DEPARTMENT OF JUSTICE

                     Antitrust Division



                          ANNE K. BINGAMAN

                          Assistant Attorney General







                                      Main Justice Building

                                      10th & Constitution Ave., NW

   Washington, DC  20530

                                      (202) 514-2401/(202) 616-2645 (f)







                                        July 21, 1995





Bennett M. Lincoff

Director of Legal Affairs

American Society of Composers, Authors & Publishers

One Lincoln Plaza

New York, NY 10023



Marvin L. Berenson

Senior Vice President and General Counsel

Broadcast Music, Inc.

320 West 57th Street

New York, NY 10019



Laurie Hughes

General Counsel

SESAC, Inc.

55 Music Square East

Nashville, TN 37203



Dear Messrs. Lincoff and Berenson and Ms. Hughes:



     This letter responds to your request on behalf of the American Society of

Composers, Authors & Publishers; Broadcast Music, Inc.; and SESAC, Inc. ("the

musical rights societies") for the issuance of a business review letter

pursuant to the Department of Justice's business review procedure, 28 C.F.R. .

50.6.  You have requested a statement of the Antitrust Division's present

enforcement intentions with respect to a series of meetings to be held to

discuss proposed legislation concerning the licensing practices of musical

rights societies.



      In your letter, you indicated that Congressman James Sensenbrenner has

introduced H.R.789, the Fairness in Music Licensing Act of 1995.  Congressman

Carlos J. Moorhead, Chairman of the Courts & Intellectual Property

Subcommittee of the House Judiciary Committee, has requested that the

interested parties meet and discuss the legislation.  As a result of that

invitation, the musical rights societies intend jointly to take certain

action.

  

     In your business review request, you indicate that it is contemplated

that the musical rights societies may engage in some or all of the following

activities:

  

       (1)     jointly discussing, proposing, supporting, opposing, altering,

or amending legislation and/or amendments to that legislation;

 

       (2)     jointly discussing, agreeing and carrying out activities to

inform Congress of their views with respect to legislation, or amendments to

legislation;

 

       (3)     jointly lobbying Congress with the intent of influencing

Congressional activities; and

 

       (4)     jointly submitting views on matters relevant to the proposed

legislation in response to inquiries from Congress.



     In addition, the musical rights societies intend to engage in joint

discussions on various issues surrounding the legislation.  For example, the

musical rights societies indicate that one of the issues that the legislation

addresses is the ability of licensees to get access to the musical rights

societies' respective repertories.  You have represented that the mechanics of

each society's on-line access system, which are being independently designed

and programmed by each society to provide access to repertories, likely will

be a topic of discussion in these meetings.  



     It is the musical rights societies' intention not to engage in any joint

discussions of pricing.  You have represented that at no time will the musical

rights societies raise or respond to any suggestion that they discuss rates or

fees for the licensing of public performance of music.  Among other issues

that might be discussed is the possibility of establishing ad hoc "customer

relations" committees for each musical rights society.

  

     In addition to the joint discussions that will be held, it is possible

that the musical rights societies will reach an agreement with those seeking

the legislation on issues that would solve concerns of those sponsoring this

legislation.  The musical rights societies have represented for the purposes

of seeking a business review letter that they will not enter into any joint

agreement that would have any anticompetitive effect unless that

anticompetitive effect was minimal and was outweighed by economic

efficiencies.



     After careful consideration of the information you have provided, the

Department of Justice has no present intention to challenge the activities

contemplated by the musical rights societies in conjunction with the Fairness

in Musical Licensing Act of 1995.



     Your business review request can be analyzed by independently examining

each of the three types of activities the musical rights societies potentially

will engage in with respect to this legislation.  First, the musical rights

societies intend to engage in joint discussions and reach joint agreements

with respect to the legislative proposal at issue, the Fairness in Musical

Licensing Act of 1995.  Second, the musical rights societies may engage in

joint nonprice discussions on issues raised by the legislation. 

Finally, the musical rights societies may reach joint private marketplace

agreements on issues designed to eliminate the need for any legislation or any

legislative proposal. 



     Your initial interest is with respect to joint discussions, agreements,

or other joint actions with respect to the legislative proposal at issue.  You

indicate that discussions with respect to the legislation are being held at

the specific request of a subcommittee chairman.



