The Spanish Society of Authors and Publishers (SGAE) “abused its position” as the country’s dominant collective management organization (CMO) to prevent members from switching to a competing agency, a court in Barcelona has concluded.
The ruling marks a victory for UNISON, a Barcelona-based private music rights management company set up in 2017 as a competitor to SGAE, which found its efforts in the market stymied by what it has described as SGAE’s “anti-competitive practices.”
In a February 16 ruling, the Provincial Court of Barcelona effectively upheld a 2019 ruling by the Spanish Competition Authority (CNMC) that SGAE had “abused its dominant position in the management and exploitation of intellectual property rights of authors and publishers of musical works” by “imposing contractual conditions that oblige the author to entrust the management of all the rights to [their] works.”
The same year as the CNMC ruling, SGAE was kicked out of CISAC, the international umbrella group of authors’ and composers’ societies, over allegations of corruption that included claims it gave unfair advantages to certain rightsholders.
Those claims centered around “The Wheel,” an apparent “scam” under which the music of certain SGAE members was played throughout the night on certain Spanish TV stations, enabling those rights holders to claim a larger chunk of royalty payouts.
SGAE was readmitted to CISAC in 2021, after reforms to its governance practices and Board composition.
In its investigation, CNMC concluded that, by requiring rightsholders to either hold or all or none of their rights with SGAE, the organization in effect prevented rights holders from moving some parts of their rights (for instance, music streaming or live performance) to other organizations such as UNISON. CNMC ordered SGAE to pay a EUR €2.95 million fine.
Spain’s National Court struck down that fine this past January, but the Barcelona court, in its recent ruling, said that this didn’t invalidate the rest of the original ruling against SGAE. The court gave UNISON the green light to proceed with legal action against SGAE to seek damages for lost income.
“Competition in the market for the management of intellectual property rights was severely distorted at a crucial and historic moment of ‘liberalization,’ preventing the entry and development of UNISON as a new player.”
UNISON
“At least until the modification of the Statutes in 2020, rights holders were limited in the assignment, revocation or partial withdrawal of their rights as they were obliged to do so in accordance with the categorization unilaterally imposed by the SGAE,” the court stated in its ruling, as quoted in El Pais.
“The SGAE committed an abuse of a dominant position by limiting the right of its associates to withdraw in whole or in part.”
The ruling “confirms that the CMO [SGAE] prevented the mass exodus of clients, implementing a series of anticompetitive practices,” UNISON said in a statement.
“In this way, competition in the market for the management of intellectual property rights was severely distorted at a crucial and historic moment of ‘liberalization,’ preventing the entry and development of UNISON as a new player.”
UNISON added it has already initiated the process to determine the damages caused by SGAE’s practices.
In a statement to El Pais, SGAE said it had asked the Barcelona court to clarify its ruling “since, although it partially upholds our appeal, [this] is not reflected in the ruling.”
SGAE added that it had “completed the statutory modifications required by law in 2020, so since then it has not carried out, directly or indirectly, the aforementioned infringing conducts.”
However, UNISON responded to that claim by noting that in January 2022, CNMC launched another investigation into potential anti-competitive practices by SGAE, this time in relation to the use of blanket licenses in the TV and radio markets and “the licensing of the repertoire it manages to users on an allegedly universal basis.”
CNMC has not yet made a ruling in that investigation, but UNISON says it has begun the process of claiming damages under that investigation as well.Music Business Worldwide
