Legally and politically important
Not cleared from scrutiny; further information requested; but scrutiny waiver granted; Drawn to the attention of the Business, Energy and Industrial Strategy Committee
Proposal for a Regulation laying down rules on the exercise of copyright and related rights applicable to certain online transmissions of broadcasting organisations and retransmission of television and radio programmes
Article 114 TFEU; ordinary legislative procedure; QMV
Business, Energy and Industrial Strategy
(38077), 12258/16 + ADDs 1–4, COM(16) 594
1.1This Regulation forms part of the Commission’s “Copyright In the Single Market” package of September 2016. Broadly it is intended to impose the country of origin principle (introduced by Directive 93/83 in respect of satellite and cable broadcasting) to online services which are ancillary to broadcasts (such as simulcasting and catch up TV/radio services). It would also impose mandatory collective management of copyright for closed-circuit internet-protocol-based mobile and similar networks. The Regulation would not cover true on-demand services such as Netflix and Amazon Prime; nor pure webcasts such as BBC3. The Minister (Joseph Johnson) helpfully expands upon the purposes of the proposal in correspondence referred to below.
1.2The other legislative component of the package is a proposed Directive on Copyright in the Digital Single Market. Its broad range of measures was summarised in the Report of our predecessor Committee, referenced at the end of this Chapter. Negotiations in the Council on that proposal are still ongoing.
1.3In her original Explanatory Memorandum, the then Minister (Baroness Neville-Rolfe) highlighted the increasing market in on-demand services and for watching content from other countries. At that time consultation with stakeholders was ongoing.
1.4In subsequent correspondence, the substance of which is reproduced below, it became clear that broadcasters were concerned that the extension of the country of origin principle to ancillary services could negatively impact financing and distribution models based on territorial licencing; and rights holders generally disliked the principle as it affected their ability to manage their exclusive rights. Therefore the Government has made it a priority to “to protect territorial licencing, while still seeking to ensure the Regulation delivers benefits for consumers”. It expects to achieve this objective, including by narrowing the scope of the country of origin principle. It wishes to vote in favour of this text if it comes before the Council under the Bulgarian Presidency, which could be in the next few months.
1.5The Legal Affairs Committee of the European Parliament has tabled a report to form the basis of informal trilogue discussions. Significantly, the draft report suggests that the European Parliament considers that the scope of the original Commission proposal was too narrow.
1.6The Minister (Joseph Johnson) does not anticipate that the Regulation will come into force before the UK leaves the EU, and any continuation of the policy depends on reciprocity. Therefore, any continued alignment of the UK policy with that of the EU depends on the terms of the UK’s future relationship with the EU.
1.7We are grateful for the responses from the Minister to the matters raised by our predecessor Committee, and the updates on the negotiations. We grant him a scrutiny waiver to vote in favour of a general approach during the Bulgarian Presidency. Should the matter not have reached this stage during the currency of this Presidency then the scrutiny waiver lapses. In any event we ask for a further update once a general approach is agreed or there are otherwise any significant developments. This should specifically address the terms of any transitional/implementing period that has been agreed and the Minister’s assessment of the approach of the European Parliament.
1.8We retain the proposal under scrutiny but draw it and this chapter to the attention of the Business, Energy and Industrial Strategy Committee.
Proposal for a Regulation laying down rules on the exercise of copyright and related rights applicable to certain online transmissions of broadcasting organisations and retransmission of television and radio programmes: (38077), + ADDs 1–4, COM(16) 594.
1.9In his letter of 15 December 2017 the Minister sets out the background to the Regulation as follows:
“The proposed Regulation on Online Transmissions seeks to facilitate greater cross-border availability of television and radio programmes, via the internet, within the European Union. The Regulation applies only to online services of broadcasters which are ancillary to an initial broadcast, namely:
-simulcasting (linear simultaneous transmission of a broadcast by the broadcaster);
—catch-up television and radio services (where broadcasts are made available online, on an on-demand basis, for a limited period of time following the initial broadcast);
—material related to the initial broadcast (such as previews).
“The Regulation does not apply to standalone video-on-demand services (such as Netflix), where content is unconnected with a broadcast transmission by the same broadcaster. Neither does it apply to pure webcasting services.
“The Regulation seeks to enhance cross-border provision of such services via two mechanisms:
“First, it proposes a “country of origin” rule. Under this rule, a transmission of an ancillary online service is deemed to take place solely in the country where the broadcasting organisation has its principal establishment, meaning that it does not need to seek additional copyright clearances to broadcast into other Member States. Rightholders would, however, be able to seek additional remuneration via licence agreements to reflect any increased audience for their audiovisual content.
