2006/320/EC: Commission Decision of  30 June 2004  on the measures notified by Italy in favour of the publishing industry  (notified under document number C(2004) 2215)   (Text with EEA relevance)
Date: 2004-06-30
Institutions: European Commission
Subjects: Italy, State aid, control of State aid, interest rate subsidy, publishing

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II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 30 June 2004

on the measures notified by Italy in favour of the publishing industry

(notified under document number C(2004) 2215)

(Only the Italian text is authentic)

(Text with EEA relevance)

(2006/320/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

The Commission invited interested parties to submit their
comments on the measures.

Having regard to the Treaty
establishing the European
Community, and in particular the first subparagraph of Article
88(2) thereof,

Having regard to the Agreement on the European Economic
Area, and in particular Article 62(1)(a) thereof,

Having called on interested parties to submit their comments (1),
and having regard to their comments,

Whereas:

(1)

(2)

1. PROCEDURE

By letters No 15808 and No 15809 of 19 December
2002, registered on 31 December 2002, pursuant
to
the Italian authorities
Article 88(3) of the EC Treaty,
to
notified the Commission of
support the Italian publishing industry.

the above measures

the Commission
By letter dated 29 October 2003,
notified Italy of
its decision to initiate proceedings
under Article 88(2) of the EC Treaty in respect of the
two notified measures.

(3)

The Commission decision to initiate the procedure was
published in the Official Journal of the European Union (2).

(1) OJ C 285, 28.11.2003, p. 14.
(2) See footnote 1.

(4)

(5)

(6)

(7)

By letter dated 2 December 2003, the Italian authorities
requested an extension of
the response deadline to
submit
their comments to the Commission's decision
to initiate proceedings, which the Commission granted
by letter dated 10 December 2003.

The Italian authorities submitted their comments and
provided additional
information by letter dated 9
January 2004, registered on 14 January 2004.

The Commission received comments from interested
parties. It forwarded them to Italy, which was given the
its comments were received by
opportunity to react;
letter dated 3 March 2004, registered on 4 March 2004.

2. DESCRIPTION OF THE AID MEASURES

The two aid measures notified by the Italian authorities
concern respectively aid in the form of
interest rate
subsidies on bank loans in favour of companies active
in the publishing industry and tax credits in favour of
undertakings producing publishing products (3).

(3) The eligible products consist of paper-based products,

including
books or electronic-based products, which are to be published or
used to disseminate information to the public through any means,
including electronic, or through radio or television broadcasting.
Products
pictures
including documentaries; and corporate information documentation
whether for internal or external use are explicitly excluded from the
list of eligible products.

voices, moving

reproducing

sounds

and

(8)

(9)

(10)

(11)

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2.1. Aid in the form of interest subsidy

The first aid scheme is introduced by Articles 4 to 7 of
Law 62 of 7 March 2001 (4), concerning ‘Nuove norme
sull'editoria e sui prodotti editoriali e modifiche alla legge
5 agosto 1981, n. 416’ (hereinafter Law 62/2001) and
Decree 142 of the President of the Republic of 30 May
2002 concerning ‘Regolamento concernente le agevo-
lazioni di credito alle imprese operanti nel
settore
editoriale’ (5) (hereinafter DPR 142/2002).

acquisition,

The aid consists of contributions on interest payments
on 10-year loans granted by banking institutions for
projects concerning technical and economic restruc-
turing;
extension and modernisation of
equipment, with particular reference to information tech-
nology hardware
also in
conjunction with the utilisation of
the international
telematic networks and satellites for the improvement
of distribution; and expenditure for vocational training.

and software networks

products

informatic support — radio and television broadcasters;
undertakings which are mainly or exclusively selling
publishing
undertakings which
publish Italian newspapers abroad. The scheme is open
to beneficiaries which have their headquarters in one of
the Member States of the European Union. The number
of expected beneficiaries is between 101 and 500.

and

the

(12) A 10-year limit for the aid scheme is foreseen (8). The
total budget allocation for the years 2001, 2002 and
2003 is equal to about EUR 26,3 million (9), increased
by EUR 50,8 million of previously unspent appro-
priations. The aid granted under this scheme can only
be cumulated with that introduced by Article 8 of the
same law described hereinafter (10).

