The Spanish Competition Authority (CNMC) sanctions SGAE again for distorting competition

Following complaints from UNISON, the Spanish competition authority imposes a new fine of 6.4 million euros on SGAE and bans it from contracting with the Public Administration.

Why does the CNMC fine SGAE?

UNISON filed a complaint against the Spanish collective management organisation t(Sociedad general de Autores y Editores, SGAE) before the Spanish competition authority (Comisión Nacional de los Mercados y la Compentencia, CNMC) for engaging in acts that distort competition, specifically in the form of “abuse of dominant position.” In this case, it was for using “flat” or availability-based tariffs in the television and radio markets and licensing its repertoire with a supposedly universal character. As a result of this new complaint, in January 2022 the CNMC decided to open a sanctioning file (S/0641/18) against SGAE, which has now been resolved with a decision on June 19, 2024.

As noted by the CNMC in its resolution, these types of tariffs constitute a significant barrier to market entry. If an entity with significant market power like SGAE uses “flat” or availability-based tariffs without offering viable alternative tariffs based on actual use, users (in this case, radio and TV stations) see their incentives to contract with alternative competitors like UNISON drastically limited.

The CNMC also reproaches SGAE for the use of universality or indemnity clauses, through which SGAE guaranteed users that it managed all existing musical works. According to the CNMC, including declarations of presumed universality of the SGAE repertoire and indemnity clauses have the potential to limit users’ incentives to contract with other competitors like UNISON.

Again?

Yes, again. Let’s remember that the CNMC had previously opened a first sanctioning file (S/DC/0590/16), which is currently being reviewed by the Spanish  Supreme Court. At the same time, UNISON had claimed damages resulting from this first wave of anti-competitive acts by SGAE, and the Provincial Appeal Board of Barcelona – through a judgment dated February 16, 2024 – confirmed SGAE’s obligation to compensate UNISON for the damages caused.

What are the consequences of the resolution for SGAE and the market?

First, the decision imposes a fine of 6.4 million euros on SGAE.

Furthermore, the CNMC orders SGAE to immediately cease the infringing behaviours. Therefore, SGAE must stop using its anti-competitive tariffs immediately. According to the CNMC’s conclusions, SGAE’s strategies have what is known as an “exclusionary effect,” meaning that these behaviours have the potential to exclude current or potential competitors from the market and reinforce SGAE’s dominant position. The CNMC’s resolution should contribute to ending this irregular situation.

Additionally, the CNMC also decides to apply the prohibition on SGAE from contracting with the Public Administration. The duration and scope of the ban will be determined by an administrative body, but the measure could mean that SGAE cannot contract with, for example, the central, regional, or local administration or public broadcasting organizations.

What’s next?

UNISON will continue to work towards achieving a situation of competitive normality in the collective rights management market, which will involve ensuring the enforcement and compliance with all resolutions issued by the courts and competition authorities, as well as claiming damages caused by SGAE.