Updated: Sept. 25, 2012 (Initial publication: Dec. 12, 2011)

Sectorial Analysis

II-3.7:The European Court of Justice upholds the European Commission’s condemnation of Italy’s illegal state aid in the form of subsidies to purchasers of digital terrestrial television decoders

by Marie-Anne Frison-Roche

http://www.thejournalofregulation.com/spip.php?article1082

Translated Summaries

In The Journal of Regulation the summaries’ translation are done by the Editors and not by the authors


ENGLISH

On July 28, 2011, the European Court of Justice rejected an appeal by an Italian digital terrestrial broadcaster against a ruling of the European General Court, which had also rejected an appeal against the European Commission’s condemnation of Italy for having subsidized the purchase or rental by consumers of equipment for the reception of digital terrestrial television broadcast signals, since this was an indirect provision of state aid to the broadcasters.


 

FRENCH

Le 28 juillet 2011, la Cour de Justice de l’Union Européenne a rejeté un appel interjeté par un radiodiffuseur italienne numérique terrestre contre une décision de la Cour européenne de première instance, qui avait également rejeté un recours contre la condamnation prononcée par la Commission européenne de l’Italie pour avoir subventionné l’achat ou la location par le consommateurs d’équipements pour la réception de télévision numérique terrestre des signaux de télédiffusion, puisque ce fut une prestation indirecte, constitutive d’aides d’Etat au bénéfice des radiodiffuseurs.

 


SPANISH

El 28 de julio de 2011, el Tribunal Europeo de Justicia rechazó una apelación de un emisor italiano digital terrestre contra una resolución del Parlamento Europeo y del Tribunal General, que había rechazado también un recurso de apelación contra la condena de la Comisión Europea de Italia por haber subvencionado la compra o el alquiler de los consumidores de los equipos para la recepción de señales digitales terrestres de televisión, ya que esta era una disposición indirecta de las ayudas estatales a las emisoras.



DEUTSCH

Am 28. Juli 2011 hat der Gerichtshof der Europäischen Union eine Beschwerde von einem italienischen digitalen terrestrischen Sender zurückgewiesen gegen eine Entscheidung des Europäischen Gerichts Erster Instanz, die auch abgelehnt hatte Einspruch gegen der Überzeugung, in der Europäischen Kommission Italien nach dem Kauf oder Leasing von der Consumer-Geräten zum digitalen terrestrischen Fernsehsignale empfangen subventioniert haben, da es ein indirekter Nutzen war, um eine staatliche Beihilfe für Broadcaster.


ITALIAN

Il 28 luglio 2011, la Corte di Giustizia Europea ha respinto un appello di emittente italiana di digitale terrestre promosso contro una decisione della Corte generale europea. Anche tale Corte aveva respinto l’appello promosso contro la decisione della condanna dello Stato italiano per aver sovvenzionato l’acquisto o l’affitto da parte dei consumatori di un decoder, in quanto costituirebbe un aiuto statale indiretto alle emittenti.

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Other translations forthcoming.

Attached documents

Themes

Context and Summary

Click here to read the decision (in french).

Click here to read the decision (in english).

 

European Union law forbids state aids since they are a means for governments to favor their own companies, contrary to the European project of creating a common market. The prohibition on state aids is characteristic of European law, in comparison to American law, which allows them, because in the United States the construction of a common market is a non-issue.

Concerning the beneficiaries, the prohibition on state aid only concerns corporations, which are subject to competition law.

Thereby, Italy, in order to facilitate the technological transition from analog broadcasting to digital broadcasting, which requires end users to purchase or rent special equipment to receive the signal, decided to provide a public subsidy to consumers to enable them to acquire the necessary equipment. This subsidy was only granted to equipment that allowed consumers to decode digital terrestrial television signals, and not digital satellite television decoders, which remained unsubsidized.

The European Commission condemned the Italian system, considering that it was a form of prohibited state aid. The Italian digital terrestrial television broadcaster Mediaset appealed this decision before the European General Court, which upheld the Commission’s decision, which led the broadcaster to appeal before the European Court of Justice.

In its July 28, 2011 ruling, the European Court of Justice rejected the appeal on the grounds that the scheme was intended to provide an incentive in the form of a subsidy for consumers to purchase or rent a digital terrestrial television decoder. Thereby, the recipient of the subsidy is not really the consumer, but in reality, the broadcaster, since the subsidy brings it more clients. Indeed, the purchase or rental of digital satellite television decoders did not benefit from such public subsidies, which harmed competition between digital satellite broadcasters and digital terrestrial broadcasters. Therefore, the subsidy is a form of prohibited state aid to companies, and the European Commission was thereby justified in sanctioning it.

Brief commentary

From the narrow point of view of state aid legislation, the logic successively adopted by the European Commission, the General Court, and the European Court of Justice makes perfect sense.

However, the goal of the subsidy wasn’t really to provide an incentive to customers to purchase a good or service (digital terrestrial television in this case), but rather to facilitate the transition from analog broadcast to digital broadcast. Various authorities affirm that competition law takes innovation into account, and it is therefore surprising that this essential criterion was not taken into account by the European authorities.

The goal of the subsidy was not to provide an incentive to purchase or rent a decoder, but to provide an incentive to adopt digital technology, which is the key to the modernization of the media and the effectiveness of the movement towards digital convergence, especially between telecommunications and the media.

The fact that the competition authorities did not take this dimension into account shows that they remain—which is legitimate from their point of view—primarily attentive to the market seen as a forum for exchanging goods and services.
One might think that regulatory authorities—which are receptive to new technologies and innovation, not only by not hindering it (the competition authority says that it does not hinder new technology, either), but also by providing incentives for it, including by using industrial policy supported when necessary by state aids—would have reasoned differently.

But, for the time being, there is still no such thing as a common industrial policy in Europe.

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