New rules for determining private copying levies

In Hungary, collective management organizations (CMOs) shall submit for approval the proposed tariffs for royalties, including private copying levies, to the Hungarian IP Office no later than 1 September each year. These tariffs will be applicable for the next calendar year. Beginning this year, the proposed private copying tariff shall also be submitted for approval to the Hungarian Competition Office (HCO) as well no later than 30 September.

To determine private copying levies for the relevant year, CMOs shall conduct a representative survey on the volume of private copying taking place in Hungary. Before conducting these surveys, significant users (i.e. producers or distributors of devices storing copyright protected material) and user representative associations can express their opinions on survey methodology. These significant users, user representative associations can also express their opinion to the Hungarian IP Office about the proposed tariff at a later stage as well.

This year the HCO made a significant decision after investigating whether CMOs abused their dominant position. The HCO concluded that the methodology used by CMOs for determining private copying levies between 2007 and 2017 did not meet competition law requirements. As a result, they prescribed the following:
  • CMOs shall prepare a new type of representative survey that would reflect real content consumption habits (the survey used in the past years was not suitable);
  • CMOs shall prepare an economic analysis to elaborate the results of the survey and to support the extent of private copying levies;
  • the survey shall take into consideration changing content consumption habits, and shall include detailed questions on new technologies, such as streaming and cloud storing (for which no private copying levy is payable);
  • the questions of the survey shall make distinctions between audio- and audio-visual content usage habits;
  • new devices shall be incorporated into the tariff, and out-of-date ones should be removed if the results of the survey confirms that such devices are significantly used or no longer used for private copying functions.
After the above HCO decisions, this year there is a wider room for users and user representative associations to effectively influence the private copying levies payable in the upcoming years (e.g. by expressing their opinion about survey questions, and by presenting arguments on the real content consumption habits). We encourage all market players affected by private copying levies to join the conversation about the 2018 tariff.