Music & entertainment law blog

Music & entertainment law blog

London entertainment law firm Crefovi is delighted to bring you this music & entertainment law blog, to provide you with forward-thinking and insightful information on hot business and legal issues in the music and entertainment sectors.

This music & entertainment law blog provides regular news and updates, and features summaries of recent news reports, on legal issues facing the global media and entertainment community, in particular in the United Kingdom and France. This music & entertainment law blog also provides timely updates and commentary on legal issues in the cinema, book publishing and music sectors. It is curated by the entertainment lawyers of our law firm, who specialise in advising our media & entertainment clients in London, Paris and internationally on all their legal issues.

London entertainment & media law firm advises, in particular, the fashion and luxury goods sectors, the music sector, film sector, art sector & high tech sector. Crefovi writes and curates this music & entertainment law blog to guide its clients through the complexities of media law.

We support our clients, who all work in the creative industries, in London, Paris and globally, in finding the best solutions to their various legal issues relating to business law, either on contentious or non-contentious matters.

Crefovi has a roster of music clients, ranging from music artists to record labels, and is a regular attendee of, and speaker at, entertainment business events, such as MIDEM, MaMa, SXSW, Comic Con, the Berlinale and EFM, the Cannes Film Festival & seminars organised by AIM, BPI, MPA and SACEM.

London entertainment law firm Crefovi believes that, due to exponential streaming of entertainment content, the music and film industries have radically and irrevocably changed in the last five years and that it is time for the entertainment sector to take stock and foster mutually beneficial partnerships between the music and film world, high tech companies and famous brands making their mark in the consumer goods & retail arena. Crefovi is there to support its entertainment clients in achieving this delicate balance in a fast-evolving environment.

Moreover, Crefovi has industry teams, built by experienced lawyers with a wide range of practice and geographic backgrounds. These industry teams apply their extensive industry expertise to best serve clients’ business needs. One of these industry teams is the Media & entertainment department, which curate this music & entertainment law blog below, for you.

Crefovi regularly updates its social media channels, such as Linkedin, Twitter, Instagram, YouTube and Facebook. Check our latest news there!

Competition law & labour markets: the CMA springs into action

Crefovi : 04/04/2024 3:38 pm : Antitrust & competition, Articles, Consumer goods & retail, Emerging companies, Employment, compensation & benefits, Entertainment & media, Fashion law, Law of luxury goods, News, Outsourcing, Webcasts & Podcasts

Competition law in labour markets is a hot topic for many competition bodies around the world and, in particular, the United Kingdom’s Competition and Markets Authority. The CMA has lately sprung into action, in order to research, investigate and, ultimately, decide, whether the majority of UK’s labour markets lack competition due to no-poach agreements, salary-fixing agreements and other anticompetitive tactics used by UK employers. In this era of thrift and savings, generated by the recession caused by the management of the Covid 19 pandemic, and then the inflation ballooning in the aftermath of the Russia/Ukraine war, the CMA is particularly attentive that UK citizens get their fair share of remuneration, when they go to work every morning, to pay their bills. Let’s investigate how the Competition and Markets Authority is positioning itself as a model competition body, in the fight against anticompetitive behaviour in labour markets.

1. What is the CMA doing in relation to competition law & labour markets?

Competition issues in labour markets generally fall under the prohibition on anticompetitive agreements, pursuant to Chapter I of the Competition Act 1998 (‟CA98”) in the UK, and article 101 of the Treaty of the Functioning of the European Union (‟EU”).

The Competition and Markets Authority (‟CMA”) launched three investigations in labour markets in the United Kingdom (‟UK”), since July 2022, as follows.

The first investigation, started in July 2022, relates to suspected breaches of competition law in relation to the purchase of freelance services supporting the production and broadcasting of sports content in the UK. The CMA launched an investigation under section 25 (Power of CMA to investigate) CA98 into suspected infringements of the Chapter I (Agreements) prohibition of the CA98 by undertakings involved in the production and broadcasting of sports content. The CMA is investigating suspected breaches of competition law by at least the following:

This investigation was updated on 3 April 2024, with an ongoing assessment of information gathered in respect of the purchase of freelance services supporting the production and broadcasting of sports content in the UK, between March and May 2024.

The second investigation, launched in October 2023, relates to suspected anti-competitive behaviour relating to freelance and employed labour in the production, creation and/or broadcasting of television content, excluding sport content. The CMA launched this second investigation under section 25 CA98 into a suspected infringement or infringements of the Chapter I prohibition of the CA98 by a number of undertakings involved in the production, creation and/or broadcasting of television content. More specifically, the investigation concerns the activities of these undertakings in relation to the purchase of services from freelance providers, and the employment of staff, who support the production, creation and/or broadcasting of television content in the UK, excluding sport content. The following undertakings are investigated, as the investigation is digging into whether production companies have been colluding by informally fixing freelancers’ wage rates:

  • British Broadcasting Corporation;

  • ITV PLC;

Further investigatory steps and assessment of evidence is done by the CMA, between April and October 2024.

The third and last investigation, launched in March 2023, relates to suspected anticompetitive conduct in relation to fragrances and fragrance ingredients. The CMA launched an investigation under Chapter I CA98 into suspected breaches of competition law. The investigation concerns suspected anticompetitive conduct in relation to the supply of fragrances and fragrance ingredients for use in the manufacture of consumer products such as household and personal care products. In January 2024, the CMA extended the investigation to include suspected unlawful coordination by several undertakings, involving reciprocal arrangements relating to the hiring or recruitment of certain staff involved in the supply of fragrances and/or fragrance ingredients. The businesses under investigation by the CMA are:

as well as other entities within their corporate groups, including UK subsidiaries.

Also, in its annual plan for 2023/2024, the CMA referred to its current focus on competition issues in labour markets in the following terms, referring to it as a priority in relation to its strategic aim of ensuring that people can be confident they are getting great choices and fair deals: ‟More broadly on labour markets, we have produced guidance for employers on how to avoid anticompetitive behaviour such as no-poaching agreements, when 2 or more businesses agree not to approach or hire each other’s employees. Our Microeconomics unit’s research strategy includes work on labour market power – that is the extent to which employers are able to keep wages or working conditions below competitive levels”. This CMA annual plan highlights that with the cost-of-living crisis and at a time when finances are under particular pressure, the CMA wants to clamp down on cartel behaviour and unilateral effects impacting household income and labour markets, and therefore is actively pursuing collusive behaviour that affects finances and household incomes.

Indeed, in February 2023, the CMA issued guidance to support employers to identify and avoid collusion through wage-fixing, no-poaching agreements and information sharing. In this guidance, the CMA highlighted three areas of particular risk in labour markets:

  • no-poach agreements: agreement where two or more businesses agree not to approach or hire each other’s employees (or not to do so without the current employer’s consent);

  • wage fixing agreements: agreements between two or more businesses to fix employees’ salaries or other employment benefits. The CMA noted that this could include agreeing to pay the same wages or setting maximum caps for pay. Wage fixing agreements were given as an example of buyer cartels in the UK horizontal guidelines published by the CMA in August 2023; and

  • information sharing: businesses sharing sensitive information about terms and conditions of employment. The CMA highlighted that this could cover freelancers and contracted workers, as well as permanent employees.

Then, in January 2024, the CMA published a 192 pages’ long research report by their new Microeconomics Unit (part of the CMA which conducts research to inform the CMA of emerging economic issues) on ‟Competition and market power in UK labour markets” (the ‟Report”), focusing on employer market power and market concentration. The Report is intended to provide an evidential basis to support policymaking in relation to labour markets in the UK, as well as further research into competition and labour markets.

2. Why is the CMA concerned about competition law & labour markets?

2.1. Key takeways from the CMA’s Report

Some of the key findings, in the Report, are:

  • market concentration varies significantly across labour markets: overall, the level of employer market power (i.e. the ability of firms to pay workers less than the value of their contribution to the firm’s output) in the UK has, since 1998, been relatively stable or declining. Also, labour market concentration (i.e. how many firms there are in a particular market) in the UK is roughly the same as 20 years ago, despite significant changes to the structure of the labour market, including the rise of the gig economy and the impact of the Covid-19 pandemic. However, there is substantial industry variation in market concentration across labour markets, which can impact wage levels. Geographically, labour markets are much more concentrated outside London and the South East.

  • the law of non-compete clauses may need updating: non-compete provisions, which restrict the ability of employees to work for rival firms for a period of time after leaving their current employer, do not generally breach UK competition law. However, the Report finds that around 26 percent of UK workers are affected by non-compete clauses which prevent them from joining a competitor, even in low-paid jobs. Given the prevalence of non-compete clauses across the economy and their impact on worker mobility, the CMA considers that UK employment law may need updating. This supports the UK government’s intention, announced in May 2023 (as part of a package of measures to boost the productivity of UK businesses), to legislate to limit post-term non-compete clauses in employment agreements to 3 months.

Sarah Cardell, CEO of the CMA, has stated that the CMA will use the findings of the Report to inform the CMA’s work in combatting anti-competitive conduct in labour markets, including its existing above-mentioned three investigations. This Report’s findings will be used to inform broader policy developments, such as the increase in the number of self-employed people in the gig economy, for example.

2.2. Global interest in relation to competition law & labour markets

The CMA is not alone in focusing on labour market competition law violations. There is a global trend of competition authorities worldwide showing an increasing interest in potential anticompetitive conduct in labour markets in recent years.

The US Department of Justice (‟DOJ”) and the Federal Trade Commission (‟FTC”) were the first to take a stance on competition issues in labour markets when they published guidance in October 2016. The DOJ and FTC have been particularly interested in no poach agreements and announced the first criminal charges for a no-poach agreement in 2021. There have also been several civil class actions brought by employees against employers: for example, a claim was brought by nurses which resulted in the award of treble damages for wage fixing and settled actions for a large payout (against Disney by animators). In January 2023, the FTC announced a proposed rule that would ban nearly all post-employment non-compete agreements, with limited exceptions.

Similarly, Canada has implemented a no-poach ban.

In a 2021 speech, Competition Commissioner Margrethe Vestager indicated that the European Commission (the ‟Commission”) was interested in non-classic cartels, i.e. anticompetitive conduct in labour markets – including no-poach and wage-fixing agreements – as an area of enforcement activity. She also highlighted wage fixing agreements as an example of a buyer cartel with a ‟very direct effect on individuals”. At an EU-wide level, the Commission announced, and conducted, in November 2023, its first ever dawn raids carried out in relation to a suspected no-poach agreement (and associated anticompetitive exchange of information) in the online food delivery sector.

There have been numerous investigations into alleged competition law infringements in labour markets in recent years with cases in Belgium, Denmark, Finland, France, Hungary, Lithuania, Portugal, Romania and Spain in the EU, as well as Brazil, Colombia, Switzerland, Turkey and the USA. These investigations span a wide range of sectors, including banking, healthcare, sport and software.

For example, in France, in 2017, the French Competition Authority sanctioned the competitors in the floor-covering sector for having adopted a ‟tacit non-aggression agreement” or a ‟gentleman’s agreement”. This agreement prohibited the companies from actively soliciting each other’s employees for a number of years. The companies had also exchanged information on salaries (including planned increases) and bonuses awarded to employees. In January 2023, the French Directorate-General for Competition, Consumer Affairs and Fraud Control (the ‟DGCCRF”, responsible for local anti-competitive practices) fined metal recycling companies for having concluded a no-poach agreement covering the whole French territory as part of a divestment deal. The DGCCRF considered that this agreement went beyond what was necessary for the completion of the merger due to the national scope of the undertaking (which covered a larger territory than the one in which the seller offered its services prior to the divestment) and its reciprocity.

3. What are the next steps, for the CMA, with respect to competition law & labour markets?

In her speech on 25 January 2024, CMA’s CEO, Sarah Cardell reiterated the CMA’s current interest in potential competition issues in labour markets but stressed that the competition rules do not generally regulate contracts between an employer and an employee. She added that the CMA, in line with international competition authorities, does not intend to scrutinise genuine collective bargaining between self-employed workers and employers.

However, it is anticipated that during the course of 2024, in addition to the above-mentioned potential UK legislative reform to restrict the duration of non-compete clauses to three months, there will be an increase in competition enforcement in labour markets, particularly in respect to no-poach and wage-fixing agreements both in the UK and globally. Similarly, as a result of the increased scrutiny of labour markets, there could be a rise in private claims, especially concerning equal pay.

The CMA is particularly interested in clamping down on what may otherwise be seen as standard business practice.

It is therefore critical for all businesses, irrespective of the industry they compete in, to ensure Human Resources (‟HR”) and recruitment departments are fully familiar with competition law compliance and training programmes, and that care is taken to avoid potentially infringing conduct in this context. Members of those teams need to be aware of potential areas of concern when speaking to their peers in other businesses, to mitigate competition risks.

Employers and HR professionals across all sectors/industries should therefore take this opportunity to review their use of non-compete provisions and, of course, ensure that they are observing the CMA’s guidance on wage-fixing, no-poaching agreements and information sharing. Are there any agreements with competitors (commercially or in recruitment) where it is explicitly set out that they will not approach each other’s employees? Has the company agreed with its competitors that they will not pay above a certain amount or the terms on which it will employ staff? Does the company routinely contact competitors to benchmark themselves? If so, advice should be sought on how to proceed to minimise the risk of a CMA investigation.
Crefovi’s live webinar: Competition law & labour markets – the CMA springs into action – 12 April 2024


Crefovi regularly updates its social media channels, such as Linkedin, Twitter, Instagram, YouTube and Facebook. Check our latest news there!


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    Digital Services Act: the revolution will be televised

    Crefovi : 20/03/2024 4:09 pm : Antitrust & competition, Art law, Articles, Banking & finance, Capital markets, Consumer goods & retail, Emerging companies, Entertainment & media, Fashion law, Gaming, Hospitality, Information technology - hardware, software & services, Internet & digital media, Law of luxury goods, Life sciences, Litigation & dispute resolution, Music law, News, Outsourcing, Private equity & private equity finance, Product liability, Real estate, Sports & esports, Technology transactions, Webcasts & Podcasts

    The Digital Services Act is upon us and, with its bestie the Digital Markets Act, promises to force powerful changes in the digital ecosystem currently in place in the European Union and even globally. The power is shifting back to the people, with the Digital Services Act, and intermediary service providers better listen to its complaints about unclear and deceptive terms and conditions of service, its takedown notices for illegal content, products and services, as well as its concerns about bullying, breach of free speech, unfair targeting of minors, minorities, etc. Otherwise, the European Commission and national Digital Services Coordinators in the 27 European Union member-states, will take swift action to force online platforms, other types of intermediary service providers and search engines, to change their way and comply, with fines which can go up to 6 percent of worldwide annual turnover. Be warned, the Google, Apple, Microsoft and X/Twitter of this world: the revolution will be, is, televised.

    1. What is the Digital Services Act?

    Regulation (EU) 2022/2065 of the European Parliament and of the Council of 19 October 2022 on a Single Market for Digital Services and amending Directive 2000/31/EC (Digital Services Act) (‟DSA”) is a regulation from the European Union (‟EU”) that regulates online intermediaries and platforms such as marketplaces, social networks, content-sharing platforms, app stores and online travel and accommodation platforms.

    The DSA is part of a ‟package” of new EU rules focused on achieving Europe’s digital targets for 2030 and the digital ecosystem ‟Shaping Europe’s digital future”, along with the Digital Markets Act, the passed AI Act, as well as the Data Act and Data Governance Act, which form a single set of rules that apply across the EU, to implement the two following goals:

    • create a safer digital space in which the fundamental rights of all users of digital services are protected by setting clear and proportionate rules, and

    • establish a level playing field to foster innovation, growth and competitiveness, both in the European single market and globally.

    More specifically, the DSA creates an EU-wide uniform framework dealing with four issues as follows:

    • the handling of illegal or potentially harmful online content;

    • the liability of online intermediaries for third-party content;

    • the protection of users’ fundamental rights online, and

    • the bridging of information asymmetries between online intermediaries and their users.

    2. Who is affected and/or impacted by the Digital Services Act? Providers of online intermediary services

    2.1. Intermediary services

    The DSA applies to all intermediary services offered to EU users (natural persons and legal entities), irrespective of where the providers of these intermediary services have their place of establishment.

    ‟Intermediary services” are defined as:

    • a ‟mere conduit” service, consisting of the transmission in a communication network of information provided by a recipient of the service, or the provision of access to a communication network (for example, ‟mere conduit” services include generic categories of services, such as internet exchange points, wireless access points, virtual private networks, DNS services and resolvers, top-level domain name registries, registrars, certificate authorities that issue digital certificates, voice over IP and other interpersonal communication services);

    • a ‟caching” service, consisting of the transmission in a communication network of information provided by a recipient of the service, involving the automatic, intermediate and temporary storage of that information, performed for the sole purpose of making the information’s onward transmission to other recipients more efficient, upon their request (for example, ‟caching” services include the sole provision of content delivery networks, reverse proxies or content adaptation proxies), and

    • a ‟hosting” service, consisting of the storage of information provided by, and at the request of, a recipient of the service (for example, cloud computing, web hosting, paid referencing services or services enabling sharing information and content online, including file storage and sharing).

    Intermediary services may be provided in isolation, as part of another type of intermediary service, or simultaneously with other intermediary services. Whether a specific service constitutes a ‟mere conduit”, ‟caching” or ‟hosting” service depends solely on its technical functionalities, which might evolve in time, and should be assessed on a case-by-case basis.

    2.2. Providers of intermediary services

    Therefore, all companies providing online intermediary services on the EU single market, whether established in the EU or not, must comply with the DSA. These include:

    • intermediary service providers offering network infrastructure (internet access providers, caching operators);

    • hosting service providers;

    • online platforms (including social media platforms, social networks, app stores, online travel and accommodation websites, content-sharing websites, collaborative economy platforms and marketplaces), and

    • search engines.

    In the DSA, companies are subject to obligations which are proportionate to their size, role, impact and audiences in the online ecosystem, in particular:

    • micro-companies and small businesses (with less than 50 employees and annual sales of less than 10 million Euros) are exempt from some of the DSA’s obligations, and

    2.3. Very Large Online Platforms (VLOPs) and Very Large Online Search Engines (VLOSEs)

    The European Commission (the ‟Commission”) has begun to designate VLOPs and VLOSEs based on user numbers provided by platforms and search engines, which, regardless of size (except micro and small enterprises), they were required to publish by 17 February 2023. Platforms and search engines will need to update these figures at least every six months.

    Once the Commission designates a platform as a VLOP or search engine as a VLOSE, the designated online service has four months to comply with the DSA. The designation triggers specific rules that tackle the particular risks such large services pose to Europeans and society when it comes to illegal content, and their impact on fundamental rights, public security and wellbeing. For example, the VLOP or VLOSE needs to:

    • establish a point of contact for authorities and users;

    • report criminal offences;

    • have user-friendly terms and conditions, and

    • be transparent as regards advertising, recommender systems or content moderation.

    The Commission will revoke its decision if the platform or search engine does not reach the threshold of 45 million monthly users anymore, during one full year.

    So who are those VLOPs and VLOSEs, identified by the Commission as early as April 2023, so far? Some of the most notable are, inter alia:

    • Alibaba (Netherlands) B.V. is a VLOP under the DSA, for the designated service AliExpress;

    • Amazon Services Europe S.à.r.l. is a VLOP under the DSA, for the designated service Amazon Store;

    • Apple Distribution International Limited is a VLOP under the DSA, for the designated service App Store;

    • Aylo Freesites Ltd. is a VLOP under the DSA, for the designated service Pornhub;

    • B.V. is a VLOP under the DSA, for the designated service;

    • Google Ireland Ltd. is a VLOSE under the DSA, for the designated service Google Search, and a VLOP under the DSA, for the designated services Google Play, Google Maps, Google Shopping and YouTube;

    • Linkedin Ireland Unlimited Company is a VLOP under the DSA, for the designated service LinkedIn;

    • Meta Platforms Ireland Limited (MPIL) is a VLOP under the DSA, for the designated services Facebook and Instagram;

    • Microsoft Ireland Operations Limited is a VLOSE under the DSA, for the designated service Bing;

    • Pinterest Europe Ltd. is a VLOP under the DSA, for the designated service Pinterest;

    • Snap B.V. is a VLOP under the DSA, for the designated service Snapchat;

    • TikTok Technology Limited is a VLOP under the DSA, for the designated service TikTok;

    • Twitter International Unlimited Company is a VLOP under the DSA, for the designated service X;

    • Wikimedia Foundation Inc 3*** is a VLOP under the DSA, for the designated service Wikipedia, and

    • Zalanda SE is a VLOP under the DSA, for the designated service Zalando.

    On 18 December 2023, the Commission opened formal proceedings to assess whether X may have breached the DSA in areas linked to risk management, content moderation, dark patterns, advertising transparency and data access for researchers. This decision to open proceedings was motivated by the analysis of the risk assessment report submitted by X in September 2023, X’s transparency report published on 3 November, and X’s replies to a formal request for information, which, among others, concerned the dissemination of illegal content in the context of Hamas’ terrorist attacks against Israel.

    3. What are the obligations that providers of online intermediary services have, under the DSA?

    The DSA establishes a new liability framework for companies in the digital sector, meaning they are now subject to a multitude of obligations.

