SESAC Can't Escape Antitrust Claims

Meredith Corp. v. SESAC LLC, No. 09 Civ. 9177 (PAE)., 2014 BL 57263 (S.D.N.Y. Mar. 03, 2014).

The issue in this putative class action is whether SESAC's licensing practices since 2008 have violated federal antitrust law. Plaintiffs are groups of local television stations.  They sue SESAC aand allege that, in practice, they must obtain licenses for some music in SESAC's repertory. That is because SESAC's repertory is large and includes works so ubiquitous that some are inevitably embedded in shows that the stations acquire and wish to air.  Plaintiffs contend that, since 2008, SESAC, with its affiliates' assent, has taken steps to make illusory any alternative to the blanket license it sells, which conveys the right to play the music of all SESAC affiliates.  Having insulated this product from competition and forced local television stations to acquire it, plaintiffs allege, SESAC has set an exorbitant price for that "all or nothing" license, even though stations have no interest in buying the rights to the entirety of SESAC's repertory. Plaintiffs assert that SESAC and its affiliates have thereby violated § 1 of the Sherman Act, 15 U.S.C. § 1, by combining to unlawfully restrain trade; and § 2 of the same Act, 15 U.S.C. § 2, by conspiring to monopolize the market for the performance rights to the musical works within SESAC's repertory.  Plaintiffs also assert a monopolization claim against SESAC under § 2.

SESAC moved for summary judgment. The Court denied the motion as to all three counts, except that on the § 1 claim, the Court granted summary judgment to defendants in two ways that narrowed that claim. Specifically, the Court rejected plaintiffs' (1) per se theory of liability; and (2) claim of an agreement to restrain trade among all 20,000-plus SESAC affiliates, as opposed to among only the far smaller subset (under 1%) of affiliates who were party to a supplemental affiliation agreement with SESAC.

The Court first reviewed the history of antitrust litigation involving the PROs' licensing practices. The Court then considered the § 1 claim, assessing whether (1) the conduct plaintiffs assail is amenable to per se condemnation; (2) there is adequate evidence of concerted action among SESAC's affiliates to restrain trade; and (3) the evidence would support a conclusion that the anti-competitive effects of SESAC's conduct outweighed its pro-competitive tendencies, i.e., whether a jury could find harm to competition. The Court then considered the § 2 claims, addressing first the monopolization claim and then the claim of a conspiracy to monopolize.