     The antitrust laws generally do not prescribe joint activities among

economic rivals conducted for the purpose of petitioning the Government for

legislative action.  See Eastern Railroad Presidents Conference v. Noerr Motor

Freight, Inc., 365 U.S. 127 (1961); United Mine Workers of America v.

Pennington, 381 U.S. 657 (1965).  While there are exceptions to this general

rule, none appear to be involved in the joint discussions and agreements that

would be reached with respect to the legislation that you have addressed in

your letter.  Thus, for example, the Division would not challenge under the

antitrust laws any joint discussions, proposals, support, opposition,

alteration, or amendments to legislation by the musical rights societies. 

Also, we would not challenge joint discussions, agreements or activities to

inform Congress of the musical rights societies' views with respect to

legislation or amendments to legislation.  Finally, we would not challenge the

musical rights societies' joint lobbying of Congress with the intent of

influencing the legislative outcome, nor would we challenge the musical rights

societies' joint submission of views on the legislation, or responses to

inquiries from Congress.  All of these types of conduct would be

protected petitioning activity under the Noerr-Pennington doctrine.



     Second, you have indicated that joint discussions may occur among the

musical rights societies that potentially would go beyond the proposed

legislation and discuss certain industry issues generally.  Much of the

discussions likely would be protected under the Noerr-Pennington doctrine if

done with respect to petitioning the government with respect to the Fairness

in Musical Licensing Act of 1995 or alternative legislation. In any event, the

antitrust laws rarely impose liability for joint discussions.  In order

for a violation of Section 1 of the Sherman Act to exist, there must be a

contract, combination or conspiracy; in other words, there must be an

agreement between two or more persons.  Of course, explicit agreements are not

necessary, an agreement can be shown by circumstantial evidence.  The primary

antitrust concerns arise when competitors engage in joint discussions

regarding prices, market allocation, or service restrictions.  In such

circumstances, the possibility of a tacit agreement or understanding resulting

in harm to competition is heightened.  You have indicated that you are aware

of this antitrust concern and that the musical rights societies will not be

part of any such discussions.  In this context, when you are avoiding pricing

discussions and if you avoid discussions of other competitively sensitive

areas such as market allocation or service restrictions, it is unlikely that

such discussions would violate the antitrust laws.

  

     Finally, you have indicated that in order to resolve matters addressed by

the proposed legislation, you may go beyond discussions and reach joint

agreements among the musical rights societies in lieu of legislation.  Of

course, Noerr-Pennington protections do not extend to such private,

marketplace agreements even if they are prompted by legislative proposals. 

Any such agreements that amount to price-fixing, market allocation, and

service restriction could be per se illegal.  Other agreements typically would

be analyzed pursuant to the rule of reason.  The objective of a rule of

reason analysis is to determine whether competition may be reduced, and, if it

might, whether the agreement is likely to produce procompetitive efficiencies

that outweigh its anticompetitive potential.  You have represented for

purposes of seeking a business review letter that the musical rights societies

do not intend to enter into any joint agreements that would have an

anticompetitive effect unless that anticompetitive effect was minimal and was

outweighed by economic efficiencies.  To the extent that any joint agreements

entered into either do not have an anticompetitive effect, or the

anticompetitive effect is minimal and is outweighed by economic efficiencies,

the rule of reason analysis would result in a conclusion that the antitrust

laws were not violated.



     Based on the information available to us, the Department of Justice has

no present intention to challenge under the antitrust laws the practices,

discussions and agreements referred to in your letter of June 30, 1995. 

Further, we would not intend to challenge under the antitrust laws any

agreements outside the price-fixing, market allocation, and service

restriction areas unless they are likely to result in reductions to

competition that are not outweighed by procompetitive efficiencies.  This

letter expresses the Department's current enforcement intention.  In

accordance with our normal practices, the Department reserves the right to

bring any enforcement action in the future, if the actual operation or any

aspect of your discussions or agreements proves to be anticompetitive in

purpose or effect.



     This statement is made in accordance with the Department's Business

Review Procedure, 28 C.F.R. . 50.6.  Pursuant to its terms, your business

review request and this letter will be made publicly available immediately,

and any supporting data will be made publicly available within 30 days of the

date of this letter, unless you request that part of the material be withheld

in accordance with Paragraph 10(c) of the Business Review Procedure.



Sincerely yours,



                                        /s/

                                   

                                   Anne K. Bingaman

                                   Assistant Attorney General