IP/07/960

Brussels, 28th June 2007

State aid: Commission endorses subsidies for digital equipment in Italy

The European Commission has decided that subsidies for equipment for the reception of digital television granted by Italy in 2007 are in compliance with EC Treaty state aid rules. The Commission's investigation concluded that tax deductions worth up to €40 million are technology-neutral and proportionate to the objective of promoting the transition to digital TV and to interoperability. The Commission supports the transition to digital broadcasting in line with its 2003 and 2005 Communications (see IP/03/1276 and IP/05/595) as long as the state support measures are compatible with the state aid rules.

Competition Commissioner Neelie Kroes said: “This decision illustrates the Commission's commitment to support the transition to digital TV and interoperability. It also shows that state support for these goals can be provided in line with the state aid rules”.

Italy notified the Law 296/2006 of 27 December 2006 (Comma 357 and Comma 361 of the Budget Bill for 2007), which grant an income tax deduction to consumers who purchase television sets with integrated tuner and digital decoders during 2007. The income tax reduction is equal to 20% of the price paid for the equipment, up to a maximum deduction of €200 per decoder, with a total budget measure of €40 million.

The measure respects the principle of technological neutrality, because the support is available irrespective of whether the decoder is used for terrestrial, cable or satellite channels. If the digital equipment has interactive features, these must be provided through programme interfaces (APIs) which use open standards, in line with the definition provided in Article 18 of the Framework Directive for electronic communications networks and services and the subsequent Communications of the Commission^[1].

After analysing the measure, the Commission concluded that the subsidy provides an indirect advantage to the broadcasters using digital technologies as it allows them to build and develop their digital audience at a faster pace and at reduced costs. However, as the measure respects the principles of transparency, necessity, proportionality and technological neutrality, the Commission considered the aid to be compatible with the Single Market.

Background

As with its assessment of the subsidy for digital terrestrial TV in Berlin-Brandenburg (see IP/05/1394), the Commission recognises that the switchover to digital television may be delayed if left entirely to market forces and that public intervention can be beneficial, through - for example - regulation, financial support to consumers, information campaigns or subsidies to overcome a specific market failure or to ensure social or regional cohesion. The onus is on Member States to demonstrate that aid is the most appropriate instrument, is limited to the minimum necessary, and does not unduly distort competition. In the case of Berlin-Brandenburg the Commission gave specific indications of acceptable forms of public support for the digital switchover:

• funding for the roll-out of a transmission network in areas where otherwise there would be insufficient TV coverage
• financial compensation to public service broadcasters for the cost of broadcasting via all transmission platforms in order to reach the entire population, provided this forms part of the public service mandate
• subsidies to consumers for the purchase of digital decoders as long as they are technologically neutral, especially if they encourage the use of open standards for interactivity
• financial compensation to broadcasters which are required to discontinue analogue transmission before the expiry of their licences, provided this takes account of granted digital transmission capacity.

These measures must respect the principles of transparency, necessity, proportionality and technological neutrality.

The above guidance is intended to enhance legal certainty for possible public policy interventions in the forthcoming EU-wide transition to digital TV. Member States remain, of course, obliged to notify to the Commission all state aid measures before they put them into effect.

^[1] COM(2004)541 of 30 July 2004 and COM(2006)37 of 2 February 2006