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Lord Simon of Highbury moved Amendment No. 33:

Page 39, line 41, leave out ("give a direction only") and insert ("also give a direction under this paragraph").

On Question, amendment agreed to.

Schedule 2 [Exclusions: Other Competition Scrutiny]:

Lord Simon of Highbury moved Amendment No. 34:

Page 41, line 13, at end insert ("to the extent to which the agreement relates to the regulating provisions of the body concerned.").

The noble Lord said: My Lords, in moving Amendment No. 34, I speak also to Amendments Nos. 35 to 45 and Amendment No. 48. They are technical amendments to include the Financial Services Act within the scope of the Bill. They also cover a related provision for the European Economic Area in addition to the European Union. They provide a geographic extension. I beg to move.

On Question, amendment agreed to.

Lord Simon of Highbury moved Amendments Nos. 35 to 45:

Page 41, line 14, at beginning insert ("Subject to subsection (2A)").
Page 41, leave out lines 19 to 21 and insert ("to the extent to which the agreement relates to the regulating provisions of the body concerned.

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(2A) The exclusion provided by subsection (2) applies only if--
(a) the body has applied for a recognition order in accordance with the provisions of this Act; and
(b) the application has not been determined.
(2B) The Chapter I prohibition does not apply to a decision made by--
(a) a recognised self-regulating organisation,
(b) a recognised investment exchange, or
(c) a recognised clearing house,
to the extent to which the decision relates to any of that body's regulating provisions or specified practices.
(2C) The Chapter I prohibition does not apply to the specified practices of--
(a) a recognised self-regulating organisation, a recognised investment exchange or a recognised clearing house; or
(b) a person who is subject to--
(i) the rules of one of those bodies; or
(ii) the statements of principle, rules, regulations or codes of practice made by a designated agency in the exercise of functions transferred to it by a delegation order.").
Page 41, line 34, after ("provisions") insert ("or specified practices").
Page 41, line 45, leave out ("(3) and (4)") and insert ("and (2B) to (4)").
Page 42, leave out lines 2 to 11 and insert--
("(a) in relation to a self-regulating organisation, any rules made, or guidance issued, by the organisation;
(b) in relation to an investment exchange, any rules made or guidance issued by the exchange;
(c) in relation to a clearing house, any rules made, or guidance issued, by the clearing house;
"specified practices" means--
(a) in the case of a recognised self-regulating organisation, the practices mentioned in section 119(2)(a)(ii) and (iii) (read with section 119(5) and (6)(a));
(b) in the case of a recognised investment exchange, the practices mentioned in section 119(2)(b)(ii) and (iii) (read with section 119(5) and (6)(b));
(c) in the case of a recognised clearing house, the practices mentioned in section 119(2)(c)(ii) and (iii) (read with section 119(5) and (6)(b));
(d) in the case of a person who is subject to the statements of principle, rules, regulations or codes of practice issued or made by a designated agency in the exercise of functions transferred to it by a delegation order, the practices mentioned in section 121(2)(c) above (read with section 121(4);").
Page 42, leave out lines 15 to 21.
Page 42, line 28, after ("body") insert ("to the extent to which it relates to the rules or guidance of that body relating to the carrying on of investment business by persons certified by it ("investment business rules")").
Page 42, line 29, leave out ("between undertakings").
Page 42, line 35, leave out from ("by") to end of line 37 and insert ("that body's investment business rules").
Page 42, line 39, leave out ("the agreement") and insert ("an agreement to which this section applies").
Page 43, line 36, leave out ("that Act") and insert ("the Competition Act 1998").

On Question, amendments agreed to.

9 Feb 1998 : Column 960

Baroness Hamwee moved Amendment No. 46:

Page 46, line 48, at end insert--

Copyright, Designs and Patents Act 1988

. The Chapter I prohibition does not apply to any agreements, decisions or practices relating to the licensing of copyright works where one or more of the parties is under the jurisdiction of the Copyright Tribunal pursuant to section 149 of the Copyright, Designs and Patents Act 1988.").

The noble Baroness said: My Lords, in moving Amendment No. 46, I shall speak also to Amendments Nos. 61, 62 and 70. They were grouped with Amendment No. 4, which I did not move. I hope that I shall not confuse the House unduly by removing Amendment No. 46 from its place in the list.

I am briefed by British Music Rights, an organisation whose members consist of the Music Publishers' Association, the Alliance of Composer Organisations, the Performing Right Society and the Mechanical-Copyright Protection Society. I declare an interest in that I am a partner in a firm of solicitors which has a substantial practice in the entertainment industry.

The amendments are supported by the British Phonographic Industry. They are relevant to those who create and deal in copyright material. Although my briefing has come from the music industry, I am asked to say that the Publishers Association--that is the book publishers--wholeheartedly support the amendments concerned with copyright licensing.

Those who have briefed me fully understand and support the objectives of the Bill. However, they are concerned with the effect on their industry. They are concerned that the effect could be to stifle the industry with heavy-handed regulation, which I am well aware is quite the opposite of what the Minister is seeking to achieve. I have seen in the Official Report his use of the term "administrative overload" on a number of occasions.

I hardly need remind your Lordships of the success of the UK's music industry. Its creative success is being celebrated this evening at the Brit Awards by those who are probably in the middle of dinner and applauding the winners of those awards. Its creative success is translated into economic success and the music industry is a very substantial net earner of foreign exchange.

