2004/339/EC: Commission Decision of 15 October 2003 on the measures implemented by Italy for RAI SpA (notified under document number C(2003) 3528) (Text with EEA relevance)

• Articles: 3

Article 1

The aid provided for in Articles 2, 3 and 4 of Decree-Law No 558 of 30 December 1993 and in Article 1 of Decree-Law No 2 of 2 January 1992, which was converted into Law No 332 of 1 July 1992, and implemented by Italy for RAI-Radiotelevisione Italiana SpA over the period 1992 to 1995 is compatible with the common market within the meaning of Article 86(2) of the Treaty.

Article 2

The conversion of the 1992 and 1993 concession fee into a loan by Cassa Depositi e Prestiti in 1995 does not constitute State aid within the meaning of Article 87(1) of the Treaty.

Article 3

This Decision is addressed to the Italian Republic.

Done at Brussels, 15 October 2003.

For the Commission

Mario Monti

Member of the Commission

(1) OJ C 351, 4.12.1999, p. 20.

(2) In the present decision the Commission will refer to the complainant as "Mediaset" since it is Mediaset SpA that has participated in the Commission's State aid investigation and since it has made the complaint originally lodged by RTI SpA its own.

(3) See footnote 1.

(4) OJ C 320, 15.11.2001, p. 5.

(5) Garante per la radiodiffusione e l'editoria, 1995 report, p. 140.

(6) The Treasury Ministry currently holds 99,45 % of the share capital.

(7) Point 74 of the decision to initiate the procedure.

(8) OJ L 83, 27.3.1999, p. 1.

(9) ITL 154283 billion in 1992 and ITL 154245 billion in 1993. However, RAI paid ITL 1560 billion for 1992, leaving an amount outstanding of ITL 152723 billion.

(10) Letter from the Italian authorities of 16 June 1999.

(11) As a matter of fact, this measure is more in the nature of a grant than a capital injection. Indeed, there was no corresponding increase in capital. However, since this measure has been described as a "capital injection" from the moment the procedure was initiated, the Commission will retain the wording used.

(12) Mediaset letter of 28 January 2000.

(13) Mediaset letter of 8 January 1999.

(14) Mediaset letter of 12 June 2002.

(15) Mediaset letter of 20 April 2003.

(16) Paragraph 10.4.1 of the letter of 19 October 1998.

(17) Letter from the Italian authorities of 12 December 2002.

(18) According to the Italian authorities, a comparison between Ribor + 60 and the interest rate applied by CDDPP shows that RAI saved ITL 5 billion thanks to the CDDPP loan.

(19) The return on equity (ROE) rose from 0,0 in 1992 to 15,7 in 1997.

(20) Judgment of 24 July 2003 in Case C-280/00 Altmark Trans, not yet published.

(21) See Article 54(1)(c) of DPR No 917 of 22 December 1986: "Approvazione del testo unico delle imposte sui redditi". See also Leo, Monacchi and Schiavo, "Le imposte sui redditi nel testo unico", Giuffré 1990, p. 551.

(22) Case C-6/97 Italian Republic v Commission [1999] ECR I-2981, paragraph 16.

(23) See Case 730/79 Philip Morris [1980] ECR 2671, paragraph 11, and Opinion of the Advocate General, p. 2698; see also Case 259/85 Italian Republic v Commission [1987] ECR 4393, paragraph 24. See also opinion of the Advocate General in Case C-280/00 Altmark, not yet published in ECR, paragraph 103, where it is noted that this requirement is very easy to fulfil since it can be assumed that any State aid distorts or threatens to distort competition.

(24) Letter from the Italian authorities of 12 December 2002.

(25) See the decision to initiate the procedure.

(26) Letter from the Italian authorities of 16 June 1999.

(27) This decision implicitly refers to the three television channels allocated to RAI but the conclusion would be no different if account were taken of the three radio channels also allocated to RAI.

(28) Paragraphs 21, 23 and 24 of the decision. The Commission also noted that "this situation might actually be considered as providing State aid to RAI's competitors as the State renounces part of the concession fee and favours these undertakings over RAI, which pays the full amount".It is worth recalling that the complainant did not formally contest this analysis or the amounts of the concession fee payable by RAI and by the private broadcasters. The complainant has not even suggested any justification for the disparity between the concession fee for RAI and that for the private broadcasters.

