SOUND RECORDINGS: MMC REPORT ON COLLECTIVE LICENSING (Hansard, 7 December 1988)

§ The Secretary of State for Trade and Industry (Lord Young of Graffham)

The report, which was a joint reference by myself and the Home Secretary, is published today.

The main conclusion of the Monopolies and Mergers Commission (MMC) is that collective licensing bodies are the best available mechanism for licensing sound recordings as long as they can be restrained from abusing their monopoly position. The MMC reached this conclusion on the grounds that the smaller record companies and individual copyright owners would be at a serious disadvantage, in a totally free market, in negotiating and subsequently enforcing their rights. The report also contains recommenations for avoiding monopoly abuse in this area. Those recommendations are mainly directed to the activities of Phonographic Performance Ltd, since at present this is the only body to which the rights in question have been assigned, but would clearly apply to any collective licensing of these rights.

The Home Secretary and I accept the commission's conclusion. We also intend to take such action as may be necessary to prevent an unfair use of the monopoly. In particular, we believe that users of the repertoire of collective licensing bodies should have unlimited access to it in return for equitable remuneration terms and that the licensors' injunctive rights should be limited.

We also agree fully that the restrictive practices of Phonographic Performance Ltd of imposing needletime restraints and of requiring that musicians be employed by larger discotheques should be abandoned. In this context, we are particularly pleased to read reports that the Association of Independent Radio Contractors Ltd and Phonographic Performance Ltd have recently agreed terms to remove needletime constraints for a trial period.

The commission also recommends strengthening the Copyright Tribunal and changing some of its procedures to expedite decisions. We have always intended to use the order-making powers under the Copyright, Designs and Patents Act to expedite the tribunal's procedures and have already begun consultation.

There are two other areas on which the commission has made recommendations. First, it recommends that all performers should receive directly paid equitable remuneration and, secondly, that the BBC and independent local radio stations should be subject to a common tariff related to audience size. We agree with the principle behind these recommendations and will be discussing the practicalities of implementation with all the parties concerned.

The commission has commented that representations were made to it proposing that the United Kingdom should switch from the criterion of "first publication" to that of "first fixation" for protecting foreign sound recordings in respect of broadcasting and public performance. The commission was unable to investigate this issue and 665WA commented that a major study would be needed to establish and assess the effects of such a switch. The Government have concluded that such a study should be undertaken.

The provisions of the Fair Trading Act under which reference was made do not give order-making powers to take action to implement the MMC's findings. However my department will be entering into negotiations with the interested parties to secure satifactory changes in their practices. I will also be considering with the Home Secretary what statutory sanctions will be appropriate to ensure that such changes are made and maintained.