• 22/05/2019

    EU to examine SABAM’s tariffs for festivals and concerts

    Despite its small size, Belgium is a real hotspot for music lovers. It has some world-class concert venues and is the home of countless – some of which are award winning – festivals that cover the entire music spectrum and attract hundreds of thousands of national and international visitors each year.  

    Organising a concert or festival requires hard work and comes with responsibilities. One of the tasks for an organiser is clearing the copyrights for the music played at the event. In most cases, such clearance is sought via copyright collecting societies, such as SABAM in Belgium.

    In 2017, SABAM – which has a monopoly for music author rights – unilaterally decided to increase its tariffs for festivals and concerts. Over thirty organisers joined forces and brought proceedings against SABAM for unfair market practices and abuse of dominant position.

    The dispute has been taken to the European level, following two recent judgments. Both the European Commission and the Court of Justice of the EU (‘CJEU’) have been asked to ‘shine a light’ on SABAM’s tariffs.

    1. First instance: SABAM’s tariffs are unlawful

    On 12 April 2018, the Dutch-speaking Commercial Court of Brussels ruled in favour of the organisers. The Court found that SABAM was indeed guilty of unfair market practices and had abused its dominant position, by, among other things, “(i) increasing the tariffs for festivals to a considerable level (by up to 37%), (ii) refusing to deduct costs other than reservation costs, VAT, municipal taxes, public transport costs from the basis for calculating the fees, (iii) failing to take sufficient account of the number of works from Sabam’s repertoire that are performed and (iv) applying very high minimum tariffs that are disproportionate to the works that were performed.” 

    2. Appeal: ‘amicus curiae’ requested from the Commission

    SABAM appealed the Commercial Court’s judgment. In its judgment of 10 April 2019, the Court of Appeal of Brussels decided to stay the proceedings to request an ‘amicus curiae’ (i.e. a non-binding opinion) from the European Commission. More specifically, the Court has requested the Commission to:

    –       give its opinion on SABAM’s tariffs and tariff structure in light of the prohibition set out in Article 102 TFEU, in particular to compare the tariffs and tariff structure of SABAM with those of other collective societies with a similar objective to that of SABAM and which have a monopoly in the EU, together with a substantive opinion on whether there is an infringement of competition law (Article 102 TFEU); and

    –       provide for information of a procedural nature, more specifically whether the Commission is aware of similar cases or of any litigation or measure that might be pending at the European Union level.

    3. Parallel proceedings: referral to the CJEU for a preliminary ruling

    In another case between SABAM and two other festivals, the Commercial Court of Antwerp decided to stay the proceedings as well and to refer the case to the CJEU for a preliminary ruling. The two questions that have been referred are:

    Should Article 102 TFEU, whether or not read in conjunction with Article 16 of Directive 2014/26/EU

    on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online use in the internal market, be interpreted as meaning that there is an abuse of a dominant position when a collecting society which has a factual monopoly in a Member State applies a remuneration model based, inter alia, on the turnover of organisers of musical events in respect of the right to communicate musical works to the public, 

    1.    using a fixed ‘disc’ rate instead of a rate which takes account of the precise share (using ever evolving technical means) of the repertoire protected by the collecting society in the music played during the event?

     2.    that licence fees also depend on external elements, such as the income price, the prices of consumptions, the artistic budget for the performers and the budget for other elements, such as décor?” 

    4. Up next: the waiting game 

    It will be interesting to see how the European Commission fulfills its role as ‘amicus curiae’ of the Brussels Court of Appeal and what the CJEU’s answer will be to the request for a preliminary ruling from the Antwerp Commercial Court, as they might no doubt also have an impact on the practices of and complaints and proceedings launched against other collecting societies in the EU.

    Carmen Verdonck – Partner
    Alexander De Bleeckere and Steffie De Cock – Associates
    Altius

     

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    • 21/05/2019

    New prohibition in Belgium on the abuse of economic dependence

    On 21 March 2019, the Federal Belgian Parliament adopted an Act amending the Code of Economic Law (“CEL”) regarding abuses of economic dependence, prohibited terms and unfair market practices in B2B relationships. The Act extends the powers of the Belgian Competition Authority (“BCA”) to situations where there is an anticompetitive abuse by an undertaking, even if that undertaking does not have a dominant position. The Act also offers businesses rights comparable to those of consumers by allowing them to defend themselves against other companies’ unfair, aggressive or misleading practices. The article below focuses on the new prohibition on the abuse of economic dependence.

