 85 issue. The applicant extends its (1) applies (Article 15 (6)); management services to foreign artists only if they possess the nationality of a Member State. It therefore excludes, even in its application, those who are (5) A decision taking provisional resident in another Member State but do measures (Article 3 (1)); not possess the nationality of a Member State. (6) A recommendation for the termin- ation of an infringement (Article 3 (3)). The defendant states that it did have the competence to adopt the decision at issue. Regulation No 17, which gives specific form to the task and the powers A Commission decision which merely of the Commission set forth in Anieles records a past infringement which has 155 and 89 of the Treaty, provides for a already been brought to an end when the series of measures which may be decision is adopted and does not impose summarized as follows: a fine or any requirements whatever has certain effects for the undertaking concerned. First, there is an effect of (1) A decision requiring an undertaking publicity (judgment of the Court of to bring an infringement to an end 15 July 1970 in Case 41/69 ACF and imposing a fine on it in respect Chemiefarma NV v Commission of the of such infringement and imposing European Communities [1970] ECR 661, periodic penalty payments to compel paragraphs 101 to 104 at p. 692).

Secondly, other effects have an impact p. 42; 20 October 1978 (WANO on the undertaking's position in the Schwarzpulver) Official Journal 1978, event of a repetition of the infringement. L 322, p. 26; 5 September 1979 (BP Thirdly, there are effects in disputes Kemi-DDSF), Official Journal 1979, between the undertaking and third L 286, p. 32; 17 December 1980 (Italian parties affected by its conduct. Such cast glass), Official Journal 1980, L 383, effects are less radical than those of a p. 19; 28 September 1981 (Italian flat decision imposing a fine. A decision glass), Official Journal 1981, L 326, p. which simply records the existence of an 32). The Commission also refers to the infringement should therefore be placed, judgment of the Court of 29 June 1978 in the list set out above, between the in Case 77/77 Benzine en Petroleum third and fourth types of measure.

Practical considerations [1970] ECR 733, paragraph 49 at pp. are in no way sufficient to enable the 760 and 761). Commission to extend, on its own initiative, the powers conferred upon it If the Commission did not have such a by the Council. power an undertaking could always bring the infringement to an end a short The applicant states, furthermore, that time before the adoption of a decision the history of Regulation No 17 shows requiring such termination, and then that the Council did not confer on the resume the infringement, terminate it Commission the power to declare an once more, and so on. infringement, a power which had been Furthermore it has been the Com- claimed by the Commission in the draft mission's standing administrative practice of that regulation. to take decisions which simply declare In its rejoinder the defendant adheres to that an infringement which has already the point of view expounded in its been terminated was in breach of the defence. rules of competition law.

It states that it Official Journal 1977, L 117, p. 1; follows from the Management Law, in 20 December 1977 (video cassette particular Paragraphs 1, 4, 6, 7, 8, 11, recorders), Official Journal 1978, L 47, 18, 19 and 20 thereof, that it should be

The defendant refers to the notice of Unlike organizations such as GEHA or objections (p. 26 et seq.) and the decision SABAM the applicant is the source of at issue (paragraphs 65 to 68). It adds only an insignificant amount of the that the Management Law merely income of the holders of rights which it provides that all undertakings wishing to represents. The rights of secondary carry on their activities in the form of exploitation vested in them provide only companies set up to exploit and manage a very small complementary income performers' rights must fulfil certain pre- which amounts on average to less than conditions and be subject to certain DM 3 000 per annum for each artist. obligations (judgment of the Court of 27 That means that the artists do not March 1974 in Case 127/73 Belgische depend on the applicant as the only Radio en Televisie and Société Belge des undertaking concerned with exploiting Auteurs, Compositeurs et Éditeurs v SV rights of secondary exploitation. SABAM and NV Fonior [1974] ECR 313, see especially paragraph 23 and the Opinion of Mr Advocate General Mayras). The defendant maintains that the relevant market is that of the management of rights, for a consideration, on behalf of artists. GVL's position on the market (b) GVL's dominant position may be compared to that of an estate agent. The market position of an estate agent is not based on supply and demand The applicant maintains that it is in the property market. Rather it is a necessary to define correctly the market question of knowing what possibilities on which the exchange of services there are for an owner wishing to sell of between performing artists and users of obtaining, in return for the payment of artistic performances takes place. a fee, certain services which consist in According to the applicant the artist the search for a purchaser and the enjoys rights of primary and secondary accomplishment of the tasks of an exploitation. As regards the former intermediary. rights, there is an exchange of services with promoters and with visual and sound recording manufactures" who are The amount of the royalty the artist therefore the partners of the artist. As receives from the exploitation of his right regards the latter rights, these, on the is irrelevant to any assessment of GVL's other hand, amount to much more than position on the market. In any case the consequential rights: either the artists amount referred to by the applicant will already have disposed of such rights amounts to a salary for a 13th month. in the contract for the exploitation of primary rights made with the aforementioned partners, or they reserve The Commission does not accept that such rights in order to have them sound recording manufacturers and the managed by GVL. In GVL's view it other partners referred to by the follows that the relevant market, where applicant are in competition with it: the holders of rights carry out their where a producer of gramophone activities themselves, is the market in the records has rights of secondary supply 'of and the demand for exploitation which the artist has assigned exploitation rights. A company set up to to him he looks to GVL for the payment exploit and manage performer's rights of the relevant royalty. He is therefore