The economic and creative root of the music business is the right to control a copyright work. Some of the amendments in this group deal with the use of collecting societies. Those societies are a matter of convenience for more than one part of the sector. Collecting societies are helpful to individual creators and publishers. The administration, licensing and collection involved would be a mammoth task for individuals. The infrastructure which is provided by collecting societies is designed to support the very substantial number of medium and in particular small enterprises which flourish within the business.

I had not known, until I was briefed for this evening, that the great majority of the members of the Music Publishers' Association have businesses of less than

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£500,000. Collecting societies are convenient for users as well as for the licensees. They help them to find the source of a licence and give them certainty about the terms; for example, the BBC seeking licences for short clips of music for a programme. The ease of doing that means cost savings in the system and those savings are passed on to members.

Finally, blanket licensing creates a bargaining position. The merits of collective licensing were considered by the Monopolies and Mergers Commission which reported in 1988 on the operation of Phonographic Performance Limited and other collecting societies. The report of the MMC stated:

    "the continued existence of the bodies ... has been endorsed in many different environments because the convenience they offer to both the owner and the user of copyright is unlikely to be matched by any other means. Decisions of the European Court of Justice and the EC Commission make clear that the existence of collective licensing bodies is compatible with Article 86 of the Treaty of Rome, although the manner in which the bodies' functions are performed must comply with the Article's terms".

Of course, that is understood.

Amendments Nos. 46 and 61 seek to disapply the Chapters I and II prohibitions where the Copyright Tribunal has jurisdiction. Under the Copyright, Designs and Patents Act, the Copyright Tribunal deals with disputes between copyright owners and those who wish to use copyright works and can make orders varying the terms of licence, settling certain royalties granting certain licences and so on.

The tribunal will continue and to that extent, this country is in a different position from that of our European partners. I understand that the tribunal is unique to the United Kingdom; or, to put the matter another way, those who are concerned with copyrights will, because of the continued operation of the Copyright Tribunal as well as the regime of this Act, will be subject to a double jeopardy. In such circumstances there is concern that the Bill, and in particular Clause 58, is insufficient to protect those who work in the industry. The Minister may say that the tribunal is not concerned with competition and that it is dealing with a parallel activity. However, because of the matters which can be referred to it, I would say that the effect is that it is concerned with competition.

Amendment No. 62 deals with recommendations by trade associations. I should say at once that I understand the dilemmas of referring to particular organisations within amendments. I would not seek to press the amendment, which deals in particular with the position of the Music Publishers' Association, although it is intended to be more extensive. That association has for years negotiated agreements with, among others, the Association of British Orchestras, which looks after professional musicians, the National Federation of Music Societies, which represents amateurs, and the BBC. It makes recommendations about the terms of agreements; but only recommendations. There is no obligation on members to accept those recommendations. However, in practice, for reasons of convenience to which I have alluded, most do take note of them.

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Your Lordships will understand that, by its nature, music does not come in standard packages and it is helpful to have a body which works closely with representatives of users to find ways of making systems for hiring sheet music simpler and introducing certainty into the tariffs and pricing structure. The benefits to the amateur as well as the professional sector are also reflected in the benefits to the consumer--in this case the audience, the listener. Exempting recommendations by trade associations would, I believe, mean further streamlining administration and would, therefore, be in the public interest.

Amendment No. 70 refers to individual licensing. It seeks to bring individual licensing within the block exemptions. Perhaps I should say here that I hope the Minister can give us some words of assurance about block exemptions in this area. I well understand the Government's reluctance to attempt to write a UK-specific version of Article 85. I am not trying to challenge that approach tonight. Nevertheless, I hope that I shall receive some words of comfort this evening.

The creator of a work is the copyright owner and he has an absolute right to control the product of his creation. However, individuals find it very difficult to license and control their work, and especially to monitor its use. I am sure that a moment's thought will enable your Lordships to understand how hard it would be for an individual to ensure that he is paid for the use of a piece of music when it is not possible for him to listen, for example, to every radio station for 24 hours a day. Through my practice, I have had much experience of clients whose creativity goes hand in hand with a certain innocence about business matters.

Therefore, individuals and publishers will license collecting societies which manage copyright works. These are de facto monopolies, but they operate in the interests both of the owners and the users of the works. The amendment has been put forward because the industry is seeking certainty. For example, will all copyright agreements be notifiable? The cost and contractual uncertainty involved is another concern of the industry. The industry is also concerned because it understands that the European Commission at present processes to conclusion less than 60 arrangements a year and it has heard that the Office of Fair Trading does not anticipate being able to do better in that respect. There will be real resource problems if every contract needs notification. I suggest that the provisions would be a direct threat to the current cost structures. I believe that the exclusion regarding individual licensing of copyright works would be compatible with the Government's policy in respect of vertical agreements.

I appreciate that I have taken up a good deal of your Lordships' time, but this still feels like a rather swift canter through some of the areas of copyright which give rise to concern. I believe that this matter is viewed with concern by some in government. As I say, I hope that I may tempt the Minister to give some words of assurance tonight. I appreciate that he must have an appallingly crowded schedule given the number of areas covered by the Bill, but I hope that he can arrange a meeting with those in the music industry to discuss their

9 Feb 1998 : Column 963

concerns. I am sure that would be extremely welcome as they wish to get this matter resolved satisfactorily. I beg to move.

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