    Departure from EU competition law

    Following the example of different other EU Member States, such as France, the Belgian legislator has, after a long legislative ‘journey’, adopted an act that could significantly affect competition law’s application in Belgium. In the past, restrictive practices prohibited by the Belgian competition rules (like the EU rules) were limited to anticompetitive agreements and abuses of a dominant position. With this new law, the Belgian legislator is introducing a third type of restrictive practice, namely the abuse of economic dependence, which is currently not present in EU competition law.

    Position of submissiveness

    For an undertaking to infringe the new prohibition, the “victim-undertaking” must have a position of economic dependence.

    The new Article I.6, 4° CEL defines economic dependence as “an undertaking’s position of submissiveness towards one or more other undertakings that is characterised by the absence of a reasonable equivalent alternative, available within a reasonable period of time, and under reasonable conditions and costs, allowing this or each of these undertakings to impose obligations or conditions that cannot be obtained under normal market circumstances.

    The Act does not contain further indications on how such a position of economic dependence should be assessed. For undertakings and practitioners, it therefore remains to be seen which factors will be used in case law to find an economic dependence situation. Elements that might be relevant in this regard could possibly include: the relative market power of an undertaking, the share of the other undertaking in one’s own turnover, the technology or know-how held by an undertaking, the strong reputation of a brand or the scarcity of a product, the purchasing loyalty of consumers, and the access to essential resources or infrastructure by the economically-dependent undertaking.

    The finding of a position of economic dependence will, however, just like the finding of a dominant position, be determined on a case-by-case basis.

    Abusive behaviour

    The mere fact that an undertaking is in a position of economic dependence is not sufficient to find that the undertaking, from which it is dependent, has infringed the new prohibition of competition law. There must also be some type of abusive behaviour. Indeed, the new Article IV.2/1 CEL states “it is prohibited for one or more undertakings to abuse a position of economic dependence in which one or more undertakings is/are economically-dependent on it or on them, where competition is likely to be affected on the Belgian market concerned or a substantial part of it. The following may be considered as an abusive practice: 1° refusing a sale, a purchase or other transaction terms; directly or indirectly imposing unfair purchase or sales prices or other unfair contract terms; limiting production, markets or technical development to the detriment of users; applying dissimilar conditions to equivalent obligations towards economic partners, thereby putting them at a disadvantage in competition; or making the conclusion of contracts dependent on the acceptance by the economic partners of additional obligations that, by their nature or according to commercial usage, have no connection with the subject matter of such contracts.”

    It should be noted that the list of abusive practices in the context of economic dependence corresponds almost identically (with the exception of the addition of 1°) to the existing list in Article IV.2 of abusive practices in the context of a dominant position. Future case law will therefore have to make clear whether the interpretation of this new provision will follow the existing case law on the abuse of a dominant position.

    Second, it is important to remark that an actual effect on competition is not required since a potential effect on competition is sufficient.

    Fines of up to 2% of annual turnover

    The fines provided for this new type of restrictive practice differ from the fines for the existing infringements of anticompetitive agreements and abuse of dominance. While for the latter two a fine can be imposed of up to 10% of the undertaking’s previous year’s turnover (at the group level), the maximum fine for abuse of economic dependence is substantially lower. The fine for abuse of economic dependence is capped at 2% of the previous year’s turnover of the undertaking (at the group level) or association of undertakings. Importantly, the 2% fine cap for abuse of economic dependence will be calculated on the Belgian turnover, while in the future (after the entry into force of another new Act) the 10% fine cap for anticompetitive agreements and abuses of dominance, will be calculated on the worldwide turnover.

    Interesting times ahead

    Undertakings still have some time to prepare for the application of the prohibition on abuse of economic dependence. This new prohibition only enters into force one year after the publication of the new Act in the Belgian Official Gazette. For the moment, no such publication has happened.

