Preview document (🔗 origineel)

---

Response of the Netherlands to the draft Broadcasting Communication of
the European Commission 

1. Introductory remarks

In September 2008, on behalf of 19 member states, and in reaction to the
Commission consultation document, the Dutch Minister of Education,
Culture and Science Mr. Plasterk, sent a common position paper to
Commissioner Kroes about the revision of the Broadcasting Communication.
The general conclusion of the position paper was that there would only
need to be small changes in order to adapt the Communication to the
technical developments of the digital age. It is apparent that DG
Competition of the Commission tried to meet the needs of the member
states as laid down in the common position paper. In the multilateral
meeting of 5 December 2008 however, a majority of member states was
still critical about the draft Broadcasting Communication. The key
argument was that the draft overly interfered with the competence of
member states to define, organize and finance public service
broadcasting. The Dutch government shares this opinion. 

The current Broadcasting Communication is, on balance, a flexible
instrument which presents the principles applicable to publicly funded
public service broadcasting. In contrast, the draft for a revised
Communication contains detailed criteria and examples for evaluation
which leave member states little room to design procedures that fit in
with national systems. In particular the Dutch authorities oppose an
obligation for a broad and independent market impact assessment before
approving new media services of public service broadcasters. This part
of the draft inappropriately assumes that new services of public service
broadcasters need more far reaching regulation than traditional radio
and television. As a result, the draft fails to recognize fully that as
radio, television, internet and mobile networks converge, public service
broadcasters will need to use all electronic media to fulfil their role
in society. The Dutch authorities question whether there is a legal
basis in the Treaty (including the Amsterdam Protocol) to call for such
a broad ex ante market impact assessment.

 

In sum, the Dutch authorities feel there is ample reason for improving
the draft Broadcasting Communication. In particular, it urges the
Commission to rethink the level of detail in the ex ante evaluation of
new media activities. Below the Dutch authorities list and substantiate
the specific problems and suggest concrete text proposals. 

2. Paragraphs which need improvement 

2.1 Paragraph 51 ‘Remit of the public broadcaster in the digital
age’

In the position paper (point 5) the member states state: “In line with
the principle of technological and platform neutrality, the BC should
acknowledge that in the digital media landscape the public service remit
can include all electronic content. A flexible definition should allow
member states to entrust public service broadcasters with a remit that
could include a diversity of programmes on digital radio and television
and which could include the possibility to make full use of new forms of
distribution, such as the internet and mobile telecommunication
networks. Thus, it should be made clear that the means of distribution
are not relevant in classifying a public service activity.” 

The Dutch authorities appreciate the Commission’s effort to include
the principle of technology neutrality. They feel however that
non-linear audiovisual services are still treated differently from
linear audiovisual services. This makes the draft inconsistent with the
new Audiovisual Services Directive and could hamper digital development
of public service broadcasters. 

The Dutch authorities therefore suggest the following amendment in
paragraph 51:

 

51. Public service broadcasters shall be able to use the opportunities
offered by digitization and the diversification of distribution
platforms on a technology-neutral basis to the benefit of society. In
order to guarantee the fundamental role of public service media in the
new digital environment, public service broadcasters may provide
audiovisual media content in the form of linear services as well as in
the form of non-linear services over new distribution platforms,
catering for the general public as well as special interests provided
that they are addressing the same democratic, social and cultural needs
of the society in question, and do not entail disproportionate effects
on the market, which are not necessary for the fulfilment of the public
service remit.

2.2 Paragraphs 52, 53 and 54 ‘Services paid for by end users’

In the position paper (point 11) the member states state: “The BC
should not exclude the possibility for public service broadcasters to
offer pay services as part of the public remit. This can be necessary to
ensure appropriate and secure funding of public service media in the
digital media landscape, especially in smaller language markets within
the EU.”  

The Dutch authorities appreciate the fact that the draft Communication
recognizes the possibility for member states to include pay services as
part of the public service remit. However the explanation given in
paragraphs 53 and 54 is unclear and confuses a number of issues. 