“Secondly, the Regulation proposes a system of mandatory collective licensing in relation to online retransmissions of broadcasts. This is limited to internet-protocol-based, mobile, and similar networks. Under this system, rightholders are only able to exercise their rights in relation to retransmissions of broadcasts on a collective basis, via collecting societies, rather than individually. This will allow operators of such services to gain all the relevant rights to retransmit content via a small number of collective licences rather than potentially having to negotiate multiple licences with individual rightholders.
“Similar rules already exist in relation to satellite and cable broadcasts under the Satellite and Cable Directive (93/83/EEC).”
1.10In his letter of 30 March 2017 the Minister first outlined stakeholder views in respect of the proposed package as a whole:
“Regarding stakeholder views, in late 2016 the Intellectual Property Office conducted a ‘call for views’ on all aspects of the copyright package proposed by the European Commission, including the Regulation and the Directive in question, alongside ongoing direct engagement with stakeholders. Responses were mostly focussed on the specific aspects of the proposals in isolation rather than the potential impact of the UK’s exit, however stakeholders have demonstrated support for the legal certainty currently offered by harmonisation of copyright law at EU level. As the call for views was not a formal consultation, the Government has not issued a response summarising stakeholder views.”
1.11Specifically, in respect of this proposal he indicated:
“Broadcasters believe the proposal to extend the country of origin principle to broadcasters’ ancillary services could negatively impact financing and distribution models which are based on territorial licensing. These stakeholders have particular concerns around the potential interplay between the Regulation and the ongoing EU competition inquiry into the Pay-TV sector. Their main comments on the retransmission element of the Regulation are that the broadcaster veto should be preserved and it must be clearer about what types of service are in scope.
“Rightholders generally dislike extending the country of origin principle as it affects their ability to manage their exclusive rights. On retransmissions, they oppose mandatory collective licensing as being anti-competitive.”
1.12The objections raised by the film and television industry was reiterated in his letter of 15 December 2017:
“During the course of the negotiation representatives of the film and television sectors have raised concerns that the country of origin rule may undermine their ability to license content on a territorial basis—something which is a common practice in these sectors, and which they argue is key to financing new productions. Although the Regulation does not expressly affect the freedom of rightholders to license works on a territorial basis, the concern is that a broad country of origin rule could in practice make territorial licensing difficult or impossible. The Government has made it a priority during these negotiations to protect territorial licensing, while still seeking to ensure the Regulation delivers benefits for consumers.”
1.13In his letter of 15 December 2017 the Minister outlines the progress of negotiations:
“In view of the concerns of the audiovisual sector, the scope of the country of origin rule in the Regulation has been reduced since its proposal. In the Estonian Presidency’s recent proposal (), this mechanism has now been limited to cover only subject matter produced by the broadcasting organisation, commissioned by the broadcasting organisation, and certain material (not including extracts of films or television series incorporated in TV or radio programmes) co-produced with third parties (in Article 2(1a), subparagraphs a), b) and c), respectively. Video-on-demand services, and pure webcasts (without a broadcast to which they are ancillary) remain out of scope.
“Broadcasters and rightholders continue to push for a narrowing of scope, or deletion, of the country of origin rule. We agree that the current proposal continues to pose possible risks to territorial licensing, though these have been reduced. We expect the rule to be narrowed further, potentially to cover only content produced or commissioned by the broadcasting organisation, or to only apply to news and current affairs broadcasts, and it is possible that such further narrowing will overcome objections from the majority of Member States, including a number which have previously raised concerns about possible risks to territorial licensing.
“In the part of the Regulation relating to retransmissions of broadcasts, there is now an explicit obligation that where negotiations take place between broadcasting organisations and operators of retransmissions services, regarding authorisation for retransmission under the Regulation, these must be conducted in good faith. The Regulation has also been limited to apply to retransmissions over open internet access services, only where they are provided to a “controlled circle of users”.
“We understand that most Member States and many organisations representing rightholders and firms which retransmit broadcasts are broadly content with these changes, and with the proposal on retransmission as it now stands.”
1.14The Minister outlines the position as follows in the same letter of 15 December:
“Further to the Explanatory Memorandum (EM), which gave a summary of the European Commission’s impact assessments (Documents SWD (2017) 302 final; SWD(2016) 301 final (Parts 1–3)), the extension of the country of origin rule, reduced in scope as outlined above, would:
“A reduced scope country of origin rule is unlikely to disrupt current territorial licensing practices to a significant extent and, the more its scope is reduced, the costs and benefits will tend towards zero.
“There is effectively no change to the scope of the retransmission provisions, and the impacts on transmission service providers, rights holders, and consumers, is expected to be as the Explanatory Memorandum.”
Seventeenth Report HC 71–xv (2016–17),(2 November 2016).
1 Linear simultaneous transmission of a broadcast by the broadcaster.
5 March 2018