Antitrust Law Daily Wrap Up, TOP STORY: Music trade association, performing rights organization settle monopoly claims, (Jul 27, 2015)

By Greg Hammond, J.D.

Radio Music License Committee, Inc. (RMLC) and SESAC, Inc. have reached a settlement agreement that would dispose of claims that SESAC illegally monopolized an essential repertory of copyrighted music, quashed all competition with and among its 23,000 repertory of copyright-holding affiliates, and used its monopoly to coerce the U.S. radio industry and other consumers into paying SESAC supracompetitive prices, the parties announced on July 23. SESAC has agreed to pay RMLC’s legal fees, amounting to just over $3.5 million, and the parties will submit to binding arbitration on license fees if an agreement on the fees cannot be reached (Radio Music License Committee, Inc. v. SESAC, Inc., Dkt. 2:12-CV-5807-CDJ).

SESAC, Inc. is one of the three largest performing rights organizations that act as intermediaries between customers and holders of copyrighted music and offer licenses for the public performance of works. SESAC offers its repertory to customers exclusively in a blanket license format. RMLC is a trade association that negotiates public performance right licenses on behalf of radio stations.

RMLC previously filed suit against SESAC, alleging horizontal price fixing, group boycott and refusal to deal, and monopolization in violation of Sections 1 and 2 of the Sherman Act. Specifically, RMCL alleged that SESAC’s licensing practices were anticompetitive and destroyed competition between SESAC and other performing rights organizations. RMLC also alleged that SESAC was able to raise the price of a blanket license without enhancing the quality of its repertory.

The settlement requires SESAC to pay RMLC approximately $3.5 million, representing only legal fees reimbursement, not damages. The parties additionally agree that, in the event the parties cannot reach an agreement concerning license fees, the parties will participate in binding arbitration to set reasonable license fees to be offered the radio industry through RMLC. The binding arbitration period will last for 22 years, beginning in 2016. RMCL also agreed that SESAC is entitled to be compensated for the full value of works in its repertory, even if SESAC affiliates own less than 100 percent of the copyright interest in any particular musical work.

“We are confident in our ability to achieve a positive outcome for our affiliated composers and music publishers in radio based on our historical arbitration experience in the local television market with the Television Music license Committee,” stated SESAC Chairman and CEO, John Josephson. “We are excited to have the opportunity to work closely with the RMLC and the commercial radio stations it represents in an expedited and efficient commercial arbitration setting if the parties can’t agree.”

“Litigation is always a last resort, but the RMLC felt compelled to file this lawsuit in order to impose some rate setting parameters upon SESAC that would mirror the antitrust consent decree process that has been in place with ASCAP and BMI for decades and that has achieved equitable license fees for the industry,” RMLC Chairman Ed Christian said. “This settlement effectively bars SESAC from arbitrarily seeking unreasonably high rates from a radio operator at the risk of copyright infringement exposure. The process of arriving at reasonable fees now agreed to eliminates that exposure,” added RMLC Vice-Chairman, John VerStandig.

Attorneys: Margaret Zwisler (Latham & Watkins) and R. Bruce Rich (Weil, Gotshal & Manges LLP) for Radio Music License Committee, Inc. Gregory P. Joseph (Joseph Hage Aaronson LLC) for SESAC, Inc.

Companies: Radio Music License Committee, Inc.; SESAC, Inc.

MainStory: TopStory Antitrust