Groundbreaking Decision On Supervision Of Collective Management Of Copyright Works

• Jurisdiction: Republica Checa
• Law Firm: Havel & Partners s.r.o.
• Subject Matter: Antitrust/Competition Law, Intellectual Property, Antitrust, EU Competition , Copyright
• Author: Vladislav Bernard, Lenka 'tikov' Gachov', Robert Neruda and Ivo Tati&#269
• Published date: 31 July 2023

At the end of last month, the Regional Court in Brno declared null and void two decisions of the Office for the Protection of Competition, which fined collective management entities, OSA and INTERGRAM, for alleged abuse of dominant position. The Court (in line with the reasoning proposed by HAVEL & PARTNERS) concluded that the activities of collective management entities carried out under the Copyright Act should be supervised by the Ministry of Culture, not by the Office for the Protection of Competition. The judgment is relevant not only for competition law, but also for the whole field of collective management and enforcement of intellectual property rights.

The Czech Office for the Protection of Competition (the "Office") imposed fines on two collective managers of copyright works in 2020 and 2021 for alleged abuse of a dominant position. The Office reproached them for not taking into account room occupancy when setting the royalty rates charged to operators of accommodation facilities. Ochrann' svaz autorsk' ("OSA") was fined almost CZK 11 million by the Office. The other collective rights manager, INTERGRAM, was fined almost CZK 21 million for the same conduct.

Both cases are interesting from the competition law perspective. The Office found that both cases involved abuse of a dominant position in the form of the application of unreasonable commercial terms. It follows from the published decisions that the Office did not consider whether the final rates could be considered to be excessive or whether the conduct had an impact on end consumers.

Thus, the Office followed a different methodological approach than, for example, the Slovak Competition Authority in the case of the collective manager LITA in which it assessed a similar practice as charging excessive prices (i.e. it assessed the final amount of the rates, not the way they were determined). Indeed, the incorrectness of the Office's procedure in this respect was also argued by OSA during the administrative and judicial proceedings, as the Office replaced the established competition law test with a vague "reasonableness" assessment.

Both OSA and INTERGRAM defended themselves against the respective decisions of the Office by filing a lawsuit with the Regional Court in Brno. In addition to competition law arguments, OSA argued that the Office had no authority whatsoever to assess the conduct in...