(13)

Some 90 % of the project's total cost is eligible for aid (6).
The contribution amounts to the difference in the amor-
tisation plan calculated on the basis of a reference rate
established by the Treasury and the payments due on the
same amortisation plan calculated on the basis of half
such a rate. In practice, using a reference rate of 5 %, the
State contributes around 13 % of
the project's total
expenditure, and this is reduced to about 10 % if the
contribution is requested in the discounted form.

cycle (7). This

The beneficiaries are undertakings active in the whole
publishing
includes: press
agencies; publishing companies; printing companies;
distribution undertakings of daily press, periodicals, and
books — published on paper, or on electronic or

explicitly

(4) The Italian authorities indicate that the measure under review would
replace existing aid measures introduced by respectively Law 416 of
5.8.1981 and Law 67 of 25.2.1987, both of which were approved
by the Commission, respectively on 18.11.1983 with letter No 1398
and on 7.7.1988 with letter No 8232 under aid C-25/87.

(5) The terms, amount of

resources available and the eligibility
conditions of publishing undertakings to the aid measures defined
in Article 6 of Law 62/2001 are specified in the decree of the Capo
dipartimento per l'informazione e l'editoria della presidenza del
Consiglio of 13 December 2002, GU 297, 19.12.2002, p. 29.
(6) Further, the draft law — atto camera 4163, ‘Disposizioni in materia
di editoria e di diffusione della stampa quotidiana e periodica’ —
introduces an amendment to Article 5 of Law 62 of 7 March 2001,
which explicitly rules out from the eligible costs all the costs which
are not
in
particular promotional and advertising costs. The eligible costs can
be 100 % only in the case of cooperatives of journalists foreseen at
Article 6 of Law 416 of 5.8.1981.

incurred for the production of publishing products,

(7) Firms in difficulty are explicitly excluded pursuant to the aforemen-
tioned decree of
l'informazione e
the Capo dipartimento per
l'editoria della presidenza del Consiglio of 13 December 2002
concerning Law 62/2001.

through an individual

the project must not

The benefits foreseen in Articles 5 to 7 of Law 62/2001
will be awarded by a bespoke fund instituted and admi-
nistered by the Presidency of the Council of Ministers (11).
The aid will be granted either pursuant to an automatic
procedure (12) or
evaluation
procedure. Under the automated procedure, the funding
of
exceed about EUR 0,5
million (13) and the eligible project must be completed
within two years of the granting of the benefit. The
projects involving larger funding amounts are subject
to an individual evaluation procedure conducted by a
bespoke committee instituted by Presidency of
the
Council of Ministers. The maximum benefit allowed
under
scheme is capped at about EUR 15,5
million (14), whilst projects valued under this procedure
are also subject
requirement
to the two-year
concerning their completion. Both granting procedures
require, inter alia, the submission of detailed information
and documents proving the existence and needs of the
the
project,

the recipient, proof of

the eligibility of

limit

this

(8) The 10-year limit to the scheme has been explicitly introduced,
law presented to the Italian
after the notification,
Parliament on 16 July 2003, atto camera 4163,
in
materia di editoria e di diffusione della stampa quotidiana e
periodica’. This draft
law is currently being discussed in the
Culture Commission of the Parliament.

‘Disposizioni

in the draft

(9) The funds budgeted by the State are respectively about EUR 4,1
million in 2001, EUR 12,6 million in 2002, and EUR 9,7 million
in 2003.

(10) Pursuant to Article 8 of DPR 142/2002, aid granted pursuant to
Articles 4 to 7 of Law 62/2001 cannot be cumulated with other aid
granted by the State, regions, autonomous provinces of Trento and
Bolzano, the European Community or by any public body or insti-
tution to finance the same investment programme. However aid
granted under Articles 4 to 7 of Law 62/2001 can be cumulated
with the tax credit introduced by Article 8 of the same law.
(11) Pursuant to Article 5 of Law 62/2001, the fund is called ‘Fondo per
le agevolazioni di credito alle imprese del settore editoriale’.
(12) Article 1 of DPR 142/2002 states that undertakings can only
present one project at the time under the automatic procedure.
(13) The funding must not exceed ITL 1 billion pursuant to Article 6,

paragraph 1(a) of Law 62/2001.

(14) The maximum aid cannot exceed ITL 30 billion pursuant to Article

7, paragraph 1(a) of Law 62/2001.

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eligible expenses incurred (15), and a copy of the bank
loan contract. This measure also contains dispositions for
the recovery of unduly granted benefits.

(19)

(14) Aid granted under this scheme aims at preserving the
information pluralism within the meaning of Article 21
of the Italian Constitution.

is granted to undertakings producing
The tax credit
publishing products (19). The latter undertakings include
press agencies, publishing undertakings, printers of daily
newspapers, periodicals and books — published on
in electronic or informatic format — radio and
paper,
television broadcasting companies
and undertakings
publishing Italian newspapers abroad. The scheme is
open to beneficiaries which have their headquarters
in one of the Member States of the European Union.
The number of expected beneficiaries is between 101
and 500.