The applicant claims, furthermore, that Thus performing artists are not GVL's an artist who wishes to conclude a trading partners in competition with each management contract with it must prove other as regards the exercise of their that he has rights which are capable of rights of secondary exploitation. Instead being managed in Germany. It cannot be they are to be regarded as consumers. under a duty to conclude management contracts on a basis of uncertainty. Furthermore, the applicant does not place artists at a disadvantage in the The defendant states that the pre- context of competition between national condition of having German residence and foreign artists. So far as an artistic has no connection with "the status of a service is concerned it is the performance holder of rights" of the artist in question. which is important and not financial Furthermore, GVL provided its services capacity. The applicant emphasizes that for Germans even where they were not national and foreign artists do not offer resident in Germany and it was not it the same services, as is clear.from a certain that they had "the status of a comparison of subparagraphs (1) and (3) holder of rights", since it was possible of Paragraph 125 of the Copyright Law. that there had been assignments. So far as the applicant is concerned, what matters is to know in the first place, in regard to foreign artists, Furthermore, the question whether the whether and to what extent performers' artist is actually the holder of the rights rights exist. As the defendant itself which he claims to have arises only at admits, such rights have quite different

features and some do not even exist. In production of the rights of secondary any case, for the most part, 'they cannot exploitation which they hold. For all of be compared with the legal position of them the remuneration received is such rights in Germany. determined by the royalties paid by the users. The Commission states once again that GVL required foreign artists to furnish proof that they resided in It is not just a question whether foreign Germany and that such residence was of artists may benefit in Germany from no significance as regards the actual performers' rights pursuant to Paragraph existence of rights of secondary 125 (1) of the Copyright Law. There is exploitation. another, fundamental, question, namely whether the foreign artists have already disposed of their rights in some other manner: for example, by recording If the applicant had, prior to the contracts with foreign producers. The conclusion of the management contract, applicant explains that it did no more asked for proof not only of residence in than require foreign artists, as a pre- Germany but also of the existence of condition to entering into a management rights capable of exploitation in contract with them, to prove that they Germany — and there is nothing in the still had rights which might be exploited file relating to the administrative in the Federal Republic of Germany. procedure to indicate that such was the Those were the reasons why GVL asked case — this would have amounted to foreign artists to provide evidence of further discriminatory treatment. It is residence in Germany. plain that the applicant did not demand such proof from German artists even if they resided abroad, although those artists, too, might already have disposed The defendant replies, that the exchange of their rights elsewhere. of consideration between GVL and the artists, as described in paragraph 49 of the decision, is the criterion for determining the status of "trading (e) Grounds of justification parties" within the meaning of subpara- graph (c) of the second paragraph of Article 86 of the Treaty. GVL places The applicant states that the different foreign artists at a disadvantage by treatment of national and foreign artists depriving them of a means of exploiting is justified by the different conditions their, work. Thus the foreigner is forced relating to their acquisition of per- to demand higher fees if he wishes to formers' rights. There are differences, obtain the same profit from his work as inter alia, with regard to the origin of his German counterpart who, unlike the such rights, to their transfer to GVL, to foreigner, receives income from the distribution of royalties and to the secondary exploitation. absence of reciprocity.

of the performers' rights of artists having by foreign artists not resident in German nationality or resident in Germany, the applicant will be able to Germany. Artists who first propose their agree with such a user higher royalties services within the field of application of under general contracts made with him. another legal system do not as a general When the applicant states that previously rule have independent performing rights the royalty was the "first" means of in Germany or are paid in some other satisfying the rights claimed by national manner under the rules of some other artists it sounds as if it regards the system of law or of royalties prevailing in royalty as having compensated for more

