2008/708/EC: Commission Decision of 23 October 2007 on the State aid C 34/06 (ex N 29/05, ex CP 13/04) which the Federal Republic of Germany is planning to implement for the introduction of digital terrestrial television (DVB-T) in North Rhine-Westphalia (notified under document number C(2007) 5109) (Text with EEA relevance)
Date: 2007-10-23
Institutions: European Commission
Subjects: Germany, North Rhine-Westphalia, State aid, broadcasting, competition policy, control of State aid, high-definition television, transmission network

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(Acts adopted under the EC Treaty/Euratom Treaty whose publication is not obligatory)

II

DECISIONS

COMMISSION

COMMISSION DECISION

of 23 October 2007

on the State aid C 34/06 (ex N 29/05, ex CP 13/04) which the Federal Republic of Germany is
in North
planning to implement for the introduction of digital terrestrial television (DVB-T)

Rhine-Westphalia

(notified under document number C(2007) 5109)

(Only the German version is authentic)

(Text with EEA relevance)

(2008/708/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

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 pursuant to the provisions cited above (1) and
having regard to their comments,

Whereas:

I. PROCEDURE

(1)

the Commission requested information from the Federal
By letter dated 26 January 2004,
Government regarding press reports about public support to the introduction of digital terrestrial
television (DVB-T) in North Rhine-Westphalia (hereafter also NRW). The Federal Government replied
to this request by letter dated 23 March 2004, registered on the same day. The Commission services
met on 2 June 2004 with the authority in charge of the present measure, the Landesanstalt für Medien
Nordrhein-Westfalen (the media authority of North Rhine-Westphalia, hereafter LfM) and on
10 December 2004 with representatives of the government of the Land of North Rhine-Westphalia.

(1) OJ C 204, 26.8.2006, p. 9, State aid C 34/06 (ex N 29/05) — Introduction of digital terrestrial television (DVB-T) in

North Rhine-Westphalia — Invitation to submit comments pursuant to Article 88(2) of the EC Treaty.

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(2)

(3)

(4)

(5)

(6)

(7)

(8)

By letter dated 13 January 2005, registered on the same day, the Federal Government notified the
Commission in accordance with Article 88(3) of the EC Treaty of a measure concerning the financing
of the roll-out of DVB-T in North Rhine-Westphalia. The Federal Government notified for reasons of
legal certainty.

By letter dated 10 March 2005, the Commission requested additional
information to which the
Federal Government replied, after extension of the deadline, by letter dated 29 April 2005, registered
on the same day. The Commission services met with representatives of the media authority and of
the Land of North Rhine-Westphalia on 23 June 2005 where the latter submitted additional infor­
mation.

On 9 November 2005, the Commission adopted a final decision declaring the public funding of
DVB-T in Berlin-Brandenburg incompatible with the common market (2). In view of the similarities
the Commission and Germany agreed to suspend the notification
between the two cases,
procedure (3) in order to allow the authorities to assess the implications of the Berlin-Brandenburg
decision for the present case. At the same time, the notification procedure was also suspended with
respect to another similar measure concerning the Land of Bavaria which was notified to the
Commission on 8 December 2004 (4).

By letter dated 12 April 2006, the Commission requested Germany to determine its position in the
pending notification procedure within one month. By letter dated 12 May 2006, registered on the
same day, Germany informed the Commission that it does not intend to withdraw or modify the
notified measure concerning NRW.

By letter dated 19 July 2006, the Commission informed the Federal Republic of Germany that it had
decided to initiate the procedure laid down in Article 88(2) of the EC Treaty in respect of the
measure. The Commission decision to initiate the procedure was published in the Official Journal
of the European Union (5). The Commission invited interested parties to submit their comments on the
measure.

Germany responded, following the extension of the deadline, by letter dated 4 October 2006,
registered on the same day, to the request for comments in the opening decision. The Commission
also received comments from the European Satellite Operators Association (ESOA) (6), the Verband
Privater Kabelnetzbetreiber e. V. (ANGA) (7) and ish NRW GmbH (ish) (8).

By letter of 19 December 2006, the Commission forwarded those comments to Germany, requesting
observations. The authorities submitted their observations, following an extension of the deadline, by
letter dated 16 February 2007, registered on the same date. On 19 April 2007, the Commission held
a meeting with LfM to allow for a last exchange of views before finalising its assessment. By email
dated 24 May 2007, the Commission sent a further informal request for information to which the
German authorities responded by email dated 5 July 2007, registered on 6 July 2007.

(2) C 25/04 Einführung des digitalen terrestrischen Fernsehens (DVB-T) in Berlin-Brandenburg — Germany, 9 November

2005 (OJ L 200, 22.7.2006, p. 14).

(3) By letters of 2 December 2005, 9 December 2005 and 12 December 2005.
(4) The formal investigation procedure was also opened in this case on 19 July 2006 (C 33/06, ex N 576/04). The
Bavarian authorities subsequently decided to limit the measure to de minimis aid for local broadcasters and to
withdraw the notification (by letters of the Federal Government dated 22 June 2007 and 11 July 2007).

(5) Cf. Footnote 1.
(6) By letter dated 20 September 2006, registered on 22 September 2006.
(7) By letter dated 21 September 2006, registered on 22 September 2006.
(8) By letter dated 25 September 2006, registered on 3 October 2006.

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II. DETAILED DESCRIPTION OF THE MEASURE

1. BACKGROUND

(9)

(10)

(11)

(12)

Digitisation of television broadcasting

The notified measure concerns the introduction of digital terrestrial television in North Rhine-West­
phalia. It is to be seen against the background of the digitisation of broadcasting, which concerns all
commonly available transmission platforms for television signals, i.e. cable, satellite and terrestrial
transmission.

The prime benefit of digitisation is the increased transmission capacity on all platforms achieved by a
more efficient use of the frequency spectrum. This may enable the offering of new or improved
broadcasting services and the switch-off of analogue terrestrial TV could permit the release of
frequencies which could be relocated to new uses and the potential arrival of new entrants could
increase market competition and innovation. In view of these advantages, the Commission actively
supports digitisation (9). The process is currently taking place in Germany as well as in other EU
Member States and the overall objective is to complete analogue switch-off throughout the EU by the
beginning of 2012 (10).

Digitisation in Germany and in North Rhine-Westphalia

In order to promote the digitisation of broadcasting transmission in Germany, the Digital Broad­
casting Initiative (Initiative Digitaler Rundfunk, IDR) was launched at the end of 1997 by decision of
the Federal Government, following a decision by the Minister-Presidents of the Länder. Under this
initiative, the Federal Government, the Länder and various other market participants drew up rec­
ommendations on digitisation. An initial IDR report was approved by the Federal Government in
August 1998 and was followed by an overall plan for the introduction of digital broadcasting, called
Startszenario 2000 (11). Among others, this plan stated that the digitisation of cable, satellite and
terrestrial broadcasting would be completed in Germany by 2010 at the latest.

In North Rhine-Westphalia, the switchover project has been led by LfM. According to Section 27(1)
of the Media Law of North Rhine-Westphalia (Landesmediengesetz Nordrhein-Westfalen) (12), LfM has the
task of supporting and guiding the switchover from the analogue to the digital transmission (die LfM
unterstützt und begleitet die Umstellung der analogen auf digitale Übertragung). In the context of the digital
switchover, it has to ensure the provision of a variety of programme offers by means of the interplay
of the different transmission means at appropriate conditions (Versorgung mit vielfältigen Programm­
angeboten durch das Zusammenspiel der verschiedenen Übertragungswege zu angemessenen Bedingungen).
Another general task of LfM consists in the supervision of the commercial broadcasters.

Terrestrial broadcasting in Germany and North Rhine-Westphalia

(13) Against the background of the digitisation of cable, satellite and terrestrial transmission, the present
measure deals only with the switchover on the terrestrial platform. In general, terrestrial transmission
concerns two types of operators which may or may not be integrated: network operators which take
care of the transmission of broadcasting signals, and broadcasters which produce and package
content.

(9) COM(2002) 263 final, ‘eEurope 2005: An information society for all’, COM(2003) 541 final, ‘Communication from
the Commission on the transition from analogue to digital broadcasting (from digital “switchover” to analogue
“switch-off”)’ and COM(2005) 204 final,
‘Communication from the Commission on accelerating the transition
from analogue to digital broadcasting’.

(10) COM(2005) 204 final ‘Communication from the Commission on accelerating the transition from analogue to digital

broadcasting’, cf. Footnote 9.

(11) Federal Ministry of Economic and Technological Affairs (2000): Einführung des digitalen Rundfunks in Deutschland,
‘Startszenario 2000’, Sachstandbericht und Empfehlungen der Initiative ‘Digitaler Rundfunk’ zur Digitalisierung von
Hörfunk und Fernsehen unter Berücksichtigung der Verbreitung über Kabel, Satellit und TV-Sender.

(12) Landesmediengesetz Nordrhein-Westfalen in der Fassung vom 2. Juli 2002. (Gesetz- und Verordnungsblatt für das
Land NRW vom 30. Juli 2002, Nr. 20, S. 334), modified in 2004 (Gesetz- und Verordnungsblatt für das Land NRW
vom 17. Dezember 2004, Nr. 45, S. 774) and 2007 (Gesetz- und Verordnungsblatt für das Land NRW vom 29. Juni
2007, Nr. 13, S. 192).

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(14)

Since the emergence of cable and satellite in the 1980s, the market share of terrestrial broadcasting
has fallen sharply in Germany as a whole. Based on the information provided by the German
authorities, cable TV networks were rolled out, with important State support, during the
1980s (13). The German authorities submit that virtually every household in Germany is capable
of receiving free-to-air television programmes by satellite.

(15)

This decline in market share is depicted in the following figure which was also included in the
opening decision.

Market share of terrestrial platform countrywide and in NRW (14)

Figure 1

(16)

Starting in 2004, following the digital switchover, the declining market share of the terrestrial
platform was stabilised and the trend has been reversed since 2005. Based on information
contained in the Digitisation Report 2007 (15), the household reception figures in Germany in
(2 % increase as compared to
mid-2007 were: 53,7 % cable, 42,5 % satellite, 11,5 % terrestrial
2006). According to the report,
television has considerably
increased: 3,6 million households use DVB-T, nearly twice as many as in the preceding year. In
line with the Report, terrestrial transmission has reached a digitisation of nearly 90 %. The Digiti­
sation Report also provides a regional breakdown of television reception over DVB-T (16). According
to these data, the market shares of household reception in NRW in the ‘core areas’ (Kerngebiete),
which only comprise areas where DVB-T is available, increased from 9,5 % in 2005 to 16,5 % in
2007 (see figure 2).

the share of digital

terrestrial

(13) The notification submitted by the German authorities refers to a public investment of around EUR 15 billion for the

setting up of the cable infrastructure in the 1980s.

(14) Arbeitsgemeinschaft Fernsehforschung (AGF) is a cooperation of the main German broadcasters to gauge TV viewing
behaviour. SES/ASTRA is the largest satellite operator in Germany and publishes, every year, the German Satellite
Monitor on the importance of the different TV transmission platforms. In Figure 1, the data collected by ASTRA/
Infratest at the end of a each year, e.g. at the end of 2005, are related to the first of January of the subsequent year,
e.g. 1.1.2006, to make them comparable with the data collected by AGF/GfK which are collected at the beginning of
each year.

(15) Digitalisierungsbericht 2007 — Gemeinsame Stelle Digitaler Zugang (GSDZ), Arbeitsgemeinschaft der Landes­

medienanstalten (ALM).

(16) Page 56 of the Digitalisierungsbericht 2007.

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Market share of the digital terrestrial platform in Germany and NRW after the switchover

Figure 2

Terrestrial switchover process in North Rhine-Westphalia

(17)

From a technical point of view, the development of digital terrestrial transmission requires the update
of transmission equipment by the network operator and the allocation of frequencies to be used for
transmission. In order to reap the benefits of digitisation, existing analogue transmissions need to be
phased out. In the period where analogue and digital broadcasts are operated in parallel (the simulcast
period), switchover may actually aggravate spectrum scarcity (17). There is a need for the market
players to agree on a common date for switching on digital and switching off analogue transmission
so as to overcome the lack of frequency spectrum and to minimise the costs of parallel transmission.
In view of the complexity of the terrestrial switchover, the Startszenario 2000 envisaged a gradual
introduction of DVB-T in the different Länder, starting with those areas with higher population
density (18).

(18) As a first initiative in North Rhine-Westphalia, on 27 November 1998, LfM decided to launch a
DVB-T test project (DVB-T Feldversuch) which took place in Cologne in the years 1999 and 2000 (19).
In view of the objectives of the Startszenario 2000, the authorities in North Rhine-Westphalia have
later on agreed to cooperate with the competent authorities in the Northern Länder of Lower Saxony
the digitisation of
(Niedersachsen), Schleswig-Holstein, Hamburg and Bremen and to carry out
terrestrial transmission simultaneously in order to gain efficiencies.

(19) On 20 October 2003, LfM; the public service broadcasters (PSBs) ARD, ZDF and WDR Cologne (20);
the commercial service broadcasters (CSBs) RTL Television (RTL), VOX Film und Fernseh-GmbH &
Co. KG (VOX) and ProSiebenSat.1 Media AG (ProSiebenSat.1) signed a general agreement on the
introduction of DVB-T in North Rhine-Westphalia (Vereinbarung zur Einführung des digitalen

(17) Commission Communication on the transition from analogue to digital broadcasting, cf. Footnote 9.
(18) This strategy is referred to as ‘Strategie des inselweisen Umstiegs’.
(19) At the time, the media authority was still called Landesanstalt für Rundfunk Nordrhein-Westfalen.
(20) ARD stands for Arbeitsgemeinschaft der öffentlich-rechtlichen Rundfunkanstalten der Bundesrepublik Deutschland,

ZDF for Zweites Deutsches Fernsehen, WDR Cologne for Westdeutscher Rundfunk Köln.

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terrestrischen Fernsehens (DVB-T) in Nordrhein-Westfalen). The agreement identified the two areas of
Cologne/Bonn and Ruhr/Düsseldorf where DVB-T was to be launched next after the successful
switchover in the area of Berlin-Potsdam, and defined a binding timetable for the switchover. The
agreement did not contain any specific details about the envisaged funding measure. It merely noted
that ‘as support measure, the LfM is providing funding for the technical infrastructure for DVB-T
transmission in North Rhine-Westphalia’.
the annex contained a reference to the
In addition,
elaboration of a funding concept for citizens on social grounds (21).

(20)

(21)

(22)

(23)

The general agreement of 20 October 2003 was completed by a cooperation agreement (Koope­
rationsvereinbarung zur Einführung des digitalen terrestrischen Fernsehens (DVB-T) in Nordrhein-Westfalen)
signed by the same parties (WDR also representing the broadcasters of ARD) as well as the Land of
North Rhine-Westphalia on 10 December 2003. The cooperation agreement defined common prin­
ciples for communicating about DVB-T and designated the bodies responsible for the execution of
the agreement,
in particular a steering committee (Lenkungsausschuss) for decision-making and a
project office (Projektbüro) for execution. The project office was set up by contract between LfM
(LfM Nova GmbH), WDR (also representing the broadcasters from ARD) and ZDF of 14 January
2004.

The overall transmission capacity of the DVB-T network comprises six multiplexes (22) conceived to
carry a total of 24 programme channels both in the Cologne/Bonn and the Düsseldorf/Ruhr areas. In
order to start digital terrestrial transmission, the frequencies needed to be allocated by means of
licences both to broadcasters for the transmission of their programmes, and network operators for
the operation of the DVB-T platform. Regarding the broadcasting of programmes, both in the
Cologne/Bonn and the Düsseldorf/Ruhr areas, one multiplex was granted to each of the public
service broadcasters (ARD, ZDF and WDR). The capacity reserved for commercial service broadcasters
has been tendered by LfM and the respective DVB-T licences were allocated on 14 May 2004.
the Telecommunications and Postal Regulatory
Concerning the operation of
Authority (Regulierungsbehörde für Telekommunikation und Post, RegTP — now Bundesnetzagentur für
Elektrizität, Telekommunikation, Post und Eisenbahn, BNetzA) granted the licences in 2004 (for more
details on the allocation procedures, see recitals 24-30 below).

the network,

In line with the dates fixed in the general agreement of 20 October 2003, digital terrestrial trans­
missions were launched on 24 May 2004 in the Cologne/Bonn area and on 8 November 2004 in the
Düsseldorf/Ruhr area. The analogue terrestrial transmission (ATT) of the CSBs was halted as of the
respective launch dates. The ATT of the PSB channels ARD-Das Erste, ZDF and WDR continued in
parallel for a simulcast phase of about five months until it was switched off in the Cologne/Bonn area
on 8 November 2004 and in the Düsseldorf/Ruhr area on 4 April 2005. On 19 November 2004,
LfM issued a directive on the financial support for DVB-T (Förderrichtlinie DVB-T) taking effect
retroactively as of 3 May 2004.

