A big question mark?
This is what was left of the current system of collection of public performance rights of music in Brazil after a decision from CADE the Administrative Council for Economic Defense yesterday.
The decision was motivated by a complaint from ABTA, the Association of Television under the subscription model and concluded that the associations which form ECAD, the Brazilian Public Performance Collecting Rights Society, act in a concerted manner to fix the rates of royalties for public performance collected by the Association. ECAD and the Associations which are part of ECAD were fined in a total of approximately 19 million dollars.
The fact that the associations which are part of ECAD meet, discuss and fix a collective rate for each of the different services collected by ECAD was considered by CADE as evidence of cartel activity. The rigid conditions imposed by ECAD to accept new members was also considered illegal. It is important to note that, in order to be accepted as a legitimate association with the power to discuss and vote the rates at the meetings, the current rules of ECAD impose a threshold of a certain number of associated authors who should control also a certain number of works. It makes it very difficult for new associations to sit on the table at ECAD.
The decision prohibits the associations to discuss prices in meetings of ECAD and the publication of schedules of royalty rates. Apparently, ECAD has six months to formulate a new scheme of collection which must not involve collective fixed rates.
It is still possible for ECAD to present appeals before CADE and also to challenge any such decision before the courts.
The scenario seems really complicated now. The music industry has a big challenge ahead in Brazil. It has to sit and reorganize the system entirely. The decision can make it very difficult to organize a collective system of collection of public performance fees. We have to wonder if this was the intention from the beginning.
There is no good guy in this mess and we should expect years of litigation and uncertainty in the market.
We will keep you posted on the long and bumpy road ahead.
Rodrigo Borges Carneiro