    As the prohibition on abuse of economic dependence is completely new in Belgian competition law, it remains to be seen how this provision will be applied in practice and enforced by the BCA and Belgian courts. The BCA has already indicated that it needs more financial means if it is to investigate additional infringements of the abuse of economic dependence without reducing its activities regarding the existing competition law provisions (not only cartels and abuse of dominance, but also of course merger control). However, although the prohibition of abuse of economic dependence is included in Book IV of the CEL, it is not only within the BCA’s competence. Undertakings that are economically-dependent and that are subject to restrictive practices by their trading partner will be able to bring an action before the judicial courts in the context of private enforcement (as is also the case for cartels and abuses of dominance). A party prejudiced by such an infringement may therefore choose to file a complaint with the BCA on the one hand, or to follow the path of private enforcement by bringing an action before a judicial court. The future will have to show how, and how intensely, the new prohibition will be publicly and privately enforced.

    Carmen Verdonck – Partner
    Beatrijs Gielen and Nina Methens – Associates
    Altius

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    • 07/05/2019

    Czech Competition Authority fines Booking.com

    Following an inquiry into vertical aspects of online platforms and distribution channels, the Czech Office for the Protection of Economic Competition recently found that online travel agency (OTA) Booking.com had included most-favoured-nation (MFN) clauses in its agreements with hotels in the Czech Republic between 1 May 2009 and 30 June 2015. According to the Office, these clauses distorted competition on the Czech online booking platform market for hotels and possibly also other EU countries and therefore constituted a breach of Czech competition law. The Office imposed a fine of CZK 8.3 million.

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    • 02/05/2019

    State aid and the construction of a congress and sports centre: the Katowice International Congress Centre case

    In a decision of 17 July 2013, the Commission came to the conclusion that financing the multifunctional International Congress Centre in Katowice (“ICC”) by the European Fund for Regional Development (under the Regional Operational Programme of the Silesia Province) and the City of Katowice was compatible with the internal market pursuant to Article 107 (3) (c) TFEU as necessary and proportionate.

    The case

    In 2011-2015, a new International Congress Centre was built in Katowice, Poland. The new structure was a multifunctional congress centre designed to accommodate conferences, exhibitions and cultural, educational and sporting events. The total number of conference seats in the ICC is 12,000, with the multi-purpose hall capable of accommodating around 8000 persons for conferences, a banquet hall for 1000 persons, a banquet hall foyer for 300 persons, an auditorium for 600 persons, conference rooms for 1200 persons and exhibitor offices for 100 persons, with the total exhibition space of 12,600 m2. The multifunctional character of the infrastructure enables the operator to organise any event, including spectator sport events such as tennis, boxing, volleyball or equestrian competitions.

    The ICC construction was funded only with public money – by the European Fund for Regional Development under the Regional Operational Programme of the Silesia Province for 2007-2013 (73.3%) and the City of Katowice (26.7%). Public funding covered only the development of the infrastructure. The facility belongs to the City of Katowice and is run by an independent private operator. The operator rents out the facility to various users (both professional and non-professional), with no main or captive user. All users/organisers of events at the ICC pay market- oriented fees determined by the operator. The intention of the City of Katowice was that it would organise free events in the facility (within the scope of no-fee days reserved for the City in the ICC). In addition, all such events (e.g. cultural, educational, entertainment and sports) were to be addressed to the general public at no cost or at low cost, and their vast majority was to be non-commercial and intended for non-professional users (inhabitants of the City of Katowice and the region).

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    • 02/05/2019

    State Aid and Sports – The tax benefit scheme in the Hungarian sport sector

    Interesting decisions from the Hungarian government came out in January-February 2019 regarding the unique Hungarian tax benefit scheme operating in the sport sector since 2011. Namely, in January 2019, quite surprisingly, the government limited the total donation amount in 50 billion Hungarian forints (approx. EUR 150 million) for the donation period of 2019-2020. With another government decision issued 3 weeks later, this amount was suddenly increased to HUF 125 billion.

    These decisions also show that during its 8-year-long existence the operation of the tax benefit system has raised several – mostly political – issues and questions, and has periodically been in the focus of attention. But what is this all about and how does the scheme function?

