Brussels, 1 October 2014
State aid: Commission orders recovery of incompatible aid from certain terrestrial digital platform operators in Castilla-La Mancha
The European Commission has concluded that subsidies worth €46 million granted in the Spanish region of Castilla-La Mancha to finance the digitisation and extension of the terrestrial television network in remote areas were incompatible with EU state aid rules. The measure only benefits terrestrial digital technology, in breach of the principle of technological neutrality, and also discriminates between different terrestrial operators. As a result, some operators of terrestrial platforms received a selective advantage over their competitors and have to pay it back to the region Castilla-La Mancha. In June 2013 the Commission had already concluded that similar measures covering other regions of Spain were incompatible with EU state aid rules (see IP/13/566).
Commission Vice-President in charge of competition policy, Joaquín Almunia, said: "The Commission supports the transition from analogue to digital technology because it allows a better use of scarce frequencies. However, public financing must be available to all transmission platforms without discrimination and not only to selected operators."
Following complaints from a satellite platform operator and a terrestrial DTT operator the Commission in 2010 opened an in-depth investigation into the public financing of the DTT infrastructure in Castilla-La Mancha (see IP/10/1195)C23/2010. The investigation found that the measure exclusively funded the digitisation of terrestrial transmission technology. Alternative transmission platforms like satellite, cable or the internet could not effectively benefit from those subsidies despite the fact that the satellite platform, for instance, would be available and suitable to cover the territory. Today, many commercial TV channels are transmitted via the satellite platform. The measure also discriminated between different terrestrial operators, as the regional government had handed out the subsidy directly to only two companies.
In Member States that support the digital switch-over in a technologically neutral way other platform operators have successfully participated in open tenders. The measure applied to Castilla-La Mancha, on the contrary, unduly distorts competition both among DTT operators and between DTT players and operators using other technologies. The two pre-selected companies received an undue advantage over their competitors and therefore need to return those subsidies to taxpayers.
During the 2005-2008 period Spain adopted a series of regulatory measures to manage the switch from analogue to digital television. In the terrestrial network, this change required upgrading the existing transmission centres and building new ones. The Spanish territory was divided in three distinct areas:
- in area I, covering the vast majority of the Spanish population, the cost of the switch-over was borne by the broadcasters;
- in the less urbanised area II, broadcasters had no commercial interest in providing the service;
- the topography of area III excluded terrestrial transmission and the satellite platform was chosen.
This decision concerns exclusively the measures taken for area II in the region of Castilla-La Mancha. Measures taken in other Spanish area II regions – worth €260 million – were addressed in the Commission's decision of June 2013 (see IP/13/566). The case of Castilla-La Mancha was treated separately as it contains specific features, in particular the fact that the beneficiaries were pre-selected.
In its decision on subsidies for DTT in Berlin-Brandenburg in Germany, the Commission gave indications on how Member States could support the digital switch-over in compliance with EU State aid rules (see IP/05/1394). The Commission's decision in this case has been upheld by the EU General Court (cases T-8/06, T-21/06 and T-24/06). The principle of technological neutrality has furthermore been confirmed in the General Court ruling on the Commission's decision in the Mediaset case (see CJE/10/55, case T-177/07).
The Commission is currently also investigating a distinct case on potential aid granted by Spain to broadcasters for the change of bandwidth (see IP/12/401).
The non-confidential version of the decision will be made available under the case number SA.27408 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.