The Spanish competition authority CNMC has fined collecting society SGAE €6.4 million (USD $6.9 million at current exchange rates) for anti-competitive practices in its licensing deals with radio and TV stations.
The issue lies in SGAE’s use of flat-rate licensing fees for the use of its musical and audiovisual repertoire. The CNMC said in a press release last week (June 26) that SGAE designed its rates in a way that forced most radio and television operators to accept an “averaged availability rate.”
The use of flat rates, according to the CNMC, prevents operators from getting a rate based on their actual use of music and limits their incentive to consider SGAE’s competitors. If a broadcaster signs a deal with a competing licensing organization, and uses that competing group’s music, it will still have to pay the same amount to SGAE.
The CNMC also sanctioned SGAE for presenting its musical repertoire to users as “universal” and for “offering guarantees of indemnity against possible claims by third parties for the use of rights not belonging to its repertoire.”
The probe into SGAE began following complaints from entities Audiovisual Media Copyright, Management Entity (Dama), and Unison, CNMC said.
“The CNMC again concludes that SGAE distorted competition, preventing or hindering the entry of new players into the downstream licensing market to broadcasting entities, thus incurring two very serious infringements for abuse of dominant position.”
Unison
Unison said it filed a complaint against SGAE in 2016 over what it describes as the “abuse of dominant position” in the collecting society’s use of “flat” or availability fees in the downstream TV and radio broadcasting market, as well as for licensing its repertoire “with a supposedly universal extent.”
“The CNMC again concludes that SGAE distorted competition, preventing or hindering the entry of new players into the downstream licensing market to broadcasting entities, thus incurring two very serious infringements for abuse of dominant position,” Unison said in a separate press release.
In addition to the fine, SGAE has also been ordered to cease its infringing behaviors. The CNMC has also agreed to apply to SGAE the prohibition of contracting with the Public Administration, the duration and scope of which will be determined by Spain’s State Public Procurement Advisory Board.
This is the second time SGAE has been fined by CNMC for hindering competition. In 2019, Unison was instrumental in lobbying the CNMC to fine SGAE €2.95 million for abusing its dominant position in Spain’s music copyright market. That same year, SGAE had been kicked out of CISAC, the International Confederation of Societies of Authors and Composers, following complaints from publishers of ‘discriminatory treatment of rightsholders and unfair practices relating to the distribution of royalties’.
Meanwhile, the latest development comes as the Spanish Supreme Court is currently reviewing another case against SGAE. Unison says it had claimed damages resulting from this complaint, and as of February 16, 2024, the SGAE had been ordered to compensate Unison for the damages caused.
“With this new resolution, the CNMC confirms that SGAE has been abusing its dominant position continuously since 2016, imposing and maintaining significant barriers to entry for new operators. Specifically, the CNMC has confirmed SGAE’s anti-competitive actions in the upstream market during the period 2016-2018 and in the downstream markets from at least 2019 to the present,” Unison said.
Unison, a private musical rights management company based in Barcelona, operates as an independent management entity under the Spanish Intellectual Property Act. As the first private musical rights manager in Spain, Unison said it aims to bring transparency and fairness to the management of authors’ rights.
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