T-Series Faces the Music on its Minimum Commitment Charges

FaceTheMusic_1The CCI in a recent decision ruled that Minimum Commitment (“MC”) charges imposed by T-Series on Radio Stations were unfair and discriminatory and imposed a penalty of Rs 28.3 million on T-Series. These MC charges were charges equivalent to fixed number of radio hours that stations had to pay T-Series irrespective of whether or not they played their music. The rationale that T-Series had advanced before the commission was that radio stations had to pay charges for a fixed number of radio hours, whether or not, their music was played, owing to the uncertainty in determination of the exact number of hours that their music was in fact played.

Medianama has an analysis on the competition aspects of this decision and with regards to some aspects of the royalty rates here. I will be focussing in this post on some other aspects of the decision like the jurisdiction of the Commission, the determination of the relevant market and IP valuation that the Commission ventured into.

T-Series raised an interesting argument with regards to why the Commission does not have jurisdiction to examine this particular claim before them. They argued that this was a claim that was neither related to goods or services and therefore was not covered by S.4 of the Competition Act and in addition also argued that the Copyright Board was a better forum to adjudicate upon this complaint. They even went up to the High Court of Delhi twice to persuade the Commission not to assume jurisdiction in this case. The Commission however in this order, clearly lays down that the Copyright Act does not contain provisions to deal with situations such as abuse of dominance or anti-competitive agreements such as in Ss. 3 and 4 of the Competition Act. The Commission observes that the Copyright Board and itself, both important quasi-judicial authorities, operated in two different spheres and there was no overlap in their spheres of influence and since this particular claim dealt with unfair and discriminatory trade practices as opposed to a question of Copyright Law that the Board was tasked to deal with, it did have the jurisdiction to adjudicate this claim. It did however leave open the question as to whether this claim fell under a claim for “goods” or of “services” as required under S.4 of the Competition Act. This would have been an interesting analysis and the Commission ought to have dealt with this as it would have set valuable precedent in one other licensing tussle before it – the complaints regarding SEPs and FRAND licensing against Ericsson.

The Commission examined the question of what constitutes the relevant market with an intersection with IP rights. It examined the scope of the Copyright Act and the bundle of rights guaranteed under S.14 of the Act. It then ventures into an analysis of substitutability of each of these rights with one another, and observes that,

“Each such  right  conferred  upon  a  protected  work  is  distinct  and  cannot  be interchanged or substituted with another right. For example, exclusive rights available to the owner of a musical works include inter alia the right to perform the work in public, to communicate the work in public, to make any translation of the work or any adaption of the same. If a customer wanted to translate a song into a different language, such a customer would have to procure a license to translate the work from the owner; procurement of a license to communicate the work would not be usable. From a demand-side perspective there is clearly no substitutability between the different categories of rights. Therefore, different types of rights may constitute different markets based on the facts and circumstances of the case and markets involved.”

If this seems straightforward and appropriate – it is probably because it is. The Commission clearly recognises therefore that for the determination of the relevant market, Copyright is not to be looked as a bundle of rights as a whole but rather as a set of individual rights, each operating in its different sphere, and are not substitutable as a general rule.

Also involved in the dispute over the MC charges was an allegation on the part of the informants that T-Series was excessively pricing its license fees for music that it was providing to radio stations. In deciding this question, the Commission would necessarily have had to enter into an analysis on what the appropriate price of the license of the IP in the song would be. This is because as opposed to transactions wherein goods are sold, of which IP is but a part of the finished product, in the transaction involved in the present dispute, it is the licensing of the IP itself with no other ingredients. A few IP advocates would have had a bone to pick with the Commission had it in fact ventured into such an analysis – quite obviously because it does not have the competence or the mandate to do so. Luckily though, the Commission does not venture into a determination and instead observes that such a determination would be impossible to make as it is dependent on other factors such as the demand for the song, which is impossible to quantify. It also notes that there are multiple ways to earn revenue from one particular song or music track and it is impossible to ascertain how the costs are being distributed across these various methods. It does not however close the doors on such an assessment being made in the future when the Commission could more accurately analyse these factors.

The law on the intersection between IP and Competition is being fleshed out by the Commission, one order at a time, and for the time being, while it may have a few cracks and dents, it appears to be taking shape quite alright.

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