    3.1. Key obligations for all intermediary service providers

    Here is a summary of the key obligations imposed on different levels of digital intermediary service providers by the DSA:

    • Governance: all providers at all levels must establish two single points of contact, one for direct communication with supervisory authorities, and the other for the recipients of the services. Providers not established in the EU, but offering services in the EU, will be required to designate a legal representative in the EU. Online platforms will need to have an out-of-court alternative dispute resolution mechanism, publish annual reports on content moderation, including the number of orders received from the authorities and the number of notices received from other parties, for removal and disabling of illegal content or content contrary to their terms and conditions, and the effect given to such orders and notices. VLOPs and VLOSEs must perform systematic risk assessments, share data with regulators and appoint a compliance officer;

    • Obligations for VLOPs and VLOSEs to prevent abuse of their systems, by taking risk-based action, including oversight through independent audits of their risk management measures. Platforms must mitigate against risks such as disinformation or election manipulation, cyber violence against women or harms to minors online. These measures must be carefully balanced against restrictions of freedom of expression and are subject to independent audits;

    • Responsible online marketplaces: online platforms and VLOPs will have to strengthen checks on the information provided by traders and make efforts to prevent illegal content so that consumers can purchase safe products and services;

    • Measures to counter illegal content online, including illegal goods and services: the DSA imposes new mechanisms allowing users to flag illegal content online, and for platforms to cooperate with specialised ‟trusted flaggers” to identify and remove illegal content;

    • New rules to trace sellers on online marketplaces, to help build trust and go after scammers more easily; a new obligation for online marketplaces to randomly check against existing databases whether products or services on their sites are compliant; sustained efforts to enhance the traceability of products through advanced technological solutions;

    • Ban on dark patterns on the interface of online platforms, referring to misleading tricks that manipulate users into choices they do not intend to make; providers must not manipulate users (commonly known as ‟nudging”) into using their service, for example, by making one choice more prominent than the other. Cancelling a subscription to a service should also be as easy as subscribing;

    • Wide-ranging transparency measures for online platforms, including better information on terms and conditions, as well as transparency on the algorithms used for recommending content or products to users; Also enhanced transparency for all advertising on online platforms and influencers’ commercial communications;

    • Bans on targeted advertising on online platforms: targeted advertising to minors or targeted advertising based on special categories of personal data, such as ethnicity, political views or sexual orientation, is prohibited for online platforms and VLOPs;

    • Protection of minors on any platform in the EU: for services aimed at minors, the providers of intermediary services must provide an explanation on the conditions and restrictions of use in a way that is understandable to minors;

    • Recommender systems: VLOPs will be required to offer users a system for recommending content not based on profiling. Transparency requirements for the parameters of recommender systems will be included;

    • ‟Notice and action” procedure: providers of intermediary services must explicitly describe, in their terms and conditions, any restrictions that they may impose on the use of their services, such as the content moderation policies, and to act responsibly in applying and enforcing those restrictions. Users will be empowered to give notice of illegal online content. Online platforms and VLOPs will have to be reactive through a clearer ‟notice and action” procedure. Victims of cyber crime will see the content that they report removed momentarily;

    • Protection of fundamental rights: stronger safeguards must be put in place to ensure user notices are processed in a non-arbitrary and non-discriminatory way, and safeguards must protect fundamental rights, such as data protection and freedom of expression;

    • Effective safeguards for users, including the possibility to challenge platforms’ content moderation decisions based on the obligatory information platforms must now provide to users when their content gets removed or restricted; users have new rights, including a right to complain to the platform, seek out-of-court settlements, complain to their national authority in their own language, or seek compensation for breaches of the rules. Now, representative organisations are able to defend user rights for large scale breaches of the law;

    • Accountability: EU member-states and the Commission will be able to access the algorithms of VLOPs and VLOSEs;

    • Allow access to data to researchers of key platforms in order to scrutinise how platforms work and how online risks evolve;

    • A new crisis response mechanism in cases a serious threat for public health and security crises, such as a pandemic or a war;

    • A unique oversight structure: the Commission is the primary regulator of VLOPs and VLOSEs, while other intermediary service providers are under the supervision of member-states where they are established. Indeed, national Digital Service Coordinators (‟DSCs”), designed by each one of the 27 EU member-states, are responsible for supervising, enforcing and monitoring the DSA in that country. In France, the ‟Autorité de régulation de la communication audiovisuelle et numérique” (‟Arcom”) is the DSC. The Commission has enforcement powers similar to those it has under antitrust proceedings. An EU-wide cooperation mechanism is currently being established between national regulators, the DSCs, and the Commission.

    While the DSA does not define what illegal content online is, it sets out EU-wide rules that cover detection, flagging and removal of illegal content, as well as a new risk assessment framework for VLOPs and VLOSEs on how illegal content spreads on their services.

    What constitutes illegal content, though, is defined in other laws, either at EU level or at national level – for example, terrorist content or child sexual abuse material or illegal hate speech is defined at EU level. Where a content is illegal only in a given EU member-state, as a general rule it should only be removed in the territory where it is illegal.

    The DSA stipulates that breaches must be subject to proportionate and dissuasive penalties, determined by each member-state. Intermediary service providers can be fined up to 6 percent of annual worldwide turnover for breaching the DSA and up to 1 percent of worldwide turnover for providing incorrect or misleading information.

    3.2. Key obligations specific to VLOPs and VLOSEs

    Once they are designated as such, VLOPs and VLOSEs must follow the rules that focus only on VLOPs and VLOSEs due to the potential impact they can have on society. This means that they must identify, analyse and assess systemic risks that are linked to their services. They should look, in particular, to risks related to:

    • illegal content;

    • fundamental rights, such as freedom of expression, media freedom and pluralism, discrimination, consumer protection and children’s rights;

    • public security and electoral processes, and

    • gender-based violence, public health, protection of minors and mental and physical wellbeing.

    Once the risks are identified and reported to the Commission for oversight, VLOPs and VLOSEs are obliged to put measures in place that mitigate these risks. This could mean adapting the design or functioning of their services or changing their recommender systems. This could also consist of reinforcing the platform internally with more resources to better identify systemic risks.

    Those designated as VLOPs and VLOSEs also have to:

    • establish an internal compliance function that ensures that the risks identified are mitigated;

    • be audited by an independent auditor at least once a year and adopt measures that respond to the auditors’ recommendations;

    • share their data with the Commission and national authorities so that they can monitor and assess compliance with the DSA;

    • allow vetted researchers to access platform data when the research contributes to the detection, identification and understanding of systemic risks in the EU;

    • provide an option in their recommender systems that is not based on user profiling, and

    • have a publicly available repository of advertisements.

    To conclude, the DSA is a first-of-a-kind regulatory toolbox globally, and sets an international benchmark or a regulatory approach to online intermediaries. Designed as a single, uniform set of rules for the EU, these rules will give users new protections and businesses legal certainty across the whole single market. Moreover, the DSA will complement the distance selling regulations and EU consumer contract legislation well, empowering consumers and businesses in doing more business and deals online. While we are super glad to be Europeans and therefore to benefit from these wonderful protections, we highly recommend that providers of intermediary services take the DSA very seriously, and work their socks off to become immediately compliant with it, even when online platforms, such as Easyjet, have not yet been designated as VLOPs by the Commission.
    Crefovi’s live webinar: Digital Services Act – the revolution will be televised – 29 March 2024

    Crefovi regularly updates its social media channels, such as LinkedinTwitterInstagramYouTube and Facebook. Check our latest news there!

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      Digital Markets Act: forcing change in the digital services’ industry, to ensure more competition

      Crefovi : 19/02/2024 3:34 pm : Antitrust & competition, Articles, Consumer goods & retail, Emerging companies, Entertainment & media, Gaming, Information technology - hardware, software & services, Internet & digital media, Litigation & dispute resolution, News, Outsourcing, Technology transactions, Webcasts & Podcasts

      While the deadline for compliance with the Digital Markets Act is fast approaching, gatekeepers in the digital services’ market are (allegedly) frantically preparing themselves for compliance. But is this ever going to happen, by 5 March 2024, in light of the robust opposition and resistance to any change which may as much as weaken the monopolistic positions of the likes of Apple, Google, Microsoft, Meta, Amazon and Tiktok? Of course, none of these tech giants are European, and it is just not in the American, or Chinese, DNA, to have to suffer so much interference from a state-owned entity like the European commission, even for the sake of allowing a higher degree of competition and letting new players enter the market. So, what, exactly, is going on?

      1. What is the Digital Markets Act?

      Regulation (EU) 2022/1925 of the European Parliament and of the Council of 14 September 2022 on contestable and fair markets in the digital sector (Digital Markets Act) (‟DMA”) is a regulation from the European Union (‟EU”) that aims at ensuring a higher degree of competition in European digital markets by preventing larger companies from abusing their market power and by allowing new players to enter the market.

      Indeed, the DMA is designed to prevent the leveraging of market power across different digital services (including through a prohibition on self-preferencing), reduce barriers to entry or expansion across digital markets, facilitate switching and multi-homing between services (e.g. through data portability and interface interoperability requirements), and control how user data are processed and when such data must be made available to users as well as third party competitors.

      More specifically, the DMA applies to the markets where ‟core platform services” are provided to end users and business users, as follows:

      • online intermediation services;

      • online search engines;

      • online social networking services;

      • video-sharing platform services;

      • number-independent interpersonal communications services;

      • operating systems;

      • web browsers;

      • virtual assistants;

      • cloud computing services, and

      • online advertising services, including advertising networks, advertising exchanges and any other advertising intermediation services, provided by an undertaking that provides any of the core platform services listed above.

      2. Who is affected and/or impacted by the Digital Markets Act? Gatekeepers

      The DMA therefore targets the largest digital platforms operating in the EU, which are referred to as ‟gatekeepers”, in this EU regulation.

      The term ‟gatekeeper” refers to the ability of intermediary platforms to act as the main ‟bottleneck” to a large number of participants, that are not reachable elsewhere.

      Indeed, the DMA provides that an undertaking should be designated as a gatekeeper where it meets three qualitative criteria:

      • it has significant impact on the internal market;

      • it provides a core platform service which is an important gateway for business users to reach end users, and

      • it enjoys an entrenched and durable position, in its operations, or it is foreseeable that it will enjoy such a position in the near future.

      The DMA also requires undertakings to notify the European Commission (the ‟Commission”) where they meet three quantitative thresholds, which act as a presumption for gatekeeper status:

      • the undertaking generates EU revenues of at least 7.5bn Euros in each of the last three financial years, or had an average market capitalisation of at least 75bn Euros in the last financial year, and the undertaking provides the same core platform service in at last three EU member-states;

      • in each of the last three financial years, the undertaking provides a core platform service with at least 45m EU monthly active end users in the last financial year, and at least 10,000 yearly active EU business users, or

      • the undertaking met the second above-mentioned criteria in each of the last three financial years.

      Undertakings that meet these thresholds have the opportunity to argue why they should not be designated as a gatekeeper and thus to rebut the presumption.

      Conversely, the Commission can designate an undertaking as a gatekeeper where it does not meet the quantitative thresholds, but nevertheless satisfies the qualitative criteria.

      On 6 September 2023, the Commission designated for the first time six gatekeepers – Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft – under the DMA. In total, 22 core platform services provided by those gatekeepers have been designated.

      The Commission’s designations confer gatekeeper status on 22 core platform services, as follows:

      • Alphabet: Google Maps, Google Play, Google Shopping, YouTube, Google Search, Google (ads), Google Chrome and Google Android;

      • Meta: Facebook, Instagram, WhatsApp, Messenger, Meta Marketplace and Meta;

      • Apple: App Store, Safari and iOS;

      • Amazon: Amazon Marketplace and Amazon (ads);

      More than one gatekeeper has therefore been designated for certain services.

      After the designation of TikTok as a gatekeeper, its parent company ByteDance launched itself into applying for the suspension of the Commission’s decision designating the former as a gatekeeper, as well as bringing an action for annulment of that decision, in November 2023. However, the EU general court dismissed this application for suspension on the grounds that ByteDance failed to demonstrate the urgency required for an interim order in order to avoid serious and irreparable damage, on 9 February 2024.

      Gmail, and Samsung Internet Browser also met the quantitative notification thresholds, but their owners (Alphabet, Microsoft and Samsung) were able to persuade the Commission that the relevant services should not be designated as they did not satisfy the qualitative criteria. Having examined the submissions that were made to it, the Commission has accepted that the presumption attached to the quantitative thresholds had been successfully rebutted for each of those services.

      Similar submissions were made to the Commission in relation to Bing, Edge, Microsoft Advertising and iMessage and, on 12 February 2024, the Commission adopted decisions closing four market investigations under the DMA, finding that Apple and Microsoft should not be designated as gatekeepers for the following core platform services: Apple’s messaging service, iMessage, Microsoft’s online search engine Bing, web browser Edge and online advertising service Microsoft Advertising.

      Also, the Commission has initiated a market investigation (which must be completed within the next twelve months) to determine if iPadOS should be added to the list of designated core platform services, notwithstanding the fact that the quantitative notification thresholds are not met.

      3. What are the obligations that gatekeepers have, under the Digital Markets Act?

      Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft have six months from 6 September 2023 (i.e. the date on which some of their above-mentioned core platform services were listed in the Commission’s designation decisions) to comply with the obligations set out in the DMA that apply to designated gatekeepers.

      So, the deadline for compliance is 5 March 2024. And this is why we hear so much about the DMA at the moment, as the gatekeepers frantically prepare themselves for compliance with the following DMA obligations, inter alia:

      • the gatekeeper shall not prevent business users from offering the same products or services to end users through third-party online intermediation services or through their own direct online sales channel at prices or conditions that are different from those offered through the online intermediation services of the gatekeeper;

      • the gatekeeper shall allow business users, free of charge, to communicate and promote offers, including under different conditions, to end users acquired via its core platform service or through other channels, and to conclude contracts with those end users, regardless of whether, for that purpose, they use the core platform services of the gatekeeper;

      • the gatekeeper shall allow end users to access and use, through its core platform services, content, subscriptions, features or other items, by using the software application of a business user, including where those end users acquired such items from the relevant business user without using the core platform services of the gatekeeper;

      • the gatekeeper shall not directly or indirectly prevent or restrict business users or end users from raising any issue of non-compliance with the relevant EU or national law by the gatekeeper with any relevant public authority, including national courts, related to any practice of the gatekeeper;

      • the gatekeeper shall not require end users to use, or business users to use, to offer, or to interoperate with, an identification service, a web browser engine or a payment service, or technical services that support the provision of payment services, such as payment systems for in-app purchases, of that gatekeeper in the context of services provided by the business users using the gatekeeper’s core platform services;

      • the gatekeeper shall not require business users or end users to subscribe to, or register with, any further core platform services listed in the designation decision, or which meet the above-mentioned thresholds, as a condition for being able to use, access, sign up for or registering with any of that gatekeeper’s core platform services;

      • the gatekeeper shall provide each advertiser to which it supplies online advertising services, or third parties authorised by advertisers, upon the advertiser’s request, with information on a daily basis free of charge, concerning each advertisement placed by the advertiser, regarding th price and fees paid by the advertiser, the remuneration received by the publisher, the metrics on which each of the prices, fees and remunerations are calculated;

      • the gatekeeper will have to submit detailed compliance reports to the Commission, with the first reports due by 5 March 2024, where such reports explain the measures that have been adopted by the gatekeeper to comply with the DMA, including any action taken to inform end users and/or business users of these measures and the feedback received from these users, and

      • the gatekeeper will be under a duty to report planned acquisitions to assist the Commission in monitoring market developments and potentially problematic transactions which may fall below EU and national merger control thresholds.

      If a designated gatekeeper fails to comply with its obligations, the Commission, as sole enforcer of the DMA, has the power to impose fines up to 10 percent of the worldwide annual turnover, or up to 20 percent in the event of repeated infringements. The Commission also has the power to impose periodic penalty payments of up to 5 percent of average daily turnover and (in case of systematic infringements of DMA obligations) behavioural and structural remedies, including by ordering the divestiture of (parts of) a business.

      4. Why was the Digital Markets Act adopted by the EU?

      By way of background, Apple’s App Store and Google’s Play Store create local monopolies because consumers are locked-in by monetary costs and by convenience. Firstly, consumers are locked-in because they incur the monetary investment costs of having all choices. There cannot be competition between app stores when consumers can only choose the one app store that is tied to their phone. To have competition between app stores, consumers would need to purchase another phone, which is costly and inefficient. Secondly, consumers are locked-in because of their convenience or ‟laziness”. Apple exploits this convenience by allowing the one-click purchase option only for their own payment system. To use the external payment, consumers must click several links, which is costly in terms of time and effort.

      So, the DMA will spur competition by eliminating lock-in effects from both monetary investment and from convenience. For instance, phone makers will be forced to allow all app stores and give equal treatment to external payment systems.

      For the reasons mentioned above, the market power of big tech firms like Google, Apple, Facebook, Amazon and Microsoft has long been a thorn in the eyes of the Commission (and experts in the tech sector).

      Such concerns and frictions arose, in particular, with respect to several ongoing lawsuits and legal complaints, lodged by the likes of Epic Games and music streaming platform Spotify, against, in particular, software and hardware behemoth, Apple.

      4.1. The Epic-Apple case

      The Epic-Apple court decision in the USA illustrates why regulation in digital markets is complex and difficult.

      The situation escalated when Fortnite, a free-to-play cross-platform game, was banned from Apple’s AppStore in August 2020. Fortnite developer Epic Games was unwilling to pay the so-called ‟Apple Tax” of 30 percent, which grants automatically one third of all profits coming from apps and in-app transactions to Apple.

      Epic, eager to reclaim the total ownership over its profits, tried to circumvent this ‟tax” by integrating a link into the game. This URL link recommended users to buy directly from Epic at a 20 percent discount using virtual money ‟VBucks”, instead of Apple Play. Apple then banned Epic from the AppStore because the implementation of the link violated Apple’s anti-steering clause that forbid developers to offer alternative payment systems in their apps.

      Only a few hours after the ban, Epic Games filed a lawsuit against Apple’s abuse of market power. Google followed Apple in throwing out Fortnite from its own App store.

      Some of the claims raised by Epic Games against Apple revolved around the following key points: Do Apple and Google create illegal monopolies with their app stores? Are Apple and Google abusing their in-app market power? Are consumers and users paying too much for apps and for items in these apps? Should there be regulation of the App stores of, in particular, Apple and Google?

      The tepid court decision on this case, handed down on 10 September 2021 by the US district court for the Northern District of California, contains a mixed ruling which favours both parties but, in any case, fails to acknowledge Apple’s monopoly from lock-in effects.

      On the one hand, the judge Yvonne Rodgers sets out that ‟the court cannot ultimately conclude that Apple is a monopolist” and that its ‟App store is not in violation of antitrust law”. This part of the decision allowed Apple to continue its prohibition of third-party app stores and in-app payment systems. It further implied that consumers who buy from Apple’s app store still must pay the ‟Apple tax” price, containing its commission of 30 percent. Judge Rodgers consequently ruled against Epic Games, requiring them to pay Apple USD3.6 million, 30 percent of the revenue that was withheld to Apple related to their attempts to bypass the app store, and further stated that Epic Games violated its contractual terms as a developer.

      On the other hand, judge Rodgers decided that Apple partly engages in anticompetitive conduct, in breach of the California unfair competition law, by implementing its anti-steering clause that forces consumers to buy apps and in-app purchases directly from Apple’s app store. Trying to foster effective price competition, her judgment forces Apple to allow developers the integration of links into their apps that redirect users away from Apple’s in-app purchasing system towards alternative payment systems. Judge Rodgers issued a permanent injunction, that, in 90 days from the judgment, blocked Apple from preventing developers from linking app users to other storefronts from within apps to complete purchases or from collecting information within an app, such as an email, to notify users of these storefronts.

      Epic Games immediately appealed the judgment from the US district court. Apple also appealed. In appeal, the three-judge panel found that the lower court judgment should be upheld. However, the Ninth circuit court of appeal agreed to stay the injunction requiring Apple to offer third-party payment options in July 2023, allowing time for Apple to submit its appeal to the US supreme court. Both Apple and Epic Games have escalated this appeal decision to the supreme court in July 2023. And Epic Games’ emergency request to lift the Ninth circuit’s stay was denied in August 2023. So, under the US justice system, Apple can, in all impunity, still refuse to let Fortnite back onto its app store, until the completion of all litigation related to the dispute, which might have taken a minimum of five years, if not more, thereby prolonging the resolution of the dispute until 2026.

      However, on 16 January 2024, the US supreme court declined to hear the appeals from Apple and Epic in this case, with all charges dismissed except for the anti-steering charge. To implement this, Apple allowed developers to include ‟metadata buttons, external links, or other calls to action that direct customers to purchasing mechanisms”, but required that developers give Apple 27 percent of all sales made within seven days of being directed to these external sites, which Apple described as a ‟reasonable means to account for the substantial value Apple provides developers, including in facilitating linkedin transactions”. In addition, the Apple’s app store posts a warning screen stating that Apple is not responsible for any security or privacy issues related to third-party payment systems when clicking through to one of these systems. Epic Games stated that these changes are in bad faith compliance with the court orders, maintaining a 27 percent anti-competitive tax and a ‟scare screen” that are intended to dissuade developers from using third-party payment systems, and planned to challenge these changes in court. Apple requested the lower court to order Epic Games to pay 90 percent of Apple’s legal fees estimated at USD73 million, based on the fact that nine of the ten claims Epic Games filed were dismissed by the court.

