Spanish competition regulator CNMC has fined collecting society SGAE €6.5 million after ruling that the way it structures its licences for radio and TV broadcasters in the country breaches competition law.
The regulator says that the Spanish society set up its licensing system so that most broadcasters have to accept a flat rate licence. This means that what they pay SGAE is not “related to the actual use they make of its repertoire, both in terms of the number of works and the intensity of their use”.
That is unfair on the broadcasters, CNMC says, but also makes it difficult for smaller rival societies to get radio and TV companies to the negotiating table. Because if a broadcaster gets a licence from another society and uses music from its repertoire, and therefore less music from the SGAE repertoire, what it has to pay to SGAE stays the same.
This is all super relevant in Spain because there is now a second song rights collecting society in the country, Unison, which competes for songwriter and publisher members. Unison launched in 2017 capitalising on changes in European law that sought to bring about more competition into the collective licensing marketplace across Europe.
At the time SGAE was embroiled in various controversies about the society's governance and, more specifically, how it was distributing broadcast royalties.
This made shifting over to Unison attractive for many Spanish writers and publishers. However, Unison has claimed, SGAE put in place anticompetitive measures to make it unnecessarily difficult for members to move their rights to the new society, and for Unison to negotiate licensing deals with users of its repertoire.
CNMC previously ruled that SGAE’s attempts to make it difficult for members to switch to Unison were indeed anticompetitive, fining the society €2.95 million. Unison also successfully sued for damages in relation to that conduct, a ruling that was upheld on appeal earlier this year.
The separate CNMC investigation into SGAE’s broadcast licensing was launched in 2022. In its findings, the regulator also criticises SGAE for “presenting its musical repertoire to users as universal” and “offering guarantees of indemnity against possible claims from third parties for the use of rights not belonging to its repertoire”. Those practices also reduce the incentive for broadcasters to negotiate licences with Unison, the CNMC concludes.
Welcoming the ruling, Unison says “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”. The new ruling should force SGAE to change its broadcast licensing model otherwise it will be subject to additional fines.