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    • 02/05/2019

    Alleged State aid to Glenmore Lodge

    State aid SA.37963 (2014/NN) (ex 2013/CP) – United Kingdom
    Alleged State aid to Glenmore Lodge

    State aid SA.38208 (2014/NN) (ex 2014/CP) – United Kingdom
    Alleged State aid to UK member-owned golf clubs

    Background

    This note discusses the Commission’s decision in the State Aid case of Glenmore Lodge (SA 37963) and Member-Owned Golf Clubs (SA 38208). Both of these decisions relate to state aid and public support in the sports sector. These cases are particularly interesting from the perspective of when a sporting situation can be deemed to give rise to cross-border effects for the purpose of Article 107 TFEU and 108 TFEU.

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    • 02/05/2019

    State aid and football stadiums: A Belgian case

    On 20 November 2013, the European Commission approved, under EU State aid rules, a notified support scheme for the construction or renovation of football stadiums in the Belgian regions of Flanders and Brussels, which would be financed by the Flemish Government.

    In 2008, the Flemish Government had analysed the need for and feasibility of multifunctional football stadiums in Flanders and Brussels given that the then current infrastructure no longer qualified as suitable venues for hosting international games (UEFA or Champion League finals) and that there were also difficulties in finding an appropriate venue for the national team’s home games. The banks would have been reluctant to provide loans for large infrastructure projects that did not benefit from any state funding and it would therefore have been impossible for football clubs to construct or renovate their respective football stadiums without the Flemish Government’s financial support. Thus, the scheme’s aim was to improve stadium-quality by ensuring that they would meet the UEFA criteria for European football games while also upgrading outdated or building new infrastructure. At the same time, the measure’s objective was to put football’s social role high on professional football clubs’ agendas through the realisation of multifunctional stadiums that would ensure a higher ‘social return’. This would include initiatives for fitness and health, educational projects, integration projects or the organisation of other sports and cultural events.

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    • 02/05/2019

    CYPRUS – €30 mln aid for the construction of a new football stadium in Limassol for the benefit of the three local teams playing in the main football league

    The case

    Although there is no available official European Commission decision or press release, this case concerns a “prenotification” which was made to DG COMP by the end of 2016.

    The case relates to the construction of a new football stadium in Limassol, Cyprus which is intended to meet the UEFA Champions League specifications. Its cost is expected to exceed €30 mln.

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    • 29/03/2019
    The Antitrust Alliance recognized as the leading european network for competition law

    The Antitrust Alliance recognized as the leading european network for competition law

    The legal directory Chambers Global 2019 has ranked the Antitrust Alliance in Band 1, as the only alliance of European law firms specialized in competition law. Thus, the network consolidates itself as the most prestigious in this practice area.

     Chambers highlights our strategic position on the European legal landscape when designing regulatory compliance strategies that are cross-border: “Its members assist clients seamlessly across jurisdictions with international dawn raids, competition authority investigations, merger control, cartel investigations and compliance programs.”

    From the Alliance, we emphasize the role of competition law for business success since collaboration between national authorities, especially among the European Union, is growing in a global landscape of more and more frequent joint investigations. As consequence, companies have a greater need for strategic and multijurisdictional advice.

    Congratulations to all the members of the Antitrust Alliance: Altius (Belgium), Arnecke SIbeth (Germany), Charles Russell Speechlys (UK), Chrysses Demetriades & Co. LLC (Cyprus), Danowsky & Partners (Sweden), Grall & Associés (France), Horten (Denmark),  Kneppelhout & Korthals Advocaten (Netherlands), Lupicinio International Law Firm (Spain), Monckton Chambers (UK), Pierstone (Czech Republic), Rucellai e Raffaelli (Italy), SBGK Attorneys at Law and Patent Attorneys (Hungary), Tark Grunte Sutkiene (Latvia/Lithuania),  Wardyński & Partners (Poland).

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    • 28/03/2019

    France: Public support for the construction and renovation of nine stadiums in order to host the UEFA EURO Championship in 2016

    In this decision dated 18 December 2013, the European Commission (“Commission”) considered French public support for the construction and renovation of nine stadiums in order to host the UEFA EURO Championship in 2016 to be consistent with EU State aid rules.

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