European Commission's Thierry Breton launches a study to evaluate the impact of the recent CJEU ruling on neighbouring rights

By Emmanuel Legrand

The European Commission will "shortly" launch a study to analyse the legal and financial consequences of the recent judgment from the Court of Justice of the EU putting an end to discrimination based on nationality for the payment of performance rights on sound recordings.

 Thierry Breton, the Commissioner for Internal Market (pictured, above), said the study will help "determine which policy response may best address the concerns of the sector." In his answer to questions from Members of the European Parliament, Breton said that over the last months, the Commission has "regularly exchanged views with the Member States, in particular, at the meetings of the Council Working Party on Intellectual Property (Copyright) on 1 March, 19 April and 14 June 2021." 

  Breton added that the Commission also discussed the matter with "the stakeholders’ organisations who are concerned about the decision of the Court."

Amend the Rental Directive

  Following these discussions, the Commission has chosen to get deeper into the issue and will order an impact study on the ruling. Record labels' organisations such as IMPALA and performers have argued that if the ruling was standing, dozens of millions of euros would be sent to the US, a country that does not recognise performance rights on sound recordings on terrestrial radio, without anything in return for European performers and labels.

  Some members states have asked for the Commission to amend the Rental Directive from 2006 to guarantee the principle of reciprocity. The ruling from the CJEU does not close the door to such a development.

  The written question was filed by MEPs Ibán García Del Blanco (S&D), Marcos Ros Sempere (S&D),Laurence Farreng (Renew), Tomasz Frankowski (PPE), and Alexis Georgoulis (The Left), who suggested amending EU's Directive 2006/115/EC to "prevent a huge transfer of revenue away from Europe and European music performers and producers" if the CJEU ruling was affirmed.

The principle of reciprocity suspended

  The CJEU ruling would basically allow performers and labels from countries that have not ratified the Convention of Rome, mainly the USA, to be eligible for performance rights on sound recordings. Currently, most European countries use the principle of reciprocity to deny US performers and labels access to neighbouring rights royalties on the grounds that these rights are not recognised in the US since radio broadcasters do not pay royalties on sound recordings.

  The MEPs said that as a result of the CJEU ruling, "the basic principle of reciprocity enshrined in international copyright law has basically been suspended. This fundamental principle is what allows a country to apply national treatment with third countries only when their own performers and producers enjoy similar rights in those countries."

  They warned that if the Directive was "not amended, millions of euros will be transferred out of Europe every year to the US, which does not currently pay European performers and producers when their music is played on US terrestrial radio and TV."

Time for urgent action

  The MEPs consider that the EU can "rectify this situation" by amending the Directive and asked for "urgent action."

  They concluded: "Now is not the time to further impoverish European music performers and producers. Recent reports underline the vital contribution music makes to Europe’s economy and the losses that have already occurred owing to the crisis. Can the Commission confirm that it is working to amend Directive 2006/115/EC to address this problem? Is it considering triggering an urgent procedure?"