      This legal saga shows how, pre DMA, the lock-in effects play an important role and shift market power to gatekeepers like Apple, in the digital economy.

      Apple announced, in January 2024, that, to comply with the DMA, it will now allow third party storefronts to be loaded onto iOS devices in March 2024. In response, Epic Games stated that they plan to bring the Epic Games Store as well as Fortnite to iOS in Europe. However, Epic Games still argued that the new terms for use in the EU, of Apple’s app store, were a ‟new instance of malicious compliance” and would continue to challenge those through legal routes.

      4.2. The Spotify v Apple beef

      Many companies, such as AirnBnB and even Facebook, publicly sided with Epic Games.

      The top music streaming platform, Spotify, had even filed an EU antitrust complaint against Apple on 13 March 2019, with the Commission, alleging that the ‟Apple tax” harms consumer choice and stifles innovation.

      EU competition regulators initially sent a statement of objections to Apple in 2021, raising their own concerns that Apple’s in app payment rules were anticompetitive.

      Two years later, an updated statement of objection was sent by the Commission to Apple, announcing that the investigation had been narrowed to specifically focus on the anti-steering provision (i.e. the fact that app developers cannot sign-post users to other payment options outside of their apps). The Commission took the preliminary view that Apple’s anti-steering obligations are unfair trading conditions in breach of article 102 of the Treaty on the functioning of the EU.

      On 19 February 2024, the press unanimously reported that, nearly five years after Spotify first submitted its formal complaint, EU regulators are about to fine the tech giant 500 million Euros for breach of competition law.

      The EU regulators have reportedly concluded that Apple’s app store rules regarding the highlighting of payment options outside the Apple ecosystem are prejudicial against streaming services that compete with the tech giant’s own Apple Music. These rules are unfair trading conditions, according to the EU regulators, reportedly.

      Spotify – and many other app developers – have long criticised Apple’s app store rules in relation to in-app payments. Those rules state that, with certain apps, all in-app payments must be taken using Apple’s own commission-charging transaction platform. Not only that, but app developers cannot sign-post users to other payment options outside of their apps – the rule referred to as the anti-steering provision.

      Apple’s commission on in-app payments is up to 30 percent. As Spotify’s profit margin is also in the region of 30 percent, it would need to pass on the Apple charge to the customer, which makes a Spotify subscription look more expensive than an Apple Music subscription.

      The other option, which is the one Spotify took, is not to take in-app payments at all. But that makes up-selling premium subscriptions to free tier users much harder, and the introduction of pay-to-access tools within the Spotify app – to monetise podcasts and audiobooks – basically impossible.

      While Apple says that it has already made some changes to its app store rules in Europe, in order to comply with the DMA, Spotify argues those changes do not deal with the issues it has raised about Apple’s in-app payment rules. Spotify’s summary of Apple’s plans is that app developers will have other options for taking payments, but will still have to share any income from in-app transactions with the tech giant. ‟Apple is still charging a 17 percent rent on developers for existing in the app store if they offer alternative payment methods or link out to their own website”, Spotify explains. Plus there is a ‟completely new 0.50 Euros fee per download, every year, in perpetuity, to Apple for just allowing developers to exist on iOS”. ‟The ball is in your court, European Commissioners”, Spotify says in its blog, ‟and once and for all you must reject this blatant disregard of the very principles you worked so hard to establish”.

      To conclude, the DMA is going to create tectonic shifts in the digital services’ industry, what with the deadline of 5 March 2024 fast approaching. Gatekeepers must change their ways, in the EU first, but, gradually around the world, otherwise they will be handed down hammering fines and penalties from the Commission (and other competition authorities in the world), which will just make it unsustainable for them to keep on offering services in the EU. Let’s hope that the likes of Apple and Google get the message quickly, because neither natural persons customers, nor business users, stand to gain anything, if Apple, Microsoft and Google desert our European shores.
      Crefovi’s live webinar: Digital Markets Act – forcing change in the digital services’ industry – 23 February 2024

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        Live touring and ticketing: the sky is the limit, despite anticompetitive allegations marring the live industry

        Crefovi : 17/01/2024 4:07 pm : Antitrust & competition, Articles, Entertainment & media, Internet & digital media, Litigation & dispute resolution, Music law, News, Webcasts & Podcasts

        Let’s dive into the characteristics of this very serious contender for the top spot for revenue generator in the music industry. The live touring and ticket business is back with a vengeance, post COVID-19 pandemic. However, not all is well in this very lucrative sector of the music industry, as tour promoters and venues, and even search engines (!), see their liability, legal and financial risks increasing, in a world dominated by fans’ satisfaction, safety and fair access to tickets.

        1. How live and touring have become the core revenue stream for artists

        The music business has many facets, with each musical activity generating its own sources of revenue, as follows.

        The music publishing side, which mainly derives income from monetising the copyright on musical compositions and song lyrics:

        • by way of synchronisation fees, paid to music composers and lyricists, as well as to their music publishers and sync agents, for the licencing of copyright on musical compositions and/or lyrics which are synchronised into video content (such as advertisements, films or TV series and other visual projects), and

        • by way of print licencing fees, paid to music publishers, to obtain the right to print, display and publish the music notes and lyrics of a song on sheet music and scores, which are then sold to music performers who will perform those songs.

        The second income stream is the sound recording side, which mainly derives income from monetising:

        • the neighbouring rights on sound recordings (also called phonograms, songs, music tracks, etc.), by way of royalties collected by neighbouring rights collecting societies around the world, from music users such as major TV networks, radio stations, pay cable services, websites, the hotel industry, nightclubs, bars, theme parks, etc.;

        • the copyright on the master recordings, by way of sync fees paid to music performers (singers and session musicians), as well as to their music labels and sync agents, for the licencing of the sound recordings which are synchronised into video content (such as commercials, films, TV programmes and other visual projects).

        Next to revenue streams derived from the above-mentioned copyright in the music compositions and lyrics, as well as copyright in the master recordings and neighbouring rights, there is touring income.

        Touring revenues are generated by tickets bought by fans, music lovers and teenage fans’ chaperones, in order to have the privilege of watching a music performance live, either in a concert venue, a school, an arena, a stadium, a casino or online on a streaming site.

        Indeed, most music performers model their careers on that of the concert performer (in terms of both live and recorded performances). Touring is essential for performers to:

        • develop their craft;

        • grow and sustain their audiences;

        • help promote their record, stream and merchandising sales, and

        • build their stature (for this reason, most ‟non-legacy” performers will schedule tours to coincide with the launch of a new record album release).

        Concert performers function through true business entities, as opposed to being employees of a producer or promoter. They possess assets (such as valuable names, trademarks, very expensive music, sound and lights equipment and instruments, and often copyrights on their songs, musical compositions or lyrics); employ numerous individuals (such as agents, managers, supporting musicians and tour personnel) and, if all goes well, earn substantial touring income.

        Post COVID-19 pandemic and its string of excruciatingly-long lockdowns, the live touring industry has come back with a vengeance, with some performers’ tours single-handedly being recognised as contributing to a nation’s, or town’s, economy, in the billions of USD or GBP.

        While most music performers, composers and lyricists complain about the paltry level of their streaming income, which is going to get even smaller for the vast majority of performers due to the implementation of Spotify’s new 1,000 play minimum policy, touring is increasingly seen as THE way to make serious bucks in the music industry. Some industry analysts go as far as to say that touring is where musicians make most of their annual total income, dwarfing the revenue earned from streaming.

        Pollstar, a service that monitors live performance/touring statistics, reports that live concert sales for the 2023 worldwide top 100 tours were up 46 percent to USD9.17 billion from USD6.28 billion the previous year. Average grosses were up a whopping 53.20 percent to USD2.37 million per show from USD1.54 million. Attendance increases were less dramatic but still significant: total ticket sales were up 18.40 percent from 59 million to 70 million; and average tickets per show were up 24.25 percent from 14,570 to 18,103. Average ticket prices increased 23.33 percent from USD106.07 to USD130.81.

        2. The live and touring ecosystem

        The key players in music touring all have very specific roles, as follows.

        Each one of those stakeholders has a very specific, and important, role to play in putting on a live show or a tour. Unlike streaming technologies, which easily broadcast music tracks to billions of listeners worldwide at the pressing of a button, organising a live show or a tour is difficult and requires a team of specialists.

        2.1. Artists

        Music performers are the driving force behind the event’s overall success.

        In 2023, for example, the top performer was Taylor Swift, who set an all-time touring record with a USD1 billion touring gross.

        The music industry would be virtually non-existent if it weren’t for artists who perform. Indeed, the live music sector sells tickets for the artists and their songs.

        The entire live event gets a lot of positive feedback from the audience, if the performer performs well. Regardless of how much effort is put into making the concert a reality, if the artist fails to live up to expectations on stage, it sabotages and undermines all of it.

        2.2. Managers and tour managers

        The management of performers will participate in route planning, assist the artist in selecting the touring band, and act as a liaison between the artist’s live performance and the rest of their professional life.

        The tour is in the hands of the artist’s manager, who serves as the team’s chief executive officer.

        Top performers’ management companies are Full Stop Management, Red Light Management, Roc Nation, Salxco and SB Projects, for example.

        Famous music managers include Paul McGuinness, who managed the rock band U2 from 1978 to 2013.

        Once the tour has been set up, managers are responsible for ensuring it goes on without a hitch, ensuring that the booking agent is making the best possible deals, and making the tour happen.

        The artist’s manager is in charge of:

        • coordinating and supervising the transportation of people and equipment;

        • hiring and smooth functioning of crews;

        • booking hotels and restaurants;

        • collecting touring receipts while travelling;

        • dealing with promoters (the people who hire the artist, rent a hall, advertise the event, etc.), and

        • resolving any issues that arise (such as missing equipment, improper advertising, dates that aren’t selling well).

        Many of these responsibilities are transferred to a tour manager or tour accountant for more well-known musicians.

        However, the artist’s personal manager is ultimately liable and bears the burden of proof, in case anything goes wrong during the tour.

        Keeping things moving smoothly on the road is the job of the tour manager. It is their job to ensure that everything is in order, from the hotel reservations to the plane tickets, to the bus schedules, and to ensure that the artist and their entourage arrive at their destinations on time and with no problems.

        The tour manager must check the promoter’s accounting (settlement) every night of the event and ensure that the collected money is deposited accurately.

        There is no tour without tour managers; they are what keeps it going.

        2.3. Record labels

        Record companies in the 1960s and early 1970s supported and underwrote the costs of tours by their artists, but following the recession in the 1970s, again during the label retrenchment of the 1990s, and again since the tightening economic conditions besetting the industry during the financial crisis in 2008 to 2010, this practice has diminished considerably.

        In the wake of further record industry restructuring in response to declining sales of recorded music in the past decade, many labels have begun to demand a participation in some or all of artists’ concert touring, merchandising endorsement, publishing and other entertainment-related income streams as part of ‟360 deals” (so-called because the label seeks participation in the full ‟360 degrees” of artist commercial activities) or ‟Multiple Rights Deals” to help offset the risks of investment in record production and release.

        The major record labels (which represent the majority of music streamed and sold, making up as much as 80 percent of the music market or more, depending on the year) take the position that their marketing and release of an artist’s recordings are a primary engine for the artist’s success in and throughout all fields of the artist’s entertainment endeavours, including the artist’s touring ‟fortunes” and, as such, the record label should also participate directly as a partner/investor – particularly in a period in which touring and associated merchandising rights may eclipse income generated from record sales.

        Where record labels, major and independent alike, may have once viewed tour support as an unavoidable if not indispensable marketing cost of record sales, now the recording and its promotion are understood to be marketing vehicles for all artists’ entertainment industry related revenues from which the labels uniformly seek a participation, and, depending on the status and leverage of the artist, the labels may be willing to increase their support (financial or otherwise) for artists who agree to grant the label an economic participation in most, if not all, fields of the artist’s entertainment career, including tour income.

        Other than superstar tours, the reduction in tour support, from record labels, resulted in a downsizing of shows (i.e. reducing the technical equipment, number of personnel, and other ‟perks” on the road). It also required performers to appear in smaller venues with lower costs and less risks, in the event that they did not sell out.

        However, recognising the promotional value of touring, especially since most music tours follow an album release, performers sought other ways to finance tours.

        2.4. Tour promoters

        Promoters are responsible for securing the money for a tour and purchasing the tickets. They are the people who employ the artist, for the night, in each market.

        Top tour promoters are Live Nation, AEG Presents, OCESA / Grupo CIE, Semmel Concerts Entertainment, etc.

        Concert marketing is a diverse field, with a wide range of promoters to choose from. They may be local, regional, national or worldwide, depending on how much of the country, region or world they serve.

        Promoters reserve the space (which implies that they are responsible for paying the rent, even if no one turns up at the concert), fund publicity for the event, and oversee its execution.

        After the above-mentioned decline in financial involvement and support from their record labels, some star performers opted to enter into a comprehensive tour agreement with a national promoter or even international promoter (such as Live Nation or AEG) that guarantees a minimum fee against a percentage of ticket sales and merchandising grosses, and, in turn, assumes all other production and venue arrangements, which likely will include the right to solicit tour sponsorship.

        Rights typically granted in such comprehensive tour agreements may include not only the right to solicit tour sponsorship (with the artist generally having the right to reasonably approve the identity of the sponsor, the right to preclude potential tour sponsors whose goods or services would conflict or compete with those of already existing artist sponsors or those who are inconsistent with the artist’s ‟identity” and/or values, and any sponsor benefits or ‟deliverables” requested by a tour sponsor that require active participation by the artist, such as ‟meet and greets”, concert streaming, etc.). They may also include the right to control the sales and allocation of all ticket inventories through all sales and distribution channels, the right to implement revenue-maximising services including but not limited to ‟first class” seating, VIP packages, and the right to book private personal appearances (which are not advertised and for which tickets are not sold to the general public).

        In negotiating the concert tour agreement with the tour promoter, the artist must also arrive at terms to set aside and make available a sufficient number of preferred seats for members of the artist’s fan club and other VIP ticket sales endeavours.

        The insurance provisions of touring agreements are also the subject of extensive negotiation. Whether the artist is a ‟baby band” just undertaking a touring career or an international superstar, obtaining, at a minimum, general liability insurance and, at higher levels, non-appearance and tour cancellation insurance are critical considerations for the performer.

        Commonly, tour agreements provide that if any concert is cancelled by reason of a force majeure event, the artist and promoter will use their commercially reasonable efforts to reschedule such concert to a mutually approved date or replace such concert with a mutually approved substitute, contiguous to the current itinerary for the tour.

        Beyond that, if any cancelled concert cannot be rescheduled or replaced, then the promoter will generally not be required to make the per show guarantee payment for that concert (which should be covered by the artist’s tour cancellation insurance).

        However, if any concert cancellation is due solely to the fault of the artist, then the artist is liable to the promoter for all direct, out of pocket, verified expenses directly related to the applicable cancelled concert (with the promoter generally required to use its commercially reasonable efforts to mitigate the resulting costs promptly after any such cancellation).

        2.5. Sponsors

        While star performers may arrange commercial sponsorships, new and less famous performers are often left to find an ‟angel” or to self-finance their tours.

        With respect to such sponsorship, whether for an arena act or a new band touring small clubs, a corporate sponsor provides money to mount and finance the tour, in exchange of the right to have its corporate logo or logo of its products included in the advertising or promotion of all the tour dates, or perhaps to use the artist’s music, name, trademarks and likeness in its independent advertising and promotion.

        For example, in 2012, Beyoncé partnered with Pepsi for a USD50 million deal in which Pepsi sponsored a variety of creative projects for Beyoncé, including her tours, as well as promoting the singer’s fifth studio album.

        Beyond this, the sponsor may agree to pay for advertisements, agree to purchase a guaranteed number of tickets at each venue, agree to pay a promotional fee in addition to costs. The sponsor may also elect to enter into a separate advertising agreement with the performer in which the performer may appear as a spokesperson for the company (or at least, permit use of the artist’s approved name, approved likenesses and perhaps music) in a commercial print, television and/or radio advertising campaign that coincides with the tour.

        In all aspects of the artist’s career, it is important for the performer to control the manner in which the artist is portrayed and the artist ordinarily will have the right to approve before use all of the ‟Artist’s Identifications” to be used by the tour promoter and any sponsors, including the artist’s personal and professional names, any nickname, likeness (including caricatures), photographs, video/film footage, voice, twitter/X and Instagram feeds, facsimile signature, trademarks, biographical information, artwork, designs, logos, graphics, etc. and any reproduction or simulation of the foregoing.

        Typical sponsorship arrangements made by managers, agents or intermediary companies will involve rights to merchandising, including T-shirts, sweatshirts and other memorabilia imprinted with the name of the artists and the sponsor, coinciding with the tour or a separate term, with the costs and proceeds divided in a manner reflecting the strengths of the negotiating parties.

        The sponsor will probably insist on getting a moral clause obligation in the sponsorship agreement, in order to swiftly severe ties, with liability, with the artist, in case such performer damages their reputation, or the sponsor’s reputation, due to bad behaviour and/or other reprehensible acts.

        Where the artist is recording pursuant to a 360 deal, the label may be participating actively in one or more of the merchandising or promotional capacities, and will in any case likely share passively in the pool of sponsorship and merchandising revenues.

        2.6. Booking agents

        An artist’s manager and a booking agency work together to book the tour. They strike deals with the people in charge of promoting the event (which includes picking promoters that will produce the show).

        Examples of top booking companies are William Morris Endeavor/WME, Creative Artists Agency/CAA, United Talent Agency, Paradigm Talent Agency, etc.

        Throughout the live music industry, the agent represents the artist. They want to arrange the tour, sell the events to local talent buyers, select a venue, and negotiate the pricing with the promoters.

        Decisions about the artist’s tour schedule, radio advertising, ticket prices, and deposits paid in advance by promoters are all made by the booking agents.

        2.7. Venues and festivals

        In the live music industry, festivals and venues provide the space and, typically, the base infrastructure necessary for the concert to take place.

        Traditionally, promoters rent the building from the owners, then negotiate with the performers on their behalf.

        Music festivals are the same.

        Musicians can gain exposure to new audiences (fans and music business executives) while making a sizable profit from participating in high-profile festivals.

        Festival performances might be more crucial to an artist’s long-term success than their immediate financial benefit, especially for up-and-coming, independent performers.

        It is commonly assumed that a performance venue will comply with all applicable ordinances and maintain all necessary licences for public performances, whether on the basis of physical code and public safety requirements, public health code requirements or other business licencing requirements relating to noise, alcoholic beverage sales, and music public performance licences through music publishing collecting societies such as ASCAP, BMI and SESAC, in the USA, and PRS in the United Kingdom (‟UK”) and SACEM in France, and through neighbouring rights collecting societies such as GMR in the US, PPL in the UK, SCPP and SPPF in France.

        However, the fact is that the venue itself may or may not be properly licenced. For example, nightclubs and similar venues are more likely than not to have annual ‟blanket” performance licence agreements with the neighbouring rights collecting societies. But larger venues that are leased to promoters for the purpose of presentations of concerts typically impose the obligation to secure the necessary public performance licences on the promoter, under the terms of the venue lease for the shows concerned.

        Because the performers could be held responsible for failure to obtain such a safety-related licence or the performance date could be threatened by a promoter’s failure to obtain these or other licences, the contract between the performers and the promoter should require that the promoter obtain and provide for advance review copies of all necessary licences, including the public performance licences.

        A cautionary tale is, without a doubt, the debacle of Travis Scott’s Astroworld festival, which left eight fans dead and dozens severely injured after the crowd surged toward the stage during Scott’s performance. The civil and criminal liability of Travis Scott, Live Nation and the festival venue and event coordinators was triggered, via the scores of lawsuits that Astroworld victims filed. Traumatised fans alleged, in their lawsuits, that the co-defendants failed to provide adequate security, emergency medical services and adequately monitor the number of people entering the venue to ensure it did not become overcrowded. While Travis Scott was found not criminally liable for the Astroworld festival deaths, by a grand jury, in June 2023, to this day, he still has to fight against, and possibly settle, the hundreds of lawsuits and claims for civil damages filed by hurt fans.

        3. Ticketing issues in the live music industry

        3.1. Anticompetitive behaviour allegations against Live Nation and Ticketmaster

        Post COVID-19 pandemic, allegations of anticompetitive behaviour, by tour promoters and other marketing agents, started to circulate and were even firmed up when the largest tour promoter, Live Nation, was sued by class action investors over anticompetitive business practices, in California federal court, in August 2023. Investors accused Live Nation of lying to them over alleged anticompetitive business practices, including charging exorbitant fees, bundling services, and retaliating against venues that use a ticketing service provider other than Live Nation’s subsidiary Ticketmaster.

        Live Nation and Ticketmaster have been accused of acting in an anticompetitive way ever since the two companies merged back in 2010. In order to get regulator approval of that merger in the USA, Live Nation made a number of commitments regarding how the Live Nation touring and venue businesses would interact with Ticketmaster via a ten-year consent decree agreed with the American government’s department of justice (‟DoJ”).