Following the start in the Cologne/Bonn and Düsseldorf/Ruhr areas, DVB-T is being continuously
rolled-out to other areas of North Rhine-Westphalia. On 29 May 2006, DVB-T transmissions were
launched in two more areas (Wuppertal and Ostwestfalen-Lippe). On 12 June 2007 DVB-T started in
Münsterland and it is foreseen to launch digital terrestrial television in Aachen and South Westphalia
in November 2007. Contrary to the Cologne/Bonn and Düsseldorf/Ruhr areas, the switchover in
these zones is being carried out only by the public service broadcasters, without the participation of
CSBs (23).

(21) The annex states that ‘Für die betroffenen sozial schwächeren Mitbürgerinnen und Mitbürger soll ein Förderkonzept
entwickelt werden’. However, on the basis of the information available to the Commission, such a funding concept
based on social grounds has not been put in place by LfM.

(22) A multiplex corresponds to a frequency block which in NRW is used for four programme channels.
(23) In one part of the Düsseldorf/Ruhr area (Oberbergischer Kreis), the switchover was in fact carried out without the

participation of the CSBs.

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Award of DVB-T broadcasting licences for CSBs

(24)

In accordance with Section 52a(1) of the State Broadcasting Treaty (24), Section 28 of the Media Law
of NRW states that ‘for the first allocation of digital terrestrial broadcasting capacities, priority shall
be given to those broadcasters with programme channels which are broadcast in the given trans­
mission area in analogue form.’

(25) On 14 November 2003, LfM issued the rules for the allocation of the terrestrial broadcasting
transmission capacity (Zuweisungssatzung). However, the digitisation also required the use of the
existing analogue terrestrial television channels, which were allocated to RTL Television (by the
RTL Television GmbH), VOX/DTCP (by VOX Film-und Fernseh GmbH & Co. KG which also belongs
to the RTL group with DTCP GmbH) and SAT1 (Sat1 Satelliten Fernsehen GmbH, hereafter ProSie­
benSat.1). The respective analogue licences were granted in 2002 and 2003 by LfM and would have
ended on 21 July 2008 for RTL Television, 31 January 2007 for VOX and 31 October 2010 for
SAT1. By letters of 13 November 2003, LfM requested the commercial broadcasters RTL, VOX and
ProSiebenSat.1 to confirm in writing their willingness to return their analogue channels in order to
be able to proceed with the allocation of the transmission capacity. Further to the receipt of the
confirmation by the broadcasters (25), the announcement of LfM dated 4 December 2003 for the
first allocation of DVB-T transmission capacities to commercial broadcasters concerning the
Cologne/Bonn and the Düsseldorf/Ruhr areas was published in the Bulletin of the Land (Landes­
ministerialblatt) on 30 December 2003 (26).

(26)

(27)

The tender covered the part of the transmission capacity reserved for CSBs, i.e. three multiplexes or
12 programme channels in each of the target areas. The tender specifications spelled out the selection
criteria in case there would be more applicants than programme channels available and a decision
would have to be made between the different applicants (Vorrangentscheidung).
In line with the
provisions of the Media Law of NRW, the criteria included the contribution of a programme
channel to a balanced overall programme offer (Programmvielfalt) and to pluralism of broadcasters
(Anbietervielfalt) as well as the presence of a broadcaster in the ATT network (27). The tender did not
specify the costs of transmitting a programme channel via DVB-T nor any intention to financially
support the switchover. The deadline for submitting offers was 3 March 2004.

LfM received a total of 21 offers from broadcasters and media service providers in response to the
tender announcement. ProSiebenSat.1 and the RTL group applied with a set of programs (Programm­
bouquets) for one multiplex each (28). On 23 April 2004, the Media Commission (Medienkommission)
of LfM decided on the allocation of the programme channels reserved for CSBs. On the basis of this
decision, LfM issued an order for the allocation of the respective DVB-T licences on 14 May 2004.
According to the decision, a multiplex was allocated to each of the commercial broadcasting groups
RTL and ProSiebenSat.1, and the capacity of the remaining one multiplex was allocated to broad­
casters of individual programme channels: VIVA (VIVA Fernsehen GmbH), CNN (Turner Broadcasting
Systems Deutschland GmbH), Eurosport (Eurosport S.A.), and onyx.tv/Terra Nova (Onyx Television
GmbH) (29).

(24) Staatsvertrag über den Rundfunk im vereinten Deutschland of 31 August 1991,

last amended with effect from

1 March 2007.

(25) By letter of RTL dated 17 November 2003, by letter of VOX dated 5 December 2003 and by letter of ProSiebenSat1,

dated 23 December 2003.

(26) ‘Erstmalige Zuweisung von Übertragungskapazitäten für die landesweite digitale terrestrische Verbreitung bzw.
Weiterleitung von Fernsehprogrammen und Mediendiensten im DVB-T Standard in Nordrhein-Westfalen, Bekannt­
machung der LfM vom 4. Dezember 2003’, published in Landesministerialblatt of 30 December 2003.

(27) The provision that programme channels present in the respective ATT network need to be given priority when
awarding licences for DVB-T is based on Section 52a(1) in the State Broadcasting Treaty and referred to in Section 28
(1) of the NRW Media Law.

(28) In their reply of 23 March 2003, the German authorities indicated that the possibility for the Media Commission of
LfM to allocate entire multiplexes to the broadcasters RTL Group and ProSiebenSat.1 is based on Section 28 of the
Media Law of North Rhine-Westphalia which gives priority to those programme channels already broadcast in
analogue.

(29) The licence was granted to Onyx Television GmbH knowing that as of 20 May 2004, it is going to change its

programming and broadcast a documentary channel called TerraNova instead of its music channel onyx.tv.

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(28) According to Section 12 paragraph (2) of the Media Law of North Rhine-Westphalia, also referred to
in the tender announcement, first-time licences can be awarded for a period of between 4 and 10
years. By order of the LfM of 14 May 2004, the licences were granted to ProSiebenSat.1, RTL and
CNN respectively for five years, to VIVA until 2 December 2008, to Eurosport S.A. for three years
and to TerraNova until 17 June 2009. However, as of 1 July 2007, TerraNova left the DVB-T
platform and was replaced by Tele 5 (TM-TV GmbH) (30) which was chosen by LfM out of seven
applicants. Table 1 provides an illustration of the switchover process in the Cologne/Bonn area,
including a simulcast period for PSBs but not for CSBs as indicated in recital 22 above.

Terrestrial transmission in Cologne/Bonn before and after switchover

Table 1

Transmission
channel

Analogue
TV

Network service
area as of
4.4.2005

Programmes as
of 24.5.2004

Programmes as
of 8.11.2004

Programmes as
of 4.4.2005

K 05

K 26

K 29

K 34

K 36

Sat.1

ZDF

ZDF

VOX

RTL

K 43

ARD

K 49

K 65

K 66

WDR

X

X

ARD — Simulcast

X

X

countrywide

ZDF Bouquet

ZDF Bouquet

ZDF Bouquet

D

E

C

B

A

ZDF — Simulcast

RTL Bouquet

RTL Bouquet

ZDF bouquet

X

X

Viva/Eurosport/CNN/
Terra Nova (Tele5 as
of 1.7.2007)

RTL/VOX/ProSieben/
Sat.1

Pro7Sat.1 Bouquet

Pro7Sat.1 Bouquet

WDR — Simulcast

WDR Bouquet

WDR Bouquet

ARD Bouquet

ARD Bouquet

ARD Bouquet

N24/Kabel 1/RTL II/
Super RTL

Viva/Eurosport/CNN/
Terra Nova

X

Explanations: The network services for the DVB-T transmission channels K26, K29, K36 and K43 are provided by T-Systems, while
the transmission channels K49 and K65 were allocated to WDR but transmission is also partly provided by T-Systems. Analogue
transmissions are in italics. A ‘bouquet’ means a set of four programmes transmitted over one digital multiplex. The allocation of
DVB-T channels to broadcasters in the Düsseldorf/Ruhr area is not presented in this table. The switchover in the Cologne/Bonn
area was completed on 8 November 2004 but there were some minor technical adjustments concerning the allocation of
channels on 4 April 2005 due to the switchover in the Düsseldorf/Ruhr area. Following the simulcast period, transmission
channels K05, K65 and K66 are currently, according to the information available to the Commission, not used for television
transmission. The overview is only provided for illustrative purposes.

Award of DVB-T network licences

(29) At the request of the State Chancellery (Staatskanzlei) of the Land of North Rhine-Westphalia, the
Telecommunications and Postal Regulatory Authority (RegTP)
launched an open procedure for
frequency allocation (Frequenzzuteilungsverfahren) on 4 February 2004 (31). Similarly to the broad­
casters, the operators of the analogue terrestrial network have previously renounced their analogue
licences which were unlimited in time. The overall need of digital transmission was broken down into
five network service areas (Versorgungsbedarfe A to E) which correspond to the individual transmission
channels (multiplexes in digital mode). The relevant legislative act (Verfügung) did not note that there
was one additional, countrywide service area which had already been published on 27 November
2002 (32). This service area was allocated to T-Systems, a subsidiary of Deutsche Telekom, and serves
to transmit the ZDF programme channels.

(30) See the announcement on LfM’s website: http://www.lfm-nrw.de/presse/index.php3?id=537
(31) Official Gazette RegTP No 3/2004, Act No 3/2004, p. 82.
(32) Official Gazette RegTP No 23/2002, Act No 36/2002, p. 1695.

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(30)

(31)

(32)

(33)

In the allocation procedure in North Rhine-Westphalia, T-Systems applied for the frequencies for the
service areas C, D and E which correspond to the multiplexes dedicated to commercial service
broadcasters, and WDR for the frequencies for the service areas A and B, which were reserved for
public service broadcasters. Since there was only one application for each of the five service areas,
RegTP allocated the frequencies through the application procedure and did not need to launch the
second stage of the frequency allocation procedure, i.e. the tender procedure. Since T-Systems and
WDR were already operators of the ATT network and thus possessed a telecommunications auth­
orisation, this requirement for allocating the frequencies through the application procedure was also
met. The rights for operating the DVB-T network were granted for about
twenty years until
31 December 2025.

2. THE SUPPORT MEASURE IN DETAIL

for

the digital

The subjectmatter of the notification is the financial assistance envisaged to be provided by LfM to
CSBs
in the areas of
Cologne/Bonn and Düsseldorf/Ruhr. The German authorities estimated that by means of the intro­
duction of DVB-T in these areas, around 14 million inhabitants are able to receive DVB-T out of the
overall population of around 18 million in the Land (33).

their programme channels

transmission of

terrestrial

The legal basis for this assistance is Section 40(1)(2) of the State Broadcasting Treaty (Rundfunk­
staatsvertrag) and Section 88(3) of the Media Law of North Rhine-Westphalia, pursuant to which the
Land media authorities and,
in the present case, LfM are charged with promoting, among other
things, the development of the technical infrastructure for broadcasting and projects for new broad­
casting technologies out of their share of the licence fee (Rundfunkgebühr). LfM’s budget is essentially
financed by the 2 % of
the public service broadcasting licence fee collected in North Rhine-
Westphalia in accordance with Section 40 read in conjunction with Section 55 of the State Broad­
casting Treaty (Rundfunkstaatsvertrag), Sections 10 and 11 of the State Treaty on the Financing of
Broadcasting (Rundfunkfinanzierungs-Staatsvertrag) and 116(1) of the Media Law of North Rhine-
Westphalia (34). The licence fees are collected from private households by the German TV licensing
office (Gebühreinziehungszentrale) and transferred to the beneficiary organisations such as the LfM.

The directive on the financial support for DVB-T (Förderrichtlinie DVB-T) (35) issued on 19 November
2004 sets out the general terms of the financial assistance granted by LfM to the commercial
broadcasters. Article 2 of the directive states that the financial assistance concerns the transmission
fees paid by the broadcasters to the network operator. In line with Article 3, beneficiaries may be
those commercial broadcasters or media service providers which have received digital terrestrial
transmission capacities. Article 4 foresees that the financing is provided in the form of grants.
Article 5(1) limits the duration of the financing to five business years. Article 5(2) specifies that
‘The financing shall not exceed in average 30 % of the transmission fees payable for the operation of
the network and is granted in a decreasing scale. It starts in the first business year with 40 % of the
transmission fees payable for the operation of the network and decreases by five percentage points
each business year so that the share of financing amounts to just 20 % in the fifth business year.’ In
addition, Article 5(3) provides that ‘The savings arising from the switch-off of analogue transmissions
will be deduced from the funding’.

(34)

The details concerning the concrete implementation of the directive on the financial support were set
out in the notification. In the case of the broadcasters of the programme channels Viva, Eurosport,
CNN and Terra Nova (as of 1 July 2007, Tele5) which did not participate in the analogue terrestrial
transmission, the envisaged financial support is the same: it decreases gradually by 5 % from 40 % of
the DVB-T transmission fees in the first year to 20 % of the transmission fees in the fifth year, in line
with Article 5(2) of the directive on financial support.

(33) Answers of the German authorities dated 2 May 2005.
(34) 45 % of these funds are transferred to the NRW Film Foundation.
(35) See recital 22.

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(35)

(36)

In the case of the RTL group and ProSiebenSat.1, the CSBs previously present on the analogue
terrestrial platform, the notification does not foresee the application of the decreasing share of
assistance provided in Article 5(2) of the directive on financial support. In the case of these broad­
casters which were allocated one entire multiplex each, the calculation of the subsidy is based on the
difference between the overall amount of transmission fees in analogue and in digital mode in North
Rhine-Westphalia as well as in other Länder of Northern Germany. According to the German
authorities, thereby, the calculation method intends to take into account the savings arising from
the switch-off of analogue transmissions as provided in Article 5(3) of the directive on the financial
support.

In the notification, the German authorities also provided information about the envisaged amount of
funding based on the estimated DVB-T transmission fees. At the same time, they highlighted that the
calculation of the public support would be based on the actual transmission fees charged by the
network operator to the CSBs at the time the financing is granted. In accordance with the Federal
Telecommunications Law (Telekommunikationsgesetz), transmission fees are only fixed by the regulatory
authority BNetzA if the network operator is found to have significant market power at the relevant
market. In July 2006, BNetzA has defined the relevant market for the transmission of broadcasting
signals in line with the European regulations. As a result, the network operator concerning the CSBs,
T-Systems was only considered to have significant market power in the market for terrestrial radio
transmission over FM (terrestrische Radioübertragung via UKW) (36). Therefore, it remains free to fix the
amount of the transmission fees for commercial broadcasters on the DVB-T platform.

(37)

In the notification, the German authorities estimated that the DVB-T transmission fees of a multiplex
would amount to EUR 2,7 million per year. The transmission fees of one programme channel were
thus estimated at EUR 0,675 million per year and at EUR 3 375 million over the entire five year
period of the scheme (37). These figures are lower than the analogue terrestrial transmission fees per
programme channel.

(38)

Based on these data, the overall financial support granted to the individual programme channels Viva,
Eurosport, CNN and Terra Nova (as of 1 July 2007, Tele5) was envisaged to amount to a total of
EUR 4 050 000. The level of financing foreseen over the five years per programme channel is shown
in Table 2.

Estimated transmission fees and funding for Viva, Eurosport, CNN, TerraNova (Tele5)

Table 2

Transmission fees per programme
channel

Aid intensity

Amount of funding

(in EUR)

675 000

675 000

675 000

675 000

675 000

3 375 000

40 %

35 %

30 %

25 %

20 %

270 000

236 250

202 500

168 750

135 000

1 012 500

Years

1st year

2nd year

3rd year

4th year

5th year

Total amount per
programme channel

(36) The result of the market analysis was communicated to the Commission on 31.7.2006.
(37) The actual figures charged by T-Systems to the CSBs for the digital terrestrial transmission are actually lower.
According to the German authorities, the annual fees per programme channel (for example for 2005 and 2006)
amount to about EUR 611 000.

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(39)

In the case of the RTL group and ProSiebenSat.1, the calculation provided in the notification is
shown in Table 3. The other Länder of Northern Germany taken into account are jointly referred to
as ‘North’ in the notification (38).