In paragraph 53 the explanation on universality is only partially
correct and does not sufficiently take into account its definition as
laid down in the recent BUPA case (see points 186 and 187): “As
regards the universal nature of the PMI services (…), the concept of
universal service, within the meaning of Community law, does not mean
that the service in question must respond to a need common to the whole
population or be supplied throughout a territory”. “Accordingly, the
fact that the SGEI obligations in question have only limited territorial
or material application or that the services concerned are enjoyed by
only a relatively limited group of users does not necessarily call in
question the universal nature of an SGEI mission within the meaning of
Community law.”  

Moreover the Amsterdam Protocol leaves it up to member states to decide
about the methods of funding. Paid services should be treated as an
alternative or extra source of income, next to government funds and
advertising.

Attention should also be paid in this regard to the recent TV2/Denmark
judgement of the Court of First Instance:

“The possibility open to member states to define broadcasting SGEIs
broadly, so as to cover the broadcasting of full-spectrum programming,
cannot be called into question by the fact that the public service
broadcaster also engages in commercial activities, in particular the
sale of advertising space.” (point 107) “Calling such activities
into question would be tantamount to making the very definition of the
broadcasting SGEI dependent on its method of financing. An SGEI is
defined, ex hypothesi, in relation to general interest which it is
designed to satisfy and not in relation to the means of ensuring its
provision. As the Commission points out in point 36 of the Communication
on broadcasting, ‘the question of the definition of the public service
remit must not be confused with the question of the financing mechanism
chosen to provide these services’.” (point 108)

The Dutch authorities therefore take the view that this chapter should
not start, as stated in paragraph 53, with the assumption “that the
direct payment for a service may negatively affect the universality”.
Instead, the starting point should be, as stated in paragraph 54,
“that the provision of public services to satisfy the needs of those
parts of the society with special interests may necessitate additional
resources. In that case a member state may choose not to impose the
burden of financing of such a public service on the whole population,
but only on those interested in accessing the service.”

In addition, the mentioning of examples in paragraph 54, among which
premium (football) content, is questionable. The Commission qualifies
the final of the UEFA Champions’ League on a pay-per-view or
subscription basis as a commercial activity. It is unclear whether in
this example the method of funding or the content is the decisive
criterion. In any case, it is up to member states to define the public
service remit (which can include sport) as well as the sources of
funding (which can include direct payment by users). By stating that
premium content on a pay-per-view basis cannot be financed through State
aid, the Commission consequently jumps to the conclusion that this type
of service of a public broadcaster is a so called manifest error (the
role of the Commission is limited to control for manifest errors).
However, the evaluation of a service very much depends on the specific
circumstances in a member state, which should be taken into account by
the Commission.

The Dutch authorities therefore suggest that paragraphs 53 and 54, as
well as the last sentence of 52 be removed from the draft. The current
paragraph 55 is sufficient and clear.

2.3 Paragraphs 59 to 62:  ‘The ex ante evaluation’

In the position paper the member states ask the Commission to take into
account the following principles:

Although similar in essence, the details of the remit, the organization
and the financing of public service media cannot be harmonized across
Europe, but should continue to reflect national needs,  national culture
and national constitutional law. Therefore the BC may include only a
number of basic and flexible principles and can not create detailed
rules on the basis of State aid measures taken within individual member
states over the past years (point 2)

The BC may underline that the public service remit is to respond to the
democratic, social and cultural needs of society. The benchmark for
public services lies in criteria such as diversity, independence,
quality, accessibility and reach. The BC cannot limit the public service
remit to services which are not available on the market, neither by
criteria with regard to content nor by rules concerning the entrustment
procedure (point 4)  

The BC may acknowledge that the public service remit is fulfilled by the
totality of programmes and services which public broadcasters offer and
can not be broken up into independent parts. This also means that 
‘old’ and ‘new’ media services are inextricably linked (point 6)


In line with the present communication the BC should require the member
states to ensure that there is a clear and adequate definition and
entrustment of the public service remit. The role of the Commission is
to control for manifest errors. It should be made clear that the form of
the legal act and the choice of procedure for entrustment is for the
individual member states to decide (point 7) 

The BC may require member states to have procedures demonstrating how
public service media meet the democratic, social and cultural needs of
their respective societies. However, any inclusion or suggestion on the
use of criteria concerning the public service character of activities
goes beyond the Community’s competence (point 8) 

The BC may invite the member states to consult on the public service
remit, but should not limit member state’s options for ex ante
evaluation by requiring them to perform a broad, independent, market
impact assessment before approving any (new) activities of public
service media (point 9)

The Dutch authorities feel that the Commission has insufficiently taken
into account these principles in this part of the draft. This is
substantiated below.