The applicant the applicant on the subject of the does not do business with performing transfer of rights. In any event it must be artists in the framework of inter-State presumed that there are also national trade but only manages legal rights to artists who enter into contracts with the payment of royalties which may foreign sound recording manufacturers. accrue in Germany. The applicant does not seem to see any difficulties in that situation. Furthermore the decision asserts, theor etically, the existence of an appreciable Reciprocity is not a precondition for the effect on inter-State trade whereas the recognition by the German legislature of defendant has undertaken no inquiry secondary exploitation rights held by whatever on this point. foreigners not resident in the Federal Republic of Germany.

of national artists. However, since the appreciable effect, the Commission user of musical works will in future explains that it is sufficient for GVL's receive more from the applicant in so far conduct to be capable of affecting trade as he will be freed from the secondary to an appreciable extent. The number of exploitation rights which may be claimed artists who have complained to the

Decision

1 By application lodged at the C o u r t Registry on 8 J a n u a r y 1982 the Gesellschaft z u r V e r w e r t u n g von Leistungsschutzrechten m b H , a limited c o m p a n y having its registered office in H a m b u r g (hereinafter referred to as " G V L " ) b r o u g h t an action u n d e r the second p a r a g r a p h of Article 173 of the E E C T r e a t y for a declaration that the Commission's decision of 29 O c t o b e r 1981 relating t o a proceeding u n d e r Article 86 of the E E C T r e a t y ( I V / 29.839 — G V L ) which was c o m m u n i c a t e d to the applicant on 9 N o v e m b e r 1981 and was published in the Official J o u r n a l (Official J o u r n a l 1981, L 370, p. 49) was void.

2 T h e applicant is the only copyright m a n a g e m e n t c o m p a n y in the Federal Republic of G e r m a n y which deals with the protection of copyright and of

JUDGMENT OF 2. 3. 1983 — CASE 7/82

the rights, described as being related to copyright, namely performers' rights. In particular it undertakes the collection and distribution of the royalties to which performing artists are entitled by virtue of the provisions of the German Copyright Law (Urheberrechtgesetz) where their performance, which has previously been recorded on visual or sound recordings with their consent, is broadcast or disseminated to the public in some other manner ("secondary exploitation").

3 Prior to 21 November 1980 the applicant refused to conclude management contracts with performing artists who were neither German nationals nor resident in the Federal Republic of Germany or to protect the rights of such artists in Germany in any other way. From that date it terminated that practice by amending its articles of association and its standard management agreement in such a way that any performing artist established in the territory of one of the Member States of the European Community would be permitted to enter into a management contract and would receive his share of the income from royalties, even retroactively.

Third submission: Article 86 does not apply to the applicant as the latter must be regarded as an undertaking entrusted with the operation of services of general economic interest within the meaning of Article 90 (2) of the Treaty;

Fourth submission: The conduct of the applicant to which the Commission objects is not capable of affecting trade between Member States;

Fifth submission: That conduct cannot be considered to be an abuse of a dominant position within the meaning of Article 86 of the Treaty; in particular the applicant did not apply dissimilar conditions to equivalent transactions with its trading partners (Article 86, second paragraph, sub- paragraph (c)).

First submission: infringement of essential procedural requirements

7 The applicant claims in the first place that the Commission infringed Article 19 (1) of Regulation No 17 of the Council of 6 February 1962, First regu- lation implementing Articles 85 and 86 of the Treaty (Official Journal, English Special Edition 1959-1962, p. 87), and Article 4 of Regulation N o 99/63/EEC of the Commission of 25 July 1963 on the hearings provided for in Article 19 (1) and (2) of Regulation No 17 of the Council (Official Journal, English Special Edition 1963-1964, p. 47) inasmuch as the Commission based its decision on complaints other than those in relation to which the applicant had had the opportunity to make its views known.

s With regard to that allegation the applicant contends that the Commission did not make it sufficiently clear in its notice of objections that the objections related not only to the refusal to conclude management agreements with nationals of other Member States but also to cases where artists were resident in a Member State without being nationals of that State. This lack of clarity is said to be particularly unfortunate since the complaint which gave rise to the notice of objections, that is to say the complaint lodged in London by Interpar, did not raise the question of the position of artists who were resident in a Member State without being nationals of that State.

