WRITTEN QUESTION E-1568/00

by Bart Staes (Verts/ALE) to the Commission

(19 May 2000)

Subject: Government aid for audiovisual productions

The Commission wants to confine government aid for audiovisual productions to half the total budget. This proposal is the first occasion that the Commission has applied the competition rules in full in the area of cultural policy.

This action will have a pernicious effect on audiovisual initiatives in small and medium-sized Member States and cultural areas. They have more limited sources of finance than the large Member States and cultural areas. Moreover, a relative yardstick (in this case the 50 % rule), as used by the Commission, gives a distorted picture of the amounts actually invested.

1. Does the Commission plan to limit government aid for audiovisual productions to half the total budget? If so, why?

2. Does the Commission acknowledge that this proposal is the first occasion that it has applied the competition rules in full in the area of cultural policy? If no, how then should limiting government aid for audiovisual productions to half the total budget be interpreted?

3. In the Commission's opinion, can limiting government aid for audiovisual productions to half the total budget be reconciled with its objective of supporting the development of small and medium-sized Member States and cultural areas? If so, in what way does the Commission think that limiting government aid for audiovisual productions to half the total budget will contribute to developing small and medium-sized Member states and cultural areas?

4. Is the Commission prepared to drop its proposal to limit government aid for audiovisual productions to half the total budget in view of the detrimental effect this will have on audiovisual initiatives in small and medium-sized Member states and cultural areas? If not, why not, and what are the Commission's reasons for persisting with the proposal?

Answer given by Mr Monti on behalf of the Commission

(25 September 2000)

1. The Commission has applied the same rules and principles to state aid for films in all its recent decisions since the decision of 29 July 1998 approving the French system of support for film production (N 3/98), namely:

- certain guarantees must by given by the Member State in order to ensure that films have a cultural impact, thereby excluding commercial productions, such as audiovisual advertising, which do not make a cultural contribution;

- aid intensity must be limited to 50 %, except in the case of esoteric low budget films, with a view to stimulating normal commercial initiatives inherent in a market economy and avoiding a bidding contest between Member States;

- aid supplements for certain specific activities must not be allowed, to ensure that the aid has a neutral incentive effect; and

- the producer must be free to spend at least 20 % of the film budget in other Member States, which encourages exchanges within the Union; in other words, the full aid must still be available even if only 80 % of the budget is spent within the Member State that awards the aid.

Application of these principles enables the systems notified to the Commission to be covered by the exemption provided for in Article 87(3)(d) (formerly Article 92) of the EC Treaty.

2. This is not the first time that competition rules have been applied in the area of cultural policy. The Commission had already applied these rules to aid to culture before incorporation into the Treaty of the relevant exemption (Article 87(3)(d)). In order to be able to benefit from this exemption, the aid in question must be used for specific cultural products, e.g. film production. Otherwise it will fall under the normal industrial aid header. Aid to industry that is not destined for specific cultural products falls under the general state aid rules and frameworks, including the one for small and medium-sized enterprises.

3. The Commission considers the fostering of culture one of its most important objectives. Although the Treaty articles relating to state aid cannot be invoked for that purpose, the Commission certainly takes that objective into account when it applies these rules.

By increasing competition, the application of the rules relating to state aid is certainly very valuable, in particular for the small and average-sized Member States, given that it helps create a Community cultural area without frontiers by combating the fragmentation and compartmentalisation of the film production market.

4. In the meantime the Commission has applied the principles set out in its decision on the French support system for film production to aid schemes in Germany (federal system), Ireland, the Netherlands and Sweden. During the coming months, the Commission will, in close cooperation with the Member States in question, apply the same principles to aid schemes in force in Belgium, Germany (the Länder), Spain, Italy, Luxembourg and the United Kingdom.