Flexibility

First, the draft contains too detailed criteria and obligations that go
beyond recent case practice on state aid and public service
broadcasting. Even if the draft were to remain close to case practice, a
revised Broadcasting Communication can not translate measures which were
negotiated in individual cases between the Commission and certain member
states into a solution for all member states (one size fits all).

The obligations in the draft even go beyond the 2005 Community framework
for state aid in the form of public service compensation. This framework
does not require the member states to perform a broad market impact
assessment beforehand. It only asks for a public consultation in which,
in particular, the user should be heard. Compared to the general
framework for SGEI the detailed criteria in the draft Broadcasting
Communication leaves member states less room to design procedures
according to national needs and cultures. This is remarkable, since the
Amsterdam Protocol stresses subsidiarity in the field of public service
broadcasting.

No separation of services

Second, the ex ante evaluation proposed in the draft tends to break down
the overall offer of the public service broadcaster into independent
parts. According to the Dutch authorities, this is not a viable option.
The public service broadcaster offers public content in various forms
via various networks: general radio and television channels, digital
special interest channels, on-demand audiovisual media services,
websites, etc. In the digital media landscape such ‘old’ and
‘new’ media activities are inextricably linked. The notion of a
broad, prior market impact assessment for new media activities fails to
acknowledge this connection and could hamper digital innovation and
audience reach of public service broadcasters. Moreover, the Dutch
authorities would argue that the distinction between the public service
broadcaster and commercial media is not always apparent in each single
activity (programme, website, digital special interest channel, mobile
service). Rather, the value of public service broadcasting lies in the
range, diversity and quality of its overall offer. 

Market interests 

Third, the reasoning, criteria and examples of ex ante evaluation
intervene with the competence of member states to define the remit of a
public service broadcaster. The Dutch authorities refer to the recent
ruling of the Court of First Instance in the TV2/Denmark case. In point
123 the CFI notes: “To accept that argument and thereby to make the
definition of the broadcasting SGEI dependent – through a comparative
analysis of programming – on the range of programming offered by the
commercial broadcasters would have the effect of depriving the member
states of their power to define the public service. In fact, the
definition of the SGEI would depend, in the final analysis, on
commercial operators and their decisions as to whether or not to
broadcast certain programmes. As TV2 A/S rightly submits, when the
member states define the remit of public service broadcasting, they
cannot be constrained by the activities of the commercial television
channels.” 

A mandatory ex ante assessment, which in practice could determine to a
large extent the public task by the impact a service of the public
service broadcasters may have on the commercial offer, is not consistent
with the CFI judgment which rejects the definition of the remit by
reference to the activities of the commercial operators.

Furthermore the Dutch authorities feel that market distortion is first
and foremost prevented by proper entrustment of the public service
remit, monitoring of actual delivery, and proportionality and
transparency of funding of the public service broadcaster. See chapter
6.3.3.4. (“Market distortions”) in the Commission’s draft which
deals with respecting market principles (undercutting prices or
overbidding for programme rights). 

The Netherlands and most other member states follow the principle that
public service broadcasters have a wide and independent remit.
Activities undertaken by public service broadcasters in fulfilment of
their public service remit must meet the criteria inherent in that, such
as diversity, independence, quality, accessibility and reach. The Dutch
authorities do not call into question the necessity of transparency and
a clear public task. As it is worded in point 22 of the Commission
communication on services of general interest: “in every case, for the
exception provided for by Article 86 (2) EC to apply, the public service
mission needs to be clearly defined and must be explicitly entrusted
through an act of public authority (including contracts) … This
obligation is necessary to ensure legal certainty as well as
transparency vis-à-vis the citizens and is indispensable for the
Commission to carry out its proportionality assessment.” 