Calculation by the German authorities of ‘additional costs’ for ProSiebenSat.1 and RTL (39)

Table 3

(in EUR)

RTL group

ProSiebenSat.1

NRW

RTL, VOX

‘North’

RTL

NRW

Sat1

‘North’

Sat1, Pro7

2,2 million

3,9 million

0,8 million

4,6 million

RTL, VOX, RTL2,
S.RTL

RTL, VOX, RTL2,
S.RTL

Sat1, Pro7, N24,
K1

Sat1, Pro7, N24,
K1

2,7 million

3,3 million

2,7 million

3,3 million

– 0,5 million

+ 0,6 million

– 1,9 million

+ 1,3 million

Analogue programme
channels/Transmission fees
in EUR per year

Digital programme channels/
transmission fees in EUR per
year

Differences in fees analogue/
digital

Overall balance

+ 0,1 million

– 0,6 million

(40)

Based on this calculation, LfM does not intend to grant a subsidy to the RTL group. On the one
hand, the RTL group is found to have a positive overall balance. On the other hand, the notification
states that the RTL group has explicitly renounced the financing in the context of the negotiations
concerning the return of the analogue licences. As concerns ProSiebenSat1, it is considered to incur
‘additional expenses’ of up to EUR 600 000 per year and the German authorities foresee a funding of
up to EUR 550 000 per year over the duration of five years (up to EUR 2,75 million in total). This
represents around 28 % of the overall DVB-T transmission fees paid by ProSiebenSat.1 in North
Rhine-Westphalia.

(41)

In line with the above calculations for both groups of broadcasters, LfM’s total budget for subsidising
the DVB-T transmission of the CSBs over five years is estimated at EUR 6,8 million.

(42)

LfM grants the financial assistance described above only to programme channels of CSBs. The PSBs
finance the costs of DVB-T transmission out of the licence fee income accruing to them. According
to the information submitted by the German authorities, WDR has at its disposal a project budget of
about EUR 40,8 million for the period from 2001 until 2008 to cover the costs of the switchover. In
the case of ZDF, the budget to achieve the countrywide switchover to DVB-T amounted for the
period from 2001 to 2004 to EUR 36,8 million and to EUR 33,2 million between 2005 and 2008.

(43)

The financing directive entered into force retroactively as of 3 May 2004. However, by decision of
the Media Commission (Medienkommission) of LfM, the German authorities have undertaken not to
the Commission’s approval according to the State aid rules.
implement
Accordingly, no financing has been granted to the commercial broadcasters under the measure.

the financing until

(38) The notification does not specify how the overall transmission costs were calculated for the other Länder of Northern

Germany.

(39) Both in analogue and digital transmission, transmission costs are calculated per programme channel transmitted by
the broadcaster concerned. The calculation method of the German authorities does not take into account the increase
in the number of programme channels broadcast by the broadcasters in digital mode as compared to analogue
terrestrial transmission, whereas this increase causes the higher overall transmission costs. Moreover, it does not
include the broadcaster’s revenues arising from the transmission of their programme channels. The Commission’s
assessment of the calculation method is presented in recitals 74, 123 and 171 of the present decision.

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(44)

(45)

(46)

III. GROUNDS FOR INITIATING THE FORMAL INVESTIGATION PROCEDURE

In the opening decision, the Commission took the preliminary view that the subsidies envisaged by
LfM appear to meet all the criteria of Article 87(1) of the EC Treaty and thus to constitute State aid.
The Commission considered that the measure appears to be granted through State resources and is
It was found that the subsidy appears to constitute an advantage for
imputable to the State.
commercial broadcasters as direct beneficiaries and may also benefit
indirectly the network
operator T-Systems.

The opening decision also raised doubts whether the procedures for the allocation of broadcasting
and network licences could have minimised or eliminated the selective economic advantage deriving
from the subsidy and could have prevented a distortion of competition. The Commission considered
that the measure constitutes sectoral aid and appears to distort competition among the different
transmission platforms (terrestrial, cable, satellite). It was noted that the measure may also distort
competition among commercial broadcasters. In view of the international competition both among
broadcasters and network operators, it was considered that the measure may affect trade between
Member States.

The Commission also expressed doubts as to the compatibility of the measure with the EC Treaty.
The opening decision found that the conditions for the application of Articles 87(3)(c), 87(3)(d) and
86(2) of the EC Treaty do not seem to be met. In particular, the Commission considered that there
appears to be no indication that in the market situation prevailing in North Rhine-Westphalia, the
measure could be deemed to be appropriate, necessary and proportionate to overcome any specific
market failure which may hamper the switchover to digital television. The opening decision took the
view that the financial support is not related to any particular cultural content. The Commission also
called into question whether the measure might be considered as a compensation for a service of
general economic interest.

(47)

Finally, the Commission initiated the formal investigation procedure also in order to give Germany
and interested parties the opportunity to submit their comments on its provisional assessment of the
measure described and to make available to the Commission any relevant information related to the
measure.

IV. COMMENTS FROM INTERESTED PARTIES (40)

(48) ANGA (Verband Privater Kabelnetzbetrieber e. V.), the association of private cable network operators
stressed that the financial support for DVB-T transmission distorts competition between the different

(40) ProSiebenSat.1 and Deutscher Kabelverband (DKV) did not submit comments with respect to the present procedure.
For the sake of completeness, the Commission notes that these parties provided observations in the similar case
concerning Bavaria (C 33/06, referred to in recital 4 above). In this case, ProSiebenSat.1, as one of the beneficiaries,
stressed the importance of the funding, from a commercial viewpoint, for the digital switchover and for safeguarding
the terrestrial platform. ProSiebenSat.1 maintained that in view of the decreasing share of terrestrial platform, it was
considering switching off this mode of transmission.
In view of the economic risks linked to the switchover
(including the risk that terrestrial coverage decreases with the switchover), ProSiebenSat.1 argued that it would
not have participated in DVB-T without the envisaged support. At the same time, the participation of
large
commercial broadcasting groups alongside with the PSBs was necessary to ensure consumer interest for DVB-T.
ProSiebenSat.1 also claimed that any advantage would be passed on by the broadcasters to the network operator by
means of the transmission fees. Finally, ProSiebenSat.1 stated that the financial assistance would serve to reduce the
advantage of PSBs which had significant resources for the digitisation and would have a positive effect on infra­
structure competition. Deutscher Kabelverband, on the other hand, supported the findings expressed by the
Commission in the opening decision. DKV considered that
the envisaged measure would distort competition
between the different means of transmission and is not necessary for the introduction of DVB-T. DKV also high­
lighted other market-based alternatives for the financing of DVB-T. DKV claimed that the introduction of DVB-T led
to customer losses for cable operators: the decrease of customers was 33 % higher in 2005 than in 2004. Moreover,
DKV highlighted that on the basis of the ASTRA statistics, there has been a clear increase of terrestrial coverage in the
different German Länder following the switchover to DVB-T. DKV also claimed that the measure would benefit
Deutsche Telekom in the roll-out of its IPTV offer. Finally, DKV maintained that there was no public interest
justification to favour DVB-T over the other infrastructures from the point of view of media plurality, the trans­
mission of local and regional programmes or universal coverage.

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means of transmission to the detriment of cable operators. They submitted that the introduction of
DVB-T has already led to a loss of customers for cable operators in the Länder concerned. The
migration of terrestrial customers to cable which took place following the switch-off of analogue
terrestrial television has been very limited and by far did not compensate for the continuous loss of
cable customers. In their view, the measure aims at reducing the share of cable transmission, despite
the fact that there is already strong competition with satellite and broadband (IPTV) operators, as well
as between the different operators within the cable sector. Moreover, ANGA contests the openness of
the procedures for the granting of broadcasting and network licences. With regard to the award of
broadcasting licences, they claim that the procedure favoured those undertakings already present in
the analogue network (ProSiebenSat.1 and the RTL Group) by allocating them entire multiplexes,
including for programmes which they have not broadcast in analogue. As regards the award of
network licences, they submit that it was clear from the beginning that the licensees would be the
public service broadcasters of ARD and T-Systems. They claim that
the subsidies provide an
advantage for Deutsche Telekom which might distort competition not only in the broadcasting
if Deutsche Telekom links the DVB-T
sector, but also in the electronic communications sector,
offer of
they
argue that there would be other market-based alternatives for the financing of DVB-T by means
of the encryption of the programmes and charging customer fees.

its subsidiary T-Systems with its broadband service offers for customers. Finally,

(49)

the number of

The comments submitted by ish (ish NRW GmbH), the main cable network operator in North Rhine-
Westphalia, take a similar line to ANGA and generally support the position of the Commission in the
opening decision. In its observations,
ish claims having suffered significant customer loss (around
500 000 in 2005) due to the launch of DVB-T and in particular due to the ‘free’ subsidised reception
of DVB-T compared to the subscription-based use of cable (41). This customer loss was not
compensated by the limited customer increase following the switch-off of analogue terrestrial trans­
mission. According to ish,
their customers could only be stabilised by high
investments in the modernisation of cable infrastructure and the renewal of product structure. In
their view, the subsidies aim at preserving a technology whose economic viability is doubtful, and
which could be financed by other means such as encryption and customer fees. Similarly to ANGA,
they consider that the measure would also reinforce the position of Deutsche Telekom in the
broadband market. Finally, they take the view that the direct financial assistance increases the
advantage of broadcasters transmitting over the terrestrial platform which they already enjoy in
light of the must carry rules set out in Article 16 paragraph (2) of the Media Law of North Rhine-
Westphalia (Landesmediengesetz Nordrhein-Westfalen), which obliges cable network operators
to
transmit on their network those programmes which have received a terrestrial broadcasting licence
from LfM.

(50)

ESOA (European Satellite Operators Association) also generally supports the views expressed by the
Commission in the opening decision. They consider that LfM’s financial assistance distorts compe­
tition between the different transmission platforms. As a matter of principle, they take the view that
Member State policy interventions to promote the switchover should be transparent and justified,
non-discriminatory and technologically neutral. They consider that the support of terrestrial trans­
transmission from the market. They
mission contributes to the foreclosure of other forms of
highlight
transmission by satellite without State
support and point out that despite the significant investment required for the operation of satellites,
this means of transmission has a number of advantages over terrestrial transmission (e.g. large and
seamless reach, no high infrastructure costs).

that satellite operators have introduced digital

V. COMMENTS FROM THE FEDERAL REPUBLIC OF GERMANY

(51) Germany considers that the measure does not constitute State aid. Moreover, it takes the view that
even if aid was found to be present, it would be compatible with the common market. Besides the
specific comments concerning the qualification and the compatibility of the measure, the written
observations put forward general arguments concerning the Commission’s policy and competences
under the State aid rules.

(41) According to ish, the reception of TV over DVB-T for ‘free’ was an important argument in the marketing campaign of
the authorities to promote the introduction of DVB-T which made customers migrate from cable to DVB-T.

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(52) As a matter of principle, the authorities take the view that the Commission has no right to interfere
with the political decision of the Federal Government and the Länder (politische Entscheidung von Bund
und Ländern) to maintain the terrestrial platform and to carry out its digitisation. Furthermore, in their
opinion, the Commission is not entitled to assess in the place of the authorities of the Member States
whether other measures might have been more appropriate. They also consider that the requirement
of technology neutrality is not a suitable criterion to assess the compatibility of aid measures in the
field of digital television. They call into question whether the Commission’s position and the length
of the investigation of the measure at hand is in line with its declared policy to support digitisation.
The comments express the view that there is a lack of consistency in the decision-making of the
Commission in particular with respect to the assessment of the grounds for compatibility. They
consider that the guidance provided in the final decision on the measure in Berlin-Brandenburg is not
applicable to the present case and would not provide sufficient
indications to authorities for
compatible measures which could help to preserve the terrestrial platform.

(53)

Regarding the qualification of the present measure, the German authorities repeatedly stress that the
envisaged payments constitute a compensation for a service of general economic interest and the
they maintain that the measure does not distort
Altmark criteria are met. At the same time,
competition neither among broadcasters nor among the different
transmission platforms. They
emphasise that the procedures for the allocation of broadcasting licences by LfM as well as for
the award of the network licences by RegTP were transparent and fully in line with the applicable
the funding was not mentioned in the tender
national
announcement concerning the granting of broadcasting licences, based on the general agreement
of 20 October 2003, the German authorities maintain that all applicants knew about the envisaged
funding measure.

requirements. Despite the fact

that

(54)

into
In response to the comments received from the cable industry, the German authorities call
question the alleged customer loss of the cable operators and contest the data submitted by ish. They
maintain that even if there was a decrease in cable customers, this would not necessarily be due to
the introduction of DVB-T. They point out that the TV cable networks have been built in the 1980s
with State support, and cable transmission also benefits from regulatory advantages up to now
(Mietnebenkostenverordnung). Moreover, the authorities submit that their overall approach is technology
neutral and if needed, they would also be ready to support the digitisation of cable.

(55) Given the high market shares of cable and satellite, they take the position that there is no risk that
DVB-T attracts broadcasters away from these platforms or influence consumers’ choice. Rather than
affecting their market position, they consider that the measure would exercise positive competitive
pressure on cable and satellite operators and thereby promote the digitisation of these platforms too.
At the same time, the comments also call
into question whether cable, satellite and terrestrial
transmission belong to the same market in view of the technological differences and the costs of
switching from one means of transmission to another. In the opinion of the German authorities,
terrestrial television is not in direct competition but rather complementary to satellite and cable.

(56)

The German authorities consider that the measure does not provide an indirect advantage to the
network operator T-Systems. They maintain that the potential advantage deriving from the funding to
the network operator is neither demonstrable nor quantifiable (weder nachweisbar noch quantifizierbar)
and is not sufficient to consider T-Systems as indirect beneficiary under the State aid rules. They
claim that the guaranteed use of the network does not follow from the measure, but from the
granting of broadcasting licences. Moreover, they consider that the measure does not necessarily
enable T-Systems to charge higher fees and obtain more revenues. Furthermore, as to the effect of the
measure on trade between Member States, the German authorities take the view that the sole fact that
broadcasters and network operators are in international competition is not sufficient to establish the
affectation of intra-community trade.

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(57)

If the measure would be considered State aid, the German authorities maintain that it should be
declared compatible with the common market under Article 86(2), 87(3)(c) or (b) of the EC Treaty.
They reiterate the position that the introduction of digital terrestrial television constitutes a service of
general economic interest. In their view, the commercial broadcasters have been entrusted with this
service by means of the attribution of the DVB-T transmission capacities.

(58) Moreover, regarding Article 87(3)(c) EC Treaty, the German authorities claim that the Commission
has not given due consideration to the positive aspects of the introduction of DVB-T. In particular,
the Commission did not take into account the contribution of DVB-T to media plurality, the
suitability of the terrestrial platform to broadcast regional and local programmes, the innovation
potential of DVB-T (above all for mobile reception) and the contribution of the measure to ensure
DVB-T coverage in rural and remote areas. Moreover, the Commission did not consider the ef­
ficiencies achieved by LfM by promoting an early switchover and by coordinating this process
with the Länder of Northern Germany. In their view, the fact that in other areas of North Rhine-
Westphalia, DVB-T is being launched without the participation of commercial broadcasters indicates
that private operators are not
interested in participating in this platform without additional
incentives. Overall, they consider that the measure is in line with the Commission Communication
on the transition from analogue to digital broadcasting (hereafter the Switchover communication) (42).
In their view, the funding addresses the difficulties identified by the Communication and compensates
in part the significant short-term costs of the switchover also referred to in the Communication.

(59)

In addition, the German authorities consider that the Commission should also examine the compati­
bility of the measure in light of Article 87(3)(b) EC Treaty. They take the view that the measure
constitutes an important project of common European interest. In their view, this also follows from
the Switchover communication and from the wide range of economic, social and political benefits
associated with digitisation.

(60)

(61)

VI. ASSESSMENT OF THE MEASURE

1. PRESENCE OF STATE AID PURSUANT TO ARTICLE 87(1) EC TREATY

The Commission has examined whether the measure can be qualified as State aid within the meaning
of Article 87(1) of the EC Treaty, which provides that ‘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 the production of certain goods shall, insofar as it affects trade
between Member States, be incompatible with the common market’. It follows that in order to be
qualified as State aid, the following cumulative conditions have to be met: (1) the measure has to be
granted out of State resources and be imputable to the State, (2) it has to confer an economic
advantage to undertakings, (3) the advantage has to be selective and distort or threaten to distort
competition, (4) the measure has to affect intra-Community trade.