(15)

(16)

(17)

(18)

2.2. Aid in the form of tax credit

The second notified scheme is introduced by Article 8 of
Law 62 of 7 March 2001 concerning ‘Nuove norme
sull'editoria e sui prodotti editoriali e modifiche alla
legge 5 agosto 1981, n. 416’ and Decree 143 of the
President of the Council of Ministers of 6 June 2002
concerning ‘Disciplina del credito di
imposta in favore
delle imprese produttrici di prodotti editoriali’ (hereinafter
Decree 143/2002).

The scheme foresees the granting of a tax credit by the
State to undertakings producing publishing products. The
aid consists of a total tax credit equal to 15 % of the total
cost of
investment, divided into equal yearly
instalments during five consecutive fiscal years (16). The
credit is to be deducted from fiscal liabilities and can be
carried forward for four years.

the

The aid is granted for the acquisition of instrumental
goods for the production of publications in the Italian
including newspapers, magazines, periodicals,
language,
Investments in plant,
books and multimedia products.
equipment and patents destined to all phases of
the
technical and economic
production cycle as part of
the
are
restructuring
reviewed scheme.

also eligible

aid under

for

The aid scheme is limited to investment taking place
before 31 December 2004. The allocated budget
for
the entire period is about EUR 102 million (17). The aid
granted under this scheme can only be cumulated with
that introduced by Articles 4 to 7 of the aforementioned
law (18). The measure contains dispositions for the veri-
fication concerning the existence and reliability of the
projects as well as for the recovery of unduly granted
benefits.

(15) The procedures and requirements giving access to the benefit are
detailed at paragraphs 2 to 6 of Article 7 of Law 62/2001, and in
DPR 142/2002.

(16) Under this scheme the maximum amount is set as a percentage of
the investment value rather than per beneficiary, nonetheless it is
capped by the total funds available.

(17) The funds budgeted by the State are respectively about EUR 5,7
million in 2001, EUR 11,3 million in 2002 and EUR 28,4 million
for each year from 2003 to 2005.

(18) See footnote 11.

(20) Aid granted under this scheme aims at promoting culture
and preserving the information pluralism within the
meaning of Article 21 of the Italian Constitution.

3. GROUNDS FOR OPENING

(21)

the

the

proceedings,

the
In its
decision to initiate
two aid measures
Commission concluded that
constituted State aid within the meaning of Article
the EC Treaty and expressed its doubts
87(1) of
concerning respectively the effect on trade of
the
notified measures and their
compatibility with the
common market.

(22)

Furthermore, the Commission regarded the opening as a
means to allow the submission of the relevant infor-
mation and comments
to allay its abovementioned
doubts.

(23)

(24)

4. COMMENTS FROM INTERESTED PARTIES

interested parties sent

Following the initiation of the investigation procedure,
their comments on the
several
measures. An overview of the relevant comments from
these parties is outlined in the following paragraphs.

In its letter of 18 December 2003, the Federation of
European Publishers (FEP-FEE) considered that
the aid
measures are not
in violation with EU legislation
because:

(i) publishing, unlike other

is
State
to publishing is unlikely to affect cross-

extremely
support
border trade in the European Union;

language dependent

and thus

industrial

activities,

(19) The definition of an undertaking producing publishing products is
more restrictive than the one used under Articles 4, 5 and 7 of the
law under review. Firstly, it only concerns publications in the Italian
language. Secondly,
it only concerns undertakings producing
publishing content whereas, under the other scheme, the eligible
beneficiaries are all the undertakings active in the production and
distribution cycle of the publishing product.

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(ii)

the amount of aid provided is very modest;

(ii)

(iii) the support is addressed to types of investments that
are tailored to linguistic areas and the publications
benefiting from State aid are only those in the Italian
language. The rationale of State support
to
stimulate private investments in order to cope with
competition
other
companies in the same competitive arena, which is
a national one.

publishers

between

and

is

For

this

the minority of newspapers which are sold abroad
are largely bought by expatriate nationals who wish
to keep up to date on current affairs in their home
country.
small number of
relatively
to have access to an Italian language
consumers,
source of
information and to be able to have
access to a familiar brand is both linguistically and
culturally highly important in value and this could
only be provided by Italian publishers;

(25)

In its letter of 19 December 2003, the Association of
Portuguese Book Publishers (APEL) considered that the
aid measures under review are not in violation with EU
legislation because:

(i) of the reasons identical to those outlined above by

the FEE; and

internet,

forms of media, e.g.