The Dutch authorities do not call into question the necessity of
transparency in relation to third parties and the need to take their
interests into account. In the Dutch system all third parties, including
commercial parties active on the market, have the right to bring forward
their interests and viewpoints, before the government decides which
activities the public service broadcaster may engage in. The proposed
decision and the final decision, as well as the grounds for the
decision, are made publicly available. This means that the interests of
third parties are heard and weighed, but this does not mean that the
overall offer of the public service broadcaster is a derivative of the
commercial market offers. 

Administrative aspects

Fourth, an elaborate ex ante evaluation of new services will entail
considerable costs and increased administrative burden. Especially in
the smaller member states and in member states where public service
broadcasters work on a tight budget, the costs of ex ante evaluation
will be disproportional to the aim. 

In the multilateral meeting on 5 December, the Commission said that it
hoped that a market impact assessment on the national level will reduce
complaints at the European level. However, the Dutch authorities think
that the level of detail in the draft is liable to lead to more
complaints, both at the national level and the European level. Moreover,
the Commission can not delegate its powers to check for manifest errors
to member states.  

Legal aspects

Fifth, the Dutch authorities question the legal basis for the broad
independent and detailed ex ante evaluation as proposed in the draft.
The Amsterdam Protocol interprets the Treaty provisions as giving more
latitude to member states and not as requiring member states to carry
out a broad market impact assessment for new activities of public
service broadcasters. Moreover the compatibility of aid, especially
where it concerns existing aid, can not be called into question because
no ex ante assessment has been carried out by member states. 

Also the Treaty itself does not require member states to conduct a broad
market impact assessment beforehand. Articles 87 and 86 (2), do not
require ex ante assessment of new services. In Community law and for the
purposes of applying the EC Treaty competition rules, there is no clear
and precise regulatory definition of the concepts of an SGEI mission.
There is also no established legal concept definitively fixing the
conditions that must be satisfied before a member state can properly
invoke the existence and protection of an SGEI mission (either within
the meaning of the first Altmark condition or within the meaning of
Article 86 (2) EC). See the BUPA case (point 165).

It follows from point 22 of the Communication on service of general
interest and point 36 of the current Broadcasting Communication that the
Commission’s task when evaluating the system of public service
broadcasting, and services of general economic interest in general for
that matter, is to control for manifest errors. Given this limited role,
the Dutch authorities do not see how the Commission can justify a
mandatory and detailed market impact assessment on an EU-wide level,
especially in the field of public service broadcasting. 

The Amsterdam Protocol emphasizes the specificity of public service
broadcasting in the member states by stating that it is directly related
to the democratic, social and cultural needs of each society and to the
need to preserve media pluralism. Public service broadcasting is thus
not like other services of general economic interest and the principle
of subsidiarity is all the more important with regard to the definition
of the public service broadcasting remit.

 

Considering the arguments above, the Dutch authorities have serious
problems with paragraphs 58 to 64 of the draft entailing a detailed
regulation of new services. This part of the draft involves a
requirement on member states (“should consider”, “shall
assess”), a mandatory procedure carried out before the introduction of
the service (ex ante), a clarification of what is considered a new
service, a right for competitors to give their views, and an assessment
carried out by an external body (independent of the management). 

The Dutch authorities feel that these paragraphs can be adjusted to the
satisfaction of all parties concerned. The Netherlands therefore has the
following suggestions for compromise. 

Text proposal

The Dutch authorities suggest removing points 60 and 62 and rewriting
point 61 to include one single and general obligation for member states
with the following wording:

“61. In order to consider the potential effects of the services in
question on the market, and to avoid undue distortions of competition,
member states shall assess, within the context of the overall offer of
the public broadcaster, the consequences entailed by the envisaged new
service, by an evaluation procedure based on open public
consultation.” 