        As the consent decree was getting close to expiring, Live Nation was accused of violating some of its terms. Having looked into the allegations, the DoJ began planning legal action. But a deal was struck that stopped the matter from getting to court, and also extended the consent decree for another five years and a half. Since then, further allegations of misconduct have been made by Live Nation’s competitors and critics. And, more recently, it emerged that a new DoJ investigation was under way.

        Indeed, the claims in the above-mentioned investors’ lawsuit originated from the increasing attention on Live Nation’s hold on the live music industry after the DoJ opened an antitrust investigation into the company in 2022. That investigation followed Ticketmaster’s systems crash during the highly anticipated resale of Taylor Swift’s Eras Tour tickets. In July 2023, Politico reported that that new investigation could result in new legal action being instigated by the DoJ against Live Nation. This DoJ probe into Ticketmaster and Live Nation, as well as the class action lawsuit filed by investors against Live Nation, are still ongoing, as far as we know.

        Ticketmaster has also been sued by customers accusing it of anti-competitive practices. Over the years, Ticketmaster managed to force various such legal disputes with customers to arbitration – rather than having those disputes being fought out in public in a court of law – because the ticketing firm’s terms and conditions have an arbitration provision in them. Attempts by customers to argue that no one reads those terms and conditions, and therefore arbitration clauses should be unenforceable, have generally been unsuccessful. However, Ticketmaster then switched its chosen arbitrator from arbitration institution JAMS, to a company called New Era ADR. It argues that the latter company is better equipped to deal with complaints where there are lots of concurrent complainants, which is common in the ticketing market. But not only have complainants claimed that New Era is biased in favour of the ticketing firm, but that its processes – which the customers are forced to navigate – are ‟kafkaesque”. Also, the complainants argued in front of the California federal court that Ticketmaster ‟slid this change into terms that most consumers had previously agreed to, without flagging the dramatic shift being made”. Therefore, in August 2023, California judge George Wu denied the motion to compel arbitration of Sherman Act antitrust claims, in the Ticketmaster case, based in large part on the bellwether procedures for mass arbitration claims set out in Ticketmaster’s arbitration clause.

        3.2. Fight against touting and marketing strategies and allies of touts

        While Michael Rapino, president and CEO of Live Nation, unconvincingly denies any wrongdoing and plays the card of ‟I am a likeable guy and average-Joe who tries to do his best in the face of adversity”, the legal fight against touting and unofficial secondary ticketing platforms, such as Viagogo, StubHub and Live Booker, is going on in full swing on the other side of the pond.

        Indeed, in March 2023, the Paris court of appeal upheld a first degree judgment against Google over ticket tout ads. The French courts confirmed that Google cannot allow unofficial ticket sellers to buy their way to the top of search results for artists and shows.

        Secondary ticketing platforms like Viagogo and StubHub have long used Google advertising to promote tickets being sold by touts on their respective sites.

        In France, where the law is particularly strict when it comes to the unofficial sale of tickets to shows, essentially banning the practice, French live industry trade group PRODISS went to court a few years ago to confirm that those laws meant Google should not allow secondary ticketing sites to advertise on their search engine (in particular, via Google Ads) in France.

        Campaigners like PRODISS argue that, because many consumers don’t realise that the top results in a Google search are often there because the featured website paid for the top ranking, they assume those sites are the official sellers of tickets to a show. But, of course, the opposite is actually true, with the official sellers often appearing lower down the page.

        Facing a bit of backlash as online ticket touting became ever more controversial, Google did start telling secondary ticketing platforms using Google Ad services that they had to better communicate the unofficial status of their sellers.

        However, many campaigners argue that the top search engine has not gone far enough in ensuring consumers are not confused into buying touted tickets at a higher price which could be cancelled by a show’s promoter.

        In 2020, the Paris ‟tribunal judiciaire” judged that Google should not allow secondary ticketing sites to advertise on their search engines in France. Google appealed the ruling. But the Paris court of appeal upheld the earlier judgment, and also ordered Google to pay 300,000 Euros in damages for failing to comply with the rules.

        While the French government and courts keep on viewing the French people as a brain-dead and hapless lot, some fans employ pretty tough tactics to get retribution, as the fans’ lawsuit against Madonna, Live Nation and Barclays Center attest, whereby two New York residents and Madonna ‟fans” sued the singer after she allegedly started her set over two hours late, on the 13 December 2023 Celebration Tour concert.
        Crefovi’s live webinar: Live touring and ticketing – the sky is the limit – 26 January 2024

        Crefovi regularly updates its social media channels, such as LinkedinTwitterInstagramYouTube and Facebook. Check our latest news there!

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          Competition law in sports: the EUCJ strikes back

          Crefovi : 04/01/2024 10:47 am : Antitrust & competition, Articles, Entertainment & media, Litigation & dispute resolution, Sports & esports, Webcasts & Podcasts

          The European sports market is about to experience a tidal wave of welcome change, in relation to how its sports federations and associations lay out their rules to ‟pay and play” in European sports competitions. From the right to set up a Super League in European football and a new organiser of skating competitions other than the International Skating Union, to the right for players who are not ‟home-grown players” to be included in European tournaments, the European Union Court of Justice has changed the rules of the sports’ game, via its three judgments handed down on 21 December 2023.

          During the Paris arbitration week 2022, the topic of competition law in sports came up, and to my awareness, at the Accuracy event, on 29 March 2022. For the first time, I was made aware that both the French Competition Authority (‟Autorité de la concurrence”) and the European Union (‟EU”) authorities, are determined to make sports federations and structures way more accountable for their anticompetitive behaviours and abuses of dominant position. While the talk on sports and competition law, at the Accuracy webinar, was fuzzy and incomplete, at best, it did stay with me as a topic worth investigating further, since sports is an economic activity and, as such, must comply with the provisions of article 101 of the Treaty of the Functioning of the European Union (‟TFEU”), which relate to the prohibition of agreements having for object or effect the prevention, restriction or distortion of competition within the EU internal market.

          So, it was a great and welcomed surprise when, at the end of 2023, I heard that the European Union Court of Justice (‟EUCJ”) had handed down not one, but three, judgments, on the same day, clearly delineating behaviours and regulations, from sports federations, which were not OK, and even forbidden, from a competition law standpoint.

          Let’s dive in, shall we?

          1. The EUCJ gives green light to football Super League

          The most important (and longest, by a wide margin) judgment handed down by the EUCJ, on 21 December 2023, was European Superleague Company SL v Fédération Internationale de football association (‟FIFA”) and Union of European Football Associations (‟UEFA”).

          1.1. Facts

          As explained in my seminal article on women’s football, FIFA is the top international governing body of association football in the world. UEFA is one of the six continental bodies of governance in association football, focused on the European continent, of course. Both FIFA and UEFA are associations governed by private law having their headquarters in Switzerland, for tax purposes.

          Article 2 of the FIFA statutes (the ‟FIFA statutes”) sets out that FIFA’s objectives include, inter alia, ‟to organise its own international competitions”, ‟to draw up regulations and provisions governing the game of football and related matters and to ensure their enforcement” and ‟to control every type of association football by taking appropriate steps to prevent infringements of the FIFA statutes, regulations or decisions of FIFA or of the laws of the game” at the world level.

          UEFA, as one of the six continental confederations recognised by FIFA, undertakes to comply, inter alia, with the FIFA statutes, regulations, directives and decisions of FIFA. And any ‟association which is responsible for organising and supervising football” in a given European country may become a member of FIFA, provided, inter alia, that it is already a member of UEFA, and that it also undertakes beforehand to comply with the FIFA statutes, regulations, directive and decisions of FIFA. Such national football associations, which are currently members of FIFA, have the obligation, inter alia, to cause their own members or affiliates to comply with the FIFA statutes, regulations, directives and decisions of FIFA, and to ensure that they are observed by all stakeholders in association football, in particular by the professional leagues, clubs and players.

          Article 22 of th FIFA statutes, entitled ‟Confederations”, provides, inter alia that ‟each confederation (including UEFA) shall have the following rights and obligations (…) to ensure that international leagues or any other such groups of clubs or leagues shall not be formed without its consent and the approval of FIFA”.

          Article 67 of the FIFA statutes, entitled ‟Rights in competitions and events”, sets out that:

          • FIFA, its member associations and the confederations are the original owners of all the rights emanating from competitions and other events coming under the respective jurisdiction, without any restrictions as to content, time, place and law. These rights include, among others, every kind of financial rights, audiovisual and radio recording, reproduction and broadcasting rights, multimedia rights, marketing and promotional rights and incorporeal rights, such as emblems and rights arising under copyright law”, and

          • the Council (i.e. the strategic and oversight body of FIFA) shall decide how and to what extent these rights are utilised and draw up special regulations to this end. The Council shall decide alone whether these rights shall be utilised exclusively, or jointly with a third party, or entirely through a third party”.

          Article 68 of the FIFA statutes, entitled ‟Authorisations to distribute”, provides that ‟FIFA, its member associations and the confederations are exclusively responsible for authorising the distribution of image and sound and other data carriers of football matches and events coming under their respective jurisdiction, without any restrictions as to content, time, place and technical and legal aspects”.

          Similarly, the UEFA statutes (the ‟UEFA statutes”) grant monopolistic rights to the UEFA, in terms of consenting to the formation of clubs and leagues in Europe, owning the rights emanating from football competitions, in particular broadcasting rights, in Europe, and of having the sole jurisdiction to organise or abolish international competitions in Europe in which Member Associations and/or their clubs participate. 55 national football associations are currently members of UEFA.

          Article 51 of the UEFA statutes provides that:

          • no combination or alliances between UEFA Member Associations or between leagues or clubs affiliated, directly or indirectly, to different UEFA Member Associations, may be formed without the permission of UEFA”, and

          • ‟a Member Association, or its affiliated leagues and clubs, may neither play nor organise matches outside its own territory without the permission of the relevant Member Associations”.

          Now that the legal framework scene is set, let’s have a look at why, on earth, the EUCJ had to take a decision relating to the FIFA statutes and UEFA statutes.

          Well, it so happens that, at the initiative of a group of professional football clubs, established:

          • in Spain (Club Atletico de Madrid, Futbol Club Barcelona and Real Madrid Club de Futbol);

          • in Italy (Associazione Calcio Milan, Football Club Internazionale Milano and Juventus Football Club), and

          • in the United Kingdom (Arsenal Football Club, Chelsea Football Club, Liverpool Football Club, Manchester City Football Club, Manchester United Football Club and Tottenham Hotspur Football Club),

          the European Super League Company was incorporated in Spain (the ‟Super League”).

          To execute the Super League project, it was planned to incorporate three other companies tasked with: (i) management of the Super League from a financial, sporting and disciplinary perspective; (ii) exploitation of the media rights related to that competition; and (iii) exploitation of the other commercial assets related to that competition.

          The Super League project was based on a shareholder and investment agreement providing for the conclusion of a set of contracts binding each of the professional football clubs participating or eligible to participate in the Super League, and the three above-mentioned companies to be established, having as their object, inter alia, to set out the detailed rules under which those clubs were to assign to the Super League their media and commercial rights to that competition and the remuneration for that assignment. Among other things, that shareholder and investment agreement made it a suspensive condition to obtain either the recognition of the Super League international competition by FIFA or UEFA, and confirmation of its compliance with the FIFA statutes and UEFA statutes, or the legal protection from the competent administrative or judicial authorities to enable the professional football clubs having the status of permanent members to participate in the Super League without that affecting their memberships of, or participation in, the national football associations, professional leagues or international competitions in which they had been involved. To that effect, that shareholder and investment agreement provided, inter alia, that FIFA and UEFA were to be informed of the Super League project.

          Predictably, FIFA and UEFA were not amused when they were made aware of the Super League project, therefore blocking any ability to move forward such Super League Project.

          1.2. Procedure

          The main proceedings have arisen out of a commercial action, including a petition for protective measures without an inter partes hearing, brought by the Super League before the Spanish ‟Juzgado de lo Mercantial de Madrid”, against FIFA and UEFA.

          That legal action was brought following the launch of the Super League project and FIFA’s and UEFA’s opposition to that project.

          Consequently, the Juzgado de lo Mercantial de Madrid” decided to stay the proceedings and to refer the following questions to the EUCJ for a preliminary ruling:

          • (1) Must article 102 TFEU (about abuse of dominant position) be interpreted as meaning that such article prohibits the abuse of a dominant position consisting of the stipulation by FIFA and UEFA in their statutes that the prior approval of those entities, which have conferred on themselves the exclusive power to organise or give permission for international club competitions in Europe, is required in order for a third-party entity to set up a new pan-European club competition like the Super League, in particular where no regulated procedure, based on objective, transparent and non-discriminatory criteria, exists, and taking into account the possible conflict of interests affecting FIFA and UEFA?

          • (2) Must article 101 TFEU (about breach of competition) be interpreted as meaning that such article prohibits FIFA and UEFA from requiring in their statutes the prior approval of those entities, which have conferred on themselves the exclusive power to organise or give permission for international competitions in Europe, in order for a third-party entity to create a new pan-European club competition like the Super League, in particular where no regulated procedure, based on objective, transparent and non-discriminatory criteria, exists, and taking into account the possible conflict of interests affecting FIFA and UEFA?

          • (3) Must articles 101 and/or 102 TFEU be interpreted as meaning that those articles prohibit conduct by FIFA, UEFA, their member associations and/or national leagues which consists of the threat to adopt sanctions against clubs participating in the Super League and/or their players, owing to the deterrent effect that those sanctions may create? If sanctions are adopted involving exclusion from competitions or a ban on participating in national team matches, would those sanctions, if they were not based on objective, transparent and non-discriminatory criteria, constitute an infringement of articles 101 and/or 102 TFEU?

          • (4) Must articles 101 and/or 102 TFEU be interpreted as meaning that the provisions of articles 67 and 68 of the FIFA statutes are incompatible with those articles in so far as they identify UEFA and its national member associations as ‟original owners of fall of the rights emanating from competitions … coming under their respective jurisdiction”, thereby depriving participating clubs and any organiser of an alternative competition of the original ownership of those rights and arrogating to themselves sole responsibility for the marketing of those rights?

          • (5) If FIFA and UEFA, as entities which have conferred on themselves the exclusive power to organise and give permission for international club football competitions in Europe, were to prohibit or prevent the development of the Super League on the basis of the above-mentioned provisions of their statutes, would article 101 TFEU have to be interpreted as meaning that those restrictions, on competition qualify for the exception laid down therein, regarding being had to the fact that production is substantially limited, the appearance on the market of products other than those offered by FIFA/UEFA is impeded, and innovation is restricted, since other formats and types are precluded, thereby eliminating potential competition on the market and limiting consumer choice? Would that restriction be covered by an objective justification which would permit the view that there is no abuse of a dominant position for the purposes of article 102 TFEU?

          • (6) Must articles 45 (about freedom of movement for workers), 49 (about freedom of establishment of EU nationals), 56 (about freedom to provide services) and/or 63 (about freedom on the movement of capital) TFEU be interpreted as meaning that, by requiring the prior approval of FIFA and UEFA for the establishment, by an economic operator of an EU member-state, of a pan-European club competition like the Super League, a provision of the kind contained in the FIFA and UEFA statutes constitutes a restriction contrary to one or more of the fundamental freedoms recognised in those articles?

          After an extremely conservative, partial and short-sighted opinion handed down by the EUCJ’s advocate general Rantos on 15 December 2022, the EUCJ saw the light and handed down, one year later, the following judgment on 21 December 2023:

          • the practice of sports, and in particular, the exploitation of broadcasting rights, etc., constitutes an economic activity and is therefore subject to the provisions of EU law applicable to such activity;

          • the rules adopted by sporting associations come within the scope of the TFEU and, in particular, EU competition law provisions set out in the TFEU;

          • article 101 TFEU and article 102 TFEU are applicable to entities which are established in the form of associations which have as their purpose the organisation and control of a given sport, as well as to associations of undertakings, such as FIFA and UEFA;

          • FIFA and UEFA both carry on economic activity consisting in the organisation and marketing of international football competitions and the exploitation of the various rights related to those competitions. Thus, in so far as they do so, FIFA and UEFA are both undertakings. They both also hold a dominant position, or even a monopoly, on the relevant market;

          • FIFA and UEFA have granted themselves regulatory and control powers and those rules confer on those two entities not only the power to authorise the setting up and organisation, by a third-party undertaking, of a new interclub football competition on EU territory, but also the power to control the participation of professional football clubs and players in such a competition, on pain of sanctions;

          • those various powers of FIFA and UEFA are not placed within a framework of either substantive criteria or detailed procedural rules suitable for ensuring that they are transparent, objective and non-discriminatory. There is therefore an abuse of dominant position pursuant to article 102 TFEU;

          • FIFA and UEFA have adopted and implemented rules which are making subject to their prior approval the setting up, on EU territory, of a new interclub football competition by a third-party undertaking, and controlling the participation of professional football clubs and players in such a competition, on pain of sanctions, where there is no framework for those various powers providing for substantive criteria and detailed procedural rules suitable for ensuring that they are transparent, objective, non-discriminatory and proportionate. These rules constitute a decision by an association of undertakings having as its object the prevention of competition, in breach of article 101 TFEU;

          • the conduct of FIFA and UEFA cannot be justified by any exemption pursuant to article 101(3) TFEU or other provisions of the TFEU, and

          • the FIFA and UEFA rules are also in breach of article 56 TFEU as they are an obstacle to freedom to provide services, limiting access to any newcomer. Such rules are not justified by a legitimate objective in the public interest and do not provide for substantive criteria and detailed procedural rules suitable for ensuring that they are transparent, objective, non-discriminatory and proportionate.

          Therefore, the FIFA statutes and the UEFA statutes on prior approval of interclub football competitions, such as the Super League, are contrary to EU law.

          While that judgment does not mean that the Super League project must necessarily be approved, it is however for the Commercial Court in Madrid to ascertain whether these abusive FIFA and UEFA statutes might nevertheless benefit different stakeholders in football, for example, by ensuring a solidarity-like redistribution of the profits generated by those rights.

          And now, the floodgates are opened, and the Super League project can finally move forward in Europe.

          2. EUCJ finds International Skating Union rules breach antitrust law

          The second most important judgment handed down by the EUCJ, on 21 December 2023, was International Skating Union (‟ISU”) v European Commission and others (‟EC”).

          2.1. Facts

          The ISU is also an association governed by private law which is headquartered in Switzerland. It describes itself as the only international sports federation recognised by the International Olympic Committee in the field of figure skating and speed skating (‟Skating”).

          The members of ISU are Skating national associations, whose members or affiliates are in turn associations and clubs to which, in particular, professional athletes practising those sporting disciplines as an economic activity belong.

          Article 1(1) and article 3(1) of the ISU statutes (the ‟ISU statutes”) provide that the aim of the ISU is to regulate, administer, govern and promote Skating throughout the world. At the same time, the ISU carries out an economic activity, consisting in particular of organising international Skating events and exploiting the rights associated with those events.

          ISU has set up some prior authorisation rules, which set out the procedure to follow in order to obtain advance authorisation to organise an international Skating competition. These prior authorisation rules apply to both national associations that are ISU members and any third-party entity or undertaking.

          Also, the ISU has set up some eligibility rules, which determine the conditions in which athletes may take part in Skating competitions. Those eligibility rules provide that such competitions must, first, have been authorised by the ISU or its members and, second, comply with the rules established by the ISU.

          Mr Tuitert and Mr Kerstholt, two professional speed skaters residing in the Netherlands, belonging to the Koninklijke Nederlandsche Schaatsenrijders Bond (‟KNSB”), the Royal Netherlands Skating Federation, which is a member of the ISU, submitted a complaint to the EC in which they claimed that the prior authorisation rules and eligibility rules laid down by the ISU infringed articles 101 and 102 TFEU.

          On 8 December 2017, the EC adopted the decision at issue (the ‟EC decision”), which considered that:

          • the ISU is an ‟association of undertakings”, and

          • the prior authorisation rules and eligibility rules were ‟decisions of associations of undertakings”,

          within the meaning of article 101(1) TFEU.

          The EC decision also considered that the ISU prior authorisation rules and eligibility rules had as their object the restriction of competition on the relevant market, as they prevented potential organisers of international Skating events in competition with ISU events, from entering that market and also restricted the possibility for professional skaters to take part freely in such events.

          The EC decision further considered that such ISU rules were not justified by legitimate objectives and inherent in the pursuit of those objectives. Nor do the ISU rules benefited from any exemption, pursuant to article 101(3) TFEU.

          The EC decision requested that the ISU bring the infringement established in that decision to an end, on pain of periodic penalty payments. Such measures that it required the ISU to take to bring an end to that infringement should in particular consist of, first, adopting prior authorisation criteria which are objective, transparent, non-discriminatory and proportionate, and, second, setting up suitable procedures for prior authorisation and sanctions, and third, amending the arbitration rules so as to ensure the effective review of decisions made at the end of those procedures.

          2.2. Procedure

          By application lodged at the registry of the general court of the EU on 19 February 2018, the ISU brought an appeal action for annulment of the EC decision.

          On 16 December 2020, the EU general court handed down a judgment under appeal, in which it held, in essence, that the EC decision was not vitiated by illegality in so far as it related to the ISU’s prior authorisation rules and eligibility rules, but that it was unlawful in so far as it related to the ISU arbitration rules.

