Tuesday, March 21

Competition opens another file to the SGAE for possible abuse of dominant position

The National Commission of Markets and Competition (CNMC) has opened a sanction file against the SGAE due to two reasons. One is the flat rate agreements, regardless of the repertoire used, that the SGAE signs with the large broadcasting companies. The second is the practice of licensing their repertoire universally. According to Competition, this practice of the authors’ management company would have the “purpose and possible effect of reinforcing the monopolistic position of SGAE and preventing both competition by other management entities and the entry and expansion of new operators in the market.”

This file is opened after complaints from two other rights management companies: DAMA and Unison Rights. Unison has been operating in Spain for more than four years and manages a catalog of more than 600,000 works. For its part, DAMA has been operating since 1999 and is focused on the management of audiovisual and film rights, managing a repertoire of more than 500,000 works.

The CNMC considers that there are “rational indications” of the commission of an infringement of article 2 of Law 15/2007, of July 3, on the Defense of Competition, and of article 102 of the Treaty on the Functioning of the European Union for ” restrictive conduct of competition in the field of management and exploitation of intellectual property rights”. The competition agency will have a maximum period of 18 months to instruct and resolve the file.

It is not the first complaint that the copyright management entity Unison files against the SGAE. In 2019, the CNMC imposed a fine of 2.95 million euros for abuse of a dominant position, after having received complaints in 2017 from Unison and DAMA. The new file derives from the complaints from five years ago, which have been combined into a single file. “We denounce some practices that in our opinion are anti-competitive due to the policy of setting flat rates carried out by the SGAE with radio and television,” explains Jordi Puy, CEO of Unison, to elDiario.es. “As well as the contracts of universality of the repertoire that it signs with the authors and that cannot be like that since there are other entities that also manage rights in Spain,” he adds.

SGAE sources affirm that the entity “is convinced that its rates and licences, which have recently been modified, are in accordance with competition legislation, and it will demonstrate this in the newly initiated file.” “In this sense, we remember that, as the CNMC itself says, the initiation of this file does not prejudge the final result of the investigation,” they add.

A previous file

In 2017, the CNMC considered that the SGAE was abusing its monopolistic position and a greater share in the copyright management market by imposing statutory and contractual conditions on its partners that “unjustifiably” restrict the freedom of authors to decide whether to attribute or partially withdraw the management of their rights. In other words, an author can register a work with one entity and another different work with another entity. When an aturo signs a contract with DGAE, he is obliged to grant him the management of all his rights.

In that same file, Competition already warned that there was abuse when the SGAE makes a joint sale (“bundling”) of reproduction and public communication authorizations for restaurants and hotels of the intellectual property rights it manages. And he pointed out the absence of a tariff breakdown between the audiovisual and musical repertoire. In the absence of this breakdown, the businesses that pay the SGAE for the public communication of their repertoire, generally through musical threads or other reproduction devices, cannot know the real costs and therefore compare with other possible offers from the competition. These authorization packages also force the companies that want to hire them to pay for audiovisual rights when they only want to use music.

“We have been denouncing it for years and we are pleased that another file is opened, since this alleged abuse of domain supposes a blockage of the market for the entry of new operators, us or others”, Puy values.