Case T-336/04: Action brought on 13 August 2004 by TV Danmark A/S and Kanal 5 Denmark Ltd., against the Commission of the European Communities
Date: 2004-10-23
Institutions: Court of First Instance
Subjects: Denmark, European Commission, State aid, action for annulment (EU), broadcasting, control of State aid, public service, quasi-fiscal charge, television

23.10.2004

EN

Official Journal of the European Union

C 262/51

The applicant claims that the Court should:

— annul Article 1 of Commission Decision of 19 May 2004
in State aid Case C 2/2003 (ex NN 22/2002) concerning
Denmark's measures in favour of TV2/Danmark in so far as
the decision declares the aid to be compatible with the
common market under Article 86(2) EC;

comparison between TV2/DANMARK A/S's competitors'
costs (instead of TV2/DANMARK A/S's own costs) and
TV2/DANMARK A/S's income from commercial activities,
thereby ignoring possible differences in levels of efficiency,
with the result that the test does not show fully whether
TV2/DANMARK A/S's commercial activities through cross-
subsidation have generated an economic advantage which
distorts competition;

— order the defendant to pay the costs.

— because the price test applied by the Commission is not

applicable to the present case, either.

Pleas in law and main arguments:

By the contested decision, the Commission approved the aid
granted to TV2/DANMARK A/S from 1995 to 2002 in the
form of licence-fee resources and certain other measures as
compatible with the common market, except for an amount of
DKK 628.2 million which, in the Commission's view, consti-
tutes unlawful State aid which the Kingdom of Denmark is
obliged to recover from TV2/DANMARK A/S. The applicant
has applied for annulment of that part of the decision by
which the Commission declares part of the aid to be compa-
tible with the common market.

The applicant submits that the Commission's assessment is
incorrect in the re-examination of the question of whether
TV2/DANMARK A/S's public service obligations are defined in
sufficient detail, since it has found that all of TV2/DANMARK
A/S's programme range forms part of its public service obliga-
tions. It is precisely this aspect which makes it difficult to re-
examine whether the Danish State has complied and continues
to comply with the Community competition rules, in particular
Article 87(1) EC, together with Article 86(2) EC.

The applicant adds that the Commission's method for assessing
whether the aid found to exist within the meaning of Article
87(1) EC pursuant to Article 86(1) EC is compatible with the
common market is incorrect because the method does not take
account of the presence of indirect (horizontal) State aid (cross-
subsidisation), contrary to Article 87(1) EC:

— because the anti-competitive conduct by TV2/DANMARK
A/S in the market for sales of television advertising cannot
be necessary for the performance of TV2/DANMARK A/S's
public service obligations pursuant
to Article 86(2) EC,
with the result that Article 87(1) EC applies absolutely in
relation to TV2/DANMARK A/S's conduct in commercial
markets;

— because the Commission assessed only whether possible
excess compensation from the State (the direct vertical and
prohibited State aid) had been provided to assist
the
commercial activities, and not whether the compensation
from the State (the direct vertical and permitted State aid)
had been provided in order to obtain an economic advan-
tage in the commercial activities which distorted competi-
tion;

— because the 'stand alone' test applied by the Commission is
not applicable to the present case, because it is based on a

Action brought on 13 August 2004 by TV Danmark A/S
and Kanal 5 Denmark Ltd., against the Commission of the
European Communities

(Case T-336/04)

(2004/C 262/95)

(Language of the case: English)

An action against the Commission of the European Commu-
nities was brought before the Court of First Instance of the
European Communities on 13 August 2004 by TV Danmark
A/S, Copenhagen, Denmark and Kanal 5 Denmark Ltd., Houn-
slow, United Kingdom represented by Mr D. Vandermeersch,
Mr K. Karl and Mr H. Peytz, lawyers with an address for service
in Luxembourg.

The applicant claims that the Court should:

— annul Article 1 of Decision C 2/03 Commission of 19 May
2004 on State financing of Danish public broadcaster TV2/
Danmark by means of licence fee and other measures, in so
far as the Commission found that aid granted to TV2/
Danmark between 1995 and 2002 in the form of licence
fee resources and other measures identified in the decision
is compatible with the common market under Article 86(2)
EC;

— order the Commission to pay the applicant's legal

fees,
costs and other expenses incurred in connection with this
application.

Pleas in law and main arguments:

In the contested decision, the Commission held that, between
1995 and 2002,
the Danish public broadcaster TV2/
DANMARK benefited from State aid within the meaning of
Article 87(1) EC. The Commission concluded that the aid is
compatible with the common market under Article 86(2) EC,
except for an overcompensation amounting to 628.2 million
DKK which should be repaid by TV 2 / DANMARK A/S.