          The ISU appealed to the EUCJ, claiming that it should:

          • set aside the judgment under appeal in so far as it dismissed in part the action at first instance;

          • annull the EC decision to the extent that it had not already been annuled by the judgment under appeal, and

          • order the EC and interveners at first instance to pay the costs incurred both at first instance and on appeal.

          In its judgment handed down on 21 December 2023, one year after an other hyper-conservative, rather useless and very partial opinion from EUCJ’s advocate general Rantos, the EUCJ decided that:

          • the practice of sports constitutes an economic activity and, as such, is subject to th provisions of EU law applicable to such activity, in particular EU competition law under the TFEU. Therefore, Skating is subject to EU competition law;

          • ISU rules have as their object and/or effect the prevention, restriction or distortion of competition, within the meaning of article 101(1) TFEU;

          • in so doing, the ISU rules prevent the growth of competition in the Skating sector, to the detriment of consumers, by limiting production, product or alternative service development or innovation;

          • moreover, the ISU rules, which do not prevent the risk of abuse of dominant position, confer a power to ISU – an undertaking in a dominant position -, infringe article 102 TFEU;

          • the ISU rules are able to be used to allow or exclude from the Skating market any competing undertaking, even an equally efficient undertaking, or at least restrict the creation and marketing of alternative or new competitions in terms of their format or content. In so doing, the ISU rules also completely deprive athletes of the opportunity to participate in those competitions, even where they could be of interest to them, for example on account of an innovative format, while observing all the principles, values and rules underpinning the sporting discipline concerned. Ultimately, the ISU rules are such as to completely deprive spectators and viewers of any opportunity to attend those competitions or to watch a broadcast thereof;

          • consequently, the first ground of appeal must be rejected;

          • the ISU prior authorisation rules and eligibility rules had at their object the restriction of competition. Such ISU rules must be subject to a framework so as to ensure that they are transparent, objective, non-discriminatory and proportionate;

          • consequently, the second ground of appeal must be rejected;

          • the exclusive and mandatory arbitration mechanisms, provided for by the ISU rules, are not a generally accepted method of resolving disputes and cannot be justified in the light of the need to ensure the uniform and effective application of the rules established by the ISU for all athletes practising Skating. The ISU arbitration rules reinforced the infringement of EU law connected with the existence of such powers because that judicial review was entrusted to a court established in a third country (i.e. CAS), thus outside the EU and its legal order and that, according to the case-law of CAS, such arbitration awards could not be reviewed in the light of EU competition rules, in particular articles 101 and 102 TFEU. This situation afforded legal immunity to ISU, in light of EU competition law, in the exercise of its decision-making and sanctioning powers, to the detriment of persons who may be affected by the lack of a framework for those powers and the discretionary nature which derives therefrom;

          • the ISU cannot, in doing so, limit the exercise of rights and freedoms conferred on individuals by EU law, which include the rights that underlie articles 101 and 102 TFEU;

          • thus, the EU general court erred in law by merely finding that the ISU arbitration rules may be justified by legitimate interests linked to the specific nature of the sport, and

          • the first ground of appeal raised by the EC and Mr Tuitert and Mr Kerstholt is therefore well-founded in its entirety. Consequently, the judgment under appeal must be set aside in so far as it annulled in part the EC decision, to the extent that the EC decision concerns the ISU arbitration rules.

          Et voila! Third-party Skating competitions are going to be allowed, from now on, in the world, or, at least, the EU.

          3. Rules of UEFA and the Belgian football association on ‟home-grown players” could be contrary to EU competition law

          In a similar manner than in the first judgment handed down on 21 December 2023 by the EUCJ, this court finds that the UEFA and Belgian football association’s rules which provide that:

          • professional football clubs participating in international interclub football competitions organised by UEFA must include a maximum number of 25 players on the match sheet, which itself must include a minimum number of players categorised as ‟home-grown players” (‟HGP”), and

          • HGP are players who, regardless of their nationality, have been trained by their club or by a club affiliated to the same national football association for at least three years between the ages of 15 and 21,

          may be in breach of EU competition law.

          More specifically, the EUCJ finds that the Belgian referring court must check whether the HGP rules:

          • have as their object or effect the restriction, prevention or distortion of competition, in breach of article 101(1) TFEU;

          • may benefit from an exemption to the application of article 101(1) TFEU, if it is demonstrated, through convincing arguments and evidence, that all of the conditions required for that purpose are satisfied in compliance with article 101(3) TFEU, and

          • are in breach of article 45 TFEU (relating to free movement of workers) because they require each club participating in football competitions to enter in the list of its players and to include on the match sheet a minimum number of players trained in the territorial jurisdiction of UEFA, unless it is established that the HGP rules are suitable for ensuring, in a consistent and systematic manner, the attainment of the objective of encouraging, at local level, the recruitment and training of young professional football players, and that they do not go beyond what is necessary to achieve that objective.

          So now, national courts in the EU member-states have a framework to assess whether the rules of the sports federations and associations, located on their ground or in Switzerland (such as FIFA, UEFA and ISU), breach EU competition law, in particular as far as restriction of competition, abuse of dominant position and restriction to the freedom of movement of workers, and/or to the freedom of providing services, are concerned. The floodgates are now open, and I expect a lot of litigation going on, in the next five years, in the sports’ industry, from clubs and players, to keep federations and associations on their toes and force them to change their monopolistic and autocratic ways.

          Crefovi’s live webinar: Competition law in sports – the EUCJ strikes back – 10 January 2024

          Crefovi regularly updates its social media channels, such as LinkedinTwitterInstagramYouTube and Facebook. Check our latest news there!

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            Women’s football in the UK (England & Wales): untapped potential?

            Crefovi : 09/08/2023 12:27 pm : Articles, Employment, compensation & benefits, Entertainment & media, Internet & digital media, Litigation & dispute resolution, Private equity & private equity finance, Sports & esports, Webcasts & Podcasts

            As the 2023 FIFA Women’s World Cup has now faded into the sunset, it is time to look at how women’s football came to be, in the United Kingdom (‟UK”) (England & Wales), and how it evolved, since its inception. What is it like, now? And where it is going? Does it have potential? If so, in which areas? How is UK women’s football structured, in particular to resolve disputes? Are you ready for the ride?

            1. Women’s football in England: a troubled history

            The story of women’s football in the UK (England & Wales) is one of frustrating steps ahead, and then backwards.

            The first known example of a team game involving a ball, which was made out of a rock, occurred in old Mesoamerican cultures over 3,000 years ago. It was called ‟Tchatali” by the Aztecs. On some ritual occasions, the ball would symbolise the sun and the captain of the losing team would be sacrificed to the gods (!). A unique feature of the Mesoamerican ball game was a bouncing ball made of rubber – no other early culture had access to rubber. It is unknown whether both male and female humans used to play Tchatali together, then.

            Fast-forward to the middle of the 19th century, when football (or ‟soccer” as the game is called in some parts of the world), in its current form, arose in England. An attempt to create proper rules for the game was made at a meeting in Cambridge in 1848, but no final decision regarding all questions about rules was achieved then.

            Another important event in the history of football occurred on 26 October 1863, when the Football Association (the ‟FA”) was formed, in the Freemasons’ Tavern on Great Queen Street, in London, England. It is the oldest football association in the world and is responsible for overseeing all aspects of the amateur and professional game in its territory. Indeed, the FA is the governing body of association football (more commonly known as football or soccer) in England and the Crown dependencies of Jersey, Guernsey and the Isle of Man.

            The FA is now a member of both the Union of European Football Associations (‟UEFA”) – which is one of six continental bodies of governance in association football – and the ‟Fédération Internationale de Football Association (French for ‟International Association Football Federation”) (‟FIFA”), which is the international governing body of association football.

            As early as 1895, a representative football match between northern and southern women’s teams was recorded in London, in the UK.

            By 1921, women’s football had become increasingly popular through the charitable games played by women’s teams during, and after, the First World War. In a move that was widely seen as caused by jealousy of the crowds’ interest in women’s games – which frequently exceeded that of the top men’s teams – in 1921, the FA banned all women’s teams from playing on grounds affiliated to the FA. The reason given for such a ban was that the FA thought football was ‟unsuitable for females” (sic) and damaged women’s bodies. Women continued to play football between the two world wars, but there was no league structure and there were few dedicated facilities for women.

            The decision to exclude women from football was only reversed in 1969 when, after the increased interest in football caused by England’s 1966 World Cup triumph, the Women’s Football Association (‟WFA”) was founded to re-establish the female game. The WFA was an independent body and not part of the FA. Indeed, it took an order from UEFA to force the FA to remove its restrictions on the playing rights of women’s teams. So, in 1972, the FA – with the strong ‟encouragement” of UEFA – lifted its ban on women playing on football league grounds in England. It was not until 1983 that the WFA was able to affiliate with the FA as a ‟county association”.

            The WFA made real strides in the fledgling international competitions and even took an England side to the European Championship Final in 1984. The WFA grew the women’s game throughout the ’70s, ’80s and early ’90s. However, it was unable to develop the game at grassroots level, due to limited funding.

            Only in 1993 did the FA set up the ‟Women’s Football Committee” to run women’s football in England. The ‟Women’s Football Conference”, as it is now known, has representation on the FA Council equivalent to a County Football Association.

            So the FA assumed governance of the women’s game in 1993. The 1993/94 season saw the WFA Cup brought under the control of the FA – 137 teams entered. A year later, the WFA’s national league and league cup were also managed by the FA. This saw the birth of the Women’s Premier League.

            Coming under the wing of the FA in 1993 was of tangible benefit to women’s football. It allowed women’s clubs to draw fully on the development opportunities offered by the FA. It gave clubs an incentive to improve their standards and gain the FA’s Charter Standard status, which signifies that a club has achieved a quality benchmark, and which demonstrates to the public, club members and players’ parents that the club is well-organised. It has assisted in promoting women’s football to the wider public. And it has enabled links to be built with professional men’s clubs.

            In 1993, there were only 80 girls’ teams, no professional players, no football development and little funding. However, since 1993, the game has progressed and developed throughout the country and the England women’s senior team has participated at the highest stage.

            FIFA introduced the Women’s World Cup competition in 1991 and, as the women’s game started to grow globally, the decade culminated in the finals, in the USA, in 1999, which featured sold-out stadiums and a 90,000 crowd at the final.

            In the last twenty years, leagues and competitions have been formed throughout the country to form a thriving pyramid of women’s football. By 2002, it had become the top female team participation sport in England.

            In 2005, England hosted the UEFA Women’s EURO. Records for crowd attendance and TV audiences were smashed. England beat Finland 2-1 in front of a then European record crowd of 29,092 at the City of Manchester Stadium.

            Crucially, the talent pool was getting deeper – there were now England teams at various age groups and the senior team – the Lionesses – were beginning to show their talents on the world stage. The 2000s ended with the senior team winning the Cyprus Cup, which was their first international trophy and, later in the same year, reaching the final of UEFA Women’s EURO 2009, albeit losing out to Germany, who were the dominant force at the time. The Women’s Under-19s, however, won their UEFA Championship in Belarus, in 2009.

            In 2011, further to club football reformation, the FA Women’s Super League (‟WSL”) was set up, as, initially, an eight-team summer competition. This replaced the FA Women’s Premier League National Division as the highest level of women’s football in England and ran on this basis until 2017, when it finally grew into the two-division (i.e. WSL and Women’s Championship) fully professional game we know today. The WSL takes its place alongside the traditional men’s professional season, with media interest, spectator levels and sponsorship income having established a solid commercial platform.

            The top three teams each season qualify for the UEFA Women’s Champions League. The WSL has increased the visibility of women’s club football across the world, attracting star players from overseas, and broadcast partners in Australia, Canada, Dominican Republic, Mexico, Germany, Italy, Scandinavia, New Zealand and the USA. Below the two professional divisions, the game’s pyramid – the Women’s National League – has continued to develop.

            It now means that there are recognised pathways into the women’s professional game, with clubs themselves operating Academy structures.

            The last 10 years have seen major developments for both women and girls playing football.

            In 2014, England Women played their first match at the new Wembley Stadium, attracting a then record crowd of 45,619 for their match against Germany. The senior team was by now a serious contender on both the European and world stages. They took bronze in the 2015 FIFA Women’s World Cup in Canada and reached the semi-finals of UEFA Women’s 2017 EURO and got to the same stage again, in the FIFA Women’s World Cup two years later in France 2019. Their semi-final defeat to the USA attracted a record 11.7m viewers on BBC One. Earlier in the same year, they won the SheBelieves Cup for the first time. This success saw ever-increasing crowds at England matches, with 77,786 fans at Wembley to see the senior team face Germany in November 2019.

            Double participation, double the fan base and consistent success on the world stage. Those were the three goals in the Gameplan for Growth, the FA’s first formal strategy for women’s and girls’ football in England, unveiled in March 2017. According to the FA, all three goals have been scored, with now 1 million girls (aged 5-15) and 1.9 million women (16+) who play the game in England. Numerous FA participation programmes are bringing girls to football at various age groups and the fan base continues to grow.

            In October 2021, the UK, and England in particular, agreed to relocate 35 young Afghan female football players and their families, after they had to escape Afghanistan, because of the Talibans, and then Pakistan.

            Following the above-mentioned first three-year strategy, a new one – Inspiring Positive Change – was launched in October 2020. Amongst its eight goals, one stands out: to give every school-going girl the same access to football as boys, whether at schools or in clubs.

            A home win at Wembley in the UEFA Women’s EURO 2022 in front of a crowd of 87,192 has firmly established the women’s game in the national psyche.

            Media coverage and general interest in the women’s game have never been higher.

            The FIFA Women’s World Cup 2023 took place until 20 August 2023 in Australia and New Zealand, with Spain and England securing qualifications for the finals, and Spain ultimately winning the world cup. Football Australia lauded FIFA Women’s World Cup success and ticket sales passed 1.7 million.

            2. Women’s football in the UK (England & Wales): corporate governance

            As mentioned above, women’s football in England is now managed by the FA. So, let’s delve into the 753 pages FA handbook, in order to clarify the FA’s corporate structure and the place of women’s football within it.

            The FA is structured as a private company limited by shares, called Football Association Limited, which was incorporated on 23 June 1903. It is headquartered at Wembley Stadium, in Wembley, London.

            Indeed, a company limited by shares is the preferred format for sports clubs engaged in commercial enterprise, seeking to generate profit for shareholders and/or raising finance from external investors.

            The FA’s main commercial asset is its ownership of the rights to the England national football team and the FA Challenge Cup. Broadcasting income remains the FA’s largest revenue stream with both domestic and international broadcasting rights for England fixtures and the FA Cup tied up. Indeed, the annual report and financial statements for the year ended 31 July 2022 of Football Association Limited (the ‟2022 annual accounts”) sets out that ‟broadcast, sponsorship and licencing revenues are a fundamental enabler to achieving our strategic goals, accounting for over 80 percent of our turnover; any risk to this revenue stream will impact the investments we can make in the game”.

            The FA also makes money from winning and hosting tournaments. In its 2022 annual accounts, Football Association Limited sets out that ‟the results for the year are also materially impacted by the different financial results of the UEFA Euro Finals. (The FA) made a GBP6.8 million profit for coming runner-up in the men’s tournament, versus a loss of GBP2.0 million for winning the women’s tournament due to the significantly lower prize money on offer. Across the two financial years, we have made GBP2.7 million of profit for hosting both tournaments, although this is reflected in a profit in FY21 and a loss in FY22”.

            Within the FA handbook, we find the women’s football pyramid regulations, which apply to girls’ and women’s clubs and leagues sanctioned by the FA and/or an ‟Affiliated Association” (i.e. an association which is either a ‟County Association” or an ‟Other Football Association”, as such terms are defined in the FA handbook) in membership of the Women’s football pyramid. The aims and objectives of the Women’s Football Pyramid are:

            • to provide clubs with a level of competitive football appropriate to their playing ability, stadium/ground facilities, economic means and geographical location;

            • to provide a framework for discussion on matters of policy and common interest to leagues and clubs, and

            • to allow the seasonal movement of clubs.

            Today, the levels of the women’s football pyramid are:

            • the WSL, at the very top, in tier 1;

            • the Women’s Championship, which is tier 2;

            • the FA Women’s National League’s regional North and South Divisions, which are the third level of the pyramid;

            • the FA Women’s National League Division 1 North, Midlands, South East, South West, which are in tier 4;

            • the 8 regional premier divisions, which are in tier 5;

            • the 18 divisions 1, which are in tier 6, and

            • the 8 county leagues, which are the 7th and last level of the pyramid,

            as set out in Appendix A of the women’s football pyramid regulations inserted in the FA handbook.

            The Women’s FA Cup secured its first four-year sponsorship deal with SSE in 2015, which consequently expired in 2019. In 2020, health and life insurance provider Vitality became the new title sponsor of the Women’s FA Cup, on a three-year deal. However, despite sponsorship, entering the tournament actually costs clubs more than they get in prize money. In 2015, it was reported that even if Notts County had won the tournament outright, the GBP8,600 winnings would leave them out of pocket. The winners of the men’s FA Cup, in the same year, received GBP1.8 million, with teams not reaching the first round proper getting more than the women’s winners! In the 2022 annual accounts, the FA announced a new landmark investment into the Vitality Women’s FA Cup that will increase the prize fund to GBP3 million per year. The new agreement was introduced from the start of the 2022/2023 season and results in greater investment across the women’s professional and grassroots game.

            In view of these ongoing wide economic discrepancies between female and male football teams, private equity firms and investment funds are sensing an opportunity, here, and investing more and more in women’s football teams – because they are still cheap and good value. For example, there is a new club coming to women’s professional football in the United States, called Bay FC. It is backed by institutional investors, which are majority owners of that new team.

            As set out in the 2022 annual accounts, the Women’s Football Board manages all strategic and operational matters relating to women’s and girls’ football within the policy framework and budget set by the FA’s board. This, however, excludes the management of the FA Women’s Super League and FA Women’s Championships, which have their own board. Indeed, the Women’s Super League and FA Women’s Championship Board was established in 2019 and has specific responsibility for managing FA Women’s Super League and FA Women’s Championship competitions.

            The current sponsor of the Women’s Super League and FA Women’s Championship is the financial institution Barclays. In its 2022 annual accounts, the FA announced that Barclays will invest more than GBP30 million in women’s and girls’ football over the period from 2022-2025, doubling the initial commitment Barclays took when it became the title sponsor of the WSL in 2019, and setting a new record for investment in UK women’s sport. This will continue to build the Barclays Girls’ Football School Partnerships, which has already reached 55 percent of schools. In 2022, the FA also teamed up with Barclays to deliver the inaugural ‟biggest ever football session”, with over 90,000 girls from schools across England playing football as part of the ‟Let Girls Play” campaign. Also, notes the FA in its 2022 annual accounts, the BBC and Sky Sports broadcast deals for the Barclays Women Super League started with a peak of 2.7 million viewers across the first six matches and 1.2 million viewers for Manchester United vs Manchester City, the FA’s highest ever live broadcast figures.

            In the 2022 annual accounts, it is telling to read the results of the 2021/22 season, for England Women’s Senior team: they won ALL their matches (FIFA World Cup qualifications, Arnold Clark Cup, International friendly, UEFA Women’s Euro 2022), except for one game against Spain, at the Arnold Clark Cup, where the game ended up in a deadlock (0-0). So, while the FA’s formula to bring women’s football in England to the top, seems to be working, the Women’s Senior team has yet to defeat the Spanish women’s team, who ultimately beat England in the final of, and won, the 2023 FIFA Women’s World Cup in August this year.

            3. Women’s football in the UK (England & Wales): resolving football disputes

            When players play, there may be some issues during games, which may be sanctioned by red cards received by players found faulty. For example, English forward, Lauren James, was banned for two games after a red card against Nigeria, and had to miss England’s quarter-final against Colombia as well as the semi-final against Australia, in the FIFA World Cup 2023.

            Several mechanisms exist to resolve football-related disputes in England.

            For men’s professional football, the relevant dispute resolution procedures can be found in the English Football League (‟EFL”) regulations (the ‟EFL regulations”), the rules of the association (the ‟FA rules”), which are found in the above-mentioned FA handbook, and the standard EFL contract (the ‟EFL contract”) since, pursuant to Regulation 64.2 of the EFL Regulations, all contracts entered into between EFL clubs and players must be in the form of the EFL contract (available at Form 20 of the Premier League Rules).

            However, for women’s football in the UK (England & Wales), I was told by the EFL that they do not get involved in resolving disputes relating to female footballers. Therefore, I can only assume (since the FA’s legal team repeatedly refused to confirm as much, by either email or phone call) that the relevant dispute resolution procedures, for women’s football in the UK (England & Wales), can be found in the FA rules, in the FA handbook.

            Players may be involved in various types of disputes, and each will be resolved in a different way. Broadly, there are three types of disputes:

            • employment-related disputes;

            • disciplinary disputes, and

            • other disputes.

            Generally, football-related disputes are dealt with by way of arbitration or specialist tribunals and will rarely end up before national courts.

            Employment-related disputes are those which arise between players and their clubs (i.e. their employers). These might include, for example, disagreements over the club’s treatment of the player, payment or termination.

            If a player is unhappy with their club, they can follow the grievance procedure set out in their employment contract, which is usually the ‟Standard Playing Contract”, under which a player is entitled to have ‟any grievance in connection with their employment” heard. So the dissatisfied player should bring their concerns to the attention of their manager, informally, who will make enquiries and reach a decision. If the player is not satisfied with the outcome, they may serve a formal notice of grievance to the club secretary, and it will then be determined by the club’s chairman or board.

