would involve the sharing of information between the retailers studied. The researchers would have to have
access to the cash register outputs over a period of time of all the stores in the study. They would have to
share this confidential information. The reluctance of businesses to reveal their cost structures to their
competitors was a very sound principle of business, and a reason why this research had not been done. He
agreed that such a study would be prohibitively expensive and that it had not been done anywhere to his
knowledge. It would cost millions of rands and take a couple of years to complete. Although this research
would have been the first choice for a systematic analysis of optimal tariffs, it would require a retailer to
release private information and no retailer anywhere in the world would be prepared to do that.
Page 53 of [2016] 2 All SA 40 (SCA)
[36] It is against this evidence that SAMPRA's submission that the retailers were obliged to lead evidence to prove
the rand value they derive from the use of sound recordings, and that this is disproportionately lower than
the proposed tariff of SAMPRA, has to be assessed. It will be recalled that a further submission by SAMPRA in
this regard is that in the absence of this evidence, there is insufficient evidence available to this Court to
make its own determination of the reasonableness of the tariff. The consequence, according to SAMPRA, is
that unless this Court upholds the tariff set by SAMPRA the only option is to remit the matter to the tribunal.
As pointed out, it is in this context that SAMPRA adds that it is unwilling to lend its consent to this Court
substituting its own determination in the place of the tribunal's tariff, in the name of expediency.
[37] SAMPRA submits that the unwillingness of the retailers to make confidential information available could be
addressed by appropriate orders of confidentiality. The problem, however, with SAMPRA's insistence upon
proof of the rand value to retailers of playing music in their stores, lies not only in the issue of confidentiality.
The evidence is that this study would be prohibitively expensive and impractical as it would take too long to
complete. In addition, it cannot be said that any conclusion reached could be applied to all of the retailers. In
my view, it was accordingly not necessary for the retailers to lead evidence of the rand value to them of
playing music in their stores, in order for the tribunal to be satisfied that their claim was well founded. There
is, accordingly, no justification for a referral to the tribunal for this purpose.
[38] I turn to consider whether sufficient evidence was placed before the tribunal for it to be satisfied that the
claim by the retailers was well founded in that the tariff proposed by SAMPRA was unreasonable. The
evidence of Prof Ross and Prof Areni described three possible methods which could be utilised to determine
the tariff. The first method dealt with above was the determination of the rand value to the retailers of playing
music in their stores. The remaining two methods were the "marketbased solution" proposed by Prof Areni
and the use of tariff levels in foreign jurisdictions as a benchmark, proposed by Prof Ross.
[39] Prof Areni stated that in the absence of agreement between the user and copyright owner, the operation of
market forces should be left to determine the tariff. The appropriate criterion was that the tariff should
maximise SAMPRA's revenue and market forces would constantly move towards where the optimum tariff rate
should be. This would mean that there would be no need for intervention by the tribunal. However, he
accepted that the tribunal must act in the public welfare and set a tariff that accords with public welfare. He
conceded in crossexamination that he was not aware of the legal framework in which the tribunal operated,
which directed the tribunal to determine the tariff. This accordingly precluded market forces being left to
decide whether the tariff was too high or too low. In the result, there is no basis for Prof Areni's view that
market forces should be left to determine the tariff.
[40] I turn to the issue of the use of tariff levels in foreign jurisdictions as a benchmark to establish the tariff. Mr
Lister disagreed that tariff levels in foreign jurisdictions could serve as a basis for determining a reasonable
Page 54 of [2016] 2 All SA 40 (SCA)
tariff. The role of foreign tariffs was simply a point of reference, once it had been decided what a reasonable
tariff would approximately be. Mr Smit, the national sales manager for SAMPRA, stated that his first role when
he joined SAMPRA was to gather information in order to establish tariffs for SAMPRA. He looked at the tariffs of
collecting societies in other countries, which he used as a guide to establish the tariffs in 32 different
categories for SAMPRA. When crossexamined he said that in setting the tariff for retailers he looked at the
tariff set in the United Kingdom by Phonographic Performance Ltd ("PPL") and the tariff of the Phonographic
Performance Company of Australia ("PPCA") in Australia, as well as the tariff of the South African Music Rights
Organisation ("SAMRO"), which administers the performance rights of composers and lyricists. Consequently,
the two currencies he looked at were the UK pound sterling and the Australian dollar. He was told by Mr David
du Plessis to examine these two tariffs because PPL was the oldest society and the trading conditions in the
United Kingdom and Australia were similar to South Africa. Mr Du Plessis confirmed that what was presented
to Mr Lister to determine the tariff was the Australian and UK tariff levels together with the SAMRO tariff
levels. The evidence of how SAMPRA went about determining the tariff accordingly does not support the
assertion made by SAMPRA, that to use any form of benchmarking to determine the tariff would be both
unreasonable and arbitrary.
[41] Prof Ross stated that in the absence of research to establish the rand value to retailers of playing copyright
protected music in their stores, the only practical recourse in order to avoid economic arbitrariness was for the
tribunal to have regard to comparable tariffs in other countries. Prof Areni stated that although he was not
qualified to comment on Prof Ross' testimony that it was standard practice, when regulating the price in
regulated markets around the world to do benchmarking exercises, he agreed that this was fair. He conceded
that reference to international benchmarks was a relevant input in setting tariffs, but should not solely be
relied upon.
[42] In the light of the evidence that SAMPRA paid regard to international benchmarks in setting the tariff, as well
as the above concession by Prof Areni, the view of Prof Ross that international benchmarking is a method of