C 262/52

EN

Official Journal of the European Union

23.10.2004

The applicants request the annulment of Article 1 of the deci-
sion to the extent that it held that a part of the aid is compa-
tible with the common market. The applicants submit that in
the Commission has
the decision,
adopting that part of
infringed Article 86(2), 87 and 88 EC, as well as the Protocol
annexed to the EC Treaty on the system of public broadcasting
in the Member States.

The applicants allege that the Commission infringed Articles 87
and 88 EC, when, after having found that the aid was new aid,
it nevertheless proceeded to hold that the aid (with the excep-
tion of the amount found in overcompensation) was compa-
tible with the common market while it should have established
the illegality of the entire aid due to lack of notification.

that

submit

the applicants

Furthermore,
the Commission
infringed Articles 86(2), 87 and 88 EC and the Protocol, when
it held that all of TV2's costs relate to public service obligations
and could therefore be funded by the State in spite of the lack
of a sufficiently precise definition of the public service obliga-
tions of TV2. The Commission also infringed the said articles
when it approved the State aid on the basis of the test of
whether TV2 attempted ‘to maximise revenues’ and put the
burden of proof on the applicants. It committed a manifest
error of assessment when it disregarded the evidence of TV2
undercutting prices of a stand alone efficient operator.

The applicants also allege that
the Commission infringed
Article 86(2) EC and the Protocol when it approved the aid
notwithstanding its own finding of doubt as to the pricing
behaviour of TV2 and the price level in Denmark. Furthermore,
the Commission infringed Article 86(2) EC when it failed to
examine whether the net costs of TV2 were proportionate to
the public service obligations and when accepting the absence
of any, or in the alternative, sufficient Danish public control
over TV2's performance of its public service remit.

Action brought on 11 August 2004 by Centro Europa 7 srl
against the Commission of the European Communities

(Case T-338/04)

(2004/C 262/96)

(Language of the case: Italian)

An action against the Commission of the European Commu-
nities was brought before the Court of First Instance of the
European Communities on 11 August 2004 by Centro Europa
7 srl, represented by Vittorio Ripa di Meana and Roberto
Mastroianni, lawyers.

The applicant claims that the Court should:

— annul the decision not to take any further action on the
complaint lodged by the applicant on 18 October 2001,

notified to the applicant by letter by the Director of DG
Competition, Mr Menshing, on 4 June 2004, sent by fax on
9 June 2004, No D (2004)/471;

— order the Commission to pay the costs.

Pleas in law and main arguments:

The applicant in the present case participated in July 1999 in
the tender procedure organised in Italy for the granting of
private terrestrial analogue television broadcasting licences,
obtaining the award of a six-year contract for unencrypted
transmission, renewable for a further six years. However, the
applicant has still not been able to transmit in the clear because
the
it has still not been allocated the frequencies under
contract. Implementation of the national frequency plan, which
would have fulfilled its legitimate expectations, has not been
carried out because, in accordance with the Italian legislation in
the frequencies are taken up by television operators
force,
which have not obtained a licence and have been able to
continue operating under the ‘transitional arrangements’ intro-
duced by Law No 249 of 1997. Accordingly, the fact that the
third network of the group Mediaset (Retequattro) continues to
carry on business has made it impossible to free up the neces-
sary frequencies in order to allow the applicant to commence
transmission as it should after obtaining the broadcasting
licence.

This action has been brought against the decision not to take
action against the complaint regarding distortion of competi-
tion as a result of the abovementioned situation and of the
request to the Commission asking it to take action, pursuant to
Article 86(3) of the EC Treaty, regarding measures favouring
the undertaking RTI on which Italian law has conferred special
rights.

In support of its claims, the applicant alleges infringement of
Articles 82 and 86 of the Treaty and breach of the obligation
to provide reasons inasmuch as the defendant:

— should have examined the complaint in question for not
having replied to the principal complaint regarding the
discrimination suffered in respect of access to the television
broadcasting market.

— adopted the act in question without taking into considera-
tion the fact that the measures which the Italian authorities
adopted or failed to adopt, by excluding Europa 7 from the
market in television broadcasting, strengthened RTI's domi-
nant position.

— failed to take into consideration the consequences of the
entry into force of Law No 11 of 2004 on the applicant's
position.
the applicant also alleges
breach of the general principle of sound administration, as
enshrined in Article 47 of
the Charter of Fundamental
Rights.

In that connection,