1.1. MEASURE GRANTED OUT OF STATE RESOURCES AND IMPUTABLE TO THE STATE

In line with the settled case law of the European Court of Justice, for advantages to be capable of
being categorised as aid within the meaning of Article 87(1) of the EC Treaty, they must first be
granted directly or indirectly through State resources, and, second, be imputable to the State (43). The
distinction between aid granted by the State and aid granted through State resources serves to bring
within the definition of aid not only aid granted directly by the State, but also aid granted by public
or private bodies designated or established by the State (44). Community law cannot permit the rules
on State aid to be circumvented merely through the creation of autonomous institutions charged
with allocating aid (45).

(42) COM(2003) 541 final, cf. Footnote 9.
(43) C-345/02, Pearle and others, [2004] I-7139, paragraph 35 with reference to Case C-303/88 Italy v Commission
I-4379,

[1991] ECR I-1433, paragraph 11 and C-482/99, France v Commission, Stardust Marine,
paragraph 24.

[2002]

(44) C-345/02, Pearle and others, [2004] I-7139, paragraph 34 with reference to PreussenElektra, paragraph 58; see also

Joined Cases C-72/91 and C-73/91 Firma Sloman Neptun Schiffahrt AG [1993] ECR I-887, paragraph 19.

(45) C-482/99, France v Commission, Stardust Marine, [2002] I-4379, paragraph 23.

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(62)

(63)

(64)

In the course of the procedure, the German authorities have argued that the funding is not granted
out of State resources because it is financed out of licence fees collected from individual television
viewers and thus the measure does not constitute a burden for the State budget. In their view, this
follows from the judgments of the ECJ in the cases PreussenElektra (46), Sloman Neptun (47) and Pearle
and others (48).

The German authorities have not contested that LfM is a public body established by the State which
performs a public task and the funding is granted out of its budget. LfM is a public authority
established by the Media Law of North Rhine-Westphalia. The law defines the organisational
structure of LfM and entrusts it with a wide range of public tasks in the field of broadcasting and
frequency management. LfM is subject to legal supervision by the Land of North Rhine-Westphalia
(staatliche Rechtsaufsicht) (49) and its annual budget is under the control of the Court of Auditors of the
Land (50). The public task of relevance for the present case, the promotion of the technical infra­
structure for broadcasting and of projects of new broadcasting transmission technologies,
is laid
down in the national State Broadcasting Treaty (51). More specifically, with respect to the digital
switchover, the Media Law of North Rhine-Westphalia provides that LfM shall support and guide
the switchover from analogue to digital transmission (52). LfM is therefore to be considered a public
body established by the State to serve the general interest.

Clearly, the financing foreseen under the present measure constitutes a burden for LfM’s budget. The
circumstance that the budgetary resources of LfM are stemming from the licence fee collected from
private households does not in any event prevent the budgetary resources of LfM to be categorised as
State resources. The fact that the subsidies are granted out of the budget of a public body is in itself
sufficient to conclude that State resources are involved. Moreover, the licence fee is a compulsory levy
imposed on owners of radio/TV sets and their collection follows procedures similar to those of tax
collection. The level of the licence fee is decided jointly by the Länder Parliaments and fixed in the
respective legal acts. The share of licence fees accruing to LfM is defined in the State Broadcasting
Treaty, the State Treaty on the Financing of Broadcasting and the Media Law of NRW as described in
recital 32 above. Thus, the licence fees constitute statutory levies which are under public control and
which constitute State resources (53).

(65) On the basis of the above and in line with the established case law on parafiscal charges (54), the
Commission takes the position that the present measure is granted out of State resources. This
invoked by the German authorities. The cases
finding is in line with the case-law of the ECJ
types of measures which did not
referred to by the German authorities concerned different
involve an advantage granted out of the budget of public bodies.

(66)

Furthermore, the German authorities also argued that the present measure is not imputable to the
State. By reference to the cases Stardust Marine (55) and Pearle and others (56), they maintain that in
itself, the fact that LfM is a public authority under a certain State control does not mean that the
measure is imputable to the State. They claim that in accordance with the independence of LfM under
German law (Staatsferne der LfM) the State had no influence over the present measure.

(46) C-379/98, PreussenElektra, [2001] I-2099.
(47) Joined Cases C-72/91 and C-73/91, Firma Sloman Neptun Schiffahrt AG/Bodo Ziesner, [1993] I-887.
(48) C-345/02, Pearle and others, [2004] I-7139.
(49) Media Law of North Rhine-Westphalia, Section 117.
(50) Media Law of North Rhine-Westphalia, Sections 113 and 114.
(51) State Broadcasting Treaty, Section 40(1)(2).
(52) Media Law of North Rhine-Westphalia, Section 27(1).
(53) Commission Decision in the Case E 3/205 ‘Aid to the German public service broadcasters’ (OJ C 185, 8.8.2007,

p. 1).

(54) See for instance Case 173/73 Italy v Commission [1974] ECR 709, where the Court ruled that where the funds used
for a measure are financed through compulsory contributions (e.g. parafiscal charges) and then distributed according
to State legislation they must be regarded as State resources even if they are collected and administered by institutions
distinct from the public authorities.

(55) Cf. Footnote 45.
(56) Cf. Footnote 46.

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(67)

The Commission considers that the independence of LfM under German law does not prevent the
present measure from being considered imputable to the State from the point of view of the
application of the State aid rules. The information provided by the German authorities indicates
that the measure is granted by LfM in the framework of its public tasks as defined in the State
Broadcasting Treaty and the Media Law of North Rhine-Westphalia. Although these provisions
guarantee LfM a certain degree of autonomy for the purpose of safeguarding the independence of
broadcasting, they provide limited discretion concerning the use of its budgetary resources.

(68) Notwithstanding the autonomy of LfM, it is — as stated out above — a public body whose activities
are clearly guided by public policy considerations. The envisaged granting of non-repayable grants to
commercial broadcasters in the measure at hand with no direct economic benefit to LfM cannot be
considered as being driven by commercial considerations. These circumstances establish in the
Commission’s view the imputability of the funding granted by LfM to the State. The ECJ cases
referred to by the German authorities concern different situations (levies collected for a purely
commercial purpose in Pearle and others, and public undertakings carrying out commercial activities
in Stardust Marine) and do not support the position of the German authorities.

(69)

Based on the above considerations, the Commission considers that the present measure is granted out
of State resources and is imputable to the State.

1.2. ECONOMIC ADVANTAGE TO UNDERTAKINGS

(70)

In order to qualify as State aid under Article 87(1) of the EC Treaty, a measure has to confer an
economic advantage to one or more undertakings. In the opening decision, the Commission took the
preliminary view that the present measure appears to favour the commercial broadcasters which
receive the funding as direct beneficiaries and may also benefit indirectly the operator of the DVB-T
network concerning commercial broadcasters, T-Systems. In their submissions, the German auth­
orities have argued that the measure does not confer an advantage neither directly to the commercial
broadcasters, nor indirectly to the network operator.

Advantage to the commercial broadcasters

(71)

The German authorities maintain that the financing does not constitute an economic advantage to
the commercial broadcasters which receive funding under the measure. In the first place, they claim
that the funding does not constitute an advantage because it merely compensates the broadcasters for
the economic risks involved in their participation in DVB-T. Second, they argue that the measure
only covers the ‘additional costs’ of digital terrestrial broadcasting as compared to the analogue mode.

(72) At the same time, the information submitted by the German authorities indicates that the measure
subsidises the transmission fees paid by the commercial broadcasters to the network operator. These
costs are inherent in the commercial operation of the broadcasters. By covering part of the fees, the
measure relieves the broadcasters from expenses which are part of their normal operating costs.
Therefore, independently from whether it is intended to compensate for ‘economic risks’ or alleged
‘additional costs’,
the envisaged public funding constitutes an
economic advantage to the recipients.

the Commission considers that

(73) Moreover, the Commission notes that contrary to the argument put forward by the German auth­
orities, the measure cannot be considered to cover genuine ‘additional costs’ of broadcasters in
relation to DVB-T. On the one hand, this argument has not been substantiated concerning those
broadcasters which have not been previously present on the analogue terrestrial platform and
therefore did not incur costs in the analogue terrestrial transmission in NorthRhine-Westphalia. In
their case, no cost comparison has been made and the German authorities have not provided any
justification for the share of transmission fees covered by the measure.

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Official Journal of the European Union

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(74) On the other hand, in the case of those commercial broadcasters previously present on the analogue
terrestrial platform, the calculation method used by the German authorities cannot be considered as
reflecting genuine additional costs relating to the switchover to digital terrestrial transmission. On a
comparable basis per programme channel, the transmission fees are actually lower for DVB-T than in
the analogue mode. The alleged ‘additional costs’ arise merely from the increase in the number of
channels transmitted by these broadcasters (see Table 4 for an overview of the level of transmission
fees in North Rhine-Westphalia and the envisaged subsidies).

Table 4

Overview of

transmission costs per programme

channel

and planned public

support

in

North Rhine-Westphalia — all figures in EUR

Broadcasters/
programme
channels

Transmission costs per year

analogue (59)

digital (60)

Overall difference
digital/analogue
transmission costs
per year (57)

Average planned
public support per
year (58)

Average aid
intensity

RTL

VOX

RTL2

SUPER RTL

1 351 640

783 663

na

na

675 000

675 000

675 000

675 000

Total RTL

2 135 303

2 700 000

SAT 1

Pro 7

N 24

Kabel 1

722 789

na

na

na

675 000

675 000

675 000

675 000

– 676 640

– 108 663

675 000

675 000

564 697

– 47 789

675 000

675 000

675 000

Total P7Sat1

722 789

2 700 000

1 977 211

TerraNova

Eurosport

CNN

VIVA

na

na

na

na

675 000

675 000

675 000

675 000

na

na

na

na

0

0

550 000

202 500

202 500

202 500

202 500

28 %

30 %

30 %

30 %

30 %

(75)

Third, the German authorities also put forward that the subsidy is a compensation for those broad­
casters which renounced their analogue licences before the expiry date in order to allow for the
launch of DVB-T. The Commission notes, in the first place that this argument cannot be applied to
those broadcasters which have previously not been present on the analogue platform and were not in
the possession of analogue licences.

(57) As outlined in recital 74 the table shows that the comparison made by the German authorities between the costs of
analogue and digital transmission is not objective as it does not take into account the increase in the number of
programme channels which are driving the costs. For instance, ProSiebenSat.1 was present only with one programme,
Sat1, on the analogue platform whereas it broadcasts four programmes on the digital platform. The table also shows
clearly that the transmission costs for the programme Sat1 are lower in digital than in analogue mode. The
differences in the transmission costs for the programmes of the RTL group and ProSiebenSat.1 group, shown in
this column in italics, are included to show all elements of the total calculation for both broadcasting groups, which
were — contrary to the other commercial broadcasters — present on the analogue platform.

(58) For the annual amounts, see Tables 2 and 3. These figures are based on the estimated costs, the NRW authorities

would recalculate these amounts based on the actual costs.

(59) For those programmes in this column where ‘not applicable (na)’ is indicated, there was no analogue transmission.
(60) These are the estimated transmission costs and not the actual costs.

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(76) As regards the broadcasters which were present on the
analogue platform, the submissions of the German auth­
orities also state that the possession and the outstanding
duration of the licences do not have a direct influence on
the amount of the subsidy, given that in their view, the
economic disadvantage due to the return of the analogue
transmission capacities cannot be exactly determined.
According to the authorities, the return of the analogue
licences was instead taken into account in the context of
the attribution of digital multiplexes to the broadcasters
concerned (61). As a consequence, both the RTL group
and
four
received
programme channels instead of two ATT programmes
in the case of the RTL group and one ATT programme
the subsidy is not
for ProSiebenSat.1. The fact
related to the return of the licences is also indicated by
the circumstance that only ProSiebenSat.1 is entitled to
receive funding according to the calculation method
the
submitted by the German authorities. Therefore,
Commission considers
the measure cannot be
that
regarded as a compensation for the economic value of
the outstanding duration of the analogue licences which
were returned by RTL Television, VOX/DTCP and Sat1.

ProSiebenSat.1

licence

that

for

a

(77)

(78)

(79)

Finally, by reference to the observations made by ProSie­
benSat.1 in the Berlin-Brandenburg case (62), the German
authorities also submit in their observations after the
opening of the formal
investigation procedure that in
any case, following the logic of the opening decision
by the Commission, the commercial broadcasters would
the economic advantage conferred by the
transfer all
public funding to the network operator T-Systems in
the form of transmission fees.

The Commission notes that this argument contradicts
those made by Germany concerning the presence of an
economic advantage to the network operator, and has
not been substantiated by the German authorities. As
explained under recitals 80 to 88 below, the Commission
considers that the network operator T-Systems would be
able to draw an indirect benefit
from the measure.
However, there is no indication that this would imply
a complete transfer of the economic advantage of the
broadcasters arising from the direct financing of their
normal
the
expenses.
Commission’s view, this argument cannot be accepted
either.

operational

Therefore,

in

In addition, the Commission notes that the procedure for
the allocation of the broadcasting licences described in
recitals 24 to 28 cannot be considered as having
eliminated or even reduced the economic advantage
tender
granted

broadcasters.

commercial

The

to

(61) Letter of the German authorities dated 25 April 2005.
(62) These comments referred to by the German authorities are es­
in the similar

sentially the same as provided by ProSiebenSat1.
case concerning Bavaria, cf. Footnote 4.

announcement did not contain any reference to the
funding. In the general agreement of 20 October 2003
between LfM, the PSBs and the commercial broadcasters
present in the analogue platform, only a vague reference
was made to possible support measures, without giving
any details as
to the envisaged financial assistance.
Therefore, there was no possibility for the broadcasters
to take the amount of
financing into account when
submitting their licence applications.

Advantage to the network operator

for

an indirect

advantage
In their opinion,

The German authorities maintain that
the funding
provided to the commercial broadcasters does not
constitute
the network
the category of
operator T-Systems.
indirect beneficiary can only be used in exceptional
circumstances. By reference to the ECJ cases Germany v
Commission (63) and the Netherlands v Commission (64),
they take the view that in order to qualify as indirect
the undertaking
beneficiary under the State aid rules,
concerned has to benefit from an advantage which auto­
matically follows from the measure. Moreover, they claim
that the concept of indirect beneficiary can only be used
if — unlike in the present case — the advantage can be
demonstrated and quantified.

In the circumstances of the present case, the German
authorities argue that the measure does not necessarily
enable the network operator T-Systems to charge higher
transmission fees to the broadcasters than the market
price. They maintain that the level of the transmission
fees depends on a number of other factors and that in
any case,
(BNetzA, previously RegTP)
controls any eventual misuse in relation to the trans­
mission fees.
linked to their previous
argument concerning the advantage to broadcasters, the
authorities
as broadcasters only receive
compensation for ‘additional costs’ due to the switchover,
they have no interest in paying higher transmission fees
than the market price.

the regulator

In addition,

argue

that

(80)

(81)

(82)

The German authorities also contest that the measure
would lead to guaranteed revenue for T-Systems.
In
the ‘guaranteed revenues’
their view,
follow from the
the network infrastructure which results from
use of
the attribution of broadcasting licences and not from
the funding. Moreover, they also maintain that even if
there was more interest for the use of the network due to
the measure, the resulting additional revenues would be
offset by the additional costs of the network services
incurred by T-Systems.

(63) C-156/98, Germany v Commission [2000] I-6857.
(64) C-382/99, Netherlands v Commission [2002] I-5163.

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Official Journal of the European Union

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(83)

(84)

(85)

Contrary to the arguments put forward by the German
authorities,
the Commission considers that T-Systems
would be able to draw an indirect advantage from the
measure, taking into account that the measure subsidises
directly the transmission fees paid by the commercial
broadcasters to T-Systems,
is conditional upon the
it
use of the DVB-T platform and specifically targeted to
promote the platform operated by T-Systems.

resulted

accepted.