            Conversely, a club may be able to take disciplinary action against a player under the disciplinary procedure set out in the employment contract, when they consider them to have breached the employment contract or any applicable rules. A player may appeal any internal disciplinary sanction to the club’s board of directors and, if dissatisfied, any sanction in excess of an oral warning can be appealed to the player-related dispute commission. Both clubs and players then have a final right of appeal to the league appeals committee, whose decision is final.

            Where the disagreement between a player and their club is more serious, or where the grievance/disciplinary procedure has not been effective, terminating the employment contract may become possible.

            A clause in their employment contract gives a player the right to terminate their contract where the club has (i) seriously or persistently breached the terms of the contract, and/or (ii) failed to pay the player the remuneration due under the contract.

            A clause of the employment contract gives clubs a similar right to terminate where the player (i) is found to have committed gross misconduct; (ii) fails to comply with a final warning under the club’s internal disciplinary procedure, or (iii) is found to have committed a criminal offence where the punishment consists of an immediate prison sentence of three months or more.

            Both the club and player have a right of appeal against such a termination to the league appeals committee. There is also a final right of appeal to the league appeals committee.

            For other employment-related disputes which fall outside the grievance, disciplinary and termination procedures, the employment contract provides that any dispute between the club and player will be settled by way of arbitration.

            The club and the player can, by mutual agreement, opt for their dispute to be referred to arbitration under rule K (Arbitration) of the FA rules, which follows a well-defined procedure.

            Indeed, section K of the FA rules (more commonly referred to as ‟Rule K”) provides that any dispute between two or more ‟Participants” shall automatically be referred to and resolved by arbitration under the FA rules. ‟Participants” is widely defined, in the FA Rules, and includes, amongst others:

            • authorised agents/licenced agents (who are now also covered by the defined term ‟Intermediaries” under the current FA rules);

            • managers;

            • competitions;

            • clubs;

            • players, and

            • all such persons who are, from time to time, participating in any activity sanctioned either directly, or indirectly, by the FA.

            3.2. Disciplinary disputes

            A player may be subject to disciplinary proceedings initiated by the FA.

            The FA is the principal body responsible for dealing with disciplinary matters in English football, including for women’s football.

            Pursuant to Rule G3.1 of the FA Rules, facts which give rise to an alleged breach of the FA Rules will be dealt with by the FA under the FA Rules.

            The FA thus has authority to initiate disciplinary proceedings against players in respect of any misconduct, including breaches of the Laws of the Game and the FA’s rules and regulations.

            At first instance, a disciplinary matter which falls under the FA’s jurisdiction will be decided by a Regulatory Commission which has the power to sanction a player with, for example, a reprimand, a warning, a fine, or a suspension from football activity for a specified period or number of matches.

            Both players and the FA have the right to appeal a decision of a Regulatory Commission to an Appeal Board. In general, an Appeal Board’s decision is considered to be final and binding. However, in exceptionally rare cases, it may be possible to challenge the validity of an Appeal Board decision by way of FA Rule K arbitration.

            3.3. Other disputes

            For disputes falling outside the employment or disciplinary categories (such as a dispute between a player and their agent, or a dispute between a player and their former club over a mutual termination agreement), players can file a FA Rule K arbitration.

            Rule K provides that save for those which have their own dispute resolution mechanism, ‟any dispute or difference between any two or more Participants (…) shall be referred to and finally resolved by arbitration under these Rules.” As the term ‟Participant” is widely defined, as mentioned above, the scope of disputes covered by Rule K is thus extremely wide.

            Rule K arbitration tribunal have broad powers to resolve disputes, and their decisions are final and binding.

            To conclude, women’s football in the UK (England & Wales) is now extremely well-equipped and structured, via the FA, to take over the world of women’s professional football and expand its reach, in the media and on broadcasting channels, during international tournaments and in the public eye. The sky is the limit, for women’s professional football, and England & Wales are very well-placed in exploiting such a burgeoning opportunity.

            Crefovi’s live webinar: Women’s football in the UK (England & Wales) – untapped potential? – 26 October 2023

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              Cultural assets restitution: why the British Museum & ‟Musée du Quai Branly”, amongst others, must act now

              Crefovi : 22/06/2023 12:24 pm : Art law, Articles, Entertainment & media, Intellectual property & IP litigation, Litigation & dispute resolution, Webcasts & Podcasts

              1. Cultural assets restitution: legal framework

              1.1. International law: UNESCO conventions and UNIDROIT convention

              Various UNESCO conventions, such as the convention for the protection of cultural property in the event of armed conflict dated 14 May 1954 (the ‟1954 Hague convention”), and the convention on the means of prohibiting and preventing the illicit import, export and transfer of ownership of cultural property dated 14 November 1970, were adopted to protect cultural property, such as monuments of architecture, art or history, archaeological sites, works of art, manuscripts, books and other objects of artistic, historical or archaeological interest, as well as scientific collections of any kind regardless of their origin or ownership.

              While France ratified both UNESCO conventions, in 1957 and 1997 respectively, the UK belatedly ratified the 1954 Hague convention in 2017 and ‟accepted” – but did not ratify – the 1970 UNESCO convention in 2002.

              The commitments made by the state parties to the UNESCO conventions serve to preserve cultural heritage through the implementation of the following measures, inter alia:

              • declaring the import, export or transfer of ownership of cultural property effected contrary to the provisions adopted under the 1970 convention by the states parties thereto, illicit;

              • declaring the export and transfer of ownership of cultural property under compulsion arising directly or indirectly from the occupation of a country by a foreign power, illicit;

              • adopting preventive measures such as preparing inventories, planning emergency measures to protect property against the risk of fire or the collapse of buildings, and preparing the removal of cultural property to places of safety;

              • developing initiatives which guarantee respect for cultural property situated on their own territory or on the territory of other states parties. This involves refraining from using such property in any manner that might expose it to destruction or deterioration in the event of armed conflict, and by refraining from all acts of hostility directed against it;

              • registering cultural property of very high importance on the International Register of Cultural Property under Special Protection in order to obtain special protection for such property;

              • marking certain important buildings and monuments with a distinctive emblem of the conventions;

              • providing a place for eventual refuge to shelter movable cultural property;

              • establishing special units within the military forces responsible for the protection of cultural property;

              • setting sanctions for breaches of the conventions, and,

              • promoting the conventions among the general public and through target groups such as cultural heritage professionals and military or law-enforcement agencies.

              These UNESCO conventions have a limited scope, with respect to artefacts taken and stolen before their entry into force.

              Indeed, many objects, now in museum collections, were acquired from their original owners via violence or deceit, or in conditions linked to the asymmetry of the ‟colonial context”, even before the Hague conventions of 1899 and 1907 entered into force, when the practices of looting and bringing back trophies were still admissible. The collection of foreign objects, by scientific missions financed by colonising states, during the exploration and conquest of new territories, was another way to unilaterally obtain foreign cultural assets, widely used, in parallel to, and jointly with, military operations orchestrated by these same governments.

              The acquisition context is therefore going to be determining in the treatment of restitution requests, because those above-mentioned acts are not legally qualified as crimes, pursuant to international law, contrary to nazi spoliations (against which the Inter-allied declaration against acts of dispossession committed in territories under enemy occupation or control dated 5 January 1943, a specific legal act, was adopted) and contrary to pillages and destructions in wartime posterior to the above-mentioned 1954 Hague convention.

              Secondly, many objects from public collections were gifted or bequeathed to museums, by the heirs of colons, military men involved in the conquest operations, colonies’ administrators or missionaries, sometimes several decades after the death of their ancestors. The terms of the initial acquisition of these objects – which spread over almost a century and a half – may be very diverse: spoils of war, of course, thefts, gifts more or less freely consented, but also barter, purchases, fair or not, or even direct orders made to local artisans and artists. Most of the time, the museum that is the beneficiary of those gifts, already ancient, has limited information on the terms of the first acquisition of these objects, and even sometimes on their exact provenance. These objects do not fall into the scope of the above-mentioned two UNESCO conventions.

              Also, those UNESCO conventions do not have any effect in relation to cultural assets which are held in private hands, as confirmed by the legal case relating to a restitution request, made for the Nok statues, by Nigeria: ‟The provisions of the 1970 UNESCO convention are not directly applicable in the internal public order of state parties, therefore M.X. is right in arguing that this convention only provides for obligations applying to state parties, and does not create any direct obligation against private citizens of these state parties” (Court of Appeal of Paris, 5 April 2004, Federal republic of Nigeria v/ M.X., case 2002/09897, confirmed by the Court of cassation civ. 1, 20 September 2006, nº04-115599).

              Finally, these two UNESCO conventions do not provide for any restitution mechanisms, in relation to any stolen or looted cultural property, thereby leaving a legal void, in international law, with respect to art restitutions.

              However, the UNIDROIT convention on stolen or illegally exported cultural objects, dated 24 June 1995 (the ‟UNIDROIT convention”), fills this gap and is therefore complementary to these UNESCO conventions. It is an important step of establishing a common mechanism, and minimal legal rules, for the restitution and return of cultural objects between contracting states, with the objective of improving the preservation and protection of the cultural heritage in the interest of all.

              Indeed, the UNIDROIT convention applies to claims of an international character for (a) the restitution of stolen cultural objects and (b) the return of cultural objects removed from the territory of a contracting state contrary to its law regulating the export of cultural objects for the purpose of protecting its cultural heritage (‟Illegally exported cultural objects”).

              But the scope of the UNIDROIT convention is limited in practice, because countries such as France and the UK, where a considerable portion of Illegally exported cultural assets and stolen cultural objects, taken during the ‟colonisation period”, is stored in national public collections, have either not ratified, or not even signed (for the UK), such UNIDROIT convention.

              Also, some time restrictions to claims for restitution of stolen, or illegally exported, cultural objects are set out in the UNIDROIT convention. Such claims may be brought in three years from the time the claimant or the requesting state knew the location of the cultural object, and the identity of the possessor, and in fifty years since the time of the theft, the export or from the date on which the object should have been returned (articles 3.3 and 5.5). However, there are exceptions to this rule for stolen objects. Cultural objects that form an integral part of an identified monument or archaeological site, or which belong to a public collection, are not subject to time limitation other than a period of three years from the time when the claimant knew the location of the cultural object and the identity of its possessor (article 3.4). In addition, a contracting state may declare that a claim warrants an extended time limit of seventy-five years or longer, if so stated in its national law (article 3.5).

              Besides, the UNIDROIT convention is not a retroactive treaty and, as such, it only applies to cultural property stolen, or cultural objects illegally exported, after the UNIDROIT convention entered into force (article 10). However, the UNIDROIT convention ‟does not in any way legitimise any illegal transaction of whatever which has taken place before the entry into force of this convention” and does not ‟limit any right of a state or other person to make a claim under remedies available outside the framework” of the convention (article 10.3).

              1.2. European Union legislation: Directive 2014/60/EU of 15 May 2014 on the return of cultural objects unlawfully removed from the territory of a member-state

              This issue of writing and adopting common rules, between states, to guarantee the restitution of cultural property, has first emerged in Europe, and more precisely within member-states of the European Union (‟EU”).

              EU member-states benefit from economic, cultural and legal integration tools, which are highly developed on certain aspects, and in particular on restitution of cultural assets.

              But the implementation, and benefit, from these automatic restitution mechanisms, for cultural assets which were stolen or illicitly exported, are limited to EU member-states only, of course.

              Directive 2014/60/EU of 15 May 2014 on the return of cultural objects unlawfully removed from the territory of a member-state (the ‟Directive”) provides for this EU-wide right of restitution of cultural assets.

              Since Brexit, the UK is no longer a member-state of the EU, and therefore the above-mentioned Directive no longer applies on its territory.

              However, the Directive applies in France, one of the remaining twenty-seven EU member-states, via its transposition into French national statutory laws.

              The above-mentioned Directive is a very ‟hands-on” framework, on how cultural assets should be returned, within which timeframe, and under which conditions.

              However, when the request for restitution comes from a third-party state (i.e. not an EU member-state), the protection of the buyer acting in good faith, as well as the principle of territoriality of laws (i.e. the principle pursuant to which the judge will rule only in compliance with the law of the country in which the object is located, at the moment of the restitution claim) usually block any successful outcome to such restitution request.

              So, in case the request for restitution comes from a state outside the EU, the above-mentioned UNESCO 1954 and 1970 conventions apply, but, as already stated, they have limited scope.

              The imbalance between the law applicable in EU member-states, and the principles that the judge uses against third party states located outside Europe, seriously impacts the future of cultural assets’ restitutions to countries located in Africa, Asia, Australasia and the Americas. Such imbalance could be addressed if France and the UK, as well as African, Asian and Australasian countries ratified the above-mentioned UNIDROIT convention. This convention sets out an automatic restitution mechanism, which would apply to its contracting states. It could be the foundation for a common right to restitution, in particular, and potentially, in relation to cultural assets taken during the ‟colonial period”. The ratification of the UNIDROIT convention may therefore be the key to set up an automatic restitution mechanism, not only in the EU, but also outside the EU.

              EU member-states have applied such ambitions by infusing the principles from the UNIDROIT convention within the Directive. Therefore, the extension of such principles to third party states, via the UNIDROIT convention, should be achievable.

              1.3. French rules

              The current French legal framework is set up in such a way that it blocks, and opposes, most restitution requests addressed to French museums, with respect to their museum collections, via its:

              • provisions from the ‟code du patrimoine” (‟CP”), which entered into force in 2004, and

              • provisions from the ‟code général des propriétés des personnes publiques” (‟CGPPP”), which entered into force in 2006.

              The French current legal framework sets out a definition of the public domain furniture which covers all cultural assets – in particular, public collections. Such definition of the French public domain furniture triggers some legal protection backed up by the rules of imprescriptibility and inalienability of the public domain, which blocks all restitution requests.

              Indeed, the statutory principle of inalienability of French public collections, enshrined in article L. 451-5 CP, is opposed to the transfer of ownership of any one of these assets preserved in these collections. This is because all assets belonging to the French public collections are national treasures, pursuant to article L. 111-1 CP.

              In France, the rare restitution cases which took place during the last twenty years were made possible via mechanisms designed to go around the rules relating to the French public domain. Two legal avenues were pursued, as follows:

              • enacting a law creating an exception to the principle of inalienability of French public collections, derogating to the above-mentioned rules applicable to French cultural assets and public domain. For example law nº2002-323 dated 6 March 2002 relating to the authorisation of the restitution by France of the mortal remains of Saartjie (Sarah) Baartman, also known as the ‟Hottentot Venus”, to South Africa, and law nº2010-501 dated 18 May 2010 relating to the authorisation of the restitution by France of the Maori heads to New Zealand, are such laws providing for exceptions to the principle of inalienability on the grounds of the principle of dignity and of the respect due to dead people, and

              • removing a cultural asset, from the scope of the laws relating to the French public domain, because such object does not belong to the museum’s collection. For example, art works stamped ‟Musées Nationaux Récupération” since 1953, which are comprised of 60,000 works pillaged by nazi occupiers and never restituted, were never added to the French public collections, precisely in order to allow their restitution once the owners or right-holders would be identified or recognised. Also, the restitutions of Chinese cultural assets, done in 2015, were possible via the withdrawal, at the request of the French state, of the gift made a few years earlier, by a private collector, to the Guimet museum. Consequently, rebranded as ‟private property”, these objects were able to be restituted, directly by the donor, to the Chinese state. Moreover, the removal of a cultural asset from the French public domain may be due to an irreparable original defect tainting its acquisition. Objects coming from illegal trafficking, entered into French public collections after 1997 (as France ratified the above-mentioned 1970 UNESCO convention on 7 January 1997), because of some negligence in controlling their provenance upon acquisition, or which illicit status was revealed further to discovering new facts, may be the object of a cancellation of their acquisition (by way of sale, gift or donation) via legal proceedings initiated by the defrauded French public entity, in compliance with law nº2016-925 dated 7 July 2016. The object is therefore deemed to have never entered the French public domain, and new article L. 124-1 CP provides that the judge may order its restitution to its original owner.

              1.4. UK rules

              Similarly, the current UK legal framework is set up in such a way that it blocks, and opposes, restitution requests addressed to UK museums, with respect to their museum collections.

              As mentioned above in this article’s introduction, London’s British Museum is fiercely targeted by growing calls for repatriation of cultural assets, with repeated requests from various countries, such as Greece, Ethiopia, Italy and Nigeria, to return items from its vast collection.

              However, the British Museum, and the UK government, have systematically opposed those restitution requests by citing the British Museum Act 1963, a national statute which prohibits the institution from returning works. Indeed, section 5 (Disposal of objects) from the British Museum Act 1963 provides that ‟the trustees of the British Museum may sell, exchange, give away or otherwise dispose of any object vested in them and comprised in their collections if:

              • (a) the object is a duplicate of another such object, or

              • (b) the object appears to the Trustees to have been made not earlier than the year 1850, and substantially consists of printed matter of which a copy made by photography or a process akin to photography is held by the Trustees, or

              • (c) in the opinion of the trustees the object is unfit to be retained in the collections of the Museum and can be disposed of without detriment to the interests of students (provided that where an object has become vested in the trustees by virtue of a gift or bequest the powers conferred by this subsection shall not be exercisable as respects that object in a manner inconsistent with any condition attached to the gift or bequest)”.

              Similar very limited exceptions to the principle that objects from UK public collections cannot be deaccessioned, are set out in the National Heritage Act 1983, which focuses on the collections from the Victoria & Albert Museum, the Science Museum, etc.

              The UK has enacted only two acts so far, which carve additional exceptions to the principle of prohibition of returning works from UK public collections.

              The provisions of the Human Tissue Act 2004 create a new exception to the provisions of the British Museum Act 1963. Indeed, pursuant to the Human Tissue Act 2004, the trustees of the British Museum have the power to deaccession human remains, and return them to their owners and/or the descendants of such deceased persons. Consequently, the British Museum has set up a pragmatic policy, which sets out the circumstances in which the trustees may consider a request for the deaccessioning of human remains. It gives guidance on the procedures to be followed by those seeking to submit a claim for the return of human remains in the British Museum collection that are less than one thousand years old to a community of origin.

              Also, the Holocaust (Return of Cultural Objects) Act 2009 opened up repatriation of artwork looted during the nazi era.

              Aside from those two above-mentioned ‟ad hoc” exemption acts and processes, the UK has stuck to its guns and objected to each one of the restitution requests, made by various third party states or indigenous communities in Africa, Asia and Australasia, a stern ‟no” because it is not allowed under the British Museum Act 1963 and/or under the National Heritage Act 1983, which provide that objects considered part of the country’s national heritage may not be taken out of the UK.

              In particular, with respect to the contested objects from the collection of the British Museum, the UK government and institution have muddled the waters, proposing the development of ‟long-term relationships with the communities” (sic) making the restitution claims, signing ‟memorandums of understanding to develop mutually beneficial projects with artists, scholars and other community members” (sic), suggesting that some new museums be built in the territories of third party states which have made the restitution claims to facilitate permanent displays of objects, while still fiercely opposing any attempt to restitute these objects.

              Many think that such backward attitude towards restitution of stolen or illegally exported cultural assets is no longer acceptable, with Vice’s ‟unfiltered history tour” being a very poignant illustration of how many communities are reeling at not being able to get their cultural objects back from the British Museum.

              Some stakeholders even use guerilla war techniques, to shock members of the public and make a point, in particular with respect to African cultural assets. Mwazulu Diyabanza, a Congolese pan-African political activist, expressed his support of cultural restitution and the removal of African artefacts from European museums obtained during colonisation by barging in the ‟Musée du Quai Branly in June 2020, and subsequently taking a 19th-century funeral post of the Bari people from this French institution.

              2. Cultural assets restitution: actions taken – or to be taken – to allow the return of stolen or illicitly exported objects to their countries of origin

              While French president Emmanuel Macron is widely disliked in France, in particular due to his autocratic and violent ways to impose ‟reforms”, he was surprisingly ‟avant-gardiste” in his approach to cultural assets restitution during his first five-year mandate. Indeed, he commissioned Senegalese academic, Felwine Sarr, and French art historian, Bénédicte Savoy, to research, and then write, an ethics report on the restitution of African cultural assets, which was issued in November 2018 (the ‟Report”).

              The Report, which is excellent, extremely well-researched and well-balanced, on the whole, to find an appropriate, lawful and systematic approach to ethical restitutions of African cultural assets – which are currently predominant in French public collections, that contain around 90,000 sub-Saharan African objects acquired in dubious circumstances by France – is a major step in the right direction.

              In particular, the Report suggests to amend the CP, in order to institutionalise the restitution process and enshrine it in law, in a new section 5 of such CP, relating to the restitution of cultural assets on the grounds of a bilateral cultural cooperation agreement with countries which used to be French colonies, protectorates or managed under French mandate. Such suggested new section 5 of the CP and such proposed bilateral agreement template are both enclosed to the Report, in its Annex 2. The Report does set out that such ‟ad hoc” restitution process would be an exception to the overarching principles of inalienability and imprescriptibility of the public domain, in particular to return African objects to their countries of origin.

