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Spanish Regulator Opens New Antitrust Probe Into SGAE

Spain's largest collecting society has been mired in scandal and was previously expelled from CISAC over how it collects and distributes royalties.

MADRID — Spain’s antitrust regulator has opened a new investigation into the country’s largest rights collecting society, less than three years after imposing a significant fine for stifling competition.

The Spanish regulator, known by its acronym of CNMC, says it is probing practices based on “a possible abuse of a dominant position” by the Spanish General Society of Authors and Publishers, or SGAE, which represents over 120,000 authors and publishers, and over 16 million works. The investigation is focused on tariffs applied by SGAE in the television and radio markets, as well as the way it licenses its catalog to users on the basis “that it is allegedly universal,” the CNMC says.

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In 2019, the Spanish regulator fined SGAE almost 3 million euros ($3.37 million) for unfairly limiting the ability of members to withdraw their rights, as well as for using a system of bundled rights that prevented outsiders from making pricing comparisons between different competitors.

The latest investigation follows complaints from two of SGAE’s competitors, Unison and Derechos de Autor de Medios Audiovisuales, Entidad de Gestión, or DAMA.

Jordi Puy, the chief executive of Barcelona-based Unison, says his company, over the past year, has been sending the Spanish regulator “a big caseload of evidence to show the way we have been harmed.” He adds: “It’s clear to us that SGAE has maintained anticompetitive practices that have been a way of continuing what they were doing when SGAE was actually a monopoly.”

SGAE refutes such claims. In a statement, the organization says it was “convinced that its rates and licenses, which have been recently modified, are in accordance with the competition legislation.”

For years, SGAE has been mired in scandal, feuding between executives and courtroom battles, notably over allegations of fraud, document forgery and mismanagement.

In May 2019, the International Confederation of Societies of Authors and Composers (CISAC) temporarily expelled SGAE from its membership after an investigation revealed serious concerns over how it collected and distributed royalties. Among the concerns was SGAE’s role in a long-running royalty scam known as La Rueda (“the wheel”), where members that were also broadcasters played songs they owned rights to on late-night Spanish television — sometimes as low-level background music.

With some broadcasters serving on the SGAE board, they were able to shape the system. When La Rueda was revealed, 14 TV stations were indicted for fraud for helping SGAE generate tens of millions in royalty revenues by playing music heard by less than 1% of their average TV audiences in the middle of the night.

CISAC readmitted SGAE last March. That same month, Spain’s national court separately acquitted a group of defendants led by the former president of SGAE, Teddy Bautista, who had been briefly detained by police in 2011 and then stood accused of embezzling millions of euros from SGAE.

SGAE had revenues of 259 million euros last year ($289 million), compared with 218 million euros ($243 million) in 2020 and 279 million euros ($311 million) in 2019. It collects performance royalties for compositions across all platforms, from digital to theater performances.

In response to a query from Billboard, CISAC says it is “seeking more details” about the latest antitrust investigation in Spain. “Based on the limited information available, the inquiry involves competition law at a national level,” CISAC says. “This appears to be outside CISAC’s remit in upholding international best practices by its member societies.”

In 2014, the European Union agreed to liberalize the collection system for music rights, with an eye to ending national monopolies. But some member states dragged their feet on turning the regulatory changes into national legislation, Spain’s market was only opened to competition in 2018.

Unison was the first private and for-profit music copyright management company set up in Spain, where it started operating in 2000. It now has more than 350 clients who represent a combined 40,000 composers, singers and other music rights holders. Despite such growth, Puy argues that SGAE continues to strangle competition in Spain and had failed to adjust its ways since being fined by the CNMC.

The regulator, Puy says, needs to treat the latest proceedings against SGAE as “a case of repeated anticompetitive practices, which could lead to higher fines.” The Spanish regulator says it has 18 months to investigate the antitrust claims.

Even as it faces a new antitrust investigation, SGAE has been announcing further changes that it deems will improve its efficiency and transparency, as well as benefit its members. This week, it is introducing a new system to speed up the payment of concert royalties. And SGAE has also initiated an internal vote among its members to overhaul La Rueda, with its outcome is set to be announced at a general assembly on Feb. 9.

At the same time, the lawsuits against SGAE have been continuing. In December, a judge in Barcelona ruled that SGAE should alter the terms of its contracts in order to give music rights holders the ability to withdraw part of their repertoire from the deal struck with SGAE, following another complaint filed by Unison.