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European Commissioner for Competition Policy
Education, Culture and Science Committee of the Dutch Parliament
Thank you for inviting me today to explain the Commission's State aid policy on public broadcasting and more particularly the draft Broadcasting Communication.
This new Communication is to update an existing Commission Communication which dates back to 2001.
Since the adoption of the 2001 Communication our media markets have changed dramatically. Technological advances, particularly digitalisation, are driving convergence and have changed consumption patterns.
This evolution will be accelerated by the deployment of next generation broadband networks, which will further favour media convergence. As you know, this is a process which is strongly encouraged by the European Commission, which has also proposed specific measures to promote broadband deployment as part of the European recovery plan. On my side, I can inform you we are currently working on a draft Communication explaining how we apply EU state aid rules in relation to broadband financing. It will describe our current practice on support for "traditional broadband" and will also address public financing of "next generation access networks". This new Communication will indicate in which cases and under which conditions this financing can take place, thereby providing a clear and predictable framework to Member States in this important sector. This will complement the planned Commission Recommendation on regulatory aspects of next generation access networks.
This being said, and going back to the draft Broadcasting Communication, I can recall that on 4 November 2008 the Commission published for consultation a new draft Communication. The consultation ended on 15 January and we received 90 replies. My services are now working on a new draft taking these replies into account. The revised draft will be submitted to all interested stakeholders in due course.
This updated draft will reflect certain key principles of the Commission's case practice under the 2001 Broadcasting Communication. There have been in fact 22 more individual decisions since 2001. These 22 decisions applied rules in the EC Treaty that were introduced as long ago as 1957. The rules were subsequently refined in 1999 through an interpretative Protocol to the EC Treaty, the Amsterdam Protocol.
I am emphasising this, because contrary to some rumours, the draft Communication is not creating new law. It merely makes our existing administrative practice more coherent and clearer.
A second clarification is needed.
The Commission has the institutional task and duty to control the use of state aid in the broadcasting sector.
The Treaty contains no exception for public media from the State aid rules. Under the Amsterdam Protocol, the Commission must, as guardian of the Treaty, assess whether State aid used to finance public broadcasting – and I quote - :
"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".
This is why the Commission has a say on public financing of the media in the broadcasting sector.
Let me now turn to how we go about consolidating our case practice in a modernised Communication.
The Commission is serious about listening to Europe's citizens and to the governments and parliaments which represent Europe's citizens in the Member States.
This is why I have asked my department to hold two full public consultations with stakeholders and to carefully analyse all replies received and to publish them on our website.
This is why I went to Strasbourg to explain the draft in the European Parliament and to listen to the views of the representatives of the European citizens.
And this is also why I am here today, to listen to the views of the representatives of the Dutch citizens.
The starting point of our Communication is clarification.
We clarify that – and I quote from the draft - "public service broadcasters shall be able to use the opportunities offered by digitisation and the diversification of distribution platforms on a technology neutral basis, to the benefit of society."
This is important.
In applying the principle of technologic neutrality, the Commission finds that state aid may be used for financing all kind of audiovisual media services irrespective of the platform used. For example, if the Dutch Government wants the 8 o'clock news of NOS to be shown on mobile telephones or on the internet that is perfectly possible without a market impact test. The 8 o'clock news is not a new service simply because it is broadcast on platforms other than a television screen. Extension of its transmission to new platform is simply a consequence of technological development.
However, where genuinely new and important services are offered on whatever platform, the Amsterdam Protocol requires that the use of state aid may not distort competition contrary to the common interest.
What does this mean in practice?
It means that you have to balance the public value of a state financed offer with its expected market impact which may be positive or negative. The BBC 24 Hours Decision of November 1999 on the public financing of a new digital TV channel provides a good example in this respect. Back then the Commission used to do this balancing itself.
The novelty of our more recent case practice as of 2007 is that the balancing test is now done at national level rather than in Brussels.
