A recent report in Mint, available here states that the Competition Commission of India (CCI) through its Director General has launched an investigation against T Series for charging arbitrary royalty rates from radio broadcasters. The case has been filed before the CCI by HT Media Ltd. through their lawyers, Amarchand Mangaldas. HT Media publishes Mint and Hindustan Times and operates four FM radio stations under the Fever 104 brand. T-Series has an estimated 80% market share in music rights.
If CCI does establish that T-Series is abusing its dominant position, it can take several steps as laid out under S.27 of the Competition Act, 2002
- Issue a cease and desist order
- Impose a penalty
- Direct that the agreements stand modified to the extent and manner specified by the Commission
- Direct the enterprises concerned to abide by any other orders that the Commission passes and comply with their directions
So far CCI has found prima facie merit in the submission, that radio broadcasters have no option but to accede to the terms dictated by T-Series.
HT Media’s present petition is based on the Copyright Board’s decision last year in; Music Broadcast Pvt. Ltd vs. Phonographic Performance Ltd. (we had blogged about this case here and here) which had ruled that, for sound recordings, a music company should charge not more than 2% of net revenue from radio broadcasts as royalty.
The Delhi High Court had however stayed the operation of this order against T-Series as reported by us here on the ground that T-Series had not been made a party to the compulsory licensing dispute before the Copyright Board. It was held that S. 31(1) of the Copyright Act mandates that the owner of the copyright should be given a reasonable opportunity of being heard before deciding on whether refusal by such owner to grant licence to the complainant was unreasonable. Since they had not been made parties to the dispute the order could not be enforced against them. The order of the Delhi High Court is available here. As far as we know this order of the Delhi High Court has not been stayed by any higher court.
T-Series is currently charging Rs. 660 per needle hour which is almost 4 times higher than the stipulated amount. They have been able to charge this amount till now since they enjoy a virtual monopoly in the field, owning the rights to about 80-90% of all new Bollywood films.
It will be interesting to see how this case pans out and whether one of the remedies the CCI will consider will be grant of a compulsory licence. If they do decide to grant a compulsory licence the following two issues will be relevant to consider:
Jurisdiction: Whether the CCI has jurisdiction to hear and rule on this matter? S.31 of the Copyright Act states that the Copyright Board is empowered to issue a compulsory licence. Does this mean that only the Copyright Board can issue a compulsory licence or can both the CCI and Copyright Board issue licences? The latter could prove problematic in the future as it would lead to forum shopping. Alternatively the CCI could impose a penalty on T Series and remand the case to the Copyright Board on the issue of compulsory licence.
Grounds for Compulsory Licence: S.31 of the Copyright Act lays out the grounds for granting a compulsory licence, …if the owner of copyright in the work (i) has refused to republish or allow the republication of the work or has refused to allow the performance in public of the work, or (ii) has refused to allow communication to the public by [broadcast], of such work…
In M/S Entertainment Network … vs M/S Super Cassettes Industries Ltd, 2008 the Supreme Court held that offering copyrighted works at extremely high prices is as good as refusal. In this case while deciding on the meaning of the word ‘refusal’ the court held that when an offer is made on an unreasonable term or a stand is taken which is otherwise arbitrary, it may amount to a refusal on the part of the owner of a copyright. Further it was stated that, when the owner of a copyright or the copyright society exercises monopoly in it, then the bargaining power of an owner of a copyright and the proposed licensee may not be same. An unreasonable demand if acceded to, becomes an unconstitutional contract which for all intent and purport may amount to refusal to allow communication to the public work recorded in sound recording.
The Directorate General’s report will be submitted in 60 days. We will bring you all the latest from this case as it unfolds.