SABAM found to have abused its position by the Brussels Commercial Court

Since 2017 , SABAM increased its tariffs for concerts and music festivals to 17% for average-sized festivals and 37% for large festivals, with the pricing for small festivals remaining the same. As a result, several festivals and the federation of Flemish music festivals sued SABAM.

The claimants argued that SABAM had abused its dominant position by (i) suddenly and significantly increasing its prices without any reason, (ii) determining its prices based on the festival’s total turnover including turnover related to activities and costs that are unrelated to music and (iii) not sufficiently taking into account the use of music not covered by SABAM (SABAM asked average or large sized festivals for a third of the base tariff as soon as one of its intellectual properties was used, two thirds if more than one third of the music concerned its intellectual property and 100% if more than two thirds of the music concerned its intellectual property).

In the judgment, the Brussels Commercial Court (the Court) started its analysis by referring to the case law of the EU Court of Justice (ECJ) regarding excessive pricing which states that the imposition of a price which is excessive in relation to the economic value of the service provided constitutes an abuse of dominance in the sense of Article 102 Treaty on the Functioning of the European Union (TFEU) and/or article IV.2 Code of Economic Law (CEL). The Court subsequently noted in this respect that SABAM had not invoked any objective or economical grounds of justification. The Court also did not accept the fact that the increase followed a comparison with tariffs in neighbouring countries, made it a justified increase.

Moreover, the Court considered that some features of the existing pricing practice of SABAM (and not only the price increase since 2017) constitute an abuse of its dominant position:

• The Court considered, based on the ECJ’s case-law, that SABAM should not impose significantly different prices depending on whether the festivals were smaller or larger for the sole reason that the larger festivals have more financial means.

• The Court considered that SABAM should not determine its prices based on the festival’s gross turnover minus reservation costs, VAT, municipal taxes and costs of public transport. The Court argued in this respect that this implies that SABAM is being paid for turnover-generating services that do not concern music (eg security, side-entertainment, catering, etc.) and is therefore being paid for services that it is not providing.

• The Court considered that SABAM does not correctly quantify the use of its repertoire by not using the available technology to determine the use of its intellectual property. The Court asked SABAM in this respect to clarify how it determines how much each artist concerned gets paid to which SABAM was not able to answer. The Court concluded that this also did not consider the fact that some artists ask to be paid directly (instead of through SABAM).

• Lastly, the Court considered that SABAM’s minimum-tariff was calculated on the basis of relevant surface (m²), number of seats and entrance price, which did not reflect the economic value of SABAM’s provided services. SABAM had moreover failed to show why such alternative methods of calculation were necessary. The Court referred to the application of this minimum-tariff in practice resulting in its view in excessive prices.

On that basis, the Court ordered SABAM to cease and desist its practices.

It is usually difficult to clearly demonstrate an abuse of a dominant position by way of excessive pricing as it is difficult to determine what constitutes the “right” price. Nevertheless, the Court seemed to have little doubt that SABAM’s price increase constitutes an abuse of its dominant position. However, what is even more interesting is that the Court also considered the existing practice of SABAM to constitute an abuse of its dominant position. Although this case concerned a request to cease and desist (and not a damage claim), it could arguably be used as a basis to claim damages from SABAM.