In the Commission’s view, the restrictive interpretation of
indirect beneficiary proposed by the
the category of
In both
cannot be
German authorities
judgements referred to by the German authorities, the
Court has upheld the qualification of the undertakings
In Germany v
indirect beneficiaries.
concerned as
the fact
the Court considered that
Commission,
that
from independent
advantage
indirect
the
decisions by the direct beneficiaries did not eliminate
the connection between the measure and the indirect
the
advantage, which followed from the alteration of
market conditions by the measure (65). Given that
in
it is
the present case,
indeed not possible to quantify the indirect advantage
possibly accruing to T-Systems. However,
in any case,
the Commission is not bound to quantify the exact
to establish the
amount of
presence of an economic advantage to an undertaking
under the State aid rules.

the aid has not been granted,

the advantage in order

the

costs

In the present case, the Commission considers that the
funding of
transmission fees payable by the
commercial broadcasters changes the conditions under
which they operate, and enables them to bear eventually
higher transmission fees. As outlined in recitals 73 and
74, the funding cannot be considered as covering real
additional costs of commercial broadcasters in relation to
the introduction of DVB-T. Although the level of the
transmission fee indeed depends on a number of
factors, the ability of commercial broadcasters to bear
higher
the key
commercial considerations from the point of view of
the network operator for defining the level of the trans­
In line with the German Telecommuni­
mission fees.
cations Law (Telekommunikationsgesetz), BNetzA only
exercises control over
transmission fees charged by
operators with significant market power. As indicated
in recital 36, T-Systems has so far not been considered
by BNetzA to have a significant market power with
regard to terrestrial television transmission. Therefore, it
remains free to fix the amount of transmission fees for
commercial broadcasters on the DVB-T platform.

certainly constitutes one of

to the argument

the ‘guaranteed
(86) With respect
revenues’
for T-Systems arise from the attribution of
the licences and not from the measure, the Commission
acknowledges that the interest of the commercial broad­
casters to be present on the platform and their will­

that

(87)

(88)

(89)

costs

to be

to bear

the corresponding costs

is already
ingness
demonstrated by the high number of applications for
the licences. However, the Commission considers that
funding of part of their operational costs for a period
five years increases their willingness to pay even
of
continuously present on the
higher
platform. Thereby,
the measure may provide for ad­
ditional revenues for T-Systems deriving form the trans­
mission fees
from commercial broadcasters. These
revenues cannot be considered as fully offset by the
network service provided in return without leaving any
profit margin to the network operator which operates
under market conditions.

Based on the above, the Commission considers that T-
Systems would be able to draw an indirect benefit from
the support measure. The State funding of part of the
transmission fees would enable T-Systems to obtain
higher revenues as compared to a situation where no
aid is present.

to

funding

In addition, the Commission notes that the procedure for
the allocation of
the network licences organised by
RegTP cannot be considered as eliminating or even
reducing the indirect advantage possibly arising from
the measure for the network operator T-Systems. The
relevant procedure did not make any reference to the
funding measure
envisaged by LfM. Therefore, T-
Systems could not take into account the availability of
broadcasters when
commercial
such
submitting its application for the network licence.
In
addition, T-Systems, the incumbent operator and owner
of the analogue terrestrial network throughout Germany
to have had a competitive advantage over
appears
the
potential new entrants
the
network licence.
it
has been already allocated a licence for operating a
nation-wide DVB-T multiplex. Moreover,
there were
only about two months between the deadline for the
frequency allocation procedure (17 March 2004) and
the launch of the DVB-T operations (24 May 2004),
which left little time for potential new entrants to roll-
out the network to start DVB-T transmissions on time.

In a procedure launched in 2002,

allocation of

for

Applicability of the Altmark judgment

to argue that

In their submissions, the German authorities have also
invoked the Altmark judgment (66)
the
envisaged payments do not constitute State aid but
merely represent a compensation for a service of
general economic interest. In this judgment, the Court
compensation does not
stated that public
constitute an advantage in the meaning of Article 87(1)
of the EC Treaty if all of the following four conditions
are met: (1) the recipient undertaking must actually have
public service obligations to discharge and these obli­
gations must be clearly defined,
(2) the parameters of
the compensation must be established in advance in an

service

(65) C-156/98, Germany v Commission [2000] I-6857, paragraph 61.

[2003] I-7747.

(66) C-280/00, Altmark Trans and Regierungspräsidium Magdeburg

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Official Journal of the European Union

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objective and transparent manner, (3) the compensation
does not exceed the costs incurred in discharging the
public service obligations,
in order to ensure the
(4)
least costs to the community, the company which is to
is chosen either
discharge public service obligations
pursuant to a public procurement, or if not, the level
of compensation is determined based on the costs of a
typical, well run undertaking.

(90)

In accordance with the first Altmark criterion, it has to be
assessed whether
the beneficiary undertakings have
clearly defined public service obligations to discharge.

(94)

(91)

(92)

(93)

The German authorities maintain that the transmission of
broadcasting programmes by the private broadcasters
over the digital terrestrial platform constitutes a service
of general economic interest, which is, according to the
German authorities,
in line with the Switchover com­
munication. In their view, the general interest of DVB-T
follows from the contribution of digital terrestrial tele­
vision to the
and local
programmes, as well as to the promotion of innovation,
media plurality and infrastructure competition between
the different transmission platforms. In their view, this
public service obligation is stemming from the Media
Law of North Rhine-Westphalia which explicitly assigns
task of supporting and guiding the
LfM the general
tele­
switchover
vision (67).

from analogue to digital

transmission of

terrestrial

regional

The German authorities claim that by means of the attri­
bution of the digital terrestrial broadcasting licences, the
commercial broadcasters are entrusted with a service of
general economic interest and are under the obligation to
carry out this service. They argue that in view of the ‘dual
broadcasting system’ including both public service broad­
casters and private broadcasters in Germany, commercial
operators also have a public interest role and are bound
by legal obligations with respect to their programmes.
Without public financial support, the authorities claim
further,
(in particular
ProSiebenSat.1) would not have participated in DVB-T
in North Rhine-Westphalia. They argue that a lack of
this
public funding would obstruct
service and would have put the existence of the terrestrial
platform at risk (68).

some commercial broadcasters

the provision of

the

share

The Commission does not
arguments
submitted by the German authorities. The Commission
does not call into question that the digitisation of broad­
in the public interest. The
casting transmission is
presence of public interest objectives in relation to the
switchover is however not sufficient to demonstrate the

(67) Section 27(1) of the Media Law of North Rhine-Westphalia.
(68) This argument is assessed further in recitals 163-171.

imposed on
existence of public service obligations
commercial broadcasters in relation to the transmission
of their programmes over the digital terrestrial platform
in North Rhine-Westphalia. Furthermore, the mere fact
that commercial broadcasters are part of the dual broad­
casting system in Germany or that their programmes are
to legal obligations resulting from the broad­
subject
casting legislation in Germany does not
lead to the
they have to discharge public service
conclusion that
their
regards
as
obligations
programmes over the digital terrestrial platform (69).

transmission of

the

for

commercial

broadcasters.

that none of

In the Commission’s view,
the general provisions
concerning the public tasks of LfM in relation to the
switchover do not contain clearly defined public service
The
obligations
Commission further notes
the official
documents relating to the introduction of DVB-T in
North Rhine-Westphalia
concerning the
switchover, official documents relating to the DVB-T
licences) contain any such public service obligations.
the broadcasting licences do not
Also,
service obligation (70).
contain any
Moreover, contrary to what has been argued by the
German authorities, the broadcasters do not have the
their programmes over DVB-T:
obligation to transmit
as the example of TerraNova demonstrates, licences can
be returned upon the decision of the broadcaster.

specific public

the terms of

(agreements

(95) Hence, as already stated in the opening decision (71), the
German authorities seem to have made the argument
that a service of general economic interest was present
on an ad hoc basis, after the award of the licences and
the launch of the transmission over the digital terrestrial
network. In the Commission’s view, rather than being
their
public service obligations,
network
programmes
constitutes part of the normal commercial activities of
the commercial broadcasters.

the transmission of

terrestrial

digital

over

the

(96)

Based on the above, the Commission considers that the
present measure envisages support to normal business
than a
activities of commercial undertakings
compensation for costs incurred in discharge of public
service obligations.
the first Altmark
follows
It
criterion is not fulfilled.

rather

that

(69) As the Commission has already held in the past, general

legal
requirements do not qualify as public service obligations, see
recital 87 of the Commission Decision in the Case C 2/03 ‘State
funding of TV2/Denmark’ (OJ L 85, 24.3.2006, p. 1), and recital 14
of Commission Decision 97/606/EC of 26 June 1997 on the
exclusive right to broadcast television advertising in Flanders (OJ
L 244, 6.9.1997, p. 18).
the arguments put

forward by the German authorities were
accepted,
the
any licence granted for broadcasting or
operation of electronic communications services could qualify as
the formal entrustment of a service of general economic interest.

(70) If

for

(71) See recital 75 of the opening decision.

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(97) As regards the second Altmark criterion, the Commission
finds that the parameters of the alleged ‘compensation’
have not been established in advance in an objective and
transparent manner. The directive on the financial
support was issued on 19 November 2004 (with a retro­
active effect as of 3 May 2004), whereas the licences
were allocated by order of 14 May 2004. Therefore, it
cannot be considered as an advance definition of the
parameters of the funding. Moreover, the Directive does
not make clear how the funding would be calculated in
the case of those broadcasters previously present on the
analogue platform, which is only known to the
Commission from the notification. Consequently,
the
parameters have not been established in a transparent
the
manner. Furthermore,
calculation cannot be regarded as objective, given that
the determination of the financial support for individual
commercial broadcasters does not take into account the
increase in the number of programme channels of those
broadcasters previously present on the analogue platform
and the potential additional advertising revenues from
the presence on the terrestrial platform (see also recital
123). Therefore,
the
second Altmark criterion is not met.

in the Commission’s view,

the Commission considers

that

(98) As regards the third Altmark criterion which foresees that
the compensation shall not exceed the costs incurred in
discharging the public service obligations, the German
authorities take the view that
this criterion is only
applicable in those cases where the costs, revenues and
a reasonable profit can be calculated. They claim that in
situations like the present case, when a start-up financing
is granted to reduce the economic risks of the market
should apply to decide
participants, other
whether
In this
the measure constitutes State aid.
context, they claim that the present measure is limited
to the minimum necessary and forms part of a tech­
nology neutral policy.

criteria

(99)

In the view of the Commission, the requirements of the
Altmark judgment cannot be replaced by other con­
siderations as outlined by the German authorities. As
pointed out in recital 97 above, the envisaged public
funding is not determined on objectively established
criteria,
the relevant revenues of
the broadcasters and the funding does not correspond
to genuine additional costs incurred by the commercial
broadcasters (see recital 73 and 74 above).

taking into account

(100) Finally, as

regards

the fourth Altmark criterion,

the
Commission notes that in view of the lack of clearly
defined public service obligations,
it cannot be estab­
lished whether the level of compensation for the public
service obligation corresponds to the costs of a typical,
well run undertaking. The Commission notes that the
German authorities have also not put
forward any
arguments in this respect.
In fact, the subsidy covers
part of the transmission fees fixed by the operator of
the network for commercial broadcasters, T-Systems.

the network licences have been attributed
Given that
without tender in the application procedure, the level
of
these transmission fees cannot be considered as
having been subject to a competitive tender procedure.

(101) Based on the above, the Commission considers that none
of the four criteria of the Altmark judgment is met in the
present case.

(102)

1.3. SELECTIVITY AND DISTORTION OF COMPETITION

in
In accordance with Article 87(1) of the EC Treaty,
order to qualify as State aid,
the measure must be
selective and distort or threaten to distort competition.
In the opening decision, the Commission took the pre­
liminary view that the measure constitutes sectoral aid as
it favours the DVB-T platform over other transmission
platforms. Moreover, the Commission was of the opinion
that the different level of public funding may result in a
distortion of competition among broadcasters partici­
pating in DVB-T in North Rhine-Westphalia.
took
the view that the procedures for the allocation of the
respective broadcasting and network licences did not
exclude the selectivity and the distortion of competition
arising from the measure.

It

Award of broadcasting and network licences

(103) The German authorities maintain that the measure does
not distort competition because the respective broad­
casting and network licences were attributed following
open and transparent procedures in accordance with
level.
requirements
the
According to this argument, the tendering has ensured
that any broadcaster or network operator could,
in
principle, have benefited from the funding so that the
measure cannot be regarded as selective.

at national

relevant

legal

authorities

(104) Regarding the attribution of the broadcasting licences,
priority
the German
treatment of broadcasters previously present on the
analogue platform was a compensation for the return
of
their analogue licences and as such necessary to
realise the switchover.

argue

that

the

(105)

reserved for

commercial broadcasters,

the broadcasting licences

Indeed, LfM organised an open procedure for the attri­
bution of
for all DVB-T
as
channels
described in recitals 24 to 28. The selection criteria
referred to the plurality of programmes
and the
plurality of broadcasters,
foresaw a priority
treatment of those broadcasters previously present on
the
In line with this priority
treatment, ProSiebenSat.1 and RTL group have received
entire multiplexes for a set of programmes. Out of the
21
the
to
received
announcement, six applications have been retained.

analogue platform.

applications

response

and

in

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(106) The Commission does not intend to call

requirements. However,

into question
the compliance of the attribution procedure with the
relevant national
it considers
that it does not eliminate the selectivity of the present
the State aid
measure from the point of view of
assessment. First, only a limited number of broadcasters
could be selected as a result of the procedure. In the
selection procedure, priority was given to those broad­
casters already present on the analogue platform (72). As
a matter of fact, only those broadcasters having received
from funding under the
a DVB-T licence can benefit
measure.
licences
the
Second,
concerned specifically the transmission of broadcasting
programmes on the DVB-T platform.

attribution of

the

(107) Concerning the attribution of the network licences, the
relevant procedure was organised by RegTP, as described
in recitals 29 and 30. Since only one application was
received for each of the five service areas defined in
North Rhine-Westphalia
areas
concerning private broadcasters and WDR for the areas
concerning the members of the ARD Group), the licences
were attributed in the application procedure, without
launching the tender procedure.

(T-Systems

the

for

(108) Similarly to the allocation of the broadcasting licences,
the Commission considers that from a State aid point of
view, the procedure for the attribution of the network
licences cannot be considered as excluding the selectivity
of the measure. The procedure concerned specifically the
operation of the DVB-T network in North Rhine-West­
phalia. Moreover, T-Systems, as the incumbent operator,
was in a particularly advantageous position to apply for
the network licences.

Sectoral aid

(109)

In the opening decision, the Commission took the pre­
liminary view that the measure constitutes a sectoral aid
to broadcasting via DVB-T insofar as the subsidy is only
granted to broadcasters using the digital
terrestrial
platform and does not, for example, support the trans­
mission over other transmission platforms.

(110) The German authorities maintain that the measure does
satellite and
not distort competition between cable,
terrestrial transmission. They claim that these means of
transmission are only to a limited extent in competition.
In their view, terrestrial transmission is rather comple­
mentary to cable and satellite, as it also covers areas not
served by cable, enables the transmission of regional and
local programmes and can serve as a basis to develop
mobile reception.

(111) They submit that given the high market share of cable
and satellite and the low proportion of terrestrial tele­

in view of

vision, the promotion of DVB-T could not affect the
market position of the other platforms. According to
the authorities, on the one hand,
its low
share, terrestrial television is not able to attract broad­
casters from the other platforms. On the other hand, the
measure would also not affect the choice of consumers,
in particular as there are technical,
legal and financial
obstacles to switch from one means of transmission to
another. At the same time, they also argue that instead of
replacing cable or satellite, the promotion of DVB-T will
exercise a ‘positive competitive pressure’ on the other
means of transmission, foster infrastructure competition
and thereby facilitate the digitisation of other platforms
too.

(112) The German authorities also contest the data provided by
the cable operators concerning the effect of the intro­
duction of DVB-T on the number of cable customers.
The data at
from those
the disposal of LfM differ
provided by ish and shows a lower decrease (81 000
households as opposed to 147 000 between 2003 and
2006). The German authorities maintain that even if
there was a decrease in the number of cable customers,
this would not necessarily be due to the introduction of
DVB-T.
the
measure does not aim to harm cable. They highlight
that the cable infrastructure was established with State
support in the 1980s and still benefits from regulatory
advantages including cable fees in the rent (Mietnebenkos­
tenverordnung). They maintain that
funding
if necessary, they would
concept is technology neutral:
also be ready to support the digitisation of cable. As an
example of their alleged positive approach towards cable,
they mention that on 17 February 2007, LfM agreed to
the digitisation of the analogue cable channel of ish (73).

they also emphasise that

In this respect,

the overall

(113) The Commission considers that

the considerations in
recitals 110 to 112 do not call into question the quali­
fication of the measure as sectoral aid which selectively
supports broadcasters on the DVB-T platform and may
also entail an indirect benefit selectively for the operator
of
the network T-Systems. The envisaged measure is
specifically related to one sector of activity, the trans­
mission of broadcasting
selectively
supports digital terrestrial transmission in particular. It
is
the
regards
commercial broadcasters operating on the DVB-T
platforms, as well as the supply side,
i.e. the operator
of the digital terrestrial network, T-Systems.

the demand side,

selective both as

and it

signals

(114) The Commission is of

the opinion that

transmission of broadcasting signals,

the different
means of
i.e.
cable, satellite, terrestrial transmission and increasingly
the
also IPTV are
strengths
different
same
and weaknesses,

transmission platforms have their
serve

competition. Even if

essentially

in direct

they

the

(72) From the point of view of the selectivity of the measure, it is not

(73) The Commission has not received any information which would

relevant whether the priority treatment was justified.

indicate that public funding was granted in this case.