(iii) in order for newspapers to remain competitive with
the
other newer
industry desperately needs
resources which are
provided through the two schemes under review. If
it did not receive this support, then sharp economic
latest one, which has
such as
downturns
the
Europe's newspaper
damaged most of
sector
the decline in advertising sales, will
because of
seriously jeopardise
the national
future of
industry.

the

(ii) the eligible investments are not directed to export or

to actions in the international environment.

(29)

In its letter of 7 January 2004, the Federation of Italian
Newspapers’ Publishers (FIEG) submitted a detailed argu-
mentation to support its view that the measures under
review are not to be considered as violating EU legis-
lation because:

(26)

In addition,
the Commission received the following
comments from interested parties in the course of the
investigation more than a month after the publication of
the opening decision.

(i)

the support measures do not constitute State aid;

(27)

In their letter of 8 January 2004, the Spanish Federation
of Publishers (FGEE) considered that the aid measures
under review are not in violation of EU legislation for
the identical reasons invoked above by the Association of
Portuguese Book Publishers.

(ii)

the support measures do not constitute aid in
relation to activities for which there is no cross-
border
competition between Member
States and the EEA;

trade or

(28)

letter of 12 January 2004,

the European
In their
Newspaper Publishers’ Association (ENPA) considered
that the aid measures under review are not in violation
with EU legislation because:

(iii) the measures are compatible with the common
market pursuant to Article 87(3)(d) of the EC Treaty.

(i) newspapers’ cross-border

trade is negligible and
should not cause competition concerns between
Member States. This especially applies to regional
newspapers which operate only within well-defined
areas on the domestic market. The notable nature of
competition in this sector remains on the national
market;

(30)

5. COMMENTS OF THE ITALIAN AUTHORITIES

5.1. Comments to the opening of the procedure

to allay

In order
the
the doubts
Commission in the opening decision, the Italian autho-
rities
data
and
supporting
the marginal
incidence and the compatibility of the measures at hand.

submitted
their

view concerning

expressed by

explanations

additional

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(31)

(32)

(33)

The Italian authorities maintain aid to the publishing
sector will have very limited effects on intra-EU trade
due to the virtually non-existant diffusion of publishing
in Italian language outside their domestic
products
their
In particular
market.
analysis from the interpretation of the general principles
outlined in the CELF judgment (20) as well as from
statistical
in
response to the opening of the procedure.

they derive support

and explanations

submitted

evidence

for

Concerning the principles outlined in the CELF judgment,
in relation to books, the Italian authorities maintain that
those principles should also be applicable to the other
publishing products due to their similar characteristics
and to the fact that readership of publishing products
in the Italian language in the EU is even more limited
than that in French. The two principles referred to are:

(i)

‘Competition in the book sector (can) be limited by
linguistic and cultural barriers and consequently, the
effect on intra-EU trade should be limited’ (21);

(ii) ‘The European sector of typography and publishing
continues to be more a juxtaposition of national
markets than an integrated market at the European
level, as indicated by the share of exports in the
sector as a percentage of turnover. The multitude
of
the Community
constitutes an additional barrier to the ‘Europeani-
sation’ of the sector’ (22).

languages

spoken

inside

Concerning the situation of the Italian publishing market
and the limited intra-EU trade in publishing products, the
Italian authorities submitted statistical data to support
their assertion and additional clarifications concerning
the beneficiaries.
statistical data
submitted indicates that:

In particular,

the

(i)

in the last 20 years the daily newspaper market in
the Italian language has been characterised by a
relative stagnation despite the fact that the Italian
production system has significantly changed during
that period (23). In 2003 the number of copies sold
daily has fallen back to the 1984 level;

(20) Judgment of the European Court of Justice, 22.6.2000,

in case
v European Commission ‘Aides à la
C-332/98, French Republic
Coopérative d'Exportation du Livre Français (CELF)’ ECR I-4833.

(21) See note 20. Point VIII of the Judgment.
(22) Comments made by the Commission in the document ‘Panorama

of the Community industry’ of 1997.

(23) Statistical data submitted by Italy indicates that sales of daily news-
papers in Italy fell again in 2003, continuing their consistent
decline since 1990, and are back to their 1984 level at about 5,8
million copies.

