The decades-old agreements that limit how much radio pays to ASCAP and BMI could be in jeopardy as the Department of Justice has formally launched an initiative to terminate antitrust judgements that it believes have become outdated. The DOJ announced the first list of 26 that it aims to sunset last week, several of which date to the 1920s. And while radio’s consent decrees with the performance rights organizations aren’t on it, the DOJ continues to go through the nearly 1,300 “legacy” judgments that remain on the books.
Makan Delrahim, assistant Attorney General for the Antitrust Division, called it a “first step” in “freeing” businesses from the “burden” of judgments that no longer protect competition. “We will pursue the termination of outdated judgments around the country that presently do little more than clog court dockets, create unnecessary uncertainty for businesses or, in some cases, may actually elicit anticompetitive market conditions,” he announced.
The consent decrees between radio and ASCAP and BMI date to 1941 and are similar to nearly all judgements reached before the late-1970s, when termination dates began to be written in, typically ten years from entry. The DOJ says the vast majority of the 1,300 open-ended agreements it is reviewing no longer protect competition because of changes in industry conditions, economics, or law.
The Antitrust Division has assigned each judgment to a DOJ attorney, who will examine court papers, internal case files, and publicly available information to determine whether each judgment continues to serve competition. Once it decides to do away with a judgment, it will then open up the proposal for public comment. If it decides to move forward after that, the Antitrust Division will then file a motion with whichever federal court oversees the agreement, leaving the decision to a federal judge. In the case of radio’s ASCAP and BMI consent decrees, that would mean the process would play out in U.S. District Court in New York.
Delrahim has called the current state of music copyright law “a mess” and put the blame on the consent decrees that were put into place in 1941 to prevent ASCAP and BMI from gaining too much market power. “There’s been innovation and progress in the music business and the technology that delivers it, but the licensing of it is still governed by these consent decrees,” he said during an appearance at Vanderbilt Law School in Nashville last month.
Tool To Prevent ‘Supra-Competitive’ Fees
Under the consent decrees, if the Radio Music License Committee is unable to reach a music use agreement with ASCAP and BMI, the process shifts to a federal court where a judge oversees the rate-setting decision. When the DOJ was conducting its review of the consent decree four years ago, the RMLC said in a filing that ASCAP and BMI have historically sought to maximize their leverage by seeking “supra-competitive license fees” from broadcasters and the consent decrees were the “only protections afforded to local radio and television broadcasters.” It went on to tell the DOJ that the agreements “have restrained, to a degree, ASCAP’s and BMI’s otherwise unbridled exercise of their market power.”
That process has helped radio secure lower rates in recent years, and the process of being pulled into the courtroom setting was enough to convince SESAC to voluntarily agree to a binding arbitration process through 2038 to settle an antitrust lawsuit brought by the RMLC. The arbitration led to a discounted rate for stations for the period from Jan. 1, 2016 through Dec. 31, 2018.
But the courtroom setting has also led to long delays. After the RMLC was unable to strike a new deal with BMI when its last agreement expired, the two sides moved into rate court more than a year ago with stations paying an interim rate until a final deal covering the 2017-21 term can be reached.
As the Antitrust Division’s review moved forward, the RMLC says it is focused for the time being is on educating DOJ attorneys about the role the consent decrees play for radio and other music licensees.