On September 26, 2019, the Regional Administrative Court of Lazio (the “TAR Lazio”) rejected the appeal submitted by Società Italiana degli Autori ed Editori (“SIAE”) – the Italian copyright collecting society – against the 2018 decision by which the ICA imposed on the said undertaking a symbolic fine of €1,000 for abusing its dominant position in the market for the provision of copyright management services, in violation of Article 102 TFEU.
The 2018 ICA Decision
According to the ICA, SIAE engaged in anticompetitive conduct – targeting authors and users of copyrighted works, as well as foreign collective societies – resulting in a complex abusive strategy aimed at: (i) excluding other undertakings engaged in the management of copyright from entering the market; and (ii) preventing the entry and development of new and more innovative market players. In its view, SIAE abused its dominant position with the aim of strengthening its market position and extending it outside the scope of the statutory monopoly it enjoyed in light of Article 180 of Law No. 633 of April 22, 1941 (the “Copyright Law”). This strategy was implemented by means of, inter alia, exclusivity clauses in management contracts and the bundling of different copyright management services. In addition, the ICA found that SIAE engaged in exclusionary conducts when granting licenses to TV broadcasters and concert organizers.
The TAR Lazio judgment
(a) The notion of “public administration”
By its first ground of appeal, SIAE argued that the ICA had mistakenly launched an investigation against a public administration. According to SIAE, the ICA should have instead adopted a reasoned opinion addressed to SIAE to highlight the alleged competition violations and indicate any adequate remedies aimed at removing them.
The TAR Lazio disagreed and held that: (i) the notion of “public administration” must be read in light of antitrust law purposes, considering the nature of SIAE’s business, carried out in a competitive market, rather than SIAE’s formal qualification as a public administration; (ii) SIAE was involved in the investigation because it held a dominant position in the relevant markets in the copyright management sector; (iii) the investigation did not concern SIAE’s public functions but the application of antitrust rules, and the conduct of SIAE fell within their scope; (iv) any conduct theoretically lawful, involving the exercise of powers and prerogatives specifically provided for by law, may turn out to be anticompetitive in specific cases.
(b) Services of general economic interest: the application of antitrust rules
SIAE also argued that the ICA had erroneously found an abuse under Article 102 TFEU by a public entity that performs services of general economic interest. In its view, the ICA had mistakenly held that the copyright management activities could not be considered as services of general economic interest, according to the principles laid down in the EU Court of Justice’s OSA preliminary judgment (C-351/12, February 27, 2014).
According to the TAR Lazio, it is the conduct itself that matters, rather than the abstract structure of the entity to which that conduct is referred. Moreover, it took the view that the Court of Justice intended to highlight that Article 102 TFEU is also applicable in the case of the exercise of special or exclusive rights entrusted by law, unless the relevant conduct is strictly linked to the fulfillment of the specific tasks the company is entrusted with, in the pursuit of a general economic interest.
(c) Due process and the ICA decision-making process
By its third plea, SIAE argued that the ICA violated the principles of collegiality, proportionality and adequacy. In particular, it asserted that, despite the fact that the ICA is a collegiate body, its final decision had been adopted by the only two members in office at the time and in the absence of the president, by application of the rule under which the vote cast by the president (in this case, that of the acting president) is worth double. As a result, in SIAE’s view, the ICA adopted a decision as a single judge.
The TAR Lazio disagreed, holding that the decision was adopted in full compliance with the rules governing the functioning of the ICA (i.e., Article 10 of Law No. 287/90 and ICA Resolution No. 26614/2017). It added that SIAE had not provided any evidence that the other member of the ICA disagreed with the acting president.
(d) Due process and excessive duration of the investigation
In SIAE’s view, the ICA violated the principle of due process also in terms of the excessive duration of the procedure. The TAR Lazio disagreed once again.
According to the Court, no procedural rule provides for any time limit – from the date of filing of a complaint to the ICA – within which the ICA must initiate an investigation into the possible violation. In this respect, the duration of the preliminary investigation is left to the ICA’s discretion. Furthermore, in order to appreciate the reasonableness of the duration of a preliminary investigation, it is necessary to take into account not only when the violation was committed, but also the time necessary to ascertain it, referring not to the mere fact that a fine may hypothetically be imposed, but to the ICA’s full knowledge of the unlawful conduct. In addition, the TAR Lazio took the view that, in light of the complexity of the case and of the changes having occurred in the law, a somewhat long preliminary phase was justified in the circumstances.
SIAE also argued that the ICA prevented SIAE from participating in the preliminary investigation, contrary to what was the case for third-party complainants, which played an active role therein, and failed to take into account SIAE’s defenses as set out in a submission filed before the opening of the investigation. In this respect, the TAR Lazio held that, prior to the initiation of a formal investigation, there is no obligation to inform the interested party/ies. In addition, in the context of an investigation (including its preliminary phase), the ICA’s duty to analyze the parties’ defenses entails no obligation to analytically rebut each argument they may have submitted. It is sufficient for the ICA to provide reasoning that as a whole supports, in an understandable way, the rejection of those defenses.
(e)The subjective element
According to SIAE, the subjective element of the violation had not been proved by the ICA.
The TAR Lazio recalled that the dominant undertaking has a “special responsibility”, in light of which an abuse may occur also in the absence of willful misconduct or negligence. Moreover, SIAE was aware of the implications of its conduct for the exclusion of potential competitors from the market, as proved by the objective, precise and consistent evidence in the ICA’s casefile.
(f) Abusive conducts
In its last plea SIAE developed its arguments against the ICA’s findings concerning the various abusive conducts of which it was declared liable.
The TAR Lazio rejected it with a succinct statement of reasons, noting that SIAE abused of its dominant position through conducts that were not covered by the exclusivity set forth by Article 180 of the Copyright Act. Moreover, the “atomistic” evaluation of each conduct separately from the others, suggested by SIAE in its defenses, was found incapable automatically to rule out that a violation of Article 102 TFEU could be established on the basis of all of SIAE’s actions in their combination, which in the ICA’s view prevented or hindered the development of competitive dynamics in the copyright management sector.
 TAR Lazio, Judgment No. 11330/2019 (setting aside ICA Decision of September 25, 2018, in Case A508).
 According to the version of Article 180 of the Copyright Law in force when most of the contested conduct was carried out, SIAE enjoyed an exclusive right “to act as an intermediary in any manner, whether directly or indirectly, by mediation, agency or representation, or by assignment of the exercise of the rights of performance, recitation, broadcasting, including communication to the public by satellite, and mechanical and cinematographic reproduction of protected works.”
At the EU level, collective management of copyright is regulated by Directive 2014/26/EU (the “Barnier Directive”), which aims at ensuring that providers of collective management of copyright and related rights enjoy the freedoms established in the TFEU. More specifically, according to Article 5 of the Barnier Directive, “rightholders shall have the right to authorize a collective management organization of their choice to manage the rights, categories of rights or types of works and other subject-matter of their choice, for the territories of their choice, irrespective of the Member State of nationality, residence or establishment of either the collective management organization or the right holder”.
The Italian government implemented the Barnier Directive by Legislative Decree No. 35 of March 15, 2017 (“Legislative Decree No. 35”). Article 4, para. 2, of Legislative Decree No. 35 introduces in the national legal framework, inter alia, the principle of freedom of choice enshrined in Article 5 of the Barnier Directive. However, this was “without prejudice to”
Article 180 of the Copyright Law. Article 180 of the Copyright Law was eventually amended by Article 19 of Law Decree No. 148 of October 16, 2017, converted into Law No. 172 of December 4, 2017, extending SIAE’s exclusive rights to other collective management organizations.