(ii)

the average daily diffusion of daily newspapers and
the number of copies sold per 1 000 habitants in
Italy, France, Germany and Great Britain indicate
that Italy lags significantly behind the other large
EU Member States (24) and that
the potential
demand for publishing products
to
inferior
is
what could be reached by a country with the
revenue per capita level of Italy;

(iii)

in 2001 the diffusion of Italian daily newspapers to
the EU stands at 1,3 % of the total production,
whereas for weekly and monthly publications the
number stands at 0,8 % of the total production;

(iv) between 1996 and 2001,

statistical data
submitted to the Commission indicates that total
exports (to both outside and inside EU) of daily,
weekly
represent
between 0,7 % and 2,5 % of the total production;

and monthly

publications

the

(v) with regards to the multimedia publishing products,
the Italian authorities submitted data concerning
the aggregate exports of books and multimedia
publishing products and services, to both outside
and inside the EU in 2001, which shows that
total exports are equal to 5 % of the total sales
for these products. However, the Italian authorities
specify that exports to the EU represent only a
fraction of the aforementioned number and that
the CD-ROMs and publishing services, as well as
multimedia publishing products, account only for
a very small part of the latter fraction. Hence, the
Italian authorities conclude that
the diffusion of
Italian multimedia publishing products in the EU
is of negligible proportion;

(vi)

concerning the printing of newspapers and books,
the Italian authorities underline that publishing
products
to their
market so as not to penalise them with lateness
as well as the importance of transportation costs
in comparison to the value of the product;

typically printed close

are

(vii) concerning press agencies,

can only be

the Italian authorities
initially observe that international competition in
this market
referred to foreign
language news reports. Further, they note that the
only Italian player producing such reports is ANSA,
for which the turnover for this type of report
accounts for 0,3 % of the company's total turnover;

(24) Data from the Osservatorio Tecnico per i Quotidiani e le Agenzie
d'Informazione — ‘L'industria dei quotidiani in Italia — Monografia
macro settoriale’ — 2000.

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(viii) to conclude on the issue of the limited trade affec-
the Italian
tation of the measures under review,
authorities indicate that
the aggregate share of
Italian publishing products diffused in the EU is
0,3 % to 0,5 % of the EU market.

(iv) Article 22 of the Charter of Fundamental Rights of
the European Union (31), which reaffirmed the
principle that
religious
the EU respects cultural,
and linguistic diversity in Member States;

(34)

Pursuant to the information above, and in line with the
in the SIDE
principles outlined in the CFI
case (25), the Italian authorities maintain that the market
for publishing products in the Italian language should be
considered as distinct (26).

judgment

(v) Article 21 of the Italian Constitution, which guar-
antees the freedom of expression and pluralism as
right to exert a fundamental democratic liberty; and
the Italian authorities state that publishing products
are a means to exert this right (32).

(35) Moreover, to underscore the fact that in their view both
measures
should be compatible with the common
market pursuant to Article 87(3)(d) of the EC Treaty,
the Italian authorities make reference to:

(vi) the Treaty of Maastricht which introduced the
culture derogation under Article 87(3)(d) of the EC
Treaty in order to overcome the limitations to the
application of Article 87(3)(c) for the incentives to
the culture sector.

(i) Article 151(1) of the EC Treaty, which state that ‘the
Community shall contribute to the flowering of the
cultures of the Member States, while respecting their
national and regional diversity and at the same time
bringing the common cultural heritage to the fore’;

(36)

(ii)

to

particular

invitation

the Council

the specific value of

the Council Resolution of 12 February 2001 (27) and
the
in
Commission ‘when applying competition rules and
rules on the free taking movement of goods, to take
account of
the book as a
cultural object and the importance of books in
the cross-
promoting cultural diversity, and of
border dimension of the book market’ (28). Further,
reference is also made to another recital from the
aforementioned resolution which states that ‘homo-
geneous linguistic areas are an important area for
cross-border
distributing
dimension to the book market, which needs to be
taken into account’ (29);

books

and

add

a

(iii) the Council Resolution of 14 February 2002 (30)
language diversity
concerning the promotion of
and language learning in the framework of
the
implementation of the objectives of the European
Year of Languages 2001;

(25) Judgment of the European Court of First Instance, 28.2.2002, in

case T-155/98, page II-1179.

(26) Judgment of the European Court of First Instance, 21.10.1997, in
case T-229/94, Deutsche Bahn v Commission, page II-1689 paragraph
54 and the jurisprudence cited therein.

(27) OJ C 73, 6.3.2001, p. 5.
(28) The Italian authorities underline that despite the fact that the EC
Council Resolution of 12.2.2001 explicitly refers to books, the
principles outlined therein, and in particular those at recital 2,
should be extended to all cases in which goods have a dual
character as the bearers of cultural values and as merchandise,
e.g. publishing products ‘tout-court’.

