Philharmonie: The Luxembourg Competition Authority closes with a non-infringement decision an investigation into allegedly abusive conducts in the markets for the organization of concerts and management of concert halls

By a decision made on 22 May 2015 the Luxembourg Competition Authority (LCA) has aquitted Philharmonie of allegations that would have abused its dominant position in the markets for the organization of concerts and management of concert halls (Case n. 2015-RP-02, Philharmonie, http://www.concurrence.public.lu/fr/decisions/abus-de-position-dominante/2015/decision-2015-rp-02/Decision-n_-2015-RP-02-du-22-5-2015.pdf). The Act of 16 December 2011 entrusted the Philharmonie, a public entity, with the following tasks: i) to manage the concert halls assigned to it by the state; ii) to organize cultural events, and iii) to promote the Luxembourg Philarmonic Orchestra.

It was alleged that Philharmonie, by acting in the same time as manager of the concert halls assigned to it and as organizer of concerts at such premises, would have an unfair competitive advantage over the other organizers of cultural events. As a result, Philharmonie might abuse of this advantage by refusing to give competitors access to its facilities on fair conditions.

The LCA decided to launch an investigation against Philharmonie on the basis of Article 5 of the Luxembourg Competition Act corresponding to Article 102 TFEU. The first issue dealt with by the LCA was to establish whether the activities of Philharmonie fell within the scope of application of competition law as being economic in nature. Philharmonie contended that this was not the case, because the revenues generated by the sales of the tickets for classic music concerts did not cover the expenses incurred in the organization of such events. The LCA replied that the losses incurred in carrying out a given activity was not a relevant factor to rule out that that activity was economic. On the other hand, the economic nature of the management of concert halls was not disputed.

Then, the LCA went on by defining the relevant product markets affected by the allegedly abusive activities of Philharmonie following the European Commission's Guidelines on the definition of relevant markets. First, the LCA focused on the market for the organization of music concerts. Taking into account supply-side substitutability considerations, it held that the market for the organization of classic acoustic music concerts was a separate market from that for the organization of amplified music concert. Then, the LCA further divided the market for the organization of classic acoustic music concerts depending on the places in which the concerts took place. Accordingly, it identified the market segment for the organization of classic acoustic music concerts to be held in halls built to host symphonic music events and the market segment for the organization of classic acoustic music events to be held in other spaces. According to the LCA there was no substitutability between these two categories of music events. Philharmonie was found to have a natural monopoly in the first market segment because it was the manager of the Grand Auditorium de la Philharmonie. This was the only facility in Luxembourg specifically destined to symphonic music events. Correctly, the LCA reached the conclusion that Philharmonie enjoyed a dominant position in this market segment. However, the results of the investigation did noy show that Philharmonie abused the dominant position it had in this market segment. Instead, the LCA ruled out that Philharmonie did have a dominant position in the second market segment, where there existed many competitors, and in the distinct market for amplified music concerts of which Philharmonie had only a small share.

Finally, the LCA examined the market for the management of concert halls. It pointed out that concert halls can be divided into different categories according to their capacity and facilities. The concert halls managed by Philharmonie, the Grand Auditorium de la Philharmonie and Rockhal fell the group of concert halls with mid-capacity. Though the Grand Auditorium de la Philharmonie and Rockhal enjoyed a strong reputation with consumers, the LCA considered that many alternative mid-capacity halls were available which hosted several music events. For this reason the LCA did not found that Philharmonie had a dominant position in the market for the management of concert halls and acquitted it of all allegations of infringement of Article 5 of the Luxembourg Competition Act.

In conclusion, Philharmonie confirms that also public entities may be subject to EU or Luxembourg competition law, as made it clear by the LCA in PompesFunèbres. In addition in Philharmonie the LCA has set the boundaries of the markets for musical events on the basis of musical genre and theatres. Its distinction between markets for classic acoustic music and for amplified music echoed, to some extent, the distinction drew by the European Commission in the context of merger control between pop and classic music (Case IV/M.202, Thorn EMI/Virgin; Case IV/M.1219, Seagram/Polygram). However, unlike the LCA, in thise merger control cases the Commission left the precise of the relevant product markets open.