Potential Legal Issues in Terminating the ASCAP and BMI Decrees

30 Pages Posted: 15 Aug 2018

See all articles by Allen P. Grunes

Allen P. Grunes

The Konkurrenz Group

Maurice E. Stucke

The Konkurrenz Group; University of Tennessee College of Law

Date Written: July 31, 2018

Abstract

This paper addresses some of the likely challenges that the DOJ would face should it seek to terminate the ASCAP and BMI consent decrees.

In Part I, we provide some background on ASCAP and BMI, the consent decrees, and market structure. In Part II, we discuss how these two decrees have become an important part of the legal scaffolding for licensing music over the past 70 years.

Given the important role the decrees have played in mitigating the antitrust risks from ASCAP and BMI while promoting the efficiencies from collective licensing, Part III examines the legal standard the federal court would likely apply in determining whether to terminate the decrees. One problem is that if the ASCAP and BMI consent decrees were terminated, the duopoly would remain, and licensees and consumers would bear the risk of unduly restrictive anticompetitive practices. A second problem is the difficulties the DOJ would likely face in convincing the court that terminating the decrees would benefit the public, given that it reached the opposite conclusion a couple of years ago. Moreover, the concerns the DOJ heard during its review process from licensees, such as Netflix, Pandora, and religious broadcasters, would undercut the argument that the public would somehow benefit from the decrees’ termination.

Part IV examines the interplay between competition and regulation. One assumption is that an antitrust agency’s mission to promote competition is in tension with prescriptive government regulation. This is certainly true at times. But at other times, particularly in markets with high transaction costs and dominant players, regulation may be needed to promote competition. So this Part explores how behavioral regulatory decrees, like ones in ASCAP, BMI, and other notable antitrust cases, can actually promote, rather than undermine, competition.

If terminating the decrees will harm, rather than help, competition and consumers, what are the alternatives? Part V offers three potential paths going forward.

Keywords: Antitrust, ASCAP, BMI

JEL Classification: K21

Suggested Citation

Grunes, Allen P. and Stucke, Maurice E., Potential Legal Issues in Terminating the ASCAP and BMI Decrees (July 31, 2018). Available at SSRN: https://ssrn.com/abstract=3224545 or http://dx.doi.org/10.2139/ssrn.3224545

Allen P. Grunes

The Konkurrenz Group ( email )

5335 Wisconsin Ave., NW
Suite 440
Washington, DC 20015
United States
202-644-9760 (Phone)

Maurice E. Stucke (Contact Author)

The Konkurrenz Group ( email )

5335 Wisconsin Ave., NW
Suite 440
Washington, DC 20015
United States

University of Tennessee College of Law ( email )

1505 W. Cumberland Ave.
Knoxville, TN 37996
United States
865-974-9816 (Phone)

HOME PAGE: http://law.utk.edu/people/maurice-stucke/

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