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of

i.e.

the

transmission

broadcasting
function,
programmes, and there is substitutability between them
both at wholesale level from the point of view of the
commercial broadcasters and from the point of view of
the viewers at retail level. In Germany, cable, satellite and
terrestrial platforms all offer a large number of free-to-air
channels which points to a certain similarity of offer.
More specifically,
the current offer of a total of 24
digital terrestrial television channels appears comparable
in analogue cable, which is the most
to the offer
common transmission platform in North Rhine-West­
phalia, although digital cable is developing quickly.

(115) The relatively low share of

terrestrial

competitive

The
indicates

television as
compared to cable and satellite in Germany in general
and in particular in North Rhine-Westphalia does not
the
relationship between the
eliminate
information
different
platforms.
transmission
submitted by the cable operators
the
that
number of cable customers was affected by the launch
of DVB-T in North Rhine-Westphalia. In addition, the
cable operators note in their submission that there was
a slight increase of cable customers following the switch-
off of the analogue terrestrial network which also appears
to show substitutability from the point of view of the
end-users. When the German authorities claim that the
measure will exercise a ‘positive competitive pressure’ on
the other platforms and foster infrastructure competition,
implicitly recognise the competitive
they themselves
relation between the different means of
transmission.
The fact that the cable infrastructure has also benefited
from State support in the past, as well as the presence of
certain regulatory advantages does not reduce the selec­
tivity and the distortion of competition arising from the
present measure.

commercial broadcasters present on the DVB-T platform
in that the share of the transmission costs covered is not
the same for all CSBs.

(119) The German authorities maintain that the measure does
not distort competition between the commercial broad­
casters because the principles for defining the amount of
the subsidy are the same. They claim that the differences
in the funding are due to the different position of the
broadcasters and the different burdens they have to bear
as a consequence of the switchover to digital television.

(120) As described in recitals 34 to 40, the calculation of the
for those broadcasters previously
subsidy is different
present on the analogue platform (the RTL group and
ProSiebenSat.1 which have
respectively four digital
programme channels) and those broadcasters which
only started transmitting over the terrestrial platform
using DVB-T, which have one programme channel each.

(121) Concerning the broadcasters previously not present on
the analogue platform, the financial assistance amounts
to on average 30 % of the transmission fees per channel
for five years, decreasing by 5 % each year from 40 % in
the first year to 20 % in the fifth year. This applies in the
same manner to all the four commercial broadcasters
concerned.

(122)

(116) The distortion of competition inherent in the present
measure may also affect other markets beyond television
transmission. From the point of view of the broadcasters,
the present sectoral aid measure helps to reach a wider
audience and helps to attract advertisers. By attracting
advertisers from other media, the promotion of DVB-T
has also the potential to affect a number of companies in
other media sectors.

terrestrial

In the case of the RTL group and of ProSiebenSat.1, the
subsidy is calculated based on the difference of their
overall costs in analogue and digital
trans­
mission in North Rhine-Westphalia as well as in the
Länder of Northern Germany (see Table 3 and recitals
35, 39 and 40). According to the German authorities,
the RTL group is not considered eligible because the
decrease of
in digital
mode in the other Länder of Northern Germany covers
increase in North Rhine-Westphalia.
the overall cost
Moreover,
the German authorities maintain that RTL
also did not ask for funding.

transmission costs

its overall

(117) Moreover, with respect

to the network operator,

the
promotion of the DVB-T network may also affect new
markets. DVB-T has the potential for supplying pay TV
services as shown by the developments in other Member
States such as Italy, France, Sweden and the United
Kingdom.

Distortion of competition among the broadcasters
on the DVB-T platform

(118)

In the opening decision, the Commission considered that
the measure may distort competition among the different

(123) The Commission considers that

the method for

the
calculation of the subsidy cannot be considered objec­
tively justified given that it is not based on a thorough
account of the broadcasters’ costs and the revenues in
relation to the transmission over the digital terrestrial
platform. Moreover, as already outlined in recital 74
above, for those broadcasters previously present in the
analogue platform, the calculation method used cannot
be considered as an objective way of calculating potential
additional costs of digital transmission, given that it does
not take into account the increase in the number of
programme channels which are driving these costs.
Furthermore, the calculation depicted in Table 3 is also

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Official Journal of the European Union

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due

costs

to different

arbitrary as the RTL group and ProSiebenSat.1 had a
different number of analogue programme channels in
North-Rhine Westphalia and in Northern Germany,
with different
geographic
coverage. In fact, as also shown by the figures provided
by the German authorities,
in the present case, trans­
mission costs per channel are lower in digital mode
than on the analogue platform (see Table 4). As the
German authorities have indicated, ProSiebenSat.1 and
RTL have had the possibility to receive entire multiplexes
in the procedure for the allocation of the broadcasting
licences in view of
the priority treatment granted to
broadcasters present in the analogue platform, and as a
compensation for the return of their respective analogue
licences before the expiry date. In addition, the funding
provides them with the possibility to broadcast more
channels in North Rhine-Westphalia for more or less
the same amount of overall costs as in analogue mode.
The German authorities have not provided any expla­
nation why the share of costs covered is different in
the
case of ProSiebenSat.1 and those broadcasters
previously not present on the analogue platform.

(124) Based on the above, the Commission is of the opinion
that the advantage arising from the allocation of the
broadcasting licences for those broadcasters previously
present on the analogue platform and the calculation
of
justified
subsidy which is not objectively
the
introduces
a distortion between those broadcasters
previously present on the analogue platform and those
which started transmission over the terrestrial platform
only with the launch of the DVB-T platform.

1.4. EFFECT ON TRADE

(125) According to Article 87(1) of the EC Treaty, an inter­
vention must be liable to affect trade between Member
States in order to qualify as State aid. In the opening
decision, the Commission considered that the measure
intra-Community trade as the commercial
may affect
broadcasters are internationally active and the network
operator
cable
operators and media corporations, as well as satellite
operators.

competition with

international

is

(126) The German authorities have maintained that

the
measure is not liable to affect trade between Member
States. They claim that the amount of the aid is so low
that the effect on trade would be hardly appreciable.
the
Moreover,
undertakings concerned are internationally active does
not allow concluding that there is necessarily an effect
on trade between Member States. In their view, it follows
that there is no effect on trade as far as the situation of
commercial broadcasters is concerned.

they argue that

in itself,

the fact

that

(127)

In line with the case law of the European Courts, ‘when
(…) State financial aid or aid from State resources
strengthens the position of an undertaking as compared
with undertakings competing in intra-Community trade,
the latter must be regarded as affected by that aid’ (74).
Moreover, it was also held that even aid of a relatively
small amount is liable to affect trade between Member
States (75), in particular where there is a strong compe­
tition in the sector in which the recipient operates (76).

and may

also entail

(128) Therefore, the Commission considers that the envisaged
measure is liable to affect trade between Member States.
the measure favours directly the
As explained above,
commercial broadcasters
an
indirect advantage for the network operator T-Systems.
Both the commercial broadcasters and the network
operator are in international competition with other
undertakings. All commercial broadcasters concerned by
the present measure compete with other broadcasters
and telecommunication companies in the markets for
and film rights (77). Network
television advertising
operators like Deutsche Telekom’s subsidiary T-Systems
compete with cable operators and media corporations
like UPC (Liberty Media), satellite operators like SES
Astra, NSAB and Eutelsat, as well as other undertakings
the
offering infrastructure services to broadcasters. At
same time,
there is competition between terrestrial,
cable and satellite operators for end-users in different
Member States.

(129) The Commission is of

the overall
the opinion that
the aid in the present case, estimated at
amount of
EUR 6,8 million cannot be considered as ‘relatively
small’.
In any case, as indicated by the Community
Courts, a small amount of aid is also liable to affect
trade, in particular if there is strong competition.

1.5. CONCLUSION

CONCERNING
CHARACTER OF THE MEASURE

THE

STATE

AID

for

constituting

the subsidies envisaged by LfM fulfil all

(130) For the reasons set out above, the Commission considers
the
that
conditions
aid within the
meaning of Article 87(1) of the EC Treaty. The direct
beneficiaries are the commercial broadcasters which
receive the financial assistance. At
the same time, T-
Systems, the operator of the multiplexes used by the
commercial broadcasters, would also be able to draw
an indirect benefit from the measure.

State

(74) T-55/99 Confederación Española de transporte de mercancías
the European Communities [2000]

(CETM) v Commission of
II-3207.

(75) C-172/03 Heiser v Finanzamt Innsbruck (OJ C 106, 30.4.2005,

p. 5).

(76) T-214/95 Vlaams Gewest v Commission [1998] II-717.
(77) For instance,

in June 2007, ProSiebenSat.1 took over the SBS
Broadcasting group. The combined group will operate in more
than 10 European countries.

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2. COMPATIBILITY OF THE AID MEASURE

(135)

2.1. GENERAL CONSIDERATIONS

(131) The Commission actively supports the transition from
analogue to digital broadcasting. The advantages of the
digital switchover were underlined in the Action Plan
eEurope 2005 and in the two Communications relating
to the digital switchover (78). The digital switchover has
great advantages in terms of more efficient spectrum
usage and increased transmission possibilities. These
will
lead to new and better quality services and to
wider consumer choice. As the Commission has also
in its Communication i2010 — A
pointed out
European
and
analogue
employment,
terrestrial
improve access to
spectrum in Europe.

television by 2012 will

for
switch-off

growth
of

Information

planned

Society

the

that

the digital
(132) The Commission also recognises
left entirely to market
switchover may be delayed if
forces. Hence,
it has no objection to the principle of
public intervention in this field. Public authorities have
different means of facilitating and encouraging the digital
switchover,
for example by coordination mechanisms,
information campaigns, regulatory means and financial
assistance. If public intervention takes the form of State
aid, it must however comply with the relevant provisions
of the EC Treaty.

(133)

In line with the general approach of the Commission
towards less and better targeted State aid, as a matter
of principle, Member States may use aid to overcome a
specific market failure or to ensure social or regional
cohesion. However,
it must be shown in each specific
case that the aid is necessary to address the issue, it is
an appropriate instrument,
limited to the minimum
necessary and does not unduly distort competition.
Similarly, the Switchover communication provides that
in the specific area of digitisation, public intervention
the
would be
stake;
presence of general
secondly,
is,
market forces alone fail to deliver in terms of collective
welfare. It also specifies that in any case, public inter­
vention should be supported by a sound market analysis.

two premises:
interests which are

the existence of a market

justified under

first,
at

failure,

that

(134) The Switchover communication also indicates that the
transition to digital broadcasting represents
a big
industrial challenge that must be led by the market. In
principle, each network should compete on its own
to safeguard this principle, any
strengths.
public
aim at being technology
neutral. Exceptions from this principle can only be
intervention
explained above,
envisaged if,
targets a specific market failure or equity issue and is
at
the same time necessary, appropriate and propor­
tionate to overcome these difficulties.

intervention shall

In order

the

as

(78) Cf. Footnote 9.

It is generally recognised that the switchover may be
hindered by certain market failures. Moreover, there is
a risk that not all parts of the population can benefit
from the advantages of digital television in view of their
disadvantaged social situation (social cohesion problem).
in the Berlin-
As the Commission also pointed out
Brandenburg case, a market
for
example, where market players are unwilling to agree
on a common timetable to switch to digital TV waiting
for others to make the first step (coordination problem)
or where market players do not take into account the
positive effects of switchover on society as a whole
because they do not have the right incentives to do so
(positive externalities).

failure might exist,

(136) With respect to social cohesion, Member States will want
to make sure that all citizens have access to digital tele­
vision once analogue TV is switched off. Since the digital
switchover entails costs for consumers and requires a
change in habits, Member States may want to assist in
particular the disadvantaged groups of society such as
elderly people, low income households or people living
in peripheral regions.

(137) Over the past three years, the Commission has assessed a
number of State measures in different Member States
aimed at promoting the switchover (79). In several State
aid decisions, based on the Communications related to
the digital switchover, the Commission has clarified the
the State aid rules in this sector and
application of
provided guidance to both public and economic actors.
Member States have several possibilities to grant public
funding for the switchover, provided that the measures
do not entail an unnecessary distortion between tech­
nologies or companies and are limited to the minimum
necessary (80):

(a) pilot projects and research activities to test,

for
example, digital transmission technologies and inter­
active applications;

(79) See, inter alia, N 622/03 Digitalisierungsfonds — Austria, 16 March
2005 (OJ C 228, 17.9.2005, p. 12) C 25/04 Einführung des
digitalen terrestrischen Fernsehens (DVB-T) in Berlin-Brandenburg
— Germany, 9 November 2005 (OJ L 200, 22.7.2006, p. 14)
NN 64/05 Digital Replacement Licences — United Kingdom,
25 January 2006 (OJ C 218, 9.9.2006, p. 10) N 111/06 Aide
TNT pour les régions sans simulcast — France, 12 October 2006
(OJ C 293, 2.12.2006, p. 6) N 546/06 Fonds d’aide à des parti­
culiers dans la perspective de la fin de la radiodiffusion analogique
— France, 6 December 2006 (OJ C 23, 1.2.2006, p. 1) C 24/04
Digital
terrestrial television in Sweden, 20 December 2006 (OJ
L 112, 30.4.2007, p. 77) C 52/05 Contributi ai decoder digitali
— Italy, 24 January 2007 (OJ L 147, 8.6.2007, p. 1) N 270/06
Subsidies to digital decoders with API — Italy, 24 January 2007 (OJ
C 80, 13.4.2007, p. 3) N 107/07 Subsidies to IdTV — Italy,
28 February 2007, not yet published, N 103/07 Support for the
acquisition of digital decoders and for the adaptation of antennas in
Soria — Spain, 25 September 2007 (not yet published in the
Official Journal).

(80) Points (a) to (d) below are related to measures contained in case
N 622/03 Digitalisierungsfonds — Austria and points (e) to (h)
have been outlined in the final decision in Case C 25/04 DVB-T
Berlin-Brandenburg.

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Official Journal of the European Union

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(b) subsidies to individuals for the purchase of set-top
boxes for any platform to prevent the exclusion of
low income households from access to TV reception
and to reach a critical mass of users, in particular in
areas where due to the lack of frequency spectrum,
the terrestrial transmission will have to be switched
without simulcast period;

2.3. ARTICLE 87(3)(c) OF THE EC TREATY

(139)

In the opening decision, the Commission stated that it
was not convinced that the measure could be deemed
compatible under Article 87(3)(c) EC Treaty. This
the Commission after having
remains the opinion of
assessed the comments of
interested parties and the
observations provided by the German authorities.

(c) grants to companies to develop innovative digital
services such as electronic programme guides and
mobile applications;

to compensate for ad­
(d) subsidies
ditional
broadcasting
analogue and digital TV in parallel (simulcast phase);

to broadcasters
transmission

costs when

(e) subsidies to consumers for the purchase of digital
decoders. Such subsidies should be technologically
neutral.
the authorities may
encourage the use of open standards for interactivity.
Open standards enable consumers to benefit from
interactive services offered by different operators;

In granting subsidies,

(f)

funding for the roll-out of a transmission network in
areas where otherwise there would be insufficient TV
coverage;

(g) financial means to public service broadcasters to
enable them to be broadcast via all
transmission
platforms in order to reach the entire population.
In this context, Member States have to set out
clearly any obligations on the public service broad­
casters as to which transmission platforms should be
used;

(h) fair compensation to broadcasters which are required
to give up the use of analogue spectrum before the
expiration of their licences, if necessary and appro­
priate. The compensation should take into account
the actual costs of the switchover to broadcasters
including for instance adaptation costs to broadcast
in another channel/multiplex where applicable.

2.2. LEGAL BASES FOR ASSESSING THE COMPATIBILITY OF

THE ENVISAGED MEASURE

(138) The German authorities have invoked Articles 87(3)(c),
87(3)(b), 87(3)(d) and 86(2) of the EC Treaty to justify
the measure if it was found to constitute State aid in
accordance with Article 87(1) of the EC Treaty. In the
following, the Commission assesses the compatibility of
the measure in view of
taking into
account the general considerations outlined above (81).

these provisions,

(81) Given that the possible indirect advantage arising from the measure
for the network operator T-Systems is inextricably linked to the
funding provided to commercial broadcasters, the Commission is
assessing the compatibility of the aid measure as a whole.

(140) Article 87(3)(c) of the EC Treaty concerns ‘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’.

