ACCC proposes to re-authorise collective administration of music performing rights by APRA

The Australian Competition and Consumer Commission has issued a draft decision proposing to re-authorise* arrangements whereby the Australasian Performing Rights Association administers and licences performing rights in musical works in Australia, ACCC Chairman, Mr Graeme Samuel, said today.

"By virtue of these arrangements APRA controls performing rights in virtually the entire world wide repertoire of musical works within Australia. Any person seeking to publicly perform or broadcast a musical work requires a performing rights licence to do so".

APRA's arrangements were first authorised by the Australian Competition Tribunal in July 2000. APRA has sought re-authorisation on the same terms as authorised by the Competition Tribunal.

"The ACCC considers that APRA's collective administration of performing rights generates significant public benefits. It is far more efficient for APRA to administer performing rights than it would be for a number of competing societies to do so. Cost to composers in administering performing rights and monitoring use of works are reduced. Similarly, users' costs are reduced as they enjoy unfetted access to virtually any work in the world musical repertoire through a single performing rights licence. APRA's arrangements also save on the negotiation costs that composers and users would otherwise incur in having to deal with each other either directly or through a number of collection societies", Mr Samuel said.

Similarly APRA's arrangements contain enforcement costs and protect incentives for the creation of new works more effectively than would otherwise be the case.

However, these benefits of APRA's arrangements, while significant, also come at considerable cost to users, and the community more broadly.

APRA has a virtual monopoly in respect of performance rights licences in Australia. By generally taking exclusive assignment of its members rights APRA's arrangements effectively foreclose any realistic prospect of music composers and users dealing directly in most instances. Similarly, APRA's propensity to only offer users licences covering its entire repertoire, irrespective of the needs of the users, eliminates any incentive for music composers and users to negotiate performing rights licences other than through it.

APRA is constrained, to some extent, in its exercise of its monopoly power by the Australian Copyright Tribunal (Copyright Tribunal) which is empowered to determine the 'reasonableness' of licence terms and conditions. However, seeking recourse to the Copyright Tribunal is generally a costly and time consuming process, limiting its utility to users and consequently, the extent to which it constrains APRA's exercise of its market power.

However, if a number of competing collection societies each administered performing rights in respect of part of APRA's repertoire, it is not clear that there would be much competition between them, particularly in licensing rights to users who required access to the repertoires of a number of, or most, societies.

On balance, given the uncertainty about how the market would react if APRA ceased to collectively administer virtually all performing rights in Australia, the ability of the Copyright Tribunal to constrain APRA's exercise of its monopoly power to some extent and the significant public benefits generated by APRA's arrangements, the ACCC considers that APRA's arrangements are likely to generate public benefits which would outweigh any public detriment. The ACCC proposes to grant authorisation for four years.

However, the ACCC notes that modifications could be made to APRA's existing arrangements which could provide some additional competitive constraint on its exercise of its monopoly power. In particular, it is within the jurisdiction of the Copyright Tribunal to require APRA to provide licences to users that, by requiring APRA to discount licence fees where the user has negotiated some rights directly at source, would provide incentives for direct dealing between composers and users. The ACCC encourages the Copyright Tribunal to consider the appropriateness of such licences should users express a preference for them in proceeding before it.

The ACCC will now engage in a further round of public consultation before proceeding to make a final decision in respect of APRA's arrangements.
More information regarding the applications and a copy of the Draft Determination are available by following the Mergers and authorising anti-competitive conduct and Authorisations links on the ACCC's website.

*The ACCC has the function, through the authorisation process, of adjudicating on certain anti-competitive practices that would otherwise breach the Trade Practices Act 1974. Authorisation provides immunity from court action, and is granted where the ACCC is satisfied that the practice delivers a net public benefit.