(29)

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(30) In the absence of precise information from the Italian authorities about the calculation of interest accrued while the debt for the concession fees was outstanding, the Commission has calculated the amount of interest on the basis of the tasso ufficiale di sconto.

(31) Mediaset letter of 28 January 2000.

(32) Given the difference between the market rates and the CDDPP rate, it transpires that RAI enjoyed a reduced rate only for about half of 1995. In the most prudent and unlikely scenario (with RAI securing a loan on the market at 11,71 % for two and a half years, without refinancing it when the market rate falls), RAI would have paid about ITL 27 billion more in interest relative to the CDDPP loan.

(33) Basically, RAI paid more than ITL 300 billion while, if it had to pay the same fee as a private broadcaster, it would not have paid more than ITL 6 billion.

(34) See the 1992 profit and loss account (Contributi e/o sovvenzioni d'esercizio).

(35) See Note sulla gestione relating to RAI's 1993 balance sheet.

(36) Case 730/79 Philip Morris [1980] ECR 2671, paragraph 11, and Opinion of the Advocate-General, p. 2698; see also Case 259/85 [1987] ECR 4393, paragraph 24. See also the Opinion of the Advocate-General in Case C-280/00 Altmark, not yet published (footnote 20), point 103, where the Advocate-General notes that this requirement is very easy to fulfil since it can be assumed that any State aid distorts or threatens to distort competition. It goes without saying that this conclusion is even more true if the measure in question is considered not as a capital injection but as a mere State subsidy aimed at covering RAI's financial needs (as would seem to be the case from RAI's accounts).

(37) In the decision to initiate the procedure, the Commission calculated that, in real terms, between 1991 and 1992 RAI lost ITL 25 billion because of the failure to adjust the amount of the licence fee in line with inflation. RAI noted that the licence fee was not adjusted in 1993 either, while the inflation rate was 4,2 %. It argues that in 1993 it lost ITL 90 billion because the licence fee was not updated. However, as explained below, the question is not whether the real value of the licence fee was restored but whether the public aid granted to RAI in the period when the measures under examination were adopted exceeded the net cost of the general service task entrusted to RAI in the same period.

(38) See Philip Morris (footnote 23; paragraph 11) and Case 259/85 (footnote 23; paragraph 11).

(39) Case C-75/97 Maribel bis/ter [1999] ECR I-3671.

(40) Case C-310/99 Italy v Commission, not yet reported.

(41) See the communication, op. cit., paragraph 18.

(42) See Joined Cases T-185/00, T-216/00, T-299/00 and T-300/00 M6 and Others v Commission, not yet published.

(43) For a more detailed discussion of the effect on trade between Member States, see the decision to initiate the procedure, points 43 to 57.

(44) See, for instance, presentation of the report by the board of directors on the 1992 budget: "la fortissima concorrenza sul mercato nazionale e su quelli internazionali ..." and the reference framework (general guidelines and objectives) in the board of directors' report: "nel contesto di forte competizione nazionale e sovranazionale che caratterizza il comparto in cui opera la RAI..."; presentation of the report by the board of directors on the 1994 budget: "si é ampliata e arricchita nel 1994 la presenza internazionale della RAI, su molteplici fronti ..."; introduction to the report by the board of directors on the 1995 budget "riportare l'azienda ad un ruolo di primo piano sui mercati internazionali".

(45) Case C-280/00 Altmark Trans (not yet published).

(46) Op. cit., paragraph 94.

(47) In the best-case scenario, the measures in question may be of the same kind as those mentioned by the Court in paragraph 91 of the Altmark ruling: "Payment by a Member State of compensation for the loss incurred by an undertaking without the parameters of such compensation having been established beforehand, where it turns out after the event that the operation of certain services in connection with the discharge of public service obligations was not economically viable, therefore constitutes a financial measure which falls within the concept of State aid within the meaning of Article 92(1) of the Treaty".