3. Other paragraphs

The Dutch authorities think there are other parts of the draft which
could also be improved: 

- par. 58: in line with the principle of technological and platform
neutrality remove the part between the brackets: ‘(e.g.: non linear or
on demand rather than linear)’

- par. 64: following the proposed changes in the previous paragraphs
remove the part: ‘a thorough assessment at national level, carried out
in an independent manner, taking into account’

- par. 66: In this paragraph the Commission asks for parameters for
providing compensation. The term ‘parameters’ is not convenient in
the case of public service broadcasting. Public funding of a public
service broadcaster is generally designed to cover the foreseen needs
over a longer time period, arrangements being made to match compensation
with corresponding net cost. But quantitative parameters can not be
fixed due to the complexity of broadcasting services. In other sectors
this calculation does make sense as can be seen by the example of a
private bus company considering an SGEI fixing a certain amount per
ride. Moreover, parameters could prove to be a source of undue
litigation and claims by third parties. Attention should also be paid to
the TV2/Denmark case where the Court notes that the second (Altmark)
condition leaves member states free to choose how to comply with it in
practical terms” (point 227).  A solution can be found in not using
‘parameters’ but the more general term ‘conditions’.

- par. 89: here the Commission confuses the competence of member states
to define the public task and the proportionality test regarding the
funding of this task (test on overcompensation and cross-subsidization).
 The Dutch authorities suggest removing this paragraph.

 

- par. 100: the Dutch authorities oppose the maximum period (of 4 years)
for which financial buffers can be maintained. The draft seems to
suggest that member states should lower the annual budget of the public
service broadcaster when they maintain reserves four years in a row.
Eventually, this would leave the public service broadcaster with (almost
no) reserves which of course is not workable. The Dutch authorities
suggest removing this paragraph.

- par. 102: again the Commission mentions the example of premium sport.
This example is superfluous and focuses unnecessarily on premium sports
content. Moreover it is not clear what is meant by “transparency
concerning the general framework governing the acquisition, use and
possible sublicensing of premium rights by public service
broadcasters”. What is meant by ‘a general framework’? The
acquisition of broadcasting rights of content is primarily a concern of
the public service broadcaster. Each case can be assessed by the Media
Authority on its own merits, taking into account the specificities of
each case. The Dutch authorities suggest removing paragraph 102 and
transferring the word ‘consistently’ in the seventh sentence from
this paragraph to paragraph 105 (“or whether they are consistently
overbidding for programme rights”).  

- par. 105 last sentence: at the beginning of this paragraph the
Commission writes that the condition of respecting market principles
(for example advertising prices and payments for programme rights) shall
primarily be assessed at national level, taking into account the
specificities of each case and each market. That is why it is not
desirable to mention examples here, because examples will always be
referred by the Commission or third parties, which eventually will leave
less room for member states. The Dutch authorities suggest removing the
examples in the last sentence.

4. A procedural request

The Dutch authorities request the Commission to present a second draft
version of the Broadcasting Communication to be discussed at another
multilateral state aid meeting after the consultation.

 Directive 2007/65/EC of the European Parliament and of the Council of
11 December 2007 amending Council Directive 89/552/EEC on the
coordination of certain provisions laid down by law, regulation or
administrative action in member states concerning the pursuit of
television broadcasting activities (OJ L 332 of 18 December 2007).

 Case T-289/03.

 Judgment of the Court of First instance of 22 October 2008 in Joined
Cases T-309/04, T-317/04, T-329/04 and T-336/04.

 Community framework for State aid in the form of public service
compensation (OJ C 297, 29.11.2005, p. 4).

 See footnote 3.

 Communication from the Commission on services of general interest in
Europe (OJ 2001 C 17, p. 4, ‘the communication on services of general
interest’).

 Every five years the Minister of Education, Culture and Science grants
prior approval to all activities outlined in the public broadcasting
policy plan. For any new activities introduced subsequent to that point,
the public service broadcaster must request interim approval upon
submitting its budget. Two autonomous bodies, the Council for Culture
and the Media Authority, advise the Minister on this matter. The
assessment criteria are set down in the Media Act, which requires (1)
diversity (a balanced mix of information, culture, education and
entertainment from different perspectives, for audiences both large and
small), (2) editorial independence, (3) professional quality, (4)
accessibility and (5) reach among various target audiences. Third
parties have the opportunity to present their reactions and points of
view in the decision-making process. The public broadcasting policy plan
and the draft decision by the minister are made public. Objections can
be lodged against the Minister’s decision, under the terms of the
General Administrative Law Act.

 See footnote 5.

 Which is already covered in paragraph 57.

 PAGE    

 PAGE   1