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IP/01/1429

Brussels, 17 October 2001

Commission clarifies application of State aid rules to Public Service Broadcasting

The European Commission has today adopted in principle a Communication that explains how State aid rules are applied to funding of public service broadcasters. The Communication, which is still to be formally adopted in the Community languages, clarifies that Member States are in principle free to define the extent of the public service and the way it is financed and organised, according to their preferences, history and needs. The Commission, however, calls for transparency on these aspects in order to assess the proportionality of State funding and to control possible abusive practices. Member States are asked whenever this is lacking to establish a precise definition of the public service remit, to formally entrust it to one or more operators through an official act and to have in place an appropriate authority monitoring its fulfilment. The Commission will intervene in cases where a distortion of competition arising from the aid cannot be justified with the need to perform the public service as defined by the Member State and to provide for its funding.

The Commission is currently investigating several complaints from private operators concerning State financing of public broadcasters. In order to take into account recent developments (such as the so-called Amsterdam Protocol on public service broadcasting, the new Commission Communication on services of general interest and the amended Transparency Directive), treat consistently the various cases and provide guidance to public authorities and operators, the Commission has decided to draft a Communication on the application of State aid rules to public service broadcasting.

The Communication adopts the following approach:

The Commission recognises the particular role of public service broadcasting as acknowledged by the Protocol to the Amsterdam Treaty in the promotion of democratic, social and cultural needs of each society.

The Commission is competent for control on State aid. Public broadcasting can be defined as a service of general interest, but its funding by state resources in general remains State aid. This means that while Member States are competent for the definition and choice of funding of the public service, the Commission retains a duty to check for abusive practices and absence of overcompensation.

Member States are free to define as public service remit a broad programme spectrum. In other words, the public remit can be defined as providing the public with a balanced and varied programming that also includes, for instance, entertainment and sport.

This means that no objections will be raised as to the nature of the programmes included in the public remit. The definition of the public service remit, however, could not extend to activities that could not be reasonably considered to meet in the wording of the Protocol the "democratic, social and cultural needs of each society".

The Commission would ask the respect of the following three conditions:

The establishment of a clear and precise definition of public service in broadcasting (whatever its content);

The formal entrustment of the public service mission to one or more undertakings by means of an official act. It is also necessary that the public service be actually supplied as foreseen in the formal provision between the State and the entrusted undertaking. To this purpose, it is desirable that a body or authority of the Member State independent from the entrusted undertaking(s) monitor its fulfilment;

The limitation of public funding to what is necessary for the fulfilment of the public service mission (proportionality).

These conditions derive from Article 86 EC Treaty, which states that the application of the competition rules of the Treaty in this case, the ban on State aid may be limited if it would obstruct the performance of the public service. This approach is fully consistent with the provisions of the Amsterdam Protocol , which refers to the "public service remit as conferred, defined and organised by each Member State" (definition and entrustment) and provides a derogation to Treaty rules for funding of public service broadcasting "in so far as such funding is granted to broadcasting organisations for the fulfilment of the public service remit…and …does not affect trading conditions and competition in the Community to an extent which would be contrary to the common interest, while the realisation of the remit of that public service shall be taken into account" (proportionality).

In carrying out the proportionality test, the Commission will consider whether any distortion of competition arising from the aid can or cannot be justified with the need to perform the public service as defined by the Member State and to provide for its funding. When necessary the Commission will also take action in the light of other Treaty provisions.

Finally, the Communication recalls that public service broadcasters in so far as they are beneficiaries of State aid and are also active in non-public service activities are subject to the transparency requirements indicated in the so-called "Transparency Directive"(1). The Directive imposes the separation of accounts between public service and non-public service activities: the present Communication specifies the criteria to be followed by broadcasting operators.

Pending cases

The Commission has opened formal State aid procedures regarding public service broadcasting in Italy and France (see IP/99/532 and IP/99/531 respectively, both of 20 July 1999) and will soon decide on cases concerning Spain and Portugal. The Commission also received notifications of aid from the United Kingdom and from Belgium and is examining complaints concerning the funding of public broadcasting in Greece, Ireland, Austria, Denmark and Sweden.

The "Communication on the application of State aid rules to public service broadcasting" will be published on the Internet pages of the Commission's Directorate General for Competition (http://ec.europa.eu/competition) as soon as the legal-linguistic revision of the text has been completed.

(1) Commission Directive 80/723/EEC of 25 June 1980, as amended by the Commission Directive 85/413/EC of 24 July 1985, the Commission Directive 93/84/EC of 30 September 1993 and the Commission Directive 2000/52/EC of 26 July, 2000, published in OJ L 193 of 29.7.2000. See IP/00/763 of 12 July 2000.


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