(29) See recital 7 of EC Resolution of 12.2.2001.
(30) OJ C 50, 23.2.2002, p. 1.

and the

limited diffusion of

In conclusion the Italian authorities state that,
in the
framework of the present procedure, given the absolute
peculiarity of the publishing market, the need for public
intervention to reverse a consolidated declining trend in
the diffusion of publishing products on the domestic
market,
Italian
language at the EU level, the Commission could only
conclude that the maximum valorisation of the linguistic
specificity is one of the key factors underpinning the
culture derogation contemplated by Article 87(3)(d).
Hence,
the measures under review, which favour the
diffusion of publishing products in the Italian language
in the domestic market,
should be deemed to be
compatible with the common market.

the

5.2. Comments to the interested parties’
observations

(37)

to the opening of

By letter dated 24 February 2004, the Italian authorities
to the interested parties’
submitted their comments
the procedure. The
observations
Italian authorities noted the overall convergence with
their own assessment of
the trade affectation and
compatibility of the measures under review. Their main
comments can be summarised by the following four
considerations:

(i)

the observations received further to the Commis-
sion's invitation were submitted by the five parties
indicated in Section 4 of the present decision, which
represent book and newspaper publishers in the 15
EU Member States as well as Cyprus, the Republic of
Croatia, Lithuania, Norway and Slovenia;

(31) OJ C 364, 18.12.2000, p. 1.
(32) See Judgment of

the Constitutional Court

105/1972, 225/1974 and 94/1997.

in cases 348/1990,

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(ii)

the comments received from the interested parties
are in line with those of Italy concerning the non-
violation of EU competition law;

6.1.3. Economic advantage

(41)

The two notified schemes both confer an economic
advantage to their beneficiaries.

(iii) as outlined by ENPA,

for periodical
the market
is essentially a national market and the
papers
the measure is fulfilled since,
proportionality of
for publishing
given the structure of
products,
is not able to produce any
significant distortion to trade between Member
States;

the market

the latter

(iv) as stated by FGEE, the aid amounts under consi-
deration are limited. Further, the aid measures will
have a very limited impact on trade between
Member States because the economic activity is by
definition centred on homogeneous linguistic areas
which are subject to limited cross-border trade.

6. ASSESSMENT OF THE AID MEASURES

6.1. Existence of State aid

(38) According to Article 87(1) of the EC Treaty ‘any aid
granted by a Member State or through State resources
in any form whatsoever which distorts or threatens to
distort competition by favouring certain undertakings or
in so far as it
the production of certain goods, shall,
affects trade between Member States, be incompatible
with the common market’.

(39)

(40)

6.1.1. State resources and favouring of undertakings/economic

activity

The Commission notes that the resources to fund both
notified aid schemes come from the central government's
budget and can thus be considered as State resources.
Moreover, on the basis of their definition, the schemes
favour specific economic sectors, namely the publishing
sector in which the beneficiaries perform an economic
activity and can be regarded as undertakings within the
meaning of Article 87(1) of the EC Treaty.

6.1.2. Selectivity

Both notified schemes are selective in that
they are
addressed respectively to undertakings active in the
publishing
producing
publishing products. Both schemes therefore provide
sectoral aid.

to undertakings

sector

and

(42) Under the first scheme, the beneficiaries receive a subsi-
disation of the interest payable on bank loans for specific
projects, which effectively reduces the financing costs of
the beneficiary undertaking.

(43) Under

the second scheme the eligible undertakings
benefit from a fiscal advantage in the form of a tax
credit for investments, thereby relieving the beneficiaries
from fiscal charges that they would normally have to
incur (33).

(44)

(45)

6.1.4. Trade affectation between Member States and distortion

of competition

The Commission notes that competition rules generally
apply to all economic activities involving trade between
Member States and that the production of publishing
products can be considered as an economic activity.
The issue is whether aid to this activity really or poten-
tially affects trade between Member States, given the
alleged domestic and thus internal nature of the Italian
market for publishing products in the Italian language. It
can be noted that the publishing market includes the
market
royalties, advertising, printing and distri-
bution. Aid to a publisher may affect one or the other
of those activities.

for

States
the

between Member
by
concerned

Further, on the basis of the information submitted by the
Italian authorities, the Commission notes that there is
in the publishing
trade
products
under
review (34). Thus, the aid measures under review could
for
distort competition between firms
instance, publishing firms can pursue their activity in
different Member States, producing publications
in
different languages and competing for publishing rights
and advertising.

aid measures

inasmuch as,

(46)

The Commission acknowledges the information and clar-
submitted by the Italian authorities docu-
ifications
menting the fact that the amount of intra-EU trade, in
the publishing products in Italian language concerned by
the two measures under review, is limited.

(33) See Commission notice on the application of the State aid rules
taxation, OJ C 384,

relating to direct business

to measures
10.12.1998, p. 3.

