Case C‑425/07

1.On 22 March 2001, AEPI Elliniki Etaireia pros Prostasian tis Pnevmatikis Idioktisias AE (‘AEPI’ or ‘the appellant’), a company constituted under Greek law engaged in the collective management of copyright relating to musical works, lodged a complaint with the Commission against the Hellenic Republic and three Greek bodies which collectively manage rights relating to the copyright held, respectively, by singers, performance musicians and producers in the recording and/or film industry (Erato, Apollon and Grammo; ‘the related rights management companies’).

2.In that complaint, AEPI maintained, first, that those companies had infringed Articles 81 EC and 82 EC by setting fees for related rights at too high a level, at up to 5% of the gross income of Greek radio and television broadcasters and, secondly, that the Hellenic Republic had infringed Article 81 EC by permitting those companies to engage in concerted practices and enter agreements to that effect. AEPI claimed that it had suffered serious and irreparable damage as a result of that conduct, which, by imposing an excessive burden on undertakings using musical works, prevented them from meeting the demands for royalty payments made of them.

3.By two separate decisions of 18 and 20 April 2005, the Commission, respectively, rejected the complaint made against the related rights management companies and placed the complaint against the Hellenic Republic on the file.(2)

4.The decision of 18 April 2005 (‘the contested decision’) is based, in particular, on the following considerations:

‘In the present case, the alleged infringement is unlikely seriously to impede the proper functioning of the common market, given that all the parties involved are established in Greece and pursue their activities in that country alone. It is not foreseeable that that situation will change, that is to say, the three [related rights management] companies will start to pursue their activities in other countries in the near future, in view of the structure of the markets providing services for the protection of related rights and the practical difficulties that would be entailed in such an undertaking. Moreover, the effects of the alleged practices are felt only in the Greek market. Contracts for rights to use music are concluded only with radio and television broadcasters and other users in Greece. The three [related rights management] companies are empowered to act only in respect of the protection of related rights in Greece and do not, in practice, have the possibility of exercising such powers outside that country.

Secondly, in order to demonstrate that an infringement may have occurred, the Commission is required to undertake a complex investigation into the conditions prevailing in the market in question and the available alternatives. First of all, given that, on the one hand, Greek law (in accordance with Directive 92/100/EEC) provides that a single remuneration is to be paid for all related rights and, on the other, that the alleged infringement arises from the fact that the three [related rights management] companies make a collective demand to the user for payment of that remuneration, the Commission would have to demonstrate that effective methods exist by which it is possible to seek payment of the single remuneration separately. Second, the Commission would have to show not only that the three [related rights management] companies held a collective dominant position but also, according to the judgments of the Court in Tournier and in Lucazeau [and Others] [(3)], investigate the relative levels of fees charged in respect of copyright and related rights in all the countries of the European Union, the respective bases on which the calculations are made, the criteria employed and the conditions which prevail in the Greek market by comparison with [the markets] in other European countries.

Moreover, it must be made clear that your company has the opportunity available to it of making its own complaints to the national authorities. In particular, it may bring a case before the Greek competition authorities. On account of its in-depth knowledge of the conditions prevailing in the national market, [those authorities] are perfectly capable of dealing with your complaint. The fact that all the parties involved and all the music users in question are established in Greece and pursue their activities in the Greek market adds greater significance to its detailed knowledge of the conditions in the local market. Furthermore, those authorities have competence to apply Articles [81 EC and 82 EC] in the same way as the European Commission.

It must therefore be concluded that the extent and complexity of the measures of investigation sought in order to determine whether the conduct of the three related rights management companies complies with the Community competition rules are disproportionate in relation to the relatively minor importance of any infringement in terms of the functioning of the common market. The case does not, therefore, present the level of Community interest necessary for the Commission to open an investigation.’(4)

5.By application lodged at the Registry of the Court of First Instance of the European Communities (‘the Court of First Instance’) on 15 June 2005, AEPI sought the annulment of the contested decision. That action, in which the appellant alleged a manifest error in the assessment of the Community interest and breach of the obligation to state adequate reasons, was dismissed by the Court of First Instance by judgment of 12 July 2007 in Case T‑229/05 AEPI v Commission (the ‘judgment under appeal’), in which the appellant was ordered to pay the costs.

