“And yet my SKY shall not want”*: European General Court finds for Murdoch, orders Berlusconi’s Mediaset to repay state aid granted by Berlusconi’s government

Posted on June 15, 2010 | Filed Under competition/mergers/state aid

From a purely legal viewpoint, it seems to be quite a basic vanilla state aid case: a member state grants subsidies to consumers to buy products, favouring a particular enterprise over its competitors. The Commission then receives complaints by the competitors, examines the measure and finds that the subsidies, which had not been notified to the Commission, constitute state aid and have to be repaid. Then the (major) beneficiary files action at the EU General Court to get the Commission decision annulled (and does not succeed).

But as the aid in question was handed out by a Berlusconi government, favouring (indirectly) Berlusconi’s media conglomerate Mediaset over (amongst others) its rival Sky Italia, media have referred to it as a “media tycoon battle”. The judgment given today by the General Court in the Case C-177/07 Mediaset SpA v. Commission confirms the Commission decision of 24 January 2007 (case site). If you like personalisation, you can call it a victory for Murdoch - his Sky Italia had filed complaints with the Commission and intervened in the Court proceedings on the Commission side - over his rival Berlusconi.

I don’t think the judgment would attract all that much interest if it weren’t for the involved parties, and I don’t think there is anything extraordinary to it in points of law. But the General Court seems to be very aware of potential media interest in the case: it is rare that for a General Court judgment there is a press release in seven languages from the Court, and equally rare that the judgment is available on the same day in probably pretty much all EU languages  (I have not checked all of them, but it is available in Maltese, Bulgarian, Greek, Latvian, Lithuanian, Estonian, Hungarian, so I guess all efforts have been taken to ensure broad media coverage around the European Union).

But of course it is nice to read that - I am paraphrasing - a Berlusconi company should not have trusted in the legality of the aid a Berlusconi government has shelled out (in the judgment, it is worded a little bit different: “A diligent business operator should have known not only that the measure at issue was not technologically neutral, but also that it had not been notified to the Commission and had not been authorised.”)

*) Shakespeare, King Henry V, Act III, Scene 7 (capitalization added)

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“gone to France for aid”*: ECJ voids state aid scheme for French local broadcasters

Posted on January 12, 2009 | Filed Under communication technologies, competition/mergers/state aid

Catching up on December’s ECJ judgements, here is a quick note on a broadcasting-related case: in the judgment delivered on 22 December 2008 in the Case C-333/07 Régie Networks, the Court declared the Commission’s decision of 10 November 1997 not to raise any objections to the new version of an aid scheme to support local radio stations (State aid No N 679/97 – France) invalid. However, the Court also suspended the effects of this declaration, pending the adoption of a new decision by the Commission under Article 88 EC.

Under the aid scheme local radio stations that derived less than 20% of their revenue from advertising and sponsoring were eligible for aid (a “setting-up grant”, equipment aid, and an annual operating grant). To fund that aid, a charge was levied on the revenue from advertisements broadcast on (commercial) radio and television. Régie networks, a company selling advertising space for the NRJ GROUP’s local radio stations, claimed reimbursement for the charges it had paid, and the Administrative Court of Appeal of Lyonrequested a preliminary ruling. The ECJ stated that:

“94 Where a charge constitutes the means by which an aid scheme such as that at issue in the main proceedings is financed, it is clearly in the Community interest that the Member State notifies that scheme, including the method of financing which forms an integral part of it, so that the Commission may have available to it all the information necessary to assess the compatibility of that measure with the common market, an assessment which falls within its exclusive competence, subject to review by the Community judicature (see to that effect, inter alia, Case C‑119/05 Lucchini [2007] ECR I‑6199, paragraph 52 and the case‑law cited). …
112 It must be concluded from the above that the charge on advertising companies forms an integral part of the radio broadcasting aid scheme which that charge is intended to finance.
113 Accordingly, the Commission should have taken that charge into account when it examined the aid scheme in question, namely following notification of that scheme, at the preliminary stage of the procedure for reviewing aid under Article 93(3) of the EC Treaty.
114 It is not in dispute that, while the method by which the scheme was financed was indeed notified to the Commission, … the Commission did not review it in the course of the procedure which concluded with the adoption of the contested decision. …
116 Since, for the purpose of assessing whether the aid scheme in question was compatible with the rules of the Treaty on State aid, the Commission failed to take account of the method by which that aid was financed, even though it formed an integral part of that scheme, its assessment of the compatibility of that scheme with the common market is necessarily vitiated by an error.”

