The Competition Tribunal has granted leave to Stargrove Entertainment, the Canadian music label that has published public domain recordings from the artists such as the Beatles, to pursue a Competition Tribunal complaint against some of the giants of the music industry. The complaint targets the Canadian Music Reproduction Rights Agency (CMRRA), Universal Music, Sony Music, and several music publishers. I wrote earlier about Stargrove’s complaint and noted the backroom lobbying campaign that succeeded in obtaining a copyright term extension in Canada for sound recordings.
Despite strong opposition from the music industry, the Tribunal granted leave to pursue a complaint of price maintenance in violation of the Competition Act. The Tribunal concluded:
If Stargrove is able to establish that some or all of the Respondents, singularly or in concert, discriminated against it by refusing to issue mechanical licenses motivated by Stargrove’s low-pricing practices, an argument for section 76 relief could be available. The case for relief could be enhanced by credible evidence that mechanical licenses are routinely granted by music publishers to record labels on standard business terms and that Stargrove was treated differently.
The Tribunal was also concerned about the possibility that the conduct could have an adverse effect on competition, citing an email from Universal Canada expressing concern about maintaining market share in the face of competition from Stargrove releases:
I am also satisfied that sufficient credible evidence has been produced to support a bona fide belief that holding Stargrove out of the market could have an adverse effect on competition in a market. In an email exhibited to the affidavit of Ms. Anna Kusmider, a representative from Universal Canada noted one-week CD sales of Universal content through Walmart of 4,172 units. The author expressed concern about maintaining market share. Other evidence presented by Mr. Perusini speaks to Stargrove’s initial success in the retail market and to Walmart’s continuing interest in Stargrove’s CDs. The Respondents’ alleged denials of meaningful access to the market could also be an indication of their concern about damage to the existing higher-priced market for this music.
The case will therefore continue and holds the promise of providing new insights into efforts by some of Canada’s largest music industry participants to keep competition out of the market.