(34) Moreover, the cross-border dimension of publishing, namely for
books, has been recognised by the Resolution of 12 February
2001, and the statistical data submitted by the Italian authorities.

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(47) Notwithstanding the above consideration, in light of the
that, however
the Commission considers
foregoing,
the measures under
limited,
review cannot be excluded. Hence,
the two schemes
under review constitute State aid within the meaning of
Article 87(1) of the EC Treaty.

the effect on trade of

6.2. Compatibility

(48)

In those cases where the measures constitute State aid
within the meaning of Article 87(1) of the EC Treaty, it is
foreseen that aid which fulfils the conditions set forth
respectively in Article 87(2) and Article 87(3) of the
EC treaty shall be compatible or may be deemed
compatible with the common market.

(49)

The Commission notes that the conditions foreseen in
Article 87(2), Article 87(3)(a) and Article 87(3)(b) of the
EC Treaty are evidently not applicable to the measures at
hand.

(53)

(50)

Further to the opening, additional information and clar-
ifications were submitted by the Italian authorities and
comments were received from interested parties. On the
basis of
intra-EU trade in
publishing products in the Italian language is limited
and the measures could be deemed to be compatible
the EC
under Article 87(3)(c) or Article 87(3)(d) of
Treaty.

it appears that

the above,

6.2.1. Compatibility ex Article 87(3)(d) of the EC Treaty

(51)

Concerning the compatibility of the measures pursuant
the Commission does not concur
to Article 87(3)(d),
with the assessment made by the Italian authorities,
and is of the opinion that the cultural derogation is
not applicable to the aid schemes in point.

(52)

that

In fact, although Article 151 of the EC Treaty (35) indeed
the Community should contribute to
foresees
cultural diversity, under the terms of Article 8 of Law
62/2001 no dispositions have been outlined concerning
the appropriation of funds for the explicit promotion of
culture but rather the funds are entirely used for the
more general support of
investment by undertakings
producing publishing products in the Italian language.

(35) See in particular paragraphs contained in paragraphs 1 and 4 of

Article 151 of the EC Treaty.

in Italian abroad’. Further,

Concerning the interest subsidy measure, pursuant to the
terms (36) of Article 5 of Law 62/2001, only 5 % of the
total funds available under the interest subsidy scheme
under examination are explicitly set aside ‘for under-
takings involved in projects of specific relevance for the
diffusion of readership in Italy or the for the diffusion of
publishing products
the
Commission notes that in the event that the above 5 %
share is not utilised for the original purpose, it can be
reallocated to fund the other actions contemplated by the
measures under review. The latter include, inter alia, aid
for training and for investment. Further,
the eligible
publications in the Italian language include newspapers,
magazines, periodicals, books and multimedia products.
However, the Commission notes that the two schemes
contain no specifications concerning the allocation of
types of publications,
resources
eligible publishing
concerning the
the
cultural
products, or
values to be contained or promoted (37).

any mention concerning the

individual
content of

to the

it can be noted that

By the same token,
the Italian
language appears to be the common denominator of
the two schemes. Nonetheless, despite the fact
that
those measures might as a last resort ultimately favour
the Italian language and
learning or the diffusion of
any pedagogical or
absence of
culture, given the
language
in the
specifications
learning
measures, considering them as culture-based measures
would imply giving an unduly broad meaning to culture.

focus

or

(54) Moreover, in response to the Italian authorities’ argument
the
tying the promotion of
information pluralism foreseen by the
promotion of
the Commission has already
measures under review,
stated in past decisions (38)
the educational and
democratic needs of a Member State have to be
regarded as distinct from the promotion of culture.

and that of

culture

that

(55)

Thus, given the breadth of the scope of the measures
under review and of the very generic description of the
the measures under examination
eligible publications,
would appear
the
diffusion of publishing products in the Italian language,
which is the common denominator of the two schemes,
rather than promoting the Italian culture and language.

to primarily

fostering

aim at

(36) In particular paragraph 6 of Article 5 of Law 62/2001.
(37) In practice, products including sports and other publishing products
which do not necessarily bear any cultural content or features
would be eligible to the benefits.

(38) Commission decisions in State aid cases: NN 88/98, ‘Financing of a
24-hours advertising-free news channel with license fee by BBC’, OJ
C 78, 18.3.2000, p. 6; and NN 70/98 ‘State aid to public broad-
casting channels “Kinderkanal and Phoenix” ’, OJ C 238, 21.8.1999,
p. 3.