I have not yet looked into the new French regime for compensating the public service broadcaster for loss of advertising revenue under the rules that came into effect a few days ago (see e.g. this press report). I wonder whether the Régie Networks case might have some implications for the planned taxes or charges (on commercial TV advertising and on internet and telephone providers), that are to be introduced to raise the necessary €450 million in 2009, making up for the public service broadcaster’s loss of advertising revenue.

*) Shakespeare, King Henry VI, Part III, Act III, Scene 1

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“an assessment, tinged with subjectivity”: CFI on state aid and public service broadcasting

Posted on June 26, 2008 | Filed Under competition/mergers/state aid, public services

There is a lot going on in Public Service Broadcasting these days: in France, the “Copé Commission” delivered its final report (which prompted a speech by President Sarkozy, going even beyond the proposals in the report, with a view to abolish advertising on PSB from 8 o’clock p.m. to 6 o’clock a.m. by January next year and completely by 2012), in the UK, the second PSB review is in progress (leading, amongst other things, to official blogging by Ofcom, and to a series of Pro-BBC-lectures), and Germany is finally trying to implement the commitments give in the state aid case that was decided in April 2007. This is not to mention a range of developments in smaller EU member states (as for instance the current state aid case concerning the financing of the Austrian public service broadcaster), and of course the European Commission’s own consultation on reforming the state aid rules applied to Public Service Broadcasting.

And today (some 15 years after the first complaint in this matter had been filed with the Commission) the Court of First Instance of the European Communities delivered a long awaited judgment in the case T-442/03 SIC v. Commission that addresses a few key issues on state aid to public service broadcasters. What are the main points?

  • There is no requirement to the effect that member states must follow a competitive tendering procedure for the award of the SGEI (service of general economic interest, such as public service broadcasting)
  • “Community law in no way precludes a Member State from defining broadcasting SGEIs widely to include the broadcasting of full‑spectrum programming. That possibility cannot be called into question by the fact that the public service broadcaster carries on, in addition, commercial activities, in particular the sale of advertising space. … It follows from all of the foregoing considerations that the power of the Member States to define broadcasting SGEIs in such a way as to include broadcasting a wide range of programming, whilst authorising the operator in charge of that SGEI to carry on commercial activities, such as the sale of advertising space, cannot be disputed.”
  • As regards the monitoring of the public service broadcaster’s compliance with its public service remit, there are two aspects: “In the first part, it is necessary to examine the monitoring of RTP’s compliance with the qualitative criteria … . In the second part, it is necessary to examine the monitoring of the actual provision by RTP of the public services expected of it and the correspondence between those services and the costs declared.”
  • The first part of the analysis “relates to an assessment, tinged with subjectivity, of the qualitative level of public service television” - and this is up to the member state.
  • The second part, concerning “the objective question of the administrative and accounting fairness” of the PSB’s  accounts in relation to the cost items, is a task for the Commission - and the Commission did not fulfill this task properly as it relied on accounts without external verification by auditors. 

So the CFI annulled the greater part of the Commission’s decision. But even if SIC, the private Portuguese broadcaster that had intiated the proceedings, achieved annulment of much of the Commission’s decision, the judgment does not seem a major setback for PSB. Rather on the contrary: the CFI explicitedly referred to the Amsterdam Protocol on the system of public service broadcasting and the Resolution of the Council and the Representatives of the Member States concerning public service broadcasting and stressed the role of member states in defining the public service remit and in controlling the qualitative criteria. Only when it comes to accounting, the creativity of member states is severely restricted.

There is, however, one message in the judgment that sounds like a warning to public service broadcasters: “there is”, it states,  

“no reason for a widely defined broadcasting SGEI which sacrifices compliance with those qualitative requirements in order to adopt the conduct of a commercial operator, by broadcasting programming specifically designed to generate optimal audiences for advertisers, to continue to be financed by the State on the same conditions as if those qualitative requirements were complied with.”

PS: in another state aid/broacasting case (C-333/07 Régie Networks, not yet available in English), brought to the ECJ via a preliminary reference, the advocate general today delivered her opinion - also pleading for annulment (basically because the Commission had not examined all relevant issues).

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“Don’t expect a revolution here” - Revising the Broadcasting Communication

Posted on June 11, 2008 | Filed Under competition/mergers/state aid, digital content, public services

Already announced in its 2005 state aid action plan the European Commission is reviewing the 2001 Communication on the application of State aid rules to public service broadcasting. In January 2008 it opened a corresponding public consultation of which the results now have been published. According to Commissioner Kroes:

“… more than 120 entities made contributions. They ranged from independent producers through to the biggest broadcasters and publishers, and 16 Member States.”

