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February 27, 2009
JASRAC


Japanese Society for Rights of Authors,
Composers and Publishers (JASRAC)

A hearing request to the Fair Trade Commission


JASRAC believes that the Fair Trade Commission gave the Cease and Desist Order as of February 27, 2009 based on the misinterpretation of the fact and the misapplication of the relevant law and, therefore, can hardly accept it and will file a request for a hearing, pursuant to the rules of the law.

In this Order, the Fair Trade Commission considers that JASRAC's comprehensive agreements with TV and radio broadcasters which allow JASRAC to comprehensively collect the royalties for the JASRAC repertoire based on the broadcasters' revenues constitute the private monopolization under Section 2, Paragraph 5 of the Antimonopoly Law, because the JASRAC's agreements do not take account of the JASRAC repertoire share in royalty calculation out of the total musical works which the relevant broadcasters used in their broadcast programs. The Commission orders JASRAC to alter the way of royalty collection.

JASRAC is of the opinion that its current method of broadcast royalty collection for the JASRAC repertoire cannot be the private monopolization. To comply with this Order, JASRAC needs to receive the reports of all broadcasts for which JASRAC has so far worked with broadcasters but to date they have not completed the census reporting system.

Since last April when the Commission searched the JASRAC head office, JASRAC has cooperated with the Commission in explaining in detail the current method of broadcast royalty collection, a possible alteration of it in the future, the problems to realize the alteration, amount of time to be required for the alteration and so on. However, since the Order was given as above, JASRAC will request a hearing to seek for the proper interpretation of the fact and the correct application of the law so that JASRAC can find the right direction of the matter.

JASRAC intends not to cause any inconvenience to its trustors and music users as priority and sincerely hopes the understanding of its trustors and music users.


The summary of JASRAC's view in relation to the Order is attached.

1. JASRAC has neither given any instruction nor made any request which is anticompetitive.

JASRAC has not engaged in any practice such as asking the broadcasters not to use the repertoires of the other management business operators. The Fair Trade Commission admitted that such practice was not found in the arrangements between JASRAC and the broadcasters during JASRAC's explanation sessions prior to their Cease and Desist Order. However, the Commission concluded JASRAC's practice to fall under the private monopolization.

Broadcasters use musical works depending on the preference of the viewers/listeners. There is no rationale for the conclusion that JASRAC should take responsibility for the broadcasters' choices not to use non-JASRAC repertoire.

2. The Order doesn't state any specific way which JASRAC should adopt for calculation of broadcast royalty.

Under the "Law on Management Business of Copyright and Neighboring Rights," JASRAC negotiates the royalty rate with a representative of music users, such as an association with which an individual broadcaster is affiliated. Thus, the broadcast royalty rate is agreed on between JASRAC and the broadcasters.
Even if both parties agree on the royalty calculation method which the JASRAC repertoire share in the relevant broadcaster' actual usage of musical works does not reflect on the broadcaster's payable amount, such arrangement can not constitute any legal problem by itself. (Please refer to 4 below.)

If both parties wish to change the calculation method to reflect the JASRAC repertoire share in the broadcaster's usage on the broadcaster's payable amount, JASRAC needs to know the number of works under the JASRAC administration and the total number of the works, both of which the relevant broadcaster used in their programs. Without the cooperation of the broadcasters, JASRAC can not obtain the necessary data.

Nevertheless, the Order does not specify how and by which time the current royalty calculation method should be changed.

3. Without the cooperation of the broadcasters, JASRAC cannot implement by itself what the Commission ordered to do.

If broadcasters can provide JASRAC with the details of all musical works they used in their programs (census reporting), there will be a possibility to calculate broadcast royalty according to the JASRAC repertoire share against the total musical works in their usage.

As regards census reporting, JASRAC has had practical discussions with broadcasters since 2003, much earlier than the Commission's search made last April. To date NHK and some commercial broadcasters including Tokyo-based key stations have already started census reporting and the rest of commercial broadcasters are making efforts in realizing their census reports. Although it is expected to take time for all broadcasters to make census reporting, JASRAC will dedicate itself to deal with this issue through gaining understanding and cooperation of broadcasters.

While the parties concerned are continuously and voluntarily making their efforts in this regard, the Cease and Desist Order has been issued without specifying any practical method or grace period.

4. The royalty which JASRAC receive is the remuneration only for the use of the JASRAC repertoire.

JASRAC makes licensing agreements with broadcasters only for the use of the musical works under the JASRAC administration. If JASRAC grasps and takes into account the broadcast usage shares of the other management business operators' repertoires for the purpose of royalty calculation in its licensing agreement, such practice may go against fair and free competition.

When broadcasters use any musical works under the administration of the management business operators other than JASRAC, it is reasonable that they pay the royalties to the other management business operators besides paying the royalty to JASRAC for the use of the JASRAC repertoire. It is no more than usual business dealings.


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