State aid: Commission prohibits planned subsidies for digital terrestrial TV in North Rhine-Westphalia, Germany

The European Commission has decided that German plans to finance part of the fees commercial broadcasters pay for the transmission of their programs on the digital terrestrial television (DVB-T) network in the German Land of North Rhine-Westphalia are not compatible with the EC state aid rules. The Commission fully supports the transition from analogue to digital broadcasting. However, the proposed measures fail to identify properly the problem that requires state aid, and to choose appropriate and non-discriminatory means of funding.

Competition Commissioner Neelie Kroes commented: “The transition to digital broadcasting has many advantages for consumers and innovation. However, State support must target specific issues where the market does not provide solutions and must not be discriminatory, in particular between terrestrial, cable and satellite transmission."

In the German Land of North Rhine-Westphalia, digital terrestrial television was launched in May 2004. The media authority of the Land intended to grant commercial broadcasters present on the DVB-T platform subsidies to finance part of the transmission fees paid to the operator of the DVB-T network. The total amount of subsidy envisaged was €6.8 million over five years. The German authorities notified the subsidies to the Commission in January 2005.

The planned subsidies are very similar to the funding granted in the Land of Berlin-Brandenburg, which has been declared incompatible with the EU state aid rules in November 2005 (see IP/05/1394). In its 2005 decision, the Commission provided guidance on possible forms of state support to digitalisation. Despite this guidance, the authorities of North Rhine-Westphalia did not adapt their initial plans and the Commission opened a formal investigation in July 2006 (see IP/06/1034).

The investigation led the Commission to conclude that the subsidies envisaged in North Rhine-Westphalia are not in line with EC Treaty state aid rules. The planned funding is not an appropriate means to address specific problems in relation to digitalisation and is not necessary to realise the switchover. The German authorities did not demonstrate that the financing would be apt to trigger a change in the commercial broadcasters' behaviour: the "incentive effect". Furthermore, the planned state support disregards the principle of technology neutrality and only supports transmission over the digital terrestrial platform. Thereby, it distorts competition between terrestrial, cable and satellite transmission.

In July 2006, the Commission also opened an investigation into a similar measure in the Land of Bavaria (see IP/06/1034). Following the German authorities' decision to limit the subsidies to the de-minimis threshold of Regulation 1998/2006, the Commission closed the inquiry in this case. According to the Commission Regulation EC/1998/2006 of 15 December 2006, aid amounts below €200.000 to one undertaking over three years are not considered as state aid.

The non-confidential version of the decision will be made available under the case number C 34 / 2006 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.