Spanish Competition Watchdog Fines SGAE $6.8 Million — Collecting Society Preps Appeal Over ‘Clearly Flawed’ Findings

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The Madrid headquarters of the National Commission on Markets and Competition (CNMC), which has slapped SGAE with a multimillion-dollar fine. Photo Credit: Luis García

Back in March, Barcelona-based Unison disclosed plans to pursue damages following a “milestone” legal victory over Madrid’s Spanish Society of Authors and Publishers (SGAE). Now, Spain’s main competition watchdog has handed down a multimillion-dollar penalty.

That’s according to Unison itself, which reached out with word of the decision, and the official findings of the European nation’s National Commission on Markets and Competition (CNMC). The latter’s order for SGAE to pay close to $6.85 million (€6.39 million) resulted from an investigation set in motion by a complaint from Unison.

As we previously reported, the self-described “private musical rights management company with an international approach” Unison has levied multiple complaints against SGAE over the years. (Spain’s Supreme Court is currently reviewing some of the claims.)

And in the interest of brevity, the complaint associated with today’s penalty accused the CMO of abusing its market position and inhibiting competition. The CNMC kicked off a related investigation in January of 2022, this past March brought the initially mentioned preliminary ruling, and June 19th, Unison announced today, delivered the formal penalty order.

Digging into the above-highlighted Spanish-language watchdog decision, which seemingly leaves no stone unturned across its astonishing 291 pages, one infraction will set SGAE back $4.23 million (€3,954,364). That’s for the main alleged abuse of market position concerning radio and television rate structures as well as repertoire representations, per Google’s translation.

Meanwhile, the CNMC instituted a second, smaller penalty of $2.61 million (€2,433,455) for an alleged “abuse of a dominant position due to the design and application of tariffs” on the television side.

On top of the €6.39 million in fines, the government agency ordered SGAE to cease the conduct in question and, this time as described by Unison’s English-language summary as opposed to the multifaceted order itself, cease contracting with Spain’s Public Administration for a to-be-determined period.

DMN reached out to SGAE (which, incidentally, isn’t a stranger to regulatory fines) for comment, and the collecting society pushed back against the “clearly flawed” findings with a detail-oriented explanation while also pledging to pursue a National High Court appeal.

Here’s SGAE’s full response to the CNMC’s findings and penalty.

With respect to the recent Decision of the Spanish Competition authority (CNMC) which accuses SGAE of conducts allegedly constituting abuse of a dominant position, based on the structure and design of SGAE’s broadcasting tariffs for musical and audiovisual works, and for presenting SGAE’s repertoire as universal, SGAE would like to make the following observations.

Both findings are, in SGAE’s view, clearly flawed.

SGAE’s tariffs offer broadcasters a flat rate/availability tariff and an effective use tariff, as required by the Spanish Copyright Law. This is an obligation applied to all collective management societies and which SGAE scrupulously complies with. Furthermore, the availability tariffs are an absolutely common phenomenon in many sectors (for example, telephone or television flat rates, etc.), which tend to favour, cheapen, and simplify users’ and consumers’ use of products or services. For this reason, establishing and applying an availability-based fee cannot be considered to constitute abusive conduct.

The CNMC’s decision ignores or attempts to minimise both the fact that SGAE also offers users an effective use tariff, and, above all, the basic fact that it is the users themselves who opt for one or [the] other type of tariff, based on what they consider to be the most appropriate for their interests.

It is, therefore, radically disingenuous that, as the CNMC states, “all radio operators and the vast majority of television operators have had to use an “averaged availability fee” (comparable to a flat rate) in order to be able to use their repertoire”.  It is the broadcasters themselves who have mostly opted to use the averaged availability fee. However, some operators have opted to use the effective usage tariff, including in particular the Spanish public broadcaster, RTVE – a fact that the CNMC endeavours to minimise – which proves that, contrary to what the CNMC also claims, the effective usage tariff does represent a real alternative to the averaged availability fee. More importantly, both tariffs have been established based on economic studies that have applied consistent criteria, to ensure that both tariffs are consistent and reasonable.

The CNMC’s first accusation is therefore unfounded.

The same applies to the second allegedly abusive practice. SGAE keeps a permanently updated database of the works comprising its repertoire, to which all operators have access. Thus, they are always fully aware of which works form part of SGAE’s repertoire, and which do not.

Given that other collective management societies and other rights management entities have emerged in Spain which can manage the same types and categories of rights, SGAe only offer users the rights that it is entrusted with, and therefore, it is not true that it claims to represent the repertoires of third parties.

It is also important to recall that in December 2023, the National High Court already annulled a previous ruling issued by the CNMC in 2019 for similar grounds (Judgment dated December 19, 2023). Additionally, the CNMC’s latest decision ignores its own legal precedents as it had already validated SGAE’s Broadcasting tariffs in previous cases without raising any competition concerns.

SGAE thus radically disagrees with the CNMC’s decision and is already preparing its appeal with the Audiencia Nacional (National High Court).