(141)

In order to be compatible under Article 87(3)(c), an aid
in a
must pursue an objective of common interest
necessary and proportionate way.
the
measure shall be assessed with respect to the following
questions:

In particular,

1. Is the aid measure aimed at a well defined objective of

common interest?

2. Is the aid well designed to deliver the objective of
common interest (i.e. does the proposed aid address
a market failure or other valid objective)? In particular:

(a)

is the aid measure an appropriate instrument?

(b) is there an incentive effect, i.e. does the aid change

the behaviour of firms?

(c)

is the aid measure proportional,
i.e. could the
same change in behaviour be obtained with less
aid?

3. Are the distortions of competition and effect on trade

limited, so that the overall balance is positive?

(142) The German authorities maintain that

the planned
measure complies with Article 87(3)(c) EC Treaty. By
reference to the Switchover communication, they claim
that the promotion of the digital terrestrial platform is in
the common interest as it contributes to the achievement
interest objectives. They argue
of a number of general
that the measure is necessary to maintain the terrestrial
platform and to address a number of specific market
failures. Furthermore,
the
they take
measure is both appropriate and proportionate to the
objectives pursued.

the view that

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2.3.1. Objective of common interest

as

the

(143) As explained in the general considerations above, the
Commission agrees
transition from
insofar
analogue to digital broadcasting is to be considered as
an objective of common interest. However, as also high­
lighted in Switchover communication and subsequent
Commission policy documents related to the switchover,
this does not provide a universal justification why only
the terrestrial platform should be
the digitisation of
supported. On the contrary,
is, as
referred to above, that the transition must be led by
the market and that in principle, each network should
compete on its own strengths. In order to safeguard this
principle, any public intervention shall aim at being tech­
nology
technology
The
neutrality is not met in the present case.

the starting point

requirement

neutral.

for

(144)

and claimed that

In their submissions, the German authorities have called
the principle of
into question the appropriateness of
technology neutrality for the purpose of the State aid
assessment
technology neutrality
cannot be achieved at the level of an individual State
aid measure. They maintain that the overall policy of
the German authorities is also technology-neutral and
they might also
it was necessary,
indicate that
if
provide support
they
to other platforms. However,
consider that
the satellite technology does not need
support for realising the switchover and the digitisation
of cable is not sufficiently advanced to justify concrete
support measures. At present, the Commission has not
received any concrete information from the German
authorities
indicating that public funding would be
foreseen for other means of transmission as well.

accepted. There

(145) The Commission considers that these general arguments
concerning the non-applicability of the principle of tech­
nology neutrality cannot be
a
difference between, on the one hand, financial support
for the switchover from analogue to digital transmission
and, on the other hand, measures which are merely
supporting the digital
such.
the directly
Subsidies provided selectively to one of
competing transmission technologies introduce a strong
distortion of competition among these technologies.

terrestrial platform as

is

(146)

In accordance with Article 87(3)(c) and the applicable
case law, such a distortion may only be accepted if it
targets a specific market failure or equity problem and is
the same time necessary, appropriate and propor­
at
tionate to the objectives pursued.
In accordance with
the State aid rules, this assessment has to be carried
out individually for each measure.

(147) Besides

of

the

overall

promoting

the
objective
the German authorities have put
forward
switchover,
that
the measure aims at maintaining the terrestrial
platform by means of promoting the launch of DVB-T.
They claim that this contributes to strengthen compe­
tition both among broadcasters and at the level of the
infrastructure transmission, promoting the achievement
of a number of objectives of general interest.

(148)

the

transmission of

than cable or
the measure

In particular, they argue that the digitisation of terrestrial
transmission contributes to media plurality, allowing
commercial broadcasters to transmit their programmes
in NRW over 12 channels instead of three in analogue
mode. They claim that the terrestrial platform is better
and local
suited for
they
programmes
argue
ensuring
that
universal coverage. The authorities also argue that the
topology of the covered areas in North Rhine-Westphalia
is such that the coverage of rural and remote areas is
more costly and hence less attractive for the commercial
roll-out of DVB-T than the territory of,
for example,
Berlin-Brandenburg. They argue that the measure would
be a first step, acting as an incentive for the introduction
of DVB-T in these zones at a later stage.

regional
satellite. Moreover,
contributes

to

(149)

In addition, they emphasise the innovation potential of
digital
television, claiming that only DVB-T
allows for the development of digital mobile reception.

terrestrial

(150) The Commission acknowledges

the general

interest
forward by the German authorities.
objectives put
it considers that the
However, as demonstrated below,
aid is not
specifically targeted to promote media
plurality, regional and local content, universal coverage,
to stimulate the provision of services in rural areas, or
innovation and is not necessary, appropriate and propor­
tionate to achieve the objectives pursued.

2.3.2. Necessity and appropriateness: well designed aid

(151) The German authorities maintain that

the envisaged
measure is necessary to achieve the above mentioned
objectives and to overcome specific market
failures.
Moreover, as a matter of principle, they claim that the
Commission has no right
into question the
decision made by the Federal Government and the
Länder to maintain the terrestrial platform and to carry
out its digitisation. They also argue that the Commission
is not entitled to consider whether other measures would
have been more appropriate for achieving the same
objective.

to call

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specifically

(152) Above all, the Commission wishes to clarify that the
present decision concerns
the measure
notified by the German authorities for the introduction
of DVB-T in North Rhine-Westphalia, and not
the
political decision of the German authorities to maintain
the terrestrial platform. In the framework of the present
procedure, the Commission is bound to assess under the
State aid rules whether the State aid supporting the op­
erational
is both
costs of commercial broadcasters
necessary and proportionate to achieve the general
interest objectives pursued by the German authorities in
the circumstances of the case.

(153) An analysis of

the State aid
the appropriateness of
measure forms an inherent part of this assessment. The
Commission considers that, apart from a proof of the
necessity of a measure, the choice of State aid as a policy
instrument should be motivated by the appropriateness
this particular instrument of State intervention to
of
In cases in
deliver the objective of common interest.
to
which State aid is not an appropriate instrument
tackle a particular efficiency or equity concern, it might
create unnecessary distortions to competition and trade
that could be avoided by using another policy tool, such
as regulatory instruments.

(154)

In the following, the Commission assesses, one by one,
whether the present measure can be considered necessary
and appropriate to address the general interest objectives
put forward by the German authorities to justify the
present measure and to remedy possible market failures
which may hinder the achievement of these objectives.
Furthermore,
it evaluates whether the present measure
can be considered proportionate to overcome these diffi­
culties.

Strengthening of competition between transmission
platforms

(155) Regarding the strengthening of competition between
transmission platforms,
the German authorities have
argued that the promotion of digital terrestrial television
exercises a positive competitive pressure on the other
transmission platforms and provides an incentive for
the operators of the other platforms to improve and
services and thereby would have the
update their
potential
other
accelerate
to
platforms too. Apart
from being in contradiction to
their claim that the measure does not distort compe­
tition,
the German authorities have, however, not
provided convincing evidence that broadcasting trans­
mission in North Rhine-Westphalia is characterised by
a structural competition problem. Even leaving aside
terrestrial transmission, cable and satellite offer a large
number of
and are
generally available. More competition is emerging from
television via broadband (for example via xDSL tech­
nology) which is about to establish itself as an additional

digitisation on the

television channels

free-to-air

platform for broadcasting transmission. Consequently,
and in accordance with the
taken in other
Commission decisions on public support measures in
favour of digital television (82), this justification cannot
be accepted for granting aid.

line

Promotion of media plurality

the

has

entry

plurality

treatment while market

(156) As regards media plurality and the variety of channels,
the digital terrestrial channels have been allocated in such
incumbent broadcasters have received a
a way that
been
priority
marginal (83). Therefore, the measure is not targeted to
increase
channels.
of
Furthermore, as outlined in the opening decision (84),
while increasing capacity relative to analogue trans­
mission, the DVB-T network still compares unfavourably
with the number of channels available via cable or
satellite. Even in analogue mode, both alternative
platforms offer more channels than DVB-T and most, if
not all, of the programmes available over the DVB-T
platform can also be viewed over cable and satellite.

programme

Promotion of regional or local programmes

(157) The measure

is

for

specifically
targeted at
also not
supporting broadcasters or
channels which would
provide regional or local programmes. In fact, local TV
instance, via cable in
channels are transmitted,
numerous areas of North Rhine-Westphalia, while there
are no local TV channels transmitted via the digital
terrestrial platform in this Land. The tender for the broad­
casting licences did not specifically address the dimension
of regional or local programming. None of
the ben­
eficiaries is a regional or
local broadcaster and the
the funding is not conditional upon the
receipt of
broadcast of
local programmes by the
commercial broadcasters.

regional or

Safeguarding universal coverage

(158) Furthermore,

regarding the

alleged safeguarding of
universal coverage, the measure does not target areas
where there could be a problem of coverage as a result
of the switchover. The German authorities have admitted
that from a technical point of view, practically every
building may receive free-to-air television via satellite in
North Rhine-Westphalia. This is currently not the case
for DVB-T; the present measure is limited to urban areas
with high population density where cable is also widely
available.

(82) Berlin-Brandenburg, recital 109 ff., Italian decoders, recital 153 ff.

See Footnote 79.

(83) The interest by new entrants for a channel on the DVB-T platform,
without a guarantee for public funding,
is evidenced by the fact
that, following the departure of Terra Nova in 2007 there were
seven applicants for Terra Nova’s programme channel, which was
awarded to Tele 5.

(84) See recital 64 of the opening decision.

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Introduction of DVB-T in rural and remote areas

(159) The argument concerning the promotion of the intro­
duction of DVB-T in rural and remote areas at a later
stage has not been substantiated by the German auth­
orities and there is no indication that the measure would
have an effect on the promotion of DVB-T in less densely
populated areas as the measure only targets the most
populated areas of NRW. Moreover, the measure does
not contain any specific incentive for the broadcasters
to move to remote areas. Indeed, already when using
the analogue transmission platform,
the commercial
broadcasters were never transmitting their programmes
in North-Rhine Westphalia outside the main population
centres.

Promotion of innovation

(160) Concerning the alleged objective of promoting innovation,
the Commission notes, first of all, that the envisaged
public funding is not focused on innovative media or
to
telecommunications
subsidise
to
transmit television programmes.

serves
only
costs of broadcasters

the operational

services,

but

and

ProSiebenSat.1 is necessary

broadcasters and in particular of the big broadcasting
groups RTL
to
maintain the attractiveness of
the platform from the
viewers’ point of view. According to the information
provided by the German authorities, these broadcasting
groups were only willing to participate on the condition
that the digital terrestrial transmission does not involve
additional costs for them compared to the analogue
mode. Furthermore,
the German authorities maintain
that although the RTL group did not ask for funding,
it made its participation conditional upon the presence of
ProSiebenSat.1 on the platform.

(164)

In this respect, the German authorities have also invoked
the examples of the other areas in North Rhine-West­
(Wuppertal, Ostwestfalen-Lippe, Münsterland,
phalia
the DVB-T
Aachen and South Westphalia), where
platform has been or is being launched without the par­
ticipation of the commercial broadcasters. In their view,
this demonstrates
funding, commercial
broadcasters are unwilling to participate on the DVB-T
platform.

that without

(161) According

to

to

the

the

available

the
information
Commission, the DVB-T network used in North Rhine-
Westphalia uses
compression standard MPEG-2
whereas the more advanced MPEG-4 standard, which
provides for a better use of
frequency spectrum, will
soon be available on the market (DVB-T 2). As regards
mobile TV reception, the DVB-T platform used in North
Rhine-Westphalia does not match the capabilities of
advanced mobile TV technologies
such as DVB-H
transmission to handheld
(Digital Video Broadcast
terminals) (85) which
signal
reception and lower energy consumption. As regards
potential innovation involving interactive services, DVB-
T does not provide for a return channel and only carries
the signal to the end user. Thus, interactivity is not an
intrinsic feature of DVB-T.

a more

stable

offer

(162) Accordingly, DVB-T does not represent a clearly superior
technological solution in terms of innovation. Moreover,
as outlined above, the envisaged public support for DVB-
T may hamper innovation based on other transmission
platforms and technologies.

(165) The Commission

the

that

considers

information
submitted by the German authorities does not demon­
strate that
the funding is necessary for securing the
existence of the terrestrial platform. In the Commission’s
view, the German authorities have not demonstrated the
incentive effect between the envisaged funding and the
presence of the private broadcasters on the terrestrial
platform. It has not been proven that the envisaged aid
measure really changes the behaviour of the recipients.

(166) The general agreement on the introduction of DVB-T in
North-Rhine Westphalia contained a binding timetable
for the switchover without providing any clear indication
about
the envisaged funding measure. As highlighted
under recital 19 above, the agreement only contained
vague references to funding ‘for
infra­
structure for DVB-T transmission’ and ‘for citizens on
social grounds’. The announcement for the attribution
of broadcasting licences did not contain any reference
the financial assistance
to the funding. The terms of
were only laid down by means of
the directive on
financial support of 19 November 2004 after the attri­
bution of the broadcasting licences and several months
after the launch of DVB-T.

the technical

Maintaining the terrestrial platform

(163) The German authorities have also asserted that

the
funding is necessary to maintain the terrestrial platform
as such. They argue that the presence of commercial

(85) See for instance COM(2007) 409, Commission Communication on
Strengthening the Internal Market for Mobile TV of 18 July 2007.

(167)

It follows from the above that commercial broadcasters
were willing to engage in DVB-T without any concrete
details regarding the financial assistance. Those broad­
casters present on the analogue platform agreed to the
binding timetable for the switchover without any clear
indication about
the funding measure. Moreover, as
regards
commercial broadcasters which have
previously not been present on the analogue platform,
the submitted information indicates that LfM has received

those

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licences than
considerably more applications for digital
the number of channels available.
In this respect, the
German authorities maintain that on the basis of the
general agreement concluded on 20 October 2003, all
funding.
broadcasters knew about
However, even if all applicants were aware of
the
general agreement to which they were not parties, this
did not provide them with any clear indication about the
funding measure.

the possibility of

digital terrestrial platform without the participation of
commercial broadcasters, by means of a participation
of the public service broadcasters.

Remedying market
switchovers

failures with regard to the

(168)

In addition, the Commission notes that private broad­
casters have already been present on the digital terrestrial
platform for more than three years without public
funding. Although more recently, TerraNova has left
the platform, it has been replaced by another broadcaster,
following seven applications from commercial
Tele5,
there
broadcasters.
was clearly no guarantee for funding in light of
the
decision of the Commission in the Berlin-Brandenburg
case and of the present procedure. In other Länder, for
example in the Rhein-Main area and in the North of
Germany, the commercial broadcasters are transmitting
over the DVB-T platform without State aid (86).

these broadcasters,

In the case of

(169) Regarding those broadcasters already present on the
analogue platform,
the German authorities maintain
that the measure was necessary to cover their ‘additional
costs’ arising from digital transmission.

(170) However, as assessed in recitals 74 and 123 above, the
alleged ‘additional costs’ incurred by ProSiebenSat.1 and
the RTL group are merely due to the increase in the
number of channels, given that the digital transmission
costs per channel are lower than the costs for analogue
transmission. The German authorities have not substan­
tiated why it was necessary for these broadcasters to be
present with more channels in digital mode and why the
commercial revenues from these channels were not taken
into account in the calculation of the envisaged aid.

(171) As regards the argument concerning the other areas of
North Rhine-Westphalia where DVB-T is being launched
without the participation of commercial broadcasters, the
not
that
Commission
comparable to the urban areas targeted by the present
measure in terms of population density and attractiveness
for commercial broadcasters. At the same time, these
examples also indicate that it is possible to launch the

considers

these

areas

are

(172) The German authorities maintain that

specific market

failures which hinder

the measure
addresses
the
switchover to digital terrestrial television. By reference
to the Switchover communication, they invoke the coor­
dination problem among market players, risk, positive
increases associated
externalities and short-term cost
with the switchover. They claim that
the
in view of
terrestrial
decreasing share of
television and the high
transmission costs,
there was a risk that commercial
broadcasters would switch-off analogue transmission
abandoning the terrestrial platform. In their view, this
would lead to losing the advantages of the terrestrial
platform outlined above in terms of media plurality,
universal coverage, broadcast of
regional and local
innovation potential, and infrastructure
programmes,
competition.

