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IP/01/1326

Brussels, 27 September 2001

Commission adopts communication on future of cinema and audiovisual industry in Europe

The audiovisual sector in Europe, which is a strategic industry because of its cultural importance and its potential for the creation of wealth and jobs, continues to suffer from numerous handicaps that hinder the circulation of films and other audiovisual works. The Communication that the Commission has just adopted on the basis of a proposal from Viviane Reding, Commissioner responsible for culture and the audiovisual sector, in agreement with Mario Monti, Commissioner responsible for competition policy, analyses these handicaps and proposes ways of overcoming them. It also provides the cinema sector with greater legal security by explaining the criteria that the Commission uses when examining national cinema support schemes under the Treaty's rules on State aid.

"The European audiovisual sector is extremely creative, which is a reflection of our great cultural diversity. Given the new production and distribution opportunities provided by digital technology for our content, the Commission intends to help to remove the obstacles that prevent our film and programme makers and industrialists from taking full advantage of the Community dimension", in the words of Viviane Reding, who added: "my colleague, Mario Monti, and I wish to give this sector greater legal security and show it that the cultural dimension of audiovisual works is fully taken into account in all Community policies".

This Communication, which takes account of the findings of a very broad consultation conducted with the Member States and those working in the sector, deals with questions of the use of works (rights), electronic cinema, the taxation of the sector, the rating of works and other problems affecting the circulation of films and other audiovisual works.

This exercise is distinct from the forthcoming review of the "Television without Frontiers" Directive, but is part of the same approach, which involves ensuring that an industry that is considerably exposed to international trade can benefit more from the Community dimension. As part of this same approach, the Commission actively supports the European audiovisual sector through the Media Plus programme (€400 million for 2001-2005) and "i2i Audiovisual", which is a joint initiative of the European Investment Bank and the Commission (cf. IP/01/717 of 18 May 2001) that is designed particularly to promote venture capital in this sector. Moreover, this Communication is in keeping with the principles of Community audiovisual policy as set out in the Communication of December 1999 (cf. IP/99/981 of 14 December 1999). The process of reflection on the definitions of the concepts of "European work" and "independent producer", which was begun during the consultation with Member States and professionals, will be taken forward in the review of the "Television without Frontiers" Directive in 2002.

Removing the obstacles to the exploitation of audiovisual works in Europe and to the preservation of the heritage

  • While there is a consensus between audiovisual professionals on the need for action to improve the preservation of the European heritage in this area, the consultation revealed differing views on the advisability of setting up a system of legal deposit of audiovisual works, the level of application (national or Community level or under the Council of Europe, which is preparing a convention on this matter), and whether such a deposit should be compulsory or voluntary. Consequently, before presenting any proposal, the Commission will take stock by 2002 of the situation in the Member States. For the time being, it will encourage the dissemination of the best practices in preserving the audiovisual heritage and will assess the possibilities of setting up a data base of the different media of audiovisual works.

  • The consultation revealed interest in the establishment of registers of films containing details of, for example, the identity of producers, the film-maker or other practical and legal information on the films. But, here too, there are different views on how this idea should be implemented: system of mutual recognition of national registers or networking of these registers. The Commission will therefore take stock of the situation in the Member States. As far as the establishment of a Community-level data base on right-holders is concerned, the professionals consider this idea to be problematic because of the costs of managing the scheme and its reliability. However, some professionals complain of the difficulties of identifying right-holders, which hampers the exploitation especially the on-line exploitation of certain works. The Commission calls on the profession to take concerted action to draw up an inventory of the works concerned by this problem of identification and then to find solutions to permit the circulation of these works.

Taking advantage of the opportunities offered by e-cinema

Digital technology applied to films increases the opportunities for disseminating works throughout the territory of Europe and in the rest of the world. Given what is at stake in cultural and economic terms, Europeans must be in the forefront of the definition of the standards of e-cinema and its use. This is primarily the responsibility of the industry, and the Commission welcomes the establishment of the European Digital Film Forum. The Community is supporting the use of digital technology in Media Plus and "i2i Audiovisual".

The aim is, in particular, to develop, through standards that are open and recognised at world level, methods for film-quality digital compression, technologies for projecting works and encryption methods.

Giving thought to the taxation of audiovisual works

The consultation confirmed the call from professionals for the application of a reduced or zero rate of VAT to cultural products and services, which is already possible in certain cases, such as for cinema tickets. As to the services that are not covered by this possibility of reduced-rate taxation under the sixth Directive, such as video or on-line services, the Commission will consider including them as part of the review of the corresponding annex to the VAT Directive after 2002.

What are the other potential obstacles to the circulation of audiovisual works?

  • The differences in ratings (i.e. restrictions on whether children are allowed to see a particular film) between the Member States and between the different means of distribution could be one of these obstacles. Given the cultural differences reflected in these various classifications, the Commission will be launching a study to assess the reasons for these differences, their extent and the precise consequences for the marketing of the works. This study will be available in 2002.

  • The Commission will consider how to use its E-learning action plan (cf. IP/01/446 of 28 March 2001) to promote education on the visual image and knowledge of European films in schools.

The Communication also announces the establishment of a group of experts to continue to give thought to developing the technologies and economy of the audiovisual sector and to launch a study in 2002 on the financial characteristics of the film industry (financial importance of the various production phases, ratio between investment and revenue, etc.).

Greater legal security concerning state aid to the cinema sector

Although the Commission has not yet rejected any national support scheme for the cinema sector, the professionals expressed the fear that Community competition law (State aid) may prevent the Member States or regional entities from supporting their cinema sector in an international environment marked by tough competition with other continents. The Communication adopted by the Commission explains quite clearly the criteria used to assess the schemes of assistance for film and television productions. It should be pointed out that the Commission does not consider aid to any one film, but examines the national support schemes.

The Commission initially checks that the conditions of access to the scheme do not violate the EC Treaty, especially in terms of discrimination based on nationality (e.g. aid being available only to nationals of a particular Member State) and in terms of compliance with the rules of the internal market. It then checks that the specific criteria for cinema and television aid set out in the June 1998 decision on the French aid scheme have been met. In doing so, the Commission applies the "culture derogation" provided for in the Treaty, which, in principle, ensures favourable treatment for the cultural sector, and implements a solution which ensures a balance between the objectives of cultural creation, the development of audiovisual production in the Union and compliance with Community law on State aid. These specific criteria are as follows:

  • Member States must ensure the cultural content of the works supported, on the basis of verifiable national criteria. In accordance with the principle of subsidiarity, the Commission does not express a view, at any stage, about what is considered to be cultural;

  • Member States may not require producers to spend more than 80% of the budget for the film or television work on their territory, and producers are free to choose which headings in their budgets are spent outside the Member State concerned;

  • While the proportion of national aid is limited, in principle, to 50% of the production budget, difficult and low-budget films are excluded from this limit. The Member States define, in each aid scheme, what they consider to be difficult and low-budget films. Films produced in a limited linguistic or cultural area will benefit from greater flexibility;

  • In order to ensure that national schemes for supporting film or television productions are not more attractive in some Member States than in others, supplementary aid for specific production activities (such as post-production) is not allowed.

The Commission has already examined and approved several national schemes on the basis of these criteria: France, Netherlands, Germany (Federal level and certain Länder), Ireland and Sweden. It hopes to finish examining the other national schemes by the end of this year.


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