On 19 June 2024, the Spanish National Competition Authority (“CNMC”) fined the Spanish General Society of Authors and Publishers (“Sociedad General de Autores y Editores” or “SGAE”) a total of €6.4 million for allegedly abusing its dominant position in the market for the licensing of intellectual property rights for musical and audiovisual works. The CNMC also imposed a prohibition on contracting with the Public Administration, but the CNMC has referred the case to the Public Advisory Board in order to determine the duration and scope of such prohibition. 

SGAE is a non-profit association dedicated to the defence and collective management of the intellectual property rights of a very large number of members (e.g., authors, publishers, and their heirs), which administers musical and audiovisual works in its repertoire. SGAE operates in the upstream market for the management of intellectual property rights and in the downstream markets for the grant of authorisations to use the rights of reproduction and public communication of musical works and for the management of the remuneration rights of authors of audiovisual works.

According to the CNMC, SGAE would be dominant in all the relevant markets analysed, where authors have limited capacity to decide or easily change their IP rights management provider. As established by national law, collective IP rights must be exclusively managed by a collective management entity, which inevitably leads to high barriers to entry to a very concentrated market.

In accordance with the CNMC’s decision, SGAE would have abused its dominant position by imposing such excessively high "effective use fees" on radio and television operators that, in comparison to the “flat rates” offered, users had no real choice but to opt for the flat rates. The widespread use of flat rates has had, according to the CNMC, a double anti-competitive effect: 

1. Depriving operators of a real fee option, based on the effective use of rights (i.e., exploitative effect); and
2. Limiting their incentives to contract with SGAE's competitors (i.e., exclusionary effect).

1.Exploitative abuse

The CNMC imposes a special transparency duty on SGAE due to its position in the market. However, the decision concludes that SGAE’s pricing system imposed excessively high prices on real use fees and has forced most users to pay prices to SGAE that are completely unrelated to the actual use they make of SGAE’s repertoire of works, both in terms of the number of works and the intensity of their use.

2. Exclusionary abuse

The CNMC also argues that the flat rates imposed discouraged operators from seeking alternative repertoires in the market, thereby reinforcing SGAE's position of dominance and hindering competition. Furthermore, the decision states that SGAE's contracts (in relation to the rights of musical works) included declarations about the universality of its repertoire and indemnity guarantees against potential third-party claims, for the use of rights that do not belong to their repertoire.

In conjunction, these clauses were considered as part of an exclusionary conduct, as they unduly limited market competition by discouraging operators from engaging with competitors and helped SGAE to alter the price of the flat rates.

3. Conclusions

The CNMC's findings underscore the necessity for collective management entities to design their fee structures in a transparent and fair manner, ensuring these structures do not adversely impact competition. This case is further evidence of the importance of equity and transparency standards as regards the collective management of IP rights.

In any event, the Resolution sanctioning SGAE is not yet final since an administrative-contentious appeal may be filed against it within two months of its notification. In fact, SGAE has publicly stated its intention to challenge the CNMC’s decision.

The decision by the CNMC can be found here (in Spanish).

If you need more information or further guidance in this area, please contact Candela Sotés.

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