(173) On these points, it should be analysed first whether these
are genuine market failures which prevent the market to
deliver
the maximum outcome in terms of societal
welfare. Second, it has to be assessed whether State aid
is necessary and appropriate to remedy such market
failures, and whether the present measure is propor­
tionate to achieve this objective.
the
measure is both necessary and proportionate that the
under
considered
can
measure
Article 87(3)(c) EC Treaty.

is only if

compatible

be

It

represent

a market

in principle,

the Commission recognises

(174) Regarding the coordination problem invoked by the
that
German authorities,
this may,
failure
hindering the transition from analogue to digital broad­
casting. The problem arises because broadcasters need to
agree on common dates for switching off analogue trans­
mission and for switching on digital transmission so as
to overcome the lack of
frequency spectrum and to
minimise the costs of parallel transmission. Consumers
might not be willing to shift to digital transmission until
the
of
digital
programmes. At
the same time, broadcasters might
wish to await the arrival of other broadcasters on the
digital platform before they switch over themselves. In
the absence of coordination, these issues might delay the
switchover.

platform carries

large number

a

(86) The Commission also notes that in the case of Berlin-Brandenburg,
despite the negative decision and the recovery of the aid granted, all
commercial broadcasters concerned by the decision in this case are
still
transmitting their programmes over DVB-T in Berlin-Bran­
denburg (see http://www.garv.de/).

(175) The Commission also acknowledges that accelerating the
switch-off of analogue transmission is,
in principle, a
valid objective for public intervention in order to reap
the benefits of the better use of the freed-up spectrum.

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Official Journal of the European Union

L 236/41

(176) Regarding the coordination problem indicated above and
in line with the approach taken in the Berlin-Bran­
denburg decision (87),
the Commission considers that
State aid is neither necessary, not an appropriate
instrument to address this issue. The need for coordi­
nation arising in the context of the digital switchover
can be, and indeed was in the present case, resolved by
other means which are more suitable for this purpose
and at
the same time involve less distortion on the
market.

the frequency spectrum,

(180) Regarding the positive externalities related to the freeing-
up of
these advantages arise
mainly from the switch-off of the analogue terrestrial
platform. This fact has not been put in question in the
case of North Rhine-Westphalia. Given that the measure
intends to subsidise the transmission costs of commercial
for digital
broadcasters which are lower per channel
transmission than in analogue mode,
the measure
cannot be considered necessary to cover any possible
increases associated with the digital
short-term cost
switchover either.

(177)

agreement

In the present case, LfM has agreed on a timetable in the
concluded with the broadcasters
general
present on the analogue platform on 20 October
2003. Moreover, it has managed to fix a common date
the analogue broadcasting licences.
for the return of
Furthermore,
it has coordinated the switchover process
with the Länder of Northern Germany. These measures
have allowed launching the digital terrestrial platform in
line with a common timetable and without any simulcast
period for commercial broadcasters at the same time in
the
in addition,
several Länder. Thus,
broadcasters’
appear
costs
necessary for this specific purpose.

the funding of
does not

transmission

the specific commercial

(178) The German authorities have declared that the envisaged
payments are not only made to alleviate the commercial
broadcasters from the ‘additional costs’ of broadcasting
over the terrestrial platform but also claim that they are a
(for
compensation for
instance through reduced commercial revenues) for the
commercial broadcasters. Indeed, the 2003 Switchover
‘the likelihood of market
communication mentions:
failure is linked to the complexity of the environment
takes place, and the interactions
where switchover
between the main parties involved (88).’ However, in the
case at hand, this complexity was considerably reduced
by the preparatory action of the LfM and every broad­
caster knew about the estimated transmission costs and
could make its own revenue forecasts.

risks

(179)

that,

in view of

Indeed, the authorities never substantiated or quantified
these claims or the magnitude of the alleged risks. The
Commission doubts
the successful
switchover carried out without funding so far, there are
such specific risks for the commercial broadcasters (89) in
the case at hand apart from the general commercial risks
associated to their activity which are independent from
the platform over which they transmit broadcasting
signals. The fact that there were more applicants for a
licence to broadcast over digital terrestrial in North-Rhine
Westphalia than licences available shows that commercial
broadcasters are ready to participate in DVB-T, to pay the
necessary transmission costs and take the commercial
risk, even without guaranteed public funding.

(87) See paragraph 95 ff. of

the Berlin-Brandenburg decision of

9 November 2005.

(88) COM(2003) 541 final, cf. Footnote 9.
(89) There may be a commercial risk for the network operator but there
are no indications that the market cannot cope with this kind of
risk cf. recital 114 of the Berlin-Brandenburg decision.

Compensation for the return of analogue licences

(181) The German authorities have also argued that

in order

the
funding was necessary to compensate commercial broad­
casters for the return of their analogue licences before
their expiry date. At the same time, the submissions also
state that
to compensate the broadcasters
previously present in the analogue platform for giving
these broadcasters have
up their analogue licences,
received a priority treatment in the procedure for the
allocation of the broadcasting licences, which enabled
RTL and ProSiebenSat.1 to apply with a
set of
programmes for entire multiplexes.

(182)

In this respect, the Commission notes in the first place
that this argument is only relevant from the point of
view of
the financing granted to broadcasters which
were previously present on the analogue platform and
cannot be invoked to justify the necessity of
the
the new broadcasters on the DVB-T
funding for
platform. Regarding the broadcasters previously present
on the analogue platform, however, this argument is not
valid either. Among those broadcasters which have
returned their analogue licences, only ProSiebenSat.1 is
receiving a subsidy under the present measure and the
calculation of the subsidy submitted by the German auth­
orities does not take into account a possible value of the
outstanding duration of the licences.
In these circum­
stances, the funding of the transmission costs cannot
be considered to be linked to the return of
the
analogue licences and to be necessary and appropriate
for this purpose.

the digital

(183) This is in particular the case in view of the compensation
these broadcasters have already received in the context of
terrestrial broadcasting
the attribution of
licences. This priority treatment was not
limited to
guaranteeing a continued availability of their analogue
programmes
in digital mode, but enabled RTL and
ProSiebenSat.1 to increase the number of their channels
in the digital mode (two additional channels for the RTL
Group and three additional channels for ProSiebenSat.1).
At
several other broadcasters had
requested such a licence, without success, due to the
limited amount of transmission channels available.

same

time,

the

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Proportionality

the

view,

funding

represents

(184) The German authorities have maintained that the present
measure is proportionate to the objectives pursued. In
their
the minimum
necessary to provide an incentive for commercial broad­
casters to be present on the DVB-T platform and thereby
to secure the existence of the terrestrial platform. In their
view, proportionality is ensured by means of only
financing the ‘additional costs’ arising from digital trans­
mission for those broadcasters previously present on the
analogue platform and by providing for a decreasing
funding for the new broadcasters on DVB-T. Concerning
the amount of financing provided to the broadcasters
previously not present on the analogue platform, the
German authorities have not submitted any information
justifying the share of transmission costs covered by the
public support.

(185) Moreover, as outlined,

the Commission has

several
doubts related to the considerations and calculations
related to the alleged ‘additional costs’ submitted by the
German authorities. The Commission notes that
the
present measure subsidises the transmission costs for
broadcasters which are actually lower per channel
in
digital terrestrial than in analogue terrestrial mode. The
alleged ‘additional costs’ only arise in the case of RTL and
ProSiebenSat.1 due to the increase in the number of
channels in North Rhine-Westphalia as compared to
the analogue mode. Broadcasters previously not present
on the terrestrial platform do not have ‘additional costs’.

indicated above,

(186) As regards the broadcasters previously present on the
analogue platform, as
the measure
cannot be considered as covering any ‘additional costs’
of digital transmission. There were no simulcast costs as
a simulcast period has not taken place in relation to the
commercial broadcasters. The German authorities have
also not claimed that there were additional costs due
to the
in new
these circum­
technical equipment or similar. Under
the Commission considers
stances,
the funding
it was considered necessary and appropriate,
(even if
quod non) cannot be considered as
limited to the
minimum necessary.

linked to investments

switchover

that

2.3.3. Overall

balance

and

conclusion

regarding

Article 87(3)(c) of the EC Treaty

(187)

the

that

general

In light of the above considerations, the Commission
considers
interest objectives put
forward by the German authorities and the market
failures identified in relation to the digital switchover
cannot serve as a justification for the aid granted in
the present case. Accordingly, the Commission is not
convinced that the aid is a necessary, appropriate and
those market
proportionate
interest objectives
failures and to achieve the general
In particular,
pointed out by the German authorities.

to remedy

instrument

the Commission considers that in the context where, as
at present, the market is capable of supporting different
technologies (90) and various competing market-based
solutions can be developed, the public support to the
operational costs of commercial broadcasters on the
DVB-T platform represents an unjustified departure
from the principle of
and
technology neutrality
introduces unnecessary distortions of competition.

(188) Therefore, the Commission considers that the measure
cannot be considered compatible with the common
market on the basis of Article 87(3)(c) of the EC Treaty.

2.4. ARTICLE 87(3)(b) OF THE EC TREATY

(189) According to Article 87(3)(b) of the EC Treaty ‘aid to
promote the execution of an important project of
common European interest’ may be considered to be
compatible with the common market.

communication,

(190) The German authorities maintain that the measure falls
under Article 87(3)(b). They claim that in line with the
Switchover
switchover
constitutes an important project of common European
interest which also has economic, social and political
effects.
the
significant short-term costs and the lack of coordination
mechanisms in relation to the switchover, also referred to
in the Switchover communication.

the measure

addresses

In their

digital

view,

the

it

(191) The Commission considers that in order to fall under
Article 87(3)(b) of
is not sufficient
the EC Treaty,
that the overall objective is in the common European
interest.
It is the specific project implemented by the
measure which has to be in the common European
interest and be of European scale,
forming part of a
transnational European programme supported jointly by
the Member States, or
a number of Governments of
arising from concerted action by a number of new
Member States. As the ECJ stated ‘the mere fact that
the investments envisaged enabled a new technology to
be used does not make the project one of common
European interest’ (91).

(192) Based on the above, the Commission considers that the
promotion of digital terrestrial television specifically in
two urban areas of North Rhine-Westphalia cannot be
considered as
common
European interest’.

‘an important project of

(90) The support to DVB-T may hamper the roll-out of other platforms,
for example IPTV over broadband, which might have other
advantages and are capable of developing autonomously.

(91) C-62/87 and 72/87 Exécutif
Commission [1998] I-1573.

régional wallon and Glaverbel v

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2.5. ARTICLE 87(3)(d) OF THE EC TREATY

(193) Article 87(3)(d) of

the EC Treaty concerns

‘aid to
promote culture and heritage conservation where such
aid does not affect trading conditions and competition
in the Community to an extent that is contrary to the
common interest’. Furthermore, Article 151(4) of the EC
Treaty provides that ‘the Community shall take cultural
aspects into account in its actions under other provisions
in particular in order to respect and to
of this Treaty,
promote the diversity of its cultures’.

(194) The German authorities maintain that the measure falls
under Article 87(3)(d) of
the EC Treaty because it
contributes to ensuring a balanced broadcasting system
and thereby promotes
in the meaning of
Article 151 of the EC Treaty.

culture

(195) As stipulated by Article 151(4), cultural aspects shall be
taken into account in the Community’s action. At the
same time, the Commission considers that the cultural
derogation enshrined in Article 87(3)(d) of the EC Treaty,
as any exception of the general rules of the Treaty, must
be interpreted restrictively. Accordingly, the Commission
considers that the cultural derogation can only be applied
in cases where the cultural product is clearly identified or
identifiable (92). Moreover,
the
view that the notion of culture must be applied to the
content and nature of the product in question, and not
to the medium or its distribution per se (93).

the Commission takes

(196)

In the present case, the financial support concerns the
transmission of broadcasting signals over
the digital
terrestrial platform and it is not related to any particular
cultural content that would otherwise not be broadcast.
Therefore, the Commission considers that the conditions
for the application of Article 87(3)(d) of the EC Treaty
are not met.

2.6. ARTICLE 86(2) OF THE EC TREATY

(197) Article 86(2) of the EC Treaty provides that ‘undertakings
entrusted with the operation of
services of general
economic interest or having the character of a revenue-
producing monopoly shall be subject
to the rules
contained in this Treaty,
in particular to the rules on
in so far as the application of such rules
competition,
does not obstruct the performance, in law or in fact, of
the particular tasks assigned to them. The development
of trade must not be affected to such an extent as would
be contrary to the interests of the Community’.

(92) For example, Commission decisions NN 88/98 BBC 24 hours
(OJ C 78, 18.3.2000, p. 6), NN 70/98 ‘Kinderkanal and Phoenix’
(OJ C 238, 21.8.1999, p. 3).

(93) For example, Commission Decision N 458/04 State aid to Espacio
Editorial Andaluza Holding sl. (OJ C 131, 28.5.2005, p. 12).

of

i.e.

the

(198) As already outlined in recitals 91 and 92 above, the
German authorities maintain that the measure represents
a compensation for a service of general economic
interest,
broadcasting
transmission
programmes over the DVB-T platform. They claim that
the commercial broadcasters have been entrusted with
the service of general economic interest by means of
the attribution of
terrestrial broadcasting
licences, and accordingly they are obliged to broadcast
their programmes to the public. They argue that the lack
of funding would obstruct the provision of this service.
In their view, commercial broadcasters would have been
reluctant to participate in the DVB-T launch without the
envisaged measure, which would have put the existence
they
the terrestrial platform at risk. Furthermore,
of
consider that the funding does not affect the develop­
ment of trade to an extent as would be contrary to the
interests of the Community.

the digital

in

of

the

order

EC Treaty,

(199) According to the case law on the interpretation of
Article 86(2)
for
Article 86(2) of the EC Treaty to apply, the undertaking
beneficiary of
the aid must have been specifically
entrusted by the Member State with the operation of a
particular service of general economic interest. Such act
or acts of entrustment must specify, at least, the precise
nature, scope and duration of the public service obli­
gations imposed and the identity of the undertakings
concerned.

the

(200) As already outlined in recital 93 above, the Commission
does not call
into question that digitisation of broad­
casting is in the public interest. However, on the basis
the
findings
of
Commission considers that
the present measure en­
visaging to grant support to normal commercial activities
of commercial undertakings cannot be considered as
compensation payment for the delivery of a service of
accordance with
interest
economic
general
Article 86(2) of the EC Treaty.

stated in recitals 92 to 96,

in

(201) Moreover, even if the commercial broadcasters had been
charged with the delivery of a service of general
economic interest (quod non), Article 86(2) of the EC
Treaty requires that the compensation does not exceed
what is necessary to cover the costs incurred by the
undertaking in discharging the public service obligations,
account being taken of
receipts and a
reasonable profit.

the relevant

(202) As demonstrated in recitals 97 to 99 above,

criteria

established

the
envisaged public funding is not determined on objec­
under
tively
Article 86(2) of the Treaty. Moreover, the measure only
takes
the
commercial broadcasters transmitting over the digital
terrestrial platform but not their receipts (for instance
from advertising revenues).

transmission costs of

into account

foreseen

the

as

L 236/44

EN

Official Journal of the European Union

3.9.2008

(203) Furthermore,

in Article 86(2)

in order to ensure compliance with the
necessity requirement
the
set out
granting authorities need to lay down provisions
the
relating to the
States
amount of
should check regularly that the compensation granted
does not
lead to overcompensation. The measure at
hand does not foresee any such provisions or checks
by the public authorities involved.

compensation granted. Member

calculation and monitoring of

(204)

In view of the aforementioned, the Commission finds
that
the aid cannot be declared compatible under
Article 86(2) of the EC Treaty.

VII. CONCLUSION

(205) For these reasons, the Commission concludes that the
funding envisaged by LfM to the commercial broad­
casters constitutes State aid within the meaning of
Article 87(1) of the EC Treaty and cannot be considered
compatible with the common market in accordance with
Article 87(3)(c), 87(3)(b), 87(3)(d) and 86(2) of the EC
Treaty,

HAS ADOPTED THIS DECISION:

Article 1

The State aid which the Federal Republic of Germany is
planning to implement for the introduction of digital terrestrial

for DVB-T (Richtlinie der Landesanstalt

television in North Rhine-Westphalia to commercial broad­
casters on the DVB-T platform based on the directive on the
financial support
für
Medien Nordrhein-Westfalen über die Gewährung von Zuwendungen
zur Förderung von digitalem terrestrischem Fernsehen als Maßnahme
und Projekt für neuartige Rundfunksübertragungstechniken gem. § 88
Abs. 3 S. 5 und 6 LMG NRW) of 19 November 2004, notified
to the Commission by letter of 13 January 2005 is incom­
patible with the common market.

The aid may accordingly not be implemented.

Article 2

The Federal Republic of Germany shall inform the Commission,
within two months of notification of
the
measures taken to comply with it.

this Decision, of

Article 3

This Decision is addressed to the Federal Republic of Germany.

Done at Brussels, 23 October 2007.

For the Commission

Neelie KROES
Member of the Commission