1 3 It must be added that the contested decision sets out and discusses in its recitals the essential features of the observations submitted on behalf of GVL during the hearing of that undertaking on 12 February 1981.

GVL v COMMISSION

i4 The applicant finally contends that the Commission's refusal to take into account the observations submitted resulted in various errors of fact being made in the decision. Those complaints can, however, be examined only in the context of the substantive submissions to which they relate.

is Consequently the first submission must be rejected.

S e c o n d s u b m i s s i o n : l a c k of c o m p e t e n c e

i6 In making this submission the applicant contends that the Commission lacks the power to declare, by means of a decision, that the rules of Community law on competition have been infringed when the infringement has been terminated by the undertaking in question. Such a power arises neither from the provisions of the Treaty nor from those of Regulation N o 17.

2i From a practical point of view the defendant draws attention to the fact that if the Commission did not have the power to make a simple declaration it would always have to impose a fine in order to prevent the undertaking in question from subsequently resuming its infringement after it had brought it to an end a short time before a decision requiring it to terminate the infringement had been adopted.

22 It should be observed in the first place that, as the defendant has rightly pointed out, the provisions of Regulation N o 17, and in particular those provisions which prescribe the measures to be adopted by the Commission in order to ensure that Articles 85 and 86 of the Treaty are applied, must be interpreted within the framework of the rules on competition contained in the Treaty. Those rules are based on the premise, which finds expression in particular in Articles 87 (2) (d) and 89, that it is for the Commission to ensure the rules on competition are applied by undertakings and to determine, where necessary, whether there has been an infringement of those rules.

23 As is clear from the recitals in the preamble to Regulation No 17 and from Article 87 (a) of the Treaty, the purpose of Regulation No 17 is to ensure compliance with the rules on competition by undertakings and, to that end, to enable the Commission to require undertakings to bring to an end any infringement which it establishes and to impose fines and periodic penalty payments in respect of an infringement. The power to take decisions of such a type necessarily implies a power to make a finding that the infringement in question exists.

27 In those circumstances the Commission was entitled to take the view that there was a real danger of a resumption of that practice if GVL's obligation to terminate it were not expressly confirmed and that consequently it was necessary to clarify the legal position.

28 It follows from the foregoing that a legitimate interest on the part of the defendant to establish by means of the contested decision, an infringement of the rules on competition prior to the amendment of the applicant's articles of association has been adequately demonstrated and that therefore the second submission must be rejected.

JUDGMENT OF 2. 3. 1983 — CASE 7/82

T h i r d s u b m i s s i o n : a p p l i c a t i o n of A r t i c l e 90 of t h e T r e a t y

29 The third submission is to the effect that GVL is an undertaking entrusted with the operation of services of general economic interest within the meaning of Article 90 (2) of the Treaty and that therefore it is subject to the rules on competition only in so far as the application of such rules does not obstruct the performance of the particular tasks assigned to it.

30 For the purposes of that submission the applicant relies on the German Gesetz über die Wahrnehmung von Urheberrechten und verwandten Schutzrechten [Law on the Management of Copyright and Related Rights] (Bundesgesetzblatt I, p. 1294) which provides, inter alia, that a management company such as GVL must be officially authorized, is subject to monitoring by the Patentamt [Patent Office] and is under a duty to conclude certain management agreements.

35 In that connection the decision states (paragraph 63) that GVL's refusal to assume responsibility for exploitation of the rights of foreign artists resident in a Member State other than the Federal Republic of Germany hindered the creation of a uniform market for services in the Community. Such foreigners could not avail themselves of GVL's services. The cross-frontier movement of services within the Community which would have developed had it not been for GVL's refusal was therefore hindered within the Community. This restriction of the movement of services was appreciable, moreover, since a multitude of foreign holders of rights were prevented from exploiting their rights in Germany.

36 The applicant denies that the effect on trade between Member States was appreciable. It argues that at the commencement of the administrative procedure there was but one complaint, and that came from Interpar. Sub- sequently only one further case, which concerned a choir of Italian moun- taineers, was drawn to the attention of the Commission. The nine artists referred to as complainants in the decision all belonged to the same group. The applicant itself had never previously received any request for the management of performers' rights from foreign artists except in very special cases. GVL's previous practice therefore had a negligible impact on trade between Member States.

37 It is necessary to recall that in order to determine whether trade between Member States is capable of being affected by an abuse of a dominant position in the relevant market for the puposes of Article 86 of the Treaty, account must be taken of the consequences for the effective competitive structure in the common market (judgment of 6 March 1974 in Joined Cases 6 and 7/73 Istituto Chemioterapico Italiano SpA and Commercial Solvents Corporation v Commission of the European Communities [1974] ECR 223).

