European law

Competition law: leniency noticeThe European Commission found that Scandinavian Airlines System (SAS) and Maersk Air A/S had infringed article 81 EC - and the corresponding article of the European Economic Area Agreement, article 53 - by an overall market-sharing agreement and by specific market-sharing agreements (Case COMP.D.2 37.444 - SAS Maersk Air and Case COMP.D.2 37.386 - Sun-Air v SAS and Maersk Air, OJ L265, 5 October 2001, 15 to 41).In mitigation of the penalty, SAS and Maersk Air pleaded co-operation with the commission from the start of on-site inspections and drew attention to the provisions of the leniency notice (see OJ C207, 18 July 1996, 4) under which an enterprise might benefit from a reduction of at least 75% of a fine (section B of the notice) if certain conditions were met, for instance provision of all relevant evidence.

However, the commission ruled that the conditions in section B were cumulative and not alternatives and, as the parties had not satisfied all conditions, they could not benefit from section B.However, the parties were able to take advantage of section D(2) of the leniency notice as they had, after receipt of the statement of objections, informed the commission that they did not substantially contest the facts; Maersk Air also provided the commission with access to a former employee who had played a key role in the negotiations.

In accordance with section D(2), the commission reduced the amount of the penalty to be imposed on Maersk Air by 25% and that on SAS by 10%.

The final penalties imposed were 39.4 million on SAS and 13.1 million on Maersk Air (approximately, 24.4 million and 8.1 million respectively).CopyrightThe European Parliament and the Council have adopted Directive 2001/84/EC on the resale right of the author of an original work of art (OJ L272, 13 October 2001, 32 to 36).

It will apply to all original works of art (see below), which on 1 January 2006 are protected by national copyright laws or which satisfy the criteria for protection under the directive at that date (article 10).

The resale right is the right to receive a royalty based on the sale price of a work on any resale subsequent to the first transfer of the work by the author.

The right will be inalienable and incapable of waiver.

It will apply to all acts of resale involving (in whatever capacity) art market professionals, for example, salesrooms, art galleries, dealers, but may be made subject to a national derogation where the seller has acquired the work directly from the author less than three years previously if the resale price does not exceed 10,000 (about 6,250).The royalty will be payable by the seller; national law may provide - in the case of salesrooms, art galleries and dealers - for an entity other than the seller alone to be liable to make payment, or for such entity to share liability with the seller (article 1).

The term 'original work of art' is defined as works of graphic or plastic art, for example, pictures, collages, paintings, drawings, engravings, prints, lithographs, sculptures, tapestries, ceramics, glassware and photographs, which are made by the artist himself or are copies made in limited quantities by, or with the authority of, the artist (normally, these will be numbered, signed or authorised by the artist) (article 2).Member states will be able to set a threshold above which royalties will become payable; the threshold may not exceed 3,000 (1,875) (article 3).The rates of royalty will taper by reference to the resale price; on the first 50,000 (31,250) the rate will be 4% (member states may impose a national rate of 5%); on the portion of the resale price between 50,000.01 and 200,000 (125,000) it will be 3%; on the portion of the resale price between 200,000.01 and 350,000 (218,700) it will be 1%; on the portion of the resale price between 350,000.01 and 500,000 (312,400) it will be 0.5%; and on the portion of the resale price exceeding 500,000 it will be 0.25%.

Where a member state sets a threshold below 3,000, it may determine the rate for such sales (not less than 4%).

The total royalty may not exceed 12,500 (7,810) (article 4).The threshold and the rates of royalty will be kept under review by the commission (article 11).

The sale prices calculated under articles 3 and 4 will be net of tax (article 5).The royalties will be payable to the author of the work and, after his death, to his successors (article 6(1)); but member states which do not on 13 October 2001 have a resale right will not be required to provide for a right of succession in respect of the resale right until 1 January 2010, and this derogation may extend for a further two years (see article 8(2) and (3)).

National law may provide for the collective management of royalties, either compulsorily or on an optional basis (article 6(2)).

National law may also provide for resale rights on a reciprocal basis for nationals of third countries and for treating habitually resident authors in the same way as a country's own nationals (article 7).

National law will provide for the person entitled to royalties to obtain the necessary information from any art market professional for three years after any resale (article 9).The term of protection of the resale right will be the term laid down in article 1 of Directive 93/98/EEC ([1994] Gazette, 18 May, 37) on the harmonisation of the term of protection of copyright and certain related rights, namely (at present) 70 years (article 8(1)).

The directive entered into force on 13 October 2001 (article 13) and must be implemented by national provisions before1 January 2006 (article 12).By Paul Niekirk, barrister