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On May 30, 2019, the Spanish Markets and Competition Commission (“CNMC”) fined the Spanish Society of Authors and Publishers (“SGAE”) for abusing its dominant position between 2016 and 2018, levying a fine of €2.9 million (Case S/DC/0590/16, DAMA vs SGAE).
The probe was elicited by complaints lodged against SGAE in July and September 2016 by Derechos de Autor de Medios Audiovisuales (DAMA) and Unison Rights, S.L. (Unison), copyright management companies for, respectively, audiovisual and musical works, claiming alleged conduct in breach of competition legislation.
After the investigation, the CNMC held that SGAE had infringed article 2 of Spanish Act 15/2007 of July 3, 2007, on Unfair Competition and article 102 of the Treaty on the Functioning of the European Union by abusing its dominant position in the fields of (i) collective management of copyrights for musical and audiovisual works, and (ii) granting licenses and remuneration for the reproduction and communication rights to the public of copyrighted musical and audiovisual works at hotels, restaurants and bars. The abusive conduct took the form of three different practices discussed below.
First, according to the CNMC, SGAE had unjustifiably restricted the partial allocation or partial revocation or withdrawal of copyright management by imposing the provisions of bylaws and contractual clauses. Authors of works could only engage SGAE to manage all of their rights and were prevented from allowing other entities to partly manage their rights.
This constituted abuse of SGAE’s dominant position in the sector of copyright management for musical works by preventing entry and growth by new operators.
Second, the CNMC also considered that SGAE had abused its dominant position involving granting licenses and remuneration for rights of reproduction and communication to the public of musical and audiovisual works at establishments in the hotel and restaurant sector.
According to the decision, combined (“bundled”) sales without providing an itemized schedule of the associated costs for the audiovisual repertoire, on the one hand, and the musical repertoire, on the other, prevented users of its services from ascertaining the actual cost of each of the rights and services covered by the schedule of fees, thus preventing comparisons with and hiring of other operators and restricting access by those other operators to the markets concerned.
Accordingly, a hotel that wanted to obtain music for its guests was forced to buy audiovisual rights at the same time, without having a breakdown of prices.
Third, SGAE abused its dominant position in the same area of granting licenses and remuneration for the rights of reproduction and communication in the restaurant and bar sector by bundling works.
Unlike the second practice, in this case it was possible to ascertain which costs were for the musical repertoire and which for the audiovisual repertoire. However, the structure of the fee schedules continued to prevent users from comparing them with those of other operators. Additionally, bundling made other possible alternatives less attractive.
The CNMC has instructed SGAE to refrain from practices like these in the future and fined it €2,949,660.
This is not the first dispute between the CNMC and SGAE. The very same week this decision was made public, the Spanish Supreme Court upheld a fine of over €3 million levied by the regulator in another case of abuse of its dominant position in 2014 (the decision of November 6, 2014 in case S/0460/13, SGAE-CONCIERTOS [Concerts]). In that case, the abuse concerned SGAE’s fee scheme for copyright management for public performances of musical works at concerts.
What makes this decision particularly interesting is the small number of CNMC cases dealing with infringements involving abuse of a dominant position. Indeed, since 2015, the CNMC has only issued four decisions imposing penalties for these types of practices.
However, the number of cases may well increase substantially in the near future, because in May of this year, the CNMC carried out two probes for possible conduct contrary to article 2 of the Unfair Competition Act in the medicinal product sector.
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