WRITTEN QUESTION P-0894/96 by Anne André-Léonard (ELDR) to the Commission (11 April 1996)

Subject: Renewal of the exemption from Article 85(1) of the Treaty on European Union applied for in 1993 by UIP

The Commission has still not taken a decision on the renewal of the exemption from Article 85(1) of the Treaty on European Union applied for in 1993 by UIP.

UIP therefore continues to operate on the European market in contravention of the Community competition rules.

This state of affairs undermines the system for the production and distribution of European films, which is paradoxical in view of the policy which the EU is supposed to be following in the audio-visual sector (MEDIA II programme, cross-border television directive).

What action is the Commission intending to take to establish effective competition rules for the European audio-visual sector?

Answer given by Mr Van Miert on behalf of the Commission (26 April 1996)

The audiovisual sector is not exempt in any particular way from the application of the Community competition rules. It has indeed been subject to them for quite some time, as the judgment delivered by the Court of Justice on 30 April 1974 in Sacchi demonstrates.

As the Honourable Member notes, competition policy in the audiovisual sector exists alongside other, more sectoral Community policies such as 'Media II' or the draft revised version of the cross-border television Directive. Such policies have different legal bases and pursue different objectives. Because they are coordinated, the relationships between them are complementary and not antagonistic.

As far as the case specifically referred to by the Honourable Member is concerned, the joint subsidiary United International Pictures (UIP) was, until 26 July 1993, covered by an exemption decision adopted on 12 July 1989. UIP, which distributes the products of its three parent companies, subsequently applied for the exemption to be renewed. In examining the application, the Commission has had to look into the structure and conduct of the joint subsidiary. The object of this exercise is to assess the economic effects of exemption. If the overall effects were harmful, the Commission would not agree to the parties' application for exemption. In examining such effects, the Commission takes account of the difficulties - of which it is of course aware - facing European film producers and distributors. From a technical point of view, the Commission is bound to apply the criteria set out in Article 85(3), which means that it has to take account, on the one hand, of the developments in the main economic indicators underlying its 1989 decision and, on the other, of the extent to which UIP's conduct has been in line with the undertakings given in connection with the decision. It must also be examined whether UIP has contributed to improving the production and distribution of films, while allowing users and consumers (i.e. cinema operators and film viewers) a fair share of the resulting benefit. It was on the basis of this criterion that UIP was granted exemption, temporarily, in 1989. Since the market is by its very nature one that is subject to fluctuations, it is not certain that the Commission will adopt the same position as before. Furthermore, the characteristics of the cinema industry, and in particular its complexity and its relative lack of transparency, combined with the need to investigate a number of allegations, mean that the Commission cannot as yet consider the facts at its disposal to be complete. It is therefore actively pursuing its investigations.