The collective management of intellectual property (IP) rights is an economic sector which has drawn the attention of Spanish antitrust authorities on numerous occasions, both in the form of enforcement proceedings against anti-competitive conducts and in their advocacy work to promote effective competition in this arena.
We present here an example that serves to illustrate the actions of the National Competition Commission (CNC) and how its actions on those two fronts complement each other to achieve the objective of more efficient markets, in this case, in the collective management of IP.
CNC investigations seek to prosecute anti-competitive conducts in the markets: agreements, practices, decisions of business associations that ultimately harm consumers. The last decade has seen intense investigation in the collective management of intellectual property rights sector.
Most proceedings have involved putting an end to abuses of dominant position perpetrated by certain IP collecting societies by establishing unfair and/or discriminatory fees for use of their repertoires. There has also been a case in relation to the introduction of obstacles to competition between entities, which led to a conditioned settlement based on commitments to measures to favour competition between two collecting societies, the SGAE and DAMA.
The investigative work has underpinned concrete decisions aimed at enhancing the efficiency of the markets where those entities operate. It has also proven highly useful for underscoring certain aspects of the regulatory framework that buttress the monopoly position held by those entities, such as, for example, the lack of transparency obligations or absence of mechanisms for controlling the rates they charge.
The lack of competition in this sector, the track record of abuses of dominant position and the observations made in relation to the regulatory framework prompted the CNC to carry out an in-depth analysis of this sector from the standpoint of the advocacy and promotion of competition. The competition advocacy function, though complementary, is not the same as the investigative function. While the latter takes the form of opening formal proceedings against specific companies, advocacy consists in preparing studies and reports to analyse the conditions of competition in a given sector, with special emphasis on the regulatory framework, and in making recommendations for liberalisation, deregulation or regulatory reforms aimed at heightening real and effective competition.
The result of this work in the IP collective management sector has materialised in the Report on Collective Management of Intellectual Property Rights released by the CNC in early January 2010.
The Report analyses the economic, legal and strategic barriers to entry that explain monopoly position held by collecting societies. It also takes up the regulatory environment where they operate and that allows them to be able to exert their market power in different arenas, specifically as regards prices, which contributes to why the resulting pricing problems are a recurring issue. With the aim of heightening competitive pressure and efficiency in these markets, the Report sets out a series of recommendations for constructing a more pro-competitive model, as well as a number of regulatory improvements to avoid possible abuses and inefficiencies for so long as these entities continue to hold a monopoly position.
The CNC intends to continue working for competition with the tools at our disposal —investigation and advocacy— in this and other markets in order to make them more efficient and better serve the interests of consumers.