Everybody And Everything Competes, Rules To Follow

Michael Hedges September 27, 2016 - Follow on Twitter

Repurposing rules for the digital age is, at best, a tedious, time consuming job. But necessity is the mother of regulation. The media sector is particularly susceptible to digital anxieties in the midst of competition unforeseen only a few years ago, or moments, as the case seems to be. Those designing new media rules are sensitive to this. Competitive advantage is always suspect, though not well understood.

Gripping media and technology-related headlines recently has been the European Commission’s application of State Aid rules. Fundamentally, the European Union (EU) executive looks to keep level the playing field in just about every economic area, requiring Member States to toe the line. The August 30th decision requiring the Irish Republic to recover €13 billion from technology company Apple charged that low corporate tax-rates constitute illegal State Aid. Headlines worldwide were as big as the eleven-digit amount.

Most other State Aid decisions from DG Competition attract far less attention; bank guarantee schemes, wind turbine subsidies, airline supports, diamond trade taxation. “State aid is defined as an advantage in any form whatsoever conferred on a selective basis to undertakings by national public authorities,” says the EC website. DG Competition also looks into mergers, cartels and antitrust. Margrethe Vestager is the EC Competition commissioner, its most public face. In charge of day-to-day details is director general Johannes Laitenberger, one of the EC’s top lawyers.

Recent State Aid cases involving the audiovisual (media) sector are relatively few and far between. Only a handful of antitrust investigations - anticompetitive practices and abuse of dominance - have been pursued in the last three months, allegations that search engine provider Google breached rules being notable. But it’s mergers and acquisitions that keep DG Competition lawyers most busy. Scores of cross-border business deals in every sector go under the microscope each month, big ones and not so big, in search of those that would “significantly weaken effective competition in the market, in particular by creating or strengthening a dominant player.”

DG Competition recently ruled (September 1) that a German tax on audiovisual providers used to support German film production and distribution can be extended to foreign video on demand (VoD) providers and is not prohibited State Aid to domestic providers. Similar tax support for domestic film production and distribution exists elsewhere and the EC thoughtfully provided guidelines in 2013. In the case of German film subsidies, DG Competition cited proposed amendments to the Audiovisual Media Services Directive (AVMS) that “clarify” the country of origin principle and the “right to require providers of on-demand audiovisual media services, targeting audiences in their territories, but established in other Member States, to make such financial contributions.”

Several broadcasters, for example, claim the UK as country of origin while targeting a variety of markets to take advantage of less restrictive UK broadcasting regulation. Repurposing country of origin for targeted market, for purposes of regulatory domain, could have a direct effect. That would only be compounded by a UK exit from the EU.

Other recent media-related State Aid decisions include allowing the French state to directly finance public international media organization France Medias Monde, somewhat controversial in France when proposed leading the government to ask for EC approval. Similarly, Spanish authorities notified the EC of intentions to provide financial aid to privately owned newspapers and periodicals published in the Basque and Valencian languages. The EC did not object. DG Competition’s decision on State Aid to Spanish news agency EFE, presumed an approval, has not been published.

For several years public broadcasters in EU Member States were subjected to claims of illegal State Aid, usually with regard to new media services. The case weight led eventually to the Broadcasting Communication (2009), which clarified the EC’s support for public broadcasting services in the new media realm. More recently DG Competition has ruled on subsidies for digital television transition, finding a Spanish plan to compensate broadcasters for simulcasting, which was never used, “provided a selective advantage to terrestrial broadcasters and platform operators over other available technologies.”

See also in ftm Knowledge

State Aid - Media Rules – new

National authorities have at their disposal a variety of economic measures to stimulate, develop and improve competitive market sectors. Sometimes they miss the big picture or have special circumstances. Within the European Union an executive branch of the European Commission stands ready to clarify the rules of each and every game. State Aid rules are developing as the playing field gets bigger. 35 pages, PDF (September 2016)

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