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Spanish collecting society SGAE fined 2.95 million euros for anti-competitive conduct

By | Published on Monday 3 June 2019

SGAE logo

The always controversial Spanish collecting society SGAE has been fined 2.95 million euros by Spain’s competition regulator after it pursued anti-competitive strategies that sought to stop new rights agencies from entering its market. The competition law judgement came in the same week that global collecting society grouping CISAC announced it was expelling its Spanish member for failing to deal with concerns over alleged corruption and bad governance.

The European Union introduced new laws regulating collective licensing a few years back. Among other things, those new rules aimed to ensure that, where collecting societies within the EU had previously enjoyed a monopoly – or virtual monopoly – over any one set of copyrights, those monopolies would come to an end, allowing societies to compete across Europe and newer societies to enter the market.

Critics of collective licensing argued that more competition was required in the market overall, even though such competition can make licensing of music rights – and in particular song rights – more complicated, especially in the absence of a central music rights database. But the prospect of newer rights organisations being able to launch was most attractive in markets where the existing societies were known to be either inept or corrupt or both. Like Spain.

Following the change in the law, a new society launched in Spain called Unison. Given SGAE had been accused of all sorts of bad conduct over the years, and was embroiled in a new scandal around the distribution of TV royalties, many songwriters and music publishers welcomed the innovation. But Unison subsequently said that SGAE had set about putting up unnecessary commercial barriers to stop a new player from treading on its turf.

To that end Unison – in partnership with audio-visual performing rights organisation DAMA – filed a complaint with the Spanish Competition Authority. And last week it ruled against SGAE.

There were two main issues raised by the competition regulator. First, restrictions put on SGAE members seeking to withdraw or partially withdraw their rights, and secondly a lack of transparency in the pricing of bundled rights meaning licensees could not compare rates between competing societies. The regulator ruled that both these practices breached competition law, hence the 2.95 million euro fine. It also said SGAE should cease its anti-competitive conduct.

Welcoming the ruling, Jordi Puy, CEO of Unison, told reporters: “We can only celebrate this decision. It guarantees free competition in the music rights management market in Spain, which will only benefit rights holders, first and foremost”.

When announcing a one year expulsion of SGAE last week, CISAC said that it still was optimistic that the new President at the Spanish society was genuinely seeking to address the organisation’s bad governance issues and the various complaints that have been raised by the global music publishers. It remains to be seen whether her reforms also include addressing the competition concerns now raised by government.