# C_2005082EN.01003301.xml

| 2.4.2005 | EN | Official Journal of the European Union | C 82/33 |
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2.4.2005

EN

Official Journal of the European Union

C 82/33

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Action brought on 20 January 2005 by Viasat Broadcasting UK Ltd against the Commission of the European Communities

(Case T-16/05)

(2005/C 82/62)

Language of the case: Danish

An action against the Commission of the European Communities was brought before the Court of First Instance of the European Communities on 20 January 2005 by Viasat Broadcasting UK Ltd, West Drayton (United Kingdom), represented by Simon Evers Hjelmborg, lawyer.

The applicant claims that the Court should:

| 1. | annul point 55 of the Commission decision of 6 October 2004 in State Aid Case No N 313/2004 – Denmark (C(2004)3632 final) concerning the recapitalisation of TV 2/DANMARK A/S; |
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1.

annul point 55 of the Commission decision of 6 October 2004 in State Aid Case No N 313/2004 – Denmark (C(2004)3632 final) concerning the recapitalisation of TV 2/DANMARK A/S;

| 2. | order the defendant to pay the costs of the proceedings. |
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2.

order the defendant to pay the costs of the proceedings.

Pleas in law and main arguments:

The contested decision relates to a recapitalisation plan for the State-owned public service television broadcasting company TV 2/DANMARK A/S. The recapitalisation, which comprises a capital injection by the Danish State and conversion of debt into equity, was deemed to be necessary as a result of the Commission's decision of 19 May 2004 (1) whereby the Commission required Denmark to recover unlawfully granted State aid from TV 2/DANMARK A/S, which would, however, have resulted in technical bankruptcy of the company.

1

According to the contested decision, the Commission was unable to discount the possibility that the recapitalisation of TV 2 under consideration might contain elements of State aid under Article 87(1) EC. In point 55 of the contested decision, however, the Commission found that any element of State aid that might be linked to the planned recapitalisation of TV 2 would be compatible with the common market under Article 86(2) EC.

In support of the form of order which it seeks, the applicant submits that the Commission erred in law in not holding that the recapitalisation plan was incompatible with Article 87(1) EC. That submission is based inter alia on the following grounds:

| — | the reason why TV 2/DANMARK A/S is seeking recapitalisation lies in the demand for reimbursement of illegal State aid. Consequently, authorisation to provide new aid (recapitalisation) would mean that Article 87(1) EC and the Commission's decision of 19 May 2004 will be deprived of their independent meaning; |
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the reason why TV 2/DANMARK A/S is seeking recapitalisation lies in the demand for reimbursement of illegal State aid. Consequently, authorisation to provide new aid (recapitalisation) would mean that Article 87(1) EC and the Commission's decision of 19 May 2004 will be deprived of their independent meaning;

| — | recapitalisation under which equity is increased to the optimal capital structure cannot be regarded as being compatible with the market investor principle; |
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recapitalisation under which equity is increased to the optimal capital structure cannot be regarded as being compatible with the market investor principle;

| — | TV 2/DANMARK A/S generated a profit in 2003 without State aid; this would suggest that the company is itself in a position to build up its desired equity; and |
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TV 2/DANMARK A/S generated a profit in 2003 without State aid; this would suggest that the company is itself in a position to build up its desired equity; and

| — | an optimal capital structure is not necessary to enable TV 2/DANMARK A/S to perform its public-service obligations. |
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an optimal capital structure is not necessary to enable TV 2/DANMARK A/S to perform its public-service obligations.

The applicant further submits that the Commission erred in law in finding that any element of State aid which might be linked to recapitalisation would be compatible with the common market under Article 86(2) EC. In support of its plea in law, the applicant submits inter alia as follows:

| — | the scope of Article 86(2) EC is limited to compensation for the net supplementary costs connected with the provision of services of general economic interest (public service). That provision therefore does not cover State investments in companies which are required to provide those services; |
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the scope of Article 86(2) EC is limited to compensation for the net supplementary costs connected with the provision of services of general economic interest (public service). That provision therefore does not cover State investments in companies which are required to provide those services;

| — | the Danish State's investment in TV 2/DANMARK A/S (recapitalisation) is not compensation for the public-service related services which it has purchased and is therefore not compensation for the net supplementary costs arising from the public-service obligations; |
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the Danish State's investment in TV 2/DANMARK A/S (recapitalisation) is not compensation for the public-service related services which it has purchased and is therefore not compensation for the net supplementary costs arising from the public-service obligations;

| — | TV 2/DANMARK A/S is not considered to have net supplementary costs connected with its public-service obligations; |
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TV 2/DANMARK A/S is not considered to have net supplementary costs connected with its public-service obligations;

| — | the Commission did not check the definition of public service and thereby accepted a very wide definition of that term, under which the entire programme schedule of TV 2/DANMARK A/S constitutes a public service, with the result that the proportionality test under Article 86(2) EC is voided of substance; and |
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the Commission did not check the definition of public service and thereby accepted a very wide definition of that term, under which the entire programme schedule of TV 2/DANMARK A/S constitutes a public service, with the result that the proportionality test under Article 86(2) EC is voided of substance; and

| — | Article 86(2) EC cannot establish an exemption for State aid which was granted with a view to making State companies attractive as a step in the State's sale of those companies. |
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Article 86(2) EC cannot establish an exemption for State aid which was granted with a view to making State companies attractive as a step in the State's sale of those companies.

The applicant also submits that the Commission was limited to appraising the planned recapitalisation under Article 87(2) EC and 87(3) EC, in particular Article 87(3)(c) EC, and the Community guidelines on State aid for rescuing and restructuring firms in difficulty, (2) and that the planned recapitalisation does not meet the conditions for exemption under those provisions.

2

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(1)  Commission Decision C(2004)1814 final of 19 May 2004 in Case C 2/2003 (ex NN 22/2002) on Danish measures benefiting TV 2/DANMARK.

1

(2)  Communication from the Commission, OJ C 244 of 1 October 2004, p. 2.

2

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