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RR RUEHIK
DE RUEHMD #0070 0221700
ZNR UUUUU ZZH
R 221700Z JAN 10
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 1727
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 4306
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS MADRID 000070

SIPDIS

STATE FOR EUR/WE, EEB/IFD/OMA, EEB/TPP/IPE
STATE PASS USTR FOR D.WEINER
COMMERCE FOR 4212/DON CALVERT
TREASURY FOR OIA/OEE/R.JOHNSTON

E.O. 12958: N/A
TAGS: ECON EFIN KIPR SP
SUBJECT: MADRID ECONOMIC WEEKLY, JANUARY 18-22

REF: MADRID 42

Contents:

EFIN: EC To Limit FROB Funding of Distressed Banks
KIPR: Competition Commission Accuses Copyright Management
Entities of Monopolistic Practices
KIPR: Online Piracy Blamed for Drop in Music Sales

EC to Limit FROB Funding of Distressed Banks

¶1. (U) The European Commission will limit Spain's banking
sector restructuring fund (FROB) to loans of no more than 2%
of 'risk-weighted assets' to distressed banks and savings
banks, or 2% of their "determined minimum amount of capital
to operate effectively." The EC made this announcement after
the Spanish government said the FROB would be allowed to loan
up to 2.5%. The EC will make a final decision on approval
before February 9. The expected approval will allow the GOS
the ability to use the FROB without case-by-case
authorization from Brussels, ultimately speeding up the
banking sector restructuring process. The FROB has 9 billion
euros and the ability to borrow up to 10 times that amount,
for a total of 99 billion euros available. (El Pais, 1/19
and 1/22)

Competition Commission Accuses Copyright Management Entities
of Monopolistic Practices

¶2. (U) The National Competition Commission (CNC) issued a
100-page report accusing Spain's copyright management
entities (collecting societies) of monopolistic practices in
representing the interests of artists and entertainers and
collecting royalties. In response, the largest and
best-known of the management entities, the General Society of
Authors and Publishers (SGAE), joined forces with three
smaller groups to form a new group, 'Ibercrea' (Iberian
Creators), to defend their interests collectively. The CNC
report represents a new conflict between the GOS and the
members of Ibercrea, who support the government's
controversial legislative proposal to combat internet piracy
of copyrighted works. Separately, two outspoken Spanish
attorneys known for their support of free downloading, Javier
de la Cueva and David Bravo, presented the report to the
European Court of Justice, claiming that Spain is in
violation of the EU's anti-trust laws by allowing the
copyright entities to operate. Comment: The management
entities, especially SGAE, are unpopular in Spain due to
their support for the "digital canon" private copy levy.
SGAE in particular suffers from a bad public image resulting
from its aggressive practices in collecting royalties. The
current anti-trust accusations, combined with demonstrations
by employees over working conditions and pay, only add to
SGAE's woes. (El Pais, 1/21 and 1/22)

Online Piracy Blamed for Drop in Music Sales

¶3. (U) The International Federation of the Phonographic
Industry (IFPI) recorded a worldwide drop of 30% in sales
over the past five years, while Spanish artists have seen
sales fall by 65%. Overall sales in Spain fell 17% in the
past year alone. Industry representatives cited frustration
over what they described as the GOS' passivity in fighting
piracy. However, the head of the IFPI's local branch,
Promusicae, expressed hope that the GOS would "continue the
process it has just started," referring to the controversial
"anti-downloading" provisions in the government's draft
Economic Sustainability Law. (El Pais, 1/21)
SOLOMONT