The European Commission has decided to enjoin the French, Italian and Spanish governments respectively to submit their views and all the information relevant to assess the nature of the financing schemes in favour of public broadcasters. The decision concerns the issuing is of an information injunction, required pursuant to European Court of Justice jurisprudence in cases where the Commission has doubts as to whether a State measure constitutes existing aid within the meaning of Article 93(1) of the EC Treaty. The Commission It is not not opening a formal procedure within the sense meaning of Article 93, paragraph (2) of the EC Treaty.

The Commission received the first complaint on the financing of public broadcasters in 1992, lodged by the Spanish private channels Telecinco and Antena 3. Similar complaints were subsequently then lodged by the private broadcasters of France (1993), Italy (1996), Portugal (1993 and 1997) and Greece (1997).

All these complaints allege breach of the State aid rules through the use of "dual" financing systems to finance public broadcasters (i.e. use of commercial revenues AND and State funding in various forms). In all cases, the complainants refer to the use of State funding or guarantees by public broadcasters to undercut advertising prices or outbid private competitors in for the acquisition of programme rights acquisition.

In the domain of public broadcasting the Commission has taken a final decision there is only once, namely with regard e case where the Commission has taken a final decision, i.e. the one concerning to the Portuguese public broadcaster RTP. In that case, the Commission found that the amount of aid granted by the State was lower than the extra costs incurred by RTP for the fulfilment of a set of public service obligations , as defined by the State. RTP has implemented an analytical accounting system, which allowed the Commission to identify the extra costs attached to each obligation imposed by the State to RTP. However, the complainant appealed against Tthe Commission decision, however, has been appealed against by beforethe complainant and the Court of First Instance (CFI), which has not yet handed down its judgement is currently pending in the Court.. The complainant also lodged a new complaint concerning the a new "Service Agreement" between Portuguese adopted by the State for and RTP.

For the three cases at hand, such detailed information was never made available to the Commission. France, Italy and Spain have The not definedition of the public service remit is not as clearly defined as Portugalin the Portuguese . Alsocase, and the calculation of the the extra cost of public service provision s attached to its very difficult, in particular because as a consequence of the fact that none of the three neither of the three country's public broadcasters has implemented any separate accounting system (as proposed also by the High Level Group on Audio-visual Policy ).

As a consequence, notwithstanding a long investigations and the conclusions results of a study conducted in 1995, the Commission was not able to take a position on this complex matter. The French and Spanish complainants sued brought the Commission to before the European Court of First Instance (CFI) under the article 175 procedure for failure to act in accordance with its obligations. The CFIourt, in September 1998, condemned the Commission in the Spanish case, whilste for the French one the judgement on the French action is still outstandingpending.

Attempts to develop a common approach to the issue of financing of public broadcasters failed. Following an expert-level meeting with the Commission's services on 20 October 1998, athe majority of the Member States disagreed with the idea of a common approach and preferred that cases would be dealt with on an individual basis. This is what the Commission intends to do, and it is now starting with the three cases for which the complaints have been pending longerst.

The Commission, with this injunction, expects to receive sufficient information to assess whether the financing scheme of public broadcasters has to be considered as pre-dating either the signature of the EC Treaty of Rome (in the French and Italian cases(France and Italy) , or pre-dating the accession to the Community (as for Spain). Although the basic laws creatingof the schemes were introduced before the entryer into force of competition rules for the three Member States, the assessment of the existing nature requires a complex analysis on the legal and economic conditions under which the aid is granted.

Member States have now have one month from the day of receipt of the Commission's official letter from the Commission to submit injunction to submit their views on the nature of the aid. Should the assessmentnalysis conclude that a scheme for is existing aid, the Commission may require the Member States to adopt appropriate measures to ensurein order to make sure that the aid does not hinder the progressive development and the functioning of the common market, in particular taking into consideration that the broadcasting market - once a reserved monopoly - is now liberalised. To this endpurpose, the Commission has also requested asked some information information from to all three the Member States concerning their definition of the public service remit, ,the related costs and updated financial data on the broadcasters.

At this stage, the analysis of the Commission will not assess deal with the the compatibility of the aid with the EC Treaty (i.e. proportionality of funding the reimbursement with to the costs of the public service obligations), but only with its nature (i.e. whether or not the schemes constitute existing aid). or not). The compatibility of the aid would be assessed only in case the Commission establishesd that the measures can not be considered as existing aid.

Source:
RAPID
03/ 02 /1999