By
Glenn Peoples, Nashville
for Billboard
for Billboard
SESAC
won two favorable rulings by a district court in Pennsylvania last week, but
still faces a charge
of anti-competitive conduct by the Radio Music License Committee, an
organization that
represents the commercial radio stations in licensing matters.
In
the June 26th ruling, the court threw out claims against SESAC for price fixing
and group boycott/refusal
to deal. The price fixing complaint alleged SESAC had agreements with its affiliates
that formed a "hub-and-spoke conspiracy." However, the court
concluded the RMLC "failed
to prove the rim of a hub-and-spoke conspiracy by failing to plausibly allege agreements
among SESAC’s affiliates. As the judge noted in the decision, the Sherman Act prohibits
monopolistic power only if it's acquired through anticompetitive conduct.
But
the court refused to grant SESAC's motion to dismiss a charge of anticompetitive
behavior. The
RMLC alleged SESAC has increased its prices 8% to 20% each year since 2009
without an increase
in the size or popularity of its repertory. Unlike ASCAP and BMI, SESAC does
not operate
under a consent decree with the Department of Justice. As a result, SESAC
licensees are not
able to seek pricing relief in the rate court available to ASCAP and BMI
licensees.
The
court agreed with the RMLC's depiction of how SESAC obtained monopoly power
through exclusionary
conduct rather than "growth or development as a consequence of a superior product,
business acumen, or historical accident." Instead, alleged the RMLC, SESAC
obtained a "critical
mass of must-have works," sold them exclusively in blanket licenses,
discouraged direct
licenses through rights withdrawals and obscured works in its catalog.
Writing
about obscured works in SESAC's catalog, the court believed RMLC had adequately pleaded
that SESAC's lack of transparency "exacerbates the exclusionary nature of
its conduct by
forcing radio stations to purchase the SESAC license even if they do not plan
to perform the songs
in SESAC's repertory for fear that they may unwittingly air copyrighted
content.
The
way SESAC sets prices continues unchanged while the case works its way through
court. In December
the court denied the RMLC's request to impose an injunction against SESAC rate hikes
while the lawsuit plays out.