Whereas public broadcasters naturally opted against a review, private broadcasters and newspaper publishers as well as consumer associations seem to be in favour of a more or less comprehensive update. All kinds of media companies join the private broadcasters’ complaint about the public broadcasters’ unrestrained use of public money on platforms like the Internet which allegedly cleans out private initiatives on the internet and distortes the competition (a summary of the contributions is available here).
Read more

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current success and future support of european cinema

Posted on May 26, 2008 | Filed Under competition/mergers/state aid

palmdorcannes.jpgCommissioner Reding will have heard the news of the EU-funded (it got €30,000 through the MEDIA program) film “Entre Les Murs” directed by Laurent Cantet winning the Pame d’Or in Cannes with satisfaction. But also the overall performance of the european contributions which where all funded through MEDIA as well is impressive: Grand Prix runner-up prize for Gomorrah by Matteo Garrone, Jury prize for Il Divo by Paolo Sorrentino and best screenplay for Jean-Pierre Dardenne and Luc Dardenne for The Silence of Lorna (for details on the films see the festival’s homepage).

In the light of these achievements Reding’s joint proposal with Commissioner Kroes to once again extend the current regime for state aid for film support originally laid down in 2001 (see the Commission’s 2001 Communication on certain legal aspects relating to cinematographic and other audiovisual works) seems worthy of being supported: “Three more years! Three more years!”

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A close enemy can become a close friend - Apple and COM set off towards a pan-European marketplace for music togehter

Posted on January 9, 2008 | Filed Under competition/mergers/state aid, digital content

index_hero20070905.png The European Commission does not intend to take further action in the antitrust proceedings against Apple. The relevant case originated in a formal complaint by the UK consumer protection organisation which?, because of higher prices in the UK itunes store compared to other european countries (according to a times online article consumers in Britain pay 79p, while customers in the eurozone pay 99 cents, which is the equivalent of 54.8p). This wednesday, however, Apple announced to equalise prices for downloads of songs from its iTunes online store in Europe within the next six months; a step welcomed by the European Commission. According to Apple’s CEO Steve Jobs

“this is an important step towards a pan-European marketplace for music, and we hope every major record label will take a pan-European view of pricing”

Seems like Apple and the COM are off joining forces in the fight for a stronger more consumer-friendly Single Market for Online Music in Europe, just recently declared in the Commissions Comunication on Creative Content Online.

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Market sharing in online music distribution? Commission sends SO to Apple and record labels

Posted on April 16, 2007 | Filed Under competition/mergers/state aid

ohio_record_store.jpgIt’s hard not to notice that music distribution has undergone severe changes in the last decades. Some of our readers (though probably not too many) may remember digging for hidden treasures in dimly lit record (i.e. vinyl!) stores. Worse even, it seems like my father’s generation couldn’t even benefit from regular sales outlets but needed to place orders with private individuals, importing hot music directly from the source, mostly England and the US. If you didn’t have a hip friend like that (I can’t help imagining these guys with tight leather jackets and whiskers), life must’ve been hard (ignorance saved many – I believe).

Those days are long gone and today’s youth downloads whatever it fancies from the internet. Of course, this is a blog about law and so we talk about legal downloading only. So if you think my dad’s friend, who brought back music from his trips to London and sold it in his one-bedroom apartment in Vienna (however legal that was…) is outdated, take a closer look at iTunes. You can buy a lot there – granted. But you can only buy it from your homecountry’s on-line store. Apple makes sure you’re not hopping national fences by way of checking where your credit card has been issued. It’s all part of a deal between Apple and mayor record companies aiming at territorial sales restrictions. Divide et impera. Rule price by dividing markets. Article 81 of the EC Treaty has been written to deal with issues like that and it’s high time the Commission did something about it. Last week, Europe’s Antitrust authority issued a statement of objections (SO) alleging a violation of Article 81 EC. Apple and the music companies now have two months to reply. I will comment on developments.

However, all one could’ve found on the other side of the national fence is a better deal (99 cents/song in Germany instead of 79 pence=1.2 Euro in Britain). This may be late justice for the fact that the Brits had all the good music readily available in the old days while fans behind the seven mountains needed to revert to obscure procurement practices (see above) but it doesn’t necessarily mean that all that more, better, or newer content would be available on another country’s iTunes online store. That is the common market. You can get everything everywhere in the EEA, and someday even at the same price.

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