              Helpfully, the Report sets out a list of restitution criteria, even providing a suggested timeline of the restitution programme in three stages. During the first stage, from November 2018 to November 2019, the Report suggests to return several African cultural objects, listed in the Report, to African countries such as Benin, Senegal, Nigeria, Ethiopia, Mali and Cameroon. During the second stage, from spring 2019 to November 2022, further works and initiatives should be implemented, relating to inventories, digital sharing, workshops, joint committees between France and each of the African states that wish to recover their cultural assets. During the third stage, from November 2022, the Report suggests that the restitution process, with respect to African cultural assets in particular, should become permanent and allow third party states to continue claiming back their objects.

              For now, the Report has been mostly wishful thinking. However, France has returned the sword of Omar Tall, a 19th century Islamic scholar and ruler, to Senegal in November 2019, and returned twenty six artworks looted from Benin during the colonial era, after its parliament adopted an ad hoc” law allowing such restitutions.

              The UK continues to have a ‟stiff upper lip” attitude, when it comes to restitution requests. However, many think that this is no longer acceptable, and push towards either the enactment of more acts providing for further exceptions to the British Museum Act 1963 and/or a complete overhaul of this act (even if, after such amendments, the trustees of the British Museum would deal with each restitution request on a case-by-case basis). A potential loophole in the UK legal arsenal had even be identified in the Charities Act 2022, with its new sections 15 and 16 allowing for charities, including national museums like the British Museum, to return objects if trustees felt a moral obligation to do so and gained approval from either the UK courts, charity commission or attorney general. However, in November 2022, the UK government deferred the introduction of these legal provisions which would enable national museums to deaccession items from their collections on moral grounds.

              With up to ninety percent of the sub-Saharan Africa’s material cultural legacy outside of the African continent, for example, according to the Report, much more needs being done, in France and the UK, to return cultural assets to their rightful owners and countries of origin, and put things right. Private initiatives, such as a recent USD15 million, four-year initiative by George SorosOpen Society, hope to spur momentum in reparation efforts through legal, financial and technical support to governments, regional bodies, museums, universities and civil societies.

              Crefovi’s live webinar: Cultural assets restitution – why the British Museum must act now – 29 June 2023

              Crefovi regularly updates its social media channels, such as LinkedinTwitterInstagramYouTube and Facebook. Check our latest news there!

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                WGA authorisation to strike: why writers are defensive, in the streaming era

                Crefovi : 25/04/2023 1:54 pm : Antitrust & competition, Articles, Copyright litigation, Employment, compensation & benefits, Entertainment & media, Intellectual property & IP litigation, Litigation & dispute resolution, Webcasts & Podcasts

                Writers are absolutely essential to the supply chain of creation of enjoyable and diverse content, in the movie and TV industries. Yet, some of them are very much disgruntled, at the moment, in particular in the United States. And their concerns seem to stem from the disruptions imposed on their working conditions, in particular by streaming platforms, which now produce their own content (via either feature films or series) and therefore use the services of writers. Let’s dive into this issue, the changes that caused it, and what may happen next.

                1. The role of writers in motion pictures and TV

                1.1. Development versus production

                1.1.1. Underlying rights

                At the inception of every motion picture lay underlying rights of one sort or another. These rights may be manifested in the form of a published novel (The godfather) or autobiography (Raging bull), an unpublished stage play (Casablanca), a pre-existing film (Ocean’s eleven) or television series (Mission impossible), a person’s life story (Gandhi), a song (Frosty the snowman), a graphic novel (Batman), a toy (The lego movie), a board game (Clue), a video game (Tomb raider and, more recently, The last of us) or even a mobile phone app (The angry birds movie).

                Other films are based on the rarest of all forms of underlying rights: an original idea! Of course, that original idea may be set within the context of historical events, either loosely (Singin’ in the rain) or more directly (Chinatown), and might also be inspired by actual people from history (Citizen Kane).

                In broad strokes, the underlying rights being acquired as the basis of a motion picture could be founded in copyright, trademark, personal rights (i.e. US law rights of privacy and publicity) or implied contract. A combination of all of these rights may arise, on certain film projects.

                These underlying rights need being acquired, via assignments, in order to become part of the chain of title.

                1.1.2. Chain of title

                Chain of title review should be a component of any acquisition of underlying rights. At its essence, this means identifying the genesis of the idea upon which the motion picture is based, then tracing each link in the chain of ownership to ensure that the rights were properly transferred and are not subject to any restrictions or encumbrances that would impair the film producers’ ability to produce and exploit the motion picture.

                The first step is identifying the source of the project: where did the idea come from?

                It could be a completely original concept dreamed up by a producer or pitched by a writer, or it might be an original take on a published work of media, art or entertainment. Either way, it would be advisable to enter into an agreement with the originator of the idea, and, if the project is based on preexisting intellectual property, then permission will also need to be obtained from the owner of that intellectual property.

                In addition, if the preexisting intellectual property is based on the lives of real people, then, to the extent those people are going to be depicted in the motion picture, a signed release will need to be obtained from them, in compliance with their rights of privacy and publicity.

                It is of paramount importance to build a solid chain of title throughout development.

                1.1.3. Securing underlying rights: the motion picture literary rights option/purchase agreement

                Once the necessary chain of title analysis is conducted, and the determination of which rights need to be acquired done, the film producers and their legal team will need to construct a deal to acquire those rights.

                The most typical structure is the motion picture literary rights option/purchase agreement.

                At its essence, an option is a grant of an exclusive right to purchase specified rights from the seller for a specified period of time, on specified terms. For example, a producer may pay a book author USD5,000 for an eighteen-month exclusive window wherein the producer may purchase all motion picture and television rights in the book by paying the author an amount equal to 2.5 percent of the budget of the picture, less the option fee already paid.

                At the time the initial deal is being negotiated, it would be advisable to negotiate for the right to extend the initial option period once, or even twice, for an additional payment for each such extension. Typically, this extension period would run for an additional twelve to eighteen months.

                1.1.4. Development

                Acquiring the underlying rights and clearing chain of title is merely the beginning of a project’s development process. The film producers will next want to create a screenplay that has creative merit and is feasible to produce within the target budget.

                Typically, the first step will be to hire a writer to create an original screenplay (or rewrite the existing screenplay, if the underlying material includes a screenplay that the film producer wants to use as a starting point).

                As with the initial chain of title clearance, it is crucial to ensure that all rights and material generated during development can, and will, pass to the production. Therefore, anyone who provides services during this development phase, including writers and anyone who is supervising and giving notes to the writers (e.g. producers and directors) should all have signed agreements before they begin providing services. This is extremely important, especially once the project proceeds to production.

                One of these agreements, to keep the chain of title clear, is the writer agreement: the core topic of this thought leadership article!

                1.1.5. Motion picture writer agreements

                The first question to ask, when the film producers are hiring a writer, is whether such writer is a member of the Writers Guild of America (‟WGA”). If not, then the production team and the writer are free to negotiate any kind of arrangement they would like (although the WGA rules, in particular the WGA minimum fees, often serve as a guide during negotiations, even with a non-guild member). If the production wants to hire a writer who is a WGA member, then they will be required to become a signatory to the WGA Minimum Basic Agreement (‟MBA”), and both sides will be governed by WGA rules.

                While it is possible to hire writers on a weekly basis under WGA rules, it is much more common in the theatrical feature world for writers to be hired on a ‟step” basis, where they are paid for each pass of writing they make on a script. The WGA has divided those steps into the following forms: a treatment, first draft screenplay, final draft screenplay, rewrite and polish.

                The WGA has also set minimum ‟scale” amounts that its members must be paid for each of these forms, which varies depending on whether the step is guaranteed or is at the producer’s option, and also depending on the budget of the project.

                Once the production team has determined the number and form of the steps they want the writer to perform, the fixed compensation for each step (and amount of time given for the writer to complete each step) needs to be negotiated.

                In addition to the fixed compensation for each step, the writer will try to negotiate for some kind of bonus based on credit. The typical structure provides for a fixed amount to be paid if the writer receives sole credit on the picture, reducible by all prior amounts paid to the writer (i.e. the fixed compensation for each writing step actually paid), plus a backend participation equal to 5 percent of the net profits of the picture.

                The writer will likely ask for the first opportunity to render writing services on sequels, remakes and other derivative works, and for the right to receive passive royalties if they are not engaged to provide services on such derivative productions.

                1.2. Motion picture versus scripted TV

                So far, we have described the writer’s contractual arrangements, as they apply to the motion picture development and production cycle.

                Let’s now turn our focus away from the theatrical feature film industry, and towards scripted television as a medium.

                There are two key consistent characteristics of scripted television programming, which are essential to understanding the web of deal structures that bind the scripted television industry together.

                First, television is a writer-driven medium. Let’s compare the role of the writer in television, to that of the writer in the theatrical feature film industry. In TV, in the vast majority of cases, the lead creative force behind a series (a ‟showrunner”) is a writer. This is in contrast to feature films, where the director is typically the ‟auteur” creative force behind a production. So, in television, most of the credited producers of a series are writers, who shepherd the project throughout its life-cycle. Successful showrunners include Ryan Murphy, Shonda Rhimes, Jill/Joey Soloway and Lena Dunham. In motion pictures, on the other hand, the writer’s role is generally performed entirely during the pre-production phase, and writers have little to no ongoing role in the actual production of their scripts. In TV, a pilot – and sometimes even a series – is typically greenlit to production on the strength of a pilot script and the reliability of the writers and producers, with actors and directors being hired after the threshold decision to proceed to production has been made. This is also a major difference from feature films, where the attachment of one or more key actors (and typically a director, as well) is virtually always the necessary component that pushes a film project from development into production. The dominant role played by writers in the television industry manifests itself in the process, and the deals, that bring a series to life. Because television is a writer-driven medium, the writer-producer agreement is often the most significant deal in the development process. But the staffing writer agreements, entered into with each one of the writers and writer/producers (other than the creator/showrunner) who will populate the ‟writers’ room” for the series, are also minutiously negotiated, in the scripted TV business.

                Second, TV is a serialised medium. From a production perspective, a successful television series is always an ongoing project, which requires creative and production continuity over a period of years, months or weeks (as distinct from a theatrical feature film, in which cast and crew come together once, usually over a continuous or semi-continuous period of time, to produce a single closed-ended project watched in 1 to 3 hours maximum). Consequently, the dealmaking framework of television protects the ability of parties to maintain continuity of production and distribution over a period of weeks, months or years.

                Now that streamers have successfully entered the space of scripted television, by producing more and more of their own series, in particular to meet the mandatory European-produced film quotas imposed by the European Union (‟EU”), the likes of Netflix, Apple TV and Amazon Prime are intensifying competition among studios and networks, for the best scripts, stories, talent and content. Also, streaming companies are moving the tectonic plates of how remuneration of writers work, in the film industry, but particularly in the scripted television sector, much to the chagrin of the WGA and its members.

                2. Unionised writers: how the Writers Guild of America pulls the strings to improve writers’ fate

                2.1. The deadline: WGA 2020 theatrical and TV minimum basic agreement expires on 1 May 2023

                Every three years, the above-mentioned WGA’s MBA, which currently stands at a hefty 755 pages’ long, gets renegotiated and amended, by the members of the WGA’s negotiating committee, and the members of the negotiating committee of the Alliance of Motion Picture and Television Producers (‟AMPTP”).

                The expiry deadline of the 2020 MBA is 1 May 2023, which is round the corner. However, the WGA-AMPTP contractual negotiations appear to have stalled.

                Indeed, the WGA announced a two-week break in negotiations, starting 1 April 2023. Negotiations were slated to pick up again the week starting 17 April 2023.

                Interestingly, the WGA-AMPTP negotiation is the first of three contract negotiations with entertainment unions. The Directors Guild of America (‟DGA”) will start negotiations on 10 May 2023, ahead of their contract expiration on 30 June 2023. The Screen Actors Guild (‟SAG-AFTRA”) contract with AMPTP will also expire on 30 June 2023.

                2.2. Authorisation of strike to be ordered by WGA has now been granted

                The WGA and its members have grievances. And anger has been boiling for a while now.

                Already, in late 2007 until beginning of 2008, i.e. during the last worldwide financial crisis and collapse, a writers’ strike took place for 100 days in the United States (‟US”), bringing Hollywood production to a screeching halt.

                Then, four years ago, on 22 April 2019, more than 7,000 WGA members fired their agents en masse – in a display of solidarity at the start of the WGA’s historic two-year campaign to reshape the talent agency business that still is playing out today, emboldening the guild in its ongoing negotiations with the studios and streamers for a new film and television MBA. Five days before the mass firings, the WGA filed a lawsuit against the big four talent agencies of the time (CAA, WME, UTA and ICM Partners) that sought to establish that packagings – in which the major talent agencies were paid fees by production companies to package the creative elements of their projects – were illegal under California and federal law.

                Three of the eight named plaintiffs in the case – Meredith Stiehm, Ashley Gable and Derek Hughes – now serve as members of the WGA’s contract negotiating committee, with Ms Stiehm being elected president of the WGA West, six months after the last of the major agencies finally agreed to give up packaging fees in February 2021.

                So, why are the WGA and its members angry?

                On 14 March 2023, the WGA released a statement, complaining that, driven in large part by the shift to streaming, writers are finding their work devalued in every part of the business. According to the WGA, ‟while company profits have remained high and spending on content has grown, writers are falling behind. The companies have used the transition to streaming to cut writer pay and separate writing from production, worsening working conditions for series writers at all levels. On TV staffs, more writers are working at minimum regardless of experience, often for fewer weeks, or in mini-rooms, while showrunners are left without a writing staff to complete the season. And while series budgets have soared over the past decade, median writer-producer pay has fallen.

                In comedy-variety, writers working for streaming services – which are now the primary platforms for entertainment content – lack the most basic protection of MBA minimums.

                For screenwriters, compensation has also stagnated over the past four years. Their pay is often stretched out over many months and can be held hostage by producers’ demands for free work. Particularly for screenwriters working at or near MBA minimum, these conditions are untenable”.

                So, streaming studios have reshuffled the cards, disturbing the old set ways of the TV business, by giving short orders to writers (for usually 8 to 9 episodes, rather than 22 to 23 as is customary in linear TV), separating writing from production and not relying on any season calendar (which, in the television series’ cycle, runs from September of each year to August of the following year).

                To conclude, the WGA and its members want more money (elegantly described as ‟writer compensation and residuals from features in theaters or on streaming platforms” in the WGA statement) and more job security, as well as an end to the ‟mini-rooms” (i.e. smaller number or writers in the writers’ room). Other demands relate to increasing contributions to writers’ pension and health funds, as well as getting ahead of burgeoning technologies like artificial intelligence that are perceived as threatening writers’ jobs.

                On 17 April 2023, the results of the WGA strike authorisation vote were in, with 9,020 (97.85 percent) of WGA members voting for such authorisation. Therefore, if no deal is in place by 1 May 2023, there is a very high probability that the WGA would start a strike, and all its members with it.

                Let’s watch the space and see whether the writers’ ire has a ripple effect on the DGA/AMPTP and SAG-AFTRA/AMPTP upcoming contract negotiations!

                3. The other side of the pond

                3.1. United Kingdom and its writers: risk of inflammation in the horizon?

                The Writers’ Guild of Great Britain (‟WGGB”) is the trade union representing professional writers in TV, film, theatre, radio, books, comedy, poetry, animation and videogames. So it is the equivalent of the WGA, but for the United Kingdom (‟UK”).

                Like the WGA in the US, the WGGB negotiates rates and agreements, on behalf of its members. Such rates and agreements cover TV, theatre, audio and some areas of (theatrical feature) film. These national agreements cover key industry bodies, including the BBC, ITV, National Theatre, Royal Court and Royal Shakespeare Company.

                The WGGB lobbies and campaigns on behalf of writers, to ensure their voices are heard in a rapidly changing digital landscape.

                Therefore, the WGGB swiftly displayed some solidarity towards the WGA and its members, in their contract negotiations efforts, releasing a statement setting out that ‟in light of the WGA’s ongoing contract negotiations, including the recent announcement of a Strike Authorisation Vote from 11-17 April 2023, the WGGB’s executive council has supported the following motion. The WGGB advises its members not to work on projects within the jurisdiction of the WGA for the duration of the strike”.

                Some commentators are even musing over UK writers following the footpath of their US colleagues, and contemplating labour action on their own. However, this is pure speculation, at this point in time.

                3.2. France and its writers: all quiet on the Western front

                Meanwhile, the French are mainly concerned about the fact that a WGA and writers’ strike may impact indie production and sales – at the upcoming 2023 Cannes film festival!

                French writers are represented by the ‟Société des Auteurs et Compositeurs Dramatiques” (‟SACD”). And the French being VERY attached to their rights, privileges and perks, the SACD is doing a very efficient job to ensure that its members are well protected, well paid (via royalties, wages and residuals) and cannot be bossed around by film producers or showrunners/TV producers.

                In November 20222, the SACD has even obtained that the French audiovisual authority, Arcom (which rules all French TV and cable networks as well as streamers which offer content in France), has a right to check the provisions of writers’ agreements with their producers, in order to assess whether these clauses are compliant with French copyright law!

                With French theatrical numbers on the mend and up, post-COVID, French writers make the most of the protective context in which they evolve, where mandatory EU content quotas for SVOD platforms (imposing that 30 percent of all content on streaming services must be European-made) guarantee demand for original, home-grown films and series which most streamers will be unable to fill on their own.

                Crefovi’s live webinar: WGA authorisation to strike – why writers are defensive – 28 April 2023

                Crefovi regularly updates its social media channels, such as LinkedinTwitterInstagramYouTube and Facebook. Check our latest news there!

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                  Pharrell Williams & Louis Vuitton: the era of entertainment stars appointed as creative directors has begun

                  Crefovi : 28/03/2023 12:10 pm : Articles, Consumer goods & retail, Employment, compensation & benefits, Entertainment & media, Fashion law, Fashion lawyers, Law of luxury goods, Music law, Webcasts & Podcasts

                  Pharrell Williams & Louis Vuitton are getting into bed together. This is exciting as it is the first time a fully-fledged entertainment star has taken the helm at one of the most prestigious luxury brands worldwide, as its creative director. While musician Kanye West had already broken ground, at sportswear firm Adidas, in his role as artistic director of the uber-successful Yeezy brand, no luxury conglomerate had had the balls to appoint a celebrity as creative director of one of its crown’s jewels. Well, ‟Monsieur Arnault”, eternally the groundbreaker, has reached new ground, by doing exactly that at Louis Vuitton, with Pharrell Williams. How does this strategy fit into the inverted pyramid structure of the luxury ‟maison”? Are celebrities apt at running and maintaining their fashion brands and companies, in the long term? How are luxury brands tying creative directors to themselves, exactly, via their super-secretive contracts?

                  1. Inverted pyramid of human resource management

                  The creator-manager tandem is a characteristic of luxury.

                  Succeeding in luxury requires to be both highly creative and imaginative (right cerebral hemisphere) and highly rigorous (left cerebral hemisphere). Unlike traditional industry (left-brain), where there is often initially one person who creates an empire alone, or art (right-brain), where there is always an individual, success in luxury is achieved at minimum through a tandem of right-brain and left-brain skills, with neither dominating the other; each has its own territory.

                  The partnership formed by Pierre Bergé and Yves Saint Laurent is a famous one, such as the association of Tom Ford with Domenico de Sole at Gucci or the deal between Gabrielle Chanel and the Wertheimer brothers. In fact, all luxury brands originate with a couple (or a threesome, in the case of Chanel!), and the brand can be considered their baby.

                  Not only can success in luxury not be the work of a single person, but it cannot be the work of a single pair, either. It is critical to seek to form complementary teams, composed of artists (who should respect the universe of the brand and take into account economic and practical reality, which is that luxury items must sell), artisans (who manufacture such luxury products), managers (who need to know how to work with artists and have, themselves, an artistic side, while remaining very left-brain individuals at the same time) and salespeople (who are in direct contact with the client).

                  In luxury, other than the creator, the most important people for the brand are the workers (i.e. the artisans, who make the products), and the salespeople, who are the link with end-customers. All the others are really at their service.

                  A luxury house, therefore, functions according to the famous principle of the ‟inverted pyramid”, except that in this case it is a real and daily practice, and not a vague slogan contradicted by the facts (who would believe that an assembly line worker at carmaker Renault, or a salesperson at L’Oréal, is more important than the CEO?).

                  In a house such as Louis Vuitton, a store director has priority over all other departments and always has direct access to the CEO. It is compulsory that any new employee in a managerial position of any kind begins by working in the store, in order to understand fully what goes on there and how a manager’s job can serve the sales network and thus, the client. This period in sales is not only a matter of personal training, as in the case of major successful brands, but really a structural question: the whole organisation serves the store, in order to serve the client.

                  Managers should always be travelling to sites in order to create, and above all maintain, personal links between everyone.

                  This is one of the reasons why luxury management is so difficult. Genuinely assuming the concept of the ‟inverted pyramid” is often difficult for managers accustomed to giving orders from behind their desks; travelling endlessly to the four corners of the world is tiring (not to mention, impossible, in the midst of a pandemic or war like the Covid-19 outburst or the Russian/Ukrainian conflict); knowing how to stay in the background is unnatural to the ego of the Western ‟leader”.

                  2. Rise of entertainment stars as fashion designers

                  In this context of ‟inverted pyramid”, it can be difficult to introduce fashion, with its ‟star system”, within a luxury house. The rejection may be swift, if the teams dealing with fashion do not have the right human behaviours (i.e. prioritising the workers, artisans and salespeople).