Although public service broadcasters should be able to offer their services on all platforms as a matter of technology neutrality, there are an increasing number of important new services on different platforms where the borderlines of the Amsterdam Protocols balancing test are unclear.
Many stakeholders, including private television and radio broadcasters and newspaper publishers have come to Brussels to complain that some of the new services offered by public service broadcasters, for instance online written press, have only remotely the characteristics of a broadcasting activity.
And they believe that the public funding of such services leads to disproportionate effects on the market which cannot be justified by the public value for viewers and listeners.
One case in point is pay services. The solution of the draft Communication is flexible in this respect. It allows public broadcasters to use state aid for subsidising pay services under the general conditions of the Amsterdam Protocol.
In theory, under the terms of the Amsterdam protocol, the Commission could decide in each of these cases, for every Member State and for every broadcaster, where the adequate balance lies. But this would imply a series of interventions into national broadcasting systems. And these interventions would lead to lengthy proceedings involving legal uncertainty. I am sure that you agree with me that the future of public service broadcasting should not look like this.
Such interventions by Brussels can be avoided, once Member States start assessing not only the public value but also the actual market impact of a new state financed media activity at the national level.
I cannot agree that an Amsterdam test at national level would involve an unjustifiable administrative burden. Of course, any test involves work but I firmly believe that this work will help public service broadcasters to design the best and most valuable services for the benefit of the viewers.
First, the draft Communication only foresees the test for important and truly new services. And here, our draft leaves a large margin of appreciation to Member States.
Each Member State can decide when a new audiovisual service actually merits being tested. Germany has recently found its specific definition of which media services are truly "new" and "significant" to merit a test. And we are open to a specific Dutch solution in that respect, as well. It is important to note that the draft Communication leaves considerable leeway for each Member States to foresee a test where it makes sense, while exempting media activities that are not genuinely new or insignificant.
Second, the draft exempts pilot projects from the test. Public broadcasters can therefore freely experiment with new media offers without a preliminary test.
Third, the draft leaves Member States the freedom to choose the adequate procedures and the institutions which apply the test. The test can be done at the level of the parliament, of a minister, or an authority or also by an effectively independent body within the pubic broadcaster itself. The draft Communication is open for all these solutions.
I would therefore urge everyone to carefully consider the draft before judging it.
It is finally worth mentioning that smaller Member States such as Belgium and Ireland already implement such tests. The solutions found in these countries are proportionate to the resources available. And I am confident we can find a solution with the Dutch government which suits your needs.
As the Amsterdam test is quite broad there is finally also no possibility of infringing editorial freedom.
The test merely requires that a public media service satisfies the social, democratic and cultural needs of society and that its impact on the market is commensurate. To safeguard editorial independence, we are also open to the possibility that the test is done by a body within the public broadcaster itself, subject to safeguards to avoid a conflict of interest.
In summary, the market impact test at the national level is a flexible instrument which should be seen as an opportunity rather than as a threat. The test will help maintain media pluralism in the new environment by safeguarding the system of dual broadcasting in difficult times for public and private broadcasters alike.
Before concluding, let me state the obvious. There is always scope for improving a draft and for taking into account legitimate concerns expressed by stakeholders and public representatives.
Indeed, that was the whole purpose of our consultation. Where we are not sufficiently clear, we will improve the text. Where we can be shorter, without becoming simplistic, we will cut the text. Where we are still too prescriptive or can improve our respect for the principle of subsidiarity, we will make the necessary adjustments. In this context we have also carefully studied the suggestions by the Dutch Government in its submission of 24 December, as well as those of all other governments and stakeholders.
We will consult again all interested stakeholders on the revised draft we are working on and I hope to get a balanced and generally acceptable text to present, in agreement with my colleague Viviane Reding, to the College of Commissioners for final adoption.
But it would be a mistake to discard the Commission's openness to share the responsibility for assessing the market impact.
If the Commission is forced to continue intervening on a case by case basis in this sector, the outcome will be legal uncertainty at a time where all media alike need security for planning ahead. This cannot be in anyone's interest.