42 The applicant acknowledges that the service it provides consists of the management of performers' rights of secondary exploitation and that it is the only undertaking in the Federal Republic of Germany engaged in such management. Nevertheless, it maintains that it is not the only trading partner of performing artists since the latter may exploit their rights of primary exploitation and may therefore exchange services with, for example, promoters or sound recording manufacturers.

43 The defendant contends that the applicant's reasoning is based on a misund- erstanding as to the relevant market to be taken into account. According to the defendant the relevant market is not that of the exchange of services in the field of the performance of artistic works but that of the management of the royalties due to performing artists as a result of the secondary exploitation of their performances. That is the market in which GVL has a dominant position.

44 In that connection the decision finds (paragraph 45) t h a t the m a r k e t in which G V L is active is the m a r k e t in services relating to the m a n a g e m e n t of secondary exploitation rights vested in performing artists and manufacturers in G e r m a n y , w h i c h m a y be precisely differentiated from the activities of other u n d e r t a k i n g s engaged in the exploitation of rights. G V L has a de facto m o n o p o l y in t h a t m a r k e t in G e r m a n y , that is t o say in a substantial part of the c o m m o n market.

GVL v COMMISSION

45 The Court considers that these findings are correct and that therefore the first part of the submission cannot be upheld.

JUDGMENT OF 2. 3. 1983 — CASE 7/82

so The applicant is of the opinion that that view of the law is confirmed by Paragraph 6 (1) of the German Management Law of 1965. According to that provision a company set up to exploit and manage performers' rights is under a duty to manage the rights falling within its field of activity at the request of the holders of those rights "where the latter are German nationals within the meaning of the Basic Law or are resident in the areas in which the present statute is in force," that is to say in the Federal Republic of Germany.

si The defendant concedes that disparity exists between national laws and that the majority of the laws of the other Member States are less comprehensive than the German Law as regards secondary exploitation rights. Nevertheless those facts cannot justify the refusal to conclude contracts with foreign artists who are not resident in the Federal Republic of Germany since that refusal deprives them of the opportunity of proving that they do in fact hold the rights in question.

52 The Court notes in the first place that Paragraph 6 of the Management Law, whilst requiring management companies to manage the rights of all artists of German nationality or resident in the Federal Republic of Germany, does not prevent such companies from pursuing their activities on behalf of other artists. This interpretation of the Law was confirmed by implication by the Patentamt [Patent Office] when it approved the amendment made to GVL's articles of association on 21 November 1980.

53 It should next be observed that the freedom thus left to GVL by the Law is limited by the provisions of the Treaty, in particular those in the field of competition, especially as GVL occupied a dominant position in a substantial part of the common market.

ss Thus the fifth submission cannot be accepted and it is not necessary to examine the other parts of that submission, in particular concerning the allegation of discrimination as contemplated by subparagraph (c) of the second paragraph of Article 86 of the Treaty.

59 The application must therefore be dismissed.

Costs

60 Pursuant to Article 69 (2) of the Rules of Procedure the unsuccessful party is to be ordered to pay the costs. Since the applicant has failed in its submissions, it must be ordered to pay the costs.

OPINION OF MR: REISCHL — CASE 7/82

O n those g r o u n d s ,

Delivered in open court in L u x e m b o u r g o n 2 M a r c h 1983.

P. H e i m J. Mertens d e W i l m a r s

Registrar President

OPINION OF M R ADVOCATE GENERAL REISCHL D E L I V E R E D O N 16 N O V E M B E R 1982 '

Mr President, Leistungsschutzrechten mbH (hereinafter Members of the Court, referred to as "GVL"), whose registered office is in Hamburg, in relation to per- The subject of the case on which I am forming artists who were not of German giving my Opinion today is a nationality but did have the nationality Commission decision of 29 October 1981 of one of the Member States of the (Official Journal 1981, L 370, p. 49) European Communities or were resident taken in pursuance of Article 86 of the in a Member State. For the purposes of EEC Treaty and Regulation No 17 of understanding the case I should like the Council of 6 February 1962 (Official simply to recall to mind the main factual Journal, English Special Edition 1959- and legal points and as regards the 1962, p. 87). It concerns the past conduct details refer the Court to the account of the Gesellschaft zur Verwertung von given in the Report for the Hearing.

1 — Translated from the German.