CFI on Danish TV2: licence fee revenue “state resources”, but no adequate reasons for Commission’s overcompensation-claim

Posted on October 22, 2008 | Filed Under digital content, public services 

_antenna_bird.jpgIn its judgment in the joined cases T-309/04 TV2 v. Commission, T-317/04 Denmark v. Commission, T-329/04 Viasat Broadcasting UK v. Commission, and T-336/04 SBS and SBS Danish Television v. Commission, handed down today (see also the press release), the Court of First Instance of the European Communities annulled the Commission’s decision in the Case C 2/2003 (published in the Official Journal on 23 March 2006).

Action had been brought by all sides concerned: by private broadcasters as well as by TV2 and Danmark. The judgment is based primarily on reasons of procedure, as the Court found that the Commission has failed to provide an adequate statement of reasons for its claim of overcompensation; the Commission also had not substantiated the claim that Danish authorities did not regularly check the level of the accumulated reserves of TV2. The Court therefore concluded that the Commission erred in finding a state aid and did not go on to fully examine all pleas brought by all complainants. It did, however, make a few important points:

The Court restates that “Member States enjoy a broad discretion for defining what they regard as services of general economic interest. Accordingly, the definition of such services by a Member State can be queried by the Commission only in the event of manifest error. … The possibility open to Member States to define broadcasting SGEIs broadly, so as to cover the broadcasting of full-spectrum programming, cannot be called into question by the fact that the public service broadcaster also engages in commercial activities, in particular the sale of advertising space. … [T]he power of the Member States to define broadcasting SGEIs [Services of General Economic Interest] in broad and qualitative terms, so as to cover the broadcasting of a wide range of programmes, cannot be disputed; nor can the Member States’ freedom to use advertising revenue to finance such SGEIs.”

The Court concludes for the Danish situation:

TV2’s mandate is perfectly clear and precise: to offer the entire Danish population varied television programming which aims to provide quality, versatility and diversity. … It is also necessary to reject the argument that TV2 should not have been recognised as a public service channel, on the ground that its programming is no different from that of the commercial channels, and that the Commission should have compared TV2’s programming with the programming of those commercial channels. … To accept that argument and thereby to make the definition of the broadcasting SGEI dependent – through a comparative analysis of programming – on the range of programming offered by the commercial broadcasters would have the effect of depriving the Member States of their power to define the public service.

As regards the licence fee, the Court noted that the amount is determined by the Danish authorities, the obligation to pay the licence fee does not arise from a contractual relationship (but simply from the ownership of a television or radio receiver), where necessary the licence fee is collected in accordance with the rules on the collection of personal taxes, and the Danish authorities determine TV2’s share; licence fee resources therefore are available to and under the control of the Danish authorities and constitute “State resources”.

The Court is, however, harshly critical of the Commission as regards the reasons given for the second and fourth  “Altmark“-criteria*). The Court notes (inter alia) the “Commission’s complete failure to examine seriously, during the formal investigation procedure, the actual conditions which, during the period under investigation, governed the setting of the amount of licence fee income payable to TV2″ and also states that the Commission “failed to examine the file seriously” and that there was a “lack of a serious and detailed examination”.

So the Commission’s decision had to be annulled by the Court - and the story continues (very likely with an appeal to the ECJ).

*) No 90 and 93 of the Altmark Trans Judgment: “Second, the parameters on the basis of which the compensation is calculated must be established in advance in an objective and transparent manner, to avoid it conferring an economic advantage which may favour the recipient undertaking over competing undertakings.”
“Fourth, where the undertaking which is to discharge public service obligations, in a specific case, is not chosen pursuant to a public procurement procedure which would allow for the selection of the tenderer capable of providing those services at the least cost to the community, the level of compensation needed must be determined on the basis of an analysis of the costs which a typical undertaking, well run and adequately provided with means of transport so as to be able to meet the necessary public service requirements, would have incurred in discharging those obligations, taking into account the relevant receipts and a reasonable profit for discharging the obligations.”

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