The Amsterdam Court of Appeal has ruled that Buma/Stemra has abused its dominant position in relation to suppliers of music for cafés and restaurants. Buma/Stemra applied unequal conditions to streaming services and failed to take measures to remove that inequality. Buma/Stemra was ordered to change its licensing policy and to pay damages over a period of 12 years.
ABMD is an association of companies that offer background music for business users, such as the hospitality industry, shops or fitness centres. They pay a licence fee per customer to collective management organisation Buma/Stemra. Online streaming services (such as Spotify) offer subscriptions that allow only private use. Such subscriptions are cheaper than the products of the ABMD members. The licence fee that Buma/Stemra charges to streaming services is also lower.
As a result, businesses increasingly use streaming services to play music. Buma/Stemra does not take action against this. ABMD therefore instituted proceedings against Buma/Stemra. According to ABMD, Buma/Stemra is acting unlawfully by charging different licence fees for private and business use and by tolerating the use of private subscriptions for commercial purposes. This allegedly constitutes abuse of a dominant position, among other things (Article 24 of the Dutch Competition Act and Article 102 TFEU).
The Amsterdam District Court previously ruled that Buma/Stemra had indeed acted wrongfully by tolerating the commercial use of private subscriptions while charging different rates. As a monopolist, Buma/Stemra is obliged to treat similar cases equally. Buma/Stemra therefore had to charge the same fee and pay compensation to the ABMD members. However, in the court’s opinion, misuse of a private subscription was not subject to mandatory enforcement action by Buma/Stemra. Both Buma/Stemra and ABMD appealed the judgment.
The Amsterdam Court of Appeal first of all found that Buma/Stemra had a dominant position. A company is dependent on Buma/Stemra for permission to play music commercially in the Netherlands. The fact that a number of ABMD members have purchased a licence from the Belgian collective management organisation (SABAM) rather than directly from Buma/Stemra itself does not alter this, because the conditions of that SABAM licence, in any event in terms of its scope and price, are also determined by Buma/Stemra.
The Court of Appeal then ruled that Buma/Stemra had abused that dominant position by maintaining the licensing system it had introduced, which created inequality between the ABMD members and the streaming services. The fact that that inequality is due to unforeseen behaviour by third parties is irrelevant, according to the Court of Appeal. Buma/Stemra’s argument that it did not intend to influence the competitive position of ABMD members does not hold either: it suffices that Buma/Stemra took into account the realistic chance that its position would foreseeably disadvantage ABMD members.
The Court of Appeal therefore found that Buma/Stemra had acted wrongfully and that it must pay damages to the ABMD members over the past twelve years. It furthermore ruled that Buma/Stemra had to take measures to stop the commercial playing of music that is provided by a streaming service for private use only. Buma/Stemra must therefore amend its future licensing agreements, check whether subscribers comply with them, and take enforcement action in the event of a breach.
This blog was also published in the Snelrecht section of trade journal Mr. Online.
