ASCAP & BMI Consent Decrees Will Not Be Modified; DOJ Antitrust Div.

Here is a copy of the Statement of the Department of Justice on the Closing of the Antitrust Division’s Review of the ASCAP and BMI Consent Decrees (Aug. 4, 2016).  In short:

... the consent decrees, which describe the PROs’ licenses as providing the ability to perform “works” or “compositions,” require ASCAP and BMI to offer full-work licenses. The Division reaches this determination based not only on the language of the consent decrees and its assessment of historical practices, but also because only full-work licensing can yield the substantial procompetitive benefits associated with blanket licenses that distinguish ASCAP’s and BMI’s activities from other agreements among competitors that present serious issues under the antitrust laws. Moreover, the Division has determined not to support modifying the consent decrees to allow ASCAP and BMI to offer “fractional” licenses that convey only rights to fractional shares and require additional licenses to perform works. Although stakeholders on all sides have raised some concerns with the status quo, the Division’s investigation confirmed that the current system has well served music creators and music users for decades and should remain intact. The Division’s confirmation that the consent decrees require full-work licensing is fully consistent with preserving the significant licensing and payment benefits that the PROs have provided music creators and music users for decades. 

First, the DOJ described the background of the consent decrees.  Thereafter, the DOJ found that there is broad consensus that ASCAP and BMI as currently constituted fill important and procompetitive roles in the music licensing industry; the consent decrees require full-work licensing; modification of the consent decrees to permit fractional licensing by ASCAP and BMI would not be in the public interest; and other modifications to the consent decrees would not be appropriate at this time (e.g., modified to allow PRO members to “partially withdraw” rights and thereby prevent the PROs from granting licenses that include those rights to certain users (in particular, digital music services) but not to other music users).  Further,  the DOJ stated that assuming ASCAP and BMI proceed in good faith, the Division will forbear for one year from any enforcement action based on any purported fractional licensing by ASCAP or BMI.  Also, the DOJ identified certain guidelines and practices that may be useful as the industry moves towards such a shared understanding on fullwork licensing.  Lastly, the DOJ concluded that the consent decrees remain vital to an industry that has grown up in reliance on them.  But the consent decrees are inherently limited in scope, and a more comprehensive legislative solution may be possible and preferable.