6. In examining the plea alleging a manifest error of assessment, the Court of First Instance(5) pointed out that ‘[i]n order to assess the Community interest in continuing with the investigation of a practice, the Commission … must, in particular, strike a balance between the [effects] of the alleged infringement on the functioning of the common market and the likelihood of its being able to establish the existence of such an infringement and the extent of the investigative measures necessary, in order to fulfil to the best of its ability the task of ensuring the observance of Articles 81 EC and 82 EC’ (paragraph 40 of the judgment under appeal).(6)

7.The Court of First Instance therefore stated, with regard to the ‘adverse effects on the functioning of the common market’, that, according to established case-law, ‘in order for an agreement between undertakings to be able to affect trade between Member States, it must be possible to foresee with a sufficient degree of probability on the basis of a set of objective factors of law or of fact that it may have an influence, direct or indirect, actual or potential, on the pattern of trade between Member States, which might harm the attainment of the objectives of a single market between States’ (paragraph 42 of the judgment under appeal).(7) It added that ‘any practice or any agreement that may have an effect on freedom of trade between Member States which might harm the attainment of the objectives of a single market between the Member States, in particular by isolating national markets or altering the structure of competition in the common market, is governed by Community law’, whereas ‘where the effects of such conduct are confined to the territory of one Member State alone, such conduct is governed by the national legal system’ (paragraph 43 of the judgment under appeal).(8)

8.The Court of First Instance went on to state that ‘[m]ore specifically, in the field of copyright …, according to settled case‑law, where the effects of the infringements alleged in a complaint are essentially confined to the territory of one Member State and where complaints have been brought before the courts and competent administrative authorities of that Member State by the complainant against the body in question, the Commission is entitled to reject the complaint through lack of any sufficient Community interest in further investigation of the case, provided, however, that the rights of the complainant can be adequately safeguarded, in particular by the national courts’(9) (paragraph 44 of the judgment under appeal).

9.Furthermore, the Court of First Instance noted that, in the course of the written procedure, the appellant had challenged only the first of the three grounds on which the Commission had decided in the contested decision to rule out the existence in the case of sufficient Community interest, that is to say, the ground claiming that the practices complained of were incapable of seriously impeding the proper functioning of the common market. The Court of First Instance therefore found that it could restrict its analysis to ‘the arguments by which [the appellant] dispute[d] the contention that there were no adverse effects on trade between Member States, contending that the imposition of excessively high fees in respect of related rights constitute[d] a practice that may affect the common market within the meaning of Articles 81 EC and 82 EC, even though it is confined to Greek territory’ (paragraphs 45 to 47 of the judgment under appeal).

10.‘In that connection’ – the Court of First Instance continued – ‘the Commission took the view that … all the parties involved in the case were established and pursued their activities in Greece …, that it was unlikely that the activities of the three [related rights] management companies could be extended to other countries …, that the music users were Greek nationals and that the powers of [those] companies were confined to Greek territory’ (paragraph 48 of the judgment under appeal).

11.According to the Court of First Instance, the points of fact and law put forward by the appellant were not capable of ‘demonstrating that the practices complained of had an effect on the pattern of trade between Member States which might harm the attainment of the objectives of a single market’. In fact, it considered that the appellant did no more than ‘refer to the financial difficulties suffered by companies handling copyright and music users in Greece and in all the Member States’, but failed to demonstrate its own claims and even to adduce suitable evidence for that purpose (paragraph 49 of the judgment under appeal).

12.At paragraph 50 of the judgment under appeal, the Court of First Instance then found, with regard to ‘the applicant’s argument that the fact that the royalties of Greek and foreign authors are paid over to companies established in the European Union will have the effect of seriously impeding the proper functioning of the common market’, that ‘the powers of the three [related rights] management companies are confined to Greek territory and, therefore, it is essentially users of music in that territory and Greek authors who suffer the alleged adverse effects of the practices in question’.

13.The Court of First Instance concluded its reasoning with the following considerations:

‘54In the light of the foregoing, the applicant has not adduced any specific evidence to demonstrate the actual or potential existence of serious impediments to the proper functioning of the [common] market.

55Consequently, the applicant has failed to demonstrate that, in the contested decision, the Commission made a manifest error of assessment by considering that the effects of the practices complained of were felt for the most part, or even entirely, in the Greek market and, accordingly, were unlikely to affect trade within the meaning of Articles 81 EC and 82 EC.’

14.The Court of First Instance therefore rejected the plea in law alleging a manifest error in the assessment of the Community interest.

15.Finally, the Court of First Instance also rejected the plea in law alleging breach of the obligation to state adequate reasons, finding that, in the contested decision, the Commission had set out clearly the specific reasons on which its own assessment was based, which led to the rejection of the complaint (paragraph 63 of the judgment under appeal).

16.By document lodged at the Registry of the Court of Justice on 14 September 2007, AEPI claimed that the Court should set aside the judgment under appeal, grant the form of order sought at first instance or refer the case back to the Court of First Instance, and order the Commission to pay all the costs.

17.The Commission contends that the appeal should be dismissed and the appellant ordered to pay the costs.

18.The parties’ representatives were heard at the hearing which took place on 15 October 2008.