Brussels, 15/06/2010 (Agence Europe) - With its ruling of Tuesday 15 June in Case T-177/07, the EU General Court rejected in its entirety an appeal by the Italian company, Mediaset SpA, against a 2007 Commission decision calling on Italy to recover from the beneficiaries a public subsidy for the purchase or rental of digital terrestrial decoders. Confirming the Commission's decision, the Court ruled that the subsidiary was not technologically neutral and conferred an indirect advantage on digital terrestrial broadcasters to the detriment of satellite broadcasters, and that the selective nature of this measure had led to competition distortion between these two categories of operators.
The aid contested by the Commission consisted of a subsidy of €150 in 2004 and of €70 in 2005 granted to every user who purchased or rented equipment for the reception of TV signals transmitted using digital terrestrial technology. Digital switchover of TV signals, which began in Italy in 2001, was to be completed by 2012. While acknowledging that the transition to digital broadcasting was a common interest objective, the Commission found the subsidy disproportionate and did not prevent unnecessary distortion of competition as it did not apply to satellite decoders. It had therefore called for the subsidy to be recovered, with interest.
The Court took up these arguments saying that the measure was not neutral from the technological point of view and that it allowed digital terrestrial broadcasters and cable operations, such as Mediaset, to benefit from an advantage over satellite broadcasters. The measure created an incentive for consumers to switch from the analogue to the digital terrestrial mode and, at the same time, enabled digital terrestrial broadcasters to consolidate their position on the market in terms of brand image and customer retention. Finally, the automatic price reduction promoted by the subsidy was also liable to affect the choice of consumers mindful of costs.
Secondly, although this measure directly benefited the end consumer, it nonetheless gave an indirect advantage to digital terrestrial market operators and cable operators such as Mediaset. The treaty bans state aid without making a distinction as to whether the related advantages are granted directly or indirectly. Case-law has acknowledged that an advantage granted directly to certain natural or legal persons who are not necessarily undertakings may constitute an indirect advantage - hence state aid for other natural or legal persons who are undertakings.
Thirdly, the Court holds that the selective nature of the measure resulted in a distortion of competition between digital terrestrial broadcasters and satellite broadcasters. Even though all the satellite broadcasters could have benefitted from the measure by offering “hybrid” decoders (both terrestrial and satellite), that would have exposed them to extra costs to pass on to consumers in the selling price.
Finally, the Court rejected Mediaset's objections concerning, in particular, the notion of “legitimate confidence” invoked by the company in respect of the fact that the measure was inconsistent with the policy for promoting the digital system recommended by the Commission, and violation of the notion of “legal security” linked to the difficulty of determining the number of beneficiaries of the measure and hence the sums to be recovered.
The Court states in this respect that incentive measures recommended by the Commission had to be technologically neutral and notified to the Commission. Consequently, a diligent business operator should have known not only that the measure in question was not technologically neutral but also that it had not been notified to or authorised by the Commission.
On the subject of the amounts to be recovered, the Court pointed out that it is incumbent upon the national judge to rule on this, as no provision requires the Commission, when ordering the recovery of aid, to fix the exact amount of aid to be recovered. (F.G./transl.jl)