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(56)

(57)

(58)

the foregoing,

the Commission is of

the
In light of
opinion that the measures under review do not satisfy
the restrictive interpretation warranted for the application
of the provision set forth at Article 87(3)(d) and outlined
in the Communication on State aid to public service
broadcasting (39). Further, accepting the culture dero-
gation would also run counter to the Commission's inter-
pretation outlined in the relevant case-law (40).

6.2.2. Compatibility ex Article 87(3)(c) of the EC Treaty

Pursuant to the planned objectives, the measures under
review would ultimately aim at promoting the diffusion
of publishing products in the Italian language and at
contributing to the preservation of
the information
pluralism, whilst public intervention would appear to
be needed to reverse a consolidated declining trend in
the diffusion of publishing products on the domestic
market.

is underpinned by the
abovementioned limitations
statistical data submitted by Italy which documents the
limited incidence of cross-border trade in the EU in the
relevant products.

(61)

In addition, since the aid is primarily aimed at publi-
cations in the Italian language, it is unlikely that publi-
cations in another language would be real substitutes and
in turn that subscribers and/or advertisers would switch
between them due to the subsidy. It would thus seem
that the distortion of intra-EU trade and competition is
likely to be very limited. Further, the Community interest
is also ensured by the eligibility and equal treatment of
applicants based in other Member States.

(62)

Furthermore, the stated aim of the aid is to preserve
information pluralism, which is an objective enshrined
in Article 11 paragraph 2 of the Charter of Fundamental
Rights of the European Union (42).

that

there

The Commission acknowledges
are no
frameworks or guidelines which can be applied to
assess measures such as those under review. Hence, no
other specific compatibility clause seems to be applicable
to the notified schemes as currently specified apart from
the always possible general application of Article 87(3)(c)
of the EC Treaty. The latter provides that, ‘aid to facilitate
the development of certain economic activities or of
certain economic areas, where
such aid does not
adversely affect trading conditions to an extent contrary
to the common interest, may be considered to be
compatible with the common market’.

(63)

in particular,

Finally, the evaluation concerning the potentially limited
trade and competition distortion of the measures under
review and,
their proportionality to the
stated objectives is also underpinned by the combination
of factors including: the duration of the schemes, which
are of five and 10 years; the high number of benefi-
ciaries, which is expected to reach 500 undertakings
for
limited funds
available, which amount to a grand total of about EUR
179,3 million, for the entire period.

and the overall

each measure;

‘the European sector of

(59) As established in the CELF judgment, the Commission
notes that linguistic and cultural barriers limiting compe-
tition and cross-border trade between Member States in
the book sector would appear to exist. Similarly, it would
typography and
seem that
publishing continues to be more a juxtaposition of
national markets
the
European level, as indicated by the share of exports in
the sector as percentage of turnover. The multitude of
languages spoken inside the Community constitutes an
additional barrier
the
sector’ (41).

than an integrated market at

‘Europeanisation’ of

to the

7. CONCLUSIONS

(64)

In the light of the foregoing, the Commission has found
that the measures under review constitute State aid in the
meaning of Article 87(1) of the EC Treaty.

(65)

The factual and statistical information submitted by the
Italian authorities has documented the likely limited
effect on trade of the measures under review.

(60) Nonetheless, with regards to both books and the other
publishing products concerned by the aid measures at
hand, it should be emphasised that the existence of the

(39) OJ C 320, 15.11.2001, p. 5.
(40) See footnote 38.
(41) Comments made by the Commission in the document ‘Panorama

of the Community industry’ of 1997.

(66)

The limited distortion of trade and competition, and the
proportionality of
to the objective of
the measures
promoting publishing products in the Italian language
are underpinned by the duration of the schemes, the
large number of beneficiaries, and the overall
limited
funds available,

(42) See footnote 31.

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HAS ADOPTED THIS DECISION:

Article 1

The State aid measure in the form of interest subsidy in favour
of undertakings active in the publishing sector and the State aid
measure in the form of tax credit in favour of undertakings
producing publishing products
compatible with the
common market pursuant to Article 87(3)(c) of the EC Treaty.

are

Article 2

Annual reports containing detailed information of the appli-
cation of each measure shall be submitted to the Commission.
The information reported should include: a summary of the
application of
the respective measures during the calendar
year; a list and description of the eligible projects aided, the
publishing products
the amounts granted per
project, and the identity of the beneficiaries.

supported,

An update of the statistics concerning intra-EU trade in the
relevant publishing products shall also be submitted to the
Commission in order to allow the monitoring of the devel-
opments in the markets.

Article 3

This Decision is addressed to the Italian Republic.

Done at Brussels, 30 June 2004.

For the Commission

Mario MONTI
Member of the Commission