                  Yet, a luxury conglomerate has become very masterful at introducing some showbizz glitz at the top of its brands’ inverted pyramids, by making several stars from the entertainment sector creative directors of its luxury ‟maisons”.

                  Yes, you have guessed correctly, I am referring to French luxury conglomerate LVMH.

                  After Virgil Abloh, a trained architect who managed his own successful fashion label, Off-White, in parallel with his Louis Vuitton duties, passed away, Bernard Arnault, founder of LVMH, has made star record producer, rapper, songwriter and singer Pharrell Williams the next men’s creative director of Louis Vuitton, one of the largest (by sales, prestige and revenues) Fashion & Leather Goods’ brands from the LVMH portfolio, with Christian Dior.

                  Many other stars from the entertainment industry have made the crossover from music and/or film, to fashion. Most of the time, this is by creating their own fashion label, with varying degrees of success.

                  While the Olsen twin sisters have really hit the nail on the head, with their minimalistic, extremely expensive and highly-desirable fashion brand The Row, Beyoncé and Rihanna both failed to convince their investors (Philip Green from now-defunct Topshop, for the former, and Bernard Arnault from LVMH for the latter), as well as potential clients, that their brands Ivy Park and Fenty, were attractive propositions. The various reasons for such flops are explained with flair and aplomb by French blogger, Crazy Sally!

                  Other brands birthed by celebrities include ‟Victoria Beckham”, which continues to report a loss 14 years in the making, and despite hefty external investments poured into it by financial backers at inception, and ‟Skims”, a shapewear brand launched by ex-reality TV sensation Kim Kardashian.

                  I do not give ‟Victoria Beckham” another 10 years, as I think that its star will fade with that of its eponymous founder, ex-Spice GirlsVictoria Beckham. But Skims may be onto something, more long term, in light of the business acumen and right-brain capabilities of Ms Kardashian.

                  Indeed, most of these celebs’ led fashion collections, brands and companies are rare cases and, most of the time, are founded on fragile structures which do not pass the test of time. Those which will resist will be the most authentic and the best, i.e. striking, offering valuable products which are the outcome of a real collaboration between a star with a vision, and a designer who knows how to interpret it.

                  3. Contract between luxury brands & creative directors: freelancing but not really free

                  Most creative directors of French fashion houses are consultants, not employees, and therefore have the right to execute other fashion projects or contracts, for other fashion houses (for example, Karl Lagerfeld, who viewed himself as a ‟mercenary” was the creative director of both Chanel and LVMH’s Fendi).

                  French freelancers and consultants who work for fashion and luxury houses are not protected by French labour rules applying to employer–employee relationships, in particular in the areas of paid leave, maternity leave, medical cover and even working time. However, French labour courts are prompt at requalifying an alleged freelancing relationship into an employment relationship, provided that a subordination link (characterised by work done under the authority of an employer, which has the power to give orders, directives, guidelines, and to control the performance of such work, and may sanction any breach of such performance) exists, between the alleged freelancer and the fashion company.

                  In the United Kingdom (‟UK”), which has its fair share of luxury brands (Burberry, Alexander McQueen, Vivienne Westwood), most creative directors are either freelance workers, or sometimes have struck a consultancy or contractor arrangement with their brand, as self-employed individuals. This way, they can run multiple creative businesses simultaneously, such as Jonathan Anderson, creative director of LVMH’s LOEWE and of his eponymous label, JW Anderson. However, also in the UK, the type of contract is not determinative of the nature of the relationship. Employment tribunals can look beyond the contractual arrangements to how the relationship operates in practice when deciding whether someone is an employee, a worker or genuinely self-employed.

                  To get on the good side of their creative directors, luxury brands do not hesitate to roll out the red carpet, in terms of financial packages, often incentivising their art directors via stock options and/or minority stakes in the fashion brand. Of course, all these contracts are highly confidential and kept under wraps by the parties, but their content may transpire when art directors cash in on their stock options, with the notable example of Tom Ford, artistic director of Gucci NV, who exercised 1 million stock options in May 2003, and subsequently sold this million shares on the secondary market (since Gucci NV was a listed company), thus realising a comfortable capital gain of Euros 25 million.

                  Other less bombastic ways to find out about the content of highly confidential fashion brand/artistic director contracts, are when the parties go to court because of alleged breaches of such contracts. Fashion maverick Hedi Slimane filed a lawsuit, and won, against Kering‘s Saint Laurent, claiming that parent company Kering owed him an additional sum of about Euros 10 million in consideration of the minority stake agreed upon in the contract. The French court found that Saint Laurent’s ex-creative directorwas underpaid by as much as Euros 9.3 million after taxes for his last year of service”, bringing his annual salary – including his ownership share – to more than Euros 10 million. It was revealed, via the court ruling, that during his tenure at Saint Laurent, Slimane had a contractual clause that ‟guaranteed an after-tax compensation of at least Euros 10 million per year”, mainly through an agreement to buy shares in the company, and then resell them at a higher price.

                  A new way to incentivise creative directors, experimented on by LVMH at Louis Vuitton, is by offering flexibility in terms of schedule and time commitments. Indeed, Pharrell Williams has been appointed to succeed Virgil Abloh as Louis Vuitton’s artistic director for menswear, signing a contract with very particular conditions that allow the rapper to keep running his own companies (Joopiter and Humanrace) as well as honouring his community commitments (Black Ambition and Team Yellow). The contract signed provides that the artist will devote a third of his working time to his role at Louis Vuitton.

                  However, all this goodness comes at a hefty price, first in terms of non-competition clauses always built into the contract entered into between the luxury brand and the artistic designer. Via these non-compete covenants, the art director promises that, upon their separation from the brand (whether by termination, voluntary resignation or otherwise), they will not compete with their former brand for a certain period of time and/or within a particular geographic area. Raf Simons, for example, had to serve a nine-month non-compete period before completing his transition from the creative director role of Christian Dior to US high-end brand Calvin Klein in 2016, due to a strict non-competition undertaking with Christian Dior. One year seems to be the approximate length of time chosen by most esteemed European brands to appoint a new creative director: Nicolas Ghesquière took up his position as women’s creative director at Louis Vuitton on 4 November 2013, exactly one year and one day after leaving Kering’s Balenciaga, while Ricardo Tisci waited just over a year to join Burberry as art director in March 2018, after leaving LVMH’s Givenchy in February 2017. Sometimes, things can get a little bit out of end, when the creative director, although bound by a non-competition covenant, terminates their current employment agreement with their luxury brand. That is exactly what happened in 2013, when Nicolas Ghesquière and Balenciaga separated, before the new contract between them was finalised. This matter went to court, and, through French court documents, it was revealed that the brand paid Nicolas Ghesquiere ‟Euros 6.6. million as compensation for breaking his last work contracts signed in 2010 and 2012”. Nicolas Ghesquière also walked away with Euros 32 million for the purchase of his 10 percent stake in the company, granted to him when the Gucci Group bought Balenciaga in 2001.

                  Another important undertaking that creative directors give to their fashion brands is that they permanently assign their rights to the production and associated intellectual property rights, to their brand. This is not an automatic transfer of right, underpinning any relationship between freelancers and their clients, though (in fact, the default regime, in both France and the UK, is that the freelancer keeps his/her intellectual property rights in the works created for the client). Therefore, the contracts between art directors and luxury brands always provide for the assignment of all rights to the production and intellectual property rights, from the designer, to the luxury ‟maison”. Even then, things do not always go smoothly, as evidenced by yet another legal battle between Hedi Slimane and Kering’s Saint Laurent: the parties clashed over the rights to the photographs in Saint Laurent’s online archive, many of which had been taken by Hedi Slimane. Hence, the large-scale deletion of the content of Saint Laurent’s instagram account after Hedi Slimane’s successor, Anthony Vaccarello, was announced. And Hedi Slimane was awarded Euros 618,000 after a Paris court ruled parent company Kering unlawfully used his Saint Laurent photographs without consent (or appropriate contractual arrangements to this effect).

                  Finally, last but not least: like in the Hollywood old star system, luxury houses now include moral clauses and reputational clauses in their agreements with their creative directors, in a similar manner that they would do with their celebrities brand ambassadors. Adidas learned the lesson the hard way, after it decided to unilaterally terminate its relationship with troubled, yet supra-bankable, rapper and Yeezy creative director Kanye West, losing up to Euros 250 million to its net income in 2022, as a result of this decision.

                  So, we wish good luck to Pharrell Williams at Louis Vuitton: while him and his handlers definitely seem to have struck a sweet deal from LVMH’s Bernard Arnault, something tells me that he will sweat blood soon, in order to fulfil the high expectations of ‟Monsieur Arnault”. And, Pharrell, don’t forget: always have your models carry bags on the catwalk, as Marc Jacobs learned the hard way, from ‟Monsieur Arnault”, when he, too, was creative director of Louis Vuitton!

                  Crefovi’s live webinar: Pharrell Williams & Louis Vuitton – era of celebrities as creative directors – 31 March 2023

                  Crefovi regularly updates its social media channels, such as LinkedinTwitterInstagramYouTube and Facebook. Check our latest news there!

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                    AI & copyright protection: lawmakers must swiftly adapt to save their creative industries

                    Crefovi : 21/03/2023 10:41 am : Antitrust & competition, Art law, Articles, Copyright litigation, Entertainment & media, Gaming, Information technology - hardware, software & services, Intellectual property & IP litigation, Internet & digital media, Life sciences, Litigation & dispute resolution, Music law, Sports & esports, Webcasts & Podcasts

                    Artificial intelligence (‟AI”) technologies, which developed exponentially in the last 5 years, are here to stay and thrive. Most legal frameworks, in particular the French and US ones, are not ready for these technological advances. Indeed, most courts still refuse to grant copyright protection and ownership, to AI-generated works, worldwide. This situation is not sustainable, as AI-generating tools and platforms will replace traditional methods of generating content, in a very short timeframe. Legal frameworks must therefore adapt and yield, in order to ensure that their national creative industries remain competitive and at the top of the class. How can this be achieved?

                    1. The AI revolution: making AI the new normal

                    1.1. AI technological advances

                    AI technologies have exponentially developed, in 2022, making it possible to generate various creative outputs, in the literary field, music sector, art and illustration sectors, the film industry, the graphic novels’ sphere and the video gaming industry.

                    For example, ChatGPT is a language model developed by OpenAI, a research organisation that specialises in developing cutting-edge AI technologies, founded in 2015. ChatGPT is based on the Generative Pre-trained Transformer (‟GPT”) architecture. Its self-described purpose is to ‟provide conversational assistance and answer a wide range of questions on various topics, from factual information to subjective opinions and advice”. It can be used as a powerful research tool, writing extremely coherent and detailed research reports, which may then be inserted verbatim in any article, research paper or blog.

                    AI writing tools have become commonplace, and now assist humans in a variety of ways, in order to write better emails, blogs, articles and novels, to curate email newsletter content, to generate ready-to-write SEO outlines, to generate articles that are SEO friendly, etc.

                    In the graphic design sphere, AI tools can produce outstanding illustrations and drawings just by merely giving written instructions to AI tools such as Dall-E 2 (also created by OpenAI), Midjourney, and The results are outstanding, as Midjourney’s community showcase demonstrates.

                    These illustrations and drawings can, in turn, be used to create graphic novels, such as ‟Zarya of the Dawn” by Kristina Kashtanova (generated with Midjourney), video games, magazines’ covers, such as The Economist’s cover and Cosmopolitan’s cover for its AI issue, or films, such as ‟The Crow”, a short film generated with OpenAI’s CLIP, and which won the 2022 Jury Award at the Cannes Short Film Festival!

                    In the music field, AI-generated music is become more prevalent, with AI music composition tools such as MusicLM, a model generating high-fidelity music from text descriptions from Google Research lab, Riffusion, an AI that composes music by visualizing it, Dance Diffusion, Google’s previous project AudioLM and OpenAI’s Jukebox. Soundful, a human aided AI music platform, aims at fulfilling the demand for music within the creator community and content-creator economy. At the click of a few buttons, you can have the tune you need for your project.

                    1.2. Who are the main players in the AI field?

                    As mentioned above, OpenAI, is at the forefront of AI innovation, with multiple AI tools created to be exploited on various creative medium such as:

                    • the spoken word, via ChatGPT;

                    • films, with CLIP;

                    • illustrations, via Dall-E 2, and

                    • music with Jukebox.

                    OpenAI was founded in 2015 by a group of prominent tech industry figures, including Elon Musk, Sam Altman, Reid Hoffman, Ilya Sutskever, Peter Thiel, John Schulman, and Wojciech Zaremba. It is an American AI research laboratory consisting of the non-profit OpenAI Incorporated (OpenAI Inc.) and its for-profit subsidiary corporation OpenAI Limited Partnership (OpenAI LP). The goal of OpenAI is to create safe and beneficial AI ‟that can help to address some of the world’s most pressing challenges” (sic). OpenAI is an independent organization, and its research is funded by a mix of philanthropic contributions, corporate partnerships, and government grants. The organization is ‟dedicated to advancing AI technology while also promoting transparency, collaboration, and ethical considerations in the development and deployment of AI”.

                    In 2023, OpenAI announced a partnership with Microsoft. On 23 January 2023, Microsoft announced a new multi-year, multi-billion dollar (reported to be USD10 billion) investment in OpenAI. Then, on 7 February 2023, Microsoft announced that it is building AI technology based on the same foundation as ChatGPT into its web search engine Bing, its web browser Edge, its productivity software Microsoft 365 and other products.

                    Google is also prominent in the AI-tools’ manufacturing sector, in particular with its above-mentioned music-generating AI tools, MusicLM and AudioLM. On 6 February 2023, Google announced an AI application similar to ChatGPT (Bard, a conversational AI chatbot powered by Google’s Language Model for Dialogue Applications), after ChatGPT was launched, fearing that ChatGPT could threaten Google’s place as a go-to source for information. Google also launched Imagen, a ‟text-to-image diffusion model with an unprecedented degree of photorealism and a deep level of language understanding” (sic), to compete with Dall-E.

                    For now, the media’s general impression is that Google fell behind in AI, in particular compared to Microsoft and OpenAI.

                    2. AI’s legal challenges

                    2.1. Do AI users have rights to the outputs?

                    The question of AI authorship is particular important, especially if actors from the content-creator economy embrace it.

                    The first port of call is to review the terms and conditions of the AI-generating tool, in order to clarify who owns what, as far as the AI-generated output is concerned.

                    For example, in order to use OpenAI’s platforms, such as Dall-E 2, Jukebox or ChatGPT, the user must first agree to OpenAI’s terms of use. In the version dated 14 March 2023 of these T&Cs, it is set out that OpenAI assigns to the user all its right, title and interest in and to the output generated and returned by the OpenAI services based on the user’s input. This means the user can use the Content (defined as the input and the output together) for any purpose, including commercial purposes such as sale or publication, if the user complies with OpenAI’s terms. OpenAI may use the Content to provide and maintain its services, comply with applicable law, and enforce its policies. The user is responsible for the Content, including for ensuring that it does not violate any applicable law or OpenAI’s terms of use.

                    This is an improvement on the OpenAI’s terms of use which were in force before 14 March 2023. These terms used to state that users assigned any ownership they had in any output created by the OpenAI’s system and services, and, in turn, the users had an exclusive licence to use the generated output for any purpose. Other AI platforms which can generate output, such as Soundful, still have similar contractual copyright and licensing arrangements.

                    2.2. Who is the author of the AI-generated output?

                    Was it the person who input the text prompt? Was it the AI? Was it the developer of the AI or the company that owns the AI?

                    Most jurisdictions require a human to be the author, and a work is only capable of being protected by copyright if it shows intellectual effort, creativity, and reflects the author’s personality.

                    As AI creative systems become more widespread, can we consider that a text prompt, such as ‟a cat wearing a turban gazing at the city landscape at night, from a window, in the style of Van Gogh”, constitutes enough human input and individuality, and is sufficiently creative and reflective of the human author’s personality to allow the resulting image to be protected by copyright?

                    For example, UK law permits copyright protection of computer-generated works, with the author being the person who made the ‟necessary arrangements” for the creation of the work pursuant to section 9(3) of the Copyright, designs and patents act 1988. Other rare jurisdictions expressly provide for copyright in computer-generated works, such as Hong Kong, India, Ireland, New Zealand and South Africa.

                    However, most countries, such as France, refuse to acknowledge copyright protection if the work is generated by anyone other than a human. Indeed, pursuant to article L. 112-1 of the French intellectual property code, ‟any work of the mind, regardless of its kind, form of expression, merit or purpose”, is eligible for copyright protection. French courts acknowledge the originality of a creation as soon as the said creation is endowed by the personality of their author. While the threshold of the originality requirement is low, the author of a work must be a natural person according to a well-established case-law. It cannot be a legal person, an animal or a software. The rationale behind this position is that French law only protects works of the mind and the creations at issue must bear the imprint of the personality of their author(s); legal persons, animals and AIs neither have a conscience nor have a personality that may come out of the works created by them.

                    Time and time again, the United States Copyright Office (”USCO”) which is in charge of registering works for copyright protection in the USA, refused to grant copyright protection to AI-generated content, such as:

                    • the above-mentioned graphic novel ‟Zarya of the Dawn”, because the images generated by Midjourney, contained within the work, are ‟not original works of authorship protected by copyright” (sic) and since ‟text prompts” are insufficient to qualify as ‟human authorship”.

                    Since copyright protection is automatically granted in France, unlike in the USA where copyright protection is granted solely upon the USCO’s registration, no such case law exists in France or other European countries. We will have to wait a few more years, before copyright infringement litigation, relating to AI-generated content, lands in the European courts’ dockets (with the notable exception of the claim filed by stock image supplier Getty Images, against, for copyright infringement, with the High Court in London, UK).

                    Considering the absence of a work of the mind and the lack of originality of an output resulting exclusively from an AI, such creations are thus today in the public domain and not intellectual property right is attached to them (with the notable exception, above-mentioned, of the regime applicable in the UK, Hong Kong, Ireland, India, New Zealand and South Africa, which permits copyright protection of computer-generated works, with the author being the person who made the ‟necessary arrangements” for the creation of the work).

                    2.3. How can the law adequately address AI, in order to make it beneficial for the creative industries?

                    In France, the ‟Conseil Supérieur de la Propriété Littéraire et Artistique”, an independent advisory body advising the French ministry of culture and communication in the field of literary and artistic property, provided recommendations in a report dated 27 january 2020. It suggests that a ‟sui generis” right could be created to the benefit of the one bearing the risks of the investment, like the specific regime benefiting to database producers.

                    The European Parliament, from the European Union (‟EU”) also suggested that a legal personality be acknowledged to IA, so that copyright protection be granted to AI-generated works.

                    For the time being, none of the above recommendations have been taken up by the French and/or European legislators.

                    The European Commission (‟EC”) has proposed a four-step test in order to assess whether AI-generated output can qualify as protected work under the current EU copyright framework, as follows:

                    • step one: the AI-generated output must be a production in the literary, scientific or artistic domain (article 2(1) of the Berne Convention for the Protection of Literary and Artistic Works);

                    • step two: the AI-generated output must be the result of human intellectual effort (i.e. some sort of human intervention such as, for example, development of software, editing or gathering or choice of training data);

                    • step three: the AI-generated output must be original, and

                    • step four: the work needs to be identifiable with sufficient precision and objectivity (i.e. the generated output will fall within the creator’s general authorial intent).

                    It is blatant that the current disparities in the various legal systems and frameworks, where one set of national legal frameworks strongly pushes back against granting copyright protection to AI-generated content, while the other set of national legal frameworks fully embraces AI-generated content and grants it full copyright protection, will create substantial inequalities of treatment for content creators worldwide.

                    Indeed, content creators based in the UK or Ireland or India are incentivised to speed up their work flow, by fully embracing time-saving AI-generator tools and programmes, the output of which these creators will be able to claim copyright ownership and protection on. Meanwhile, creatives based in France or the USA will seriously struggle to enforce any type of copyright protection and rights over AI-generated content. Therefore, French and US content creators will prefer to stick to the ‟old methods” of work creation, refusing to use AI platforms which output will automatically fall into the public domain.

                    This situation cannot perdure, and since AI is here to stay – big time – stubborn law makers and enforcers, such as the USCO which recently issued some narrow-minded guidance on copyright registrations involving AI, will inevitably have to yield and reform, in order to grant copyright protection to AI-generated works.

                    Of course, lobbies and organisations representing music and other creative disciplines will try to delay the inevitable, by setting up mindless campaigns and lobbying plots, such as the ‟Human Artistry Campaign”, to prevent copyright offices and courts from finding that AI-generated works are protected by copyright.

                    But the floodgates are now open. And there is no way back: the technological advances and jumps that AI-generating tools and platforms provide are so important and ground-breaking, that the creative content economy and stakeholders at large will fully embrace them in the next few months, never looking back.

                    Lawmakers must adapt fast, in order to keep their creative economies and actors at the forefront of competition.

                    Crefovi’s live webinar: AI & copyright protection – lawmakers to adapt to save creative industries – 24 March 2023

                    Crefovi regularly updates its social media channels, such as LinkedinTwitterInstagramYouTube and Facebook. Check our latest news there!

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