(48) Altmark (see footnote 20), paragraphs 101 to 109. In those paragraphs the Court examined the question of whether State payments to transport undertakings classified as State aid could be found to be compatible with the common market within the meaning of Article 77 of the Treaty as reimbursement for the discharge of public service obligations. It did not rule out this possibility, provided that the binding conditions laid down by the secondary legislation for the transport sector were met. Mutatis mutandis this reasoning must apply to undertaking entrusted with an SGEI outside the transport sector and in relation to Article 86(2).

(49) See point 29 of the communication.

(50) See points 32 to 39 of the communication.

(51) See Articles 1 and 2 of that Law.

(52) Article 20 provides that RAI is to conclude contracts for valuable consideration with the administrative bodies interested in such services.

(53) See point 33 of the communication.

(54) Commissione Parlamentare per l'indirizzo generale e la vigilanza dei servizi radiotelevisivi.

(55) Now Autorità garante per la radiodiffusione e l'editoria.

(56) See also Articles 2 and 18 of the 1988 Convention.

(57) See also Article 17 of the 1994 Convention.

(58) See Article 20 of the 1988 Convention and Article 17 of the 1994 Convention.

(59) OJ L 195, 29.7.1980, p. 35. Directive as amended by Directive 2000/52/EC (OJ L 193, 29.7.2000, p. 75).

(60) In general, if a cost relating to a public service also benefits commercial activities, this cost must be proportionally allocated between the two activities on the basis of appropriate criteria.

(61) This, however, does not prevent broadcasters from allocating costs on the basis of other accounting principles that are clearly explained, consistently applied and objectively justifiable.

(62) The Commission has focused its investigation on prices for "spots", which represent the bulk of the advertising market (and to which the complainant appears to refer), and not for emerging forms of advertising such as "telepromotions".

(63) Since, on the basis of the information contained in RAI's financial statements, it was not possible to distinguish clearly between subsidiaries involved in the provision of the public service and those involved in the commercial exploitation of that service, the Commission has taken a prudent approach, excluding all the cost items present in RAI's profit and loss account and linked to subsidiaries.

(64) As it is not possible to verify the correctness of the transfer prices between RAI and its subsidiaries on the basis of RAI's financial statements, the Commission has adopted a prudent approach, deducting all the revenues received by RAI from its subsidiaries, including any dividend. For the reason mentioned in the previous footnote, it has made no distinction between subsidiaries involved in the provision of the public service and those involved in the commercial exploitation of that service.

(65) See Commission aid decision C 2/03 (ex NN 22/02) - State financing of Danish public broadcaster TV2 by means of licence fee and other measures, paragraph 69 (OJ C 59, 14.3.2003, p. 2).

(66) See Decision No 6662 by the Italian antitrust authority of 10 December 1998. This view is shared by another Italian autonomous authority, Garante per la radiodiffusione e l'editoria, in its 1995 report (pp. 140 to 143), referring to the absolute opacity of this market. It also notes that radio advertising revenue represents a limited component of the market since the bulk of the market is made up of television advertising. Lastly, it points out that the advertising market is concentrated in the hands of Sipra and Publitalia, respectively RAI's and Mediaset's advertising agency.

(67) In a letter of 25 May 2001 sent, inter alia, to the Commission's Competition Directorate-General, Mediaset acknowledges that it is not possible to provide significant evidence of RAI's discount practices. It further states that on some occasions RAI has granted excessive discounts but it does not identify those cases. Mediaset submitted a table on the average discounts granted by RAI, adding that it is very difficult to measure the effects of individual discounts on the basis of the data concerning average discounts (the table is reproduced below).

(68) The Garante report of 1995 indicates that between 1993 and 1995 advertising revenue represented 33 % of RAI's total revenue.

(69) The fact that, while the advertising ceiling was in force, RAI did not sell all the advertising time that it could have sold shows that there was an opportunity for RAI to sell at lower prices and it did not do so.

(70) The Garante report of 1995 refers to an increase in RAI's advertising spaces from 1993 to 1994, a fall in the average advertising price per minute and an increase in total advertising revenue. The average price per minute in the case of RAI's channels is still higher than that of Mediaset's channels. Its 1996 report confirms the tendency towards more advertising time and higher advertising revenue for RAI in 1994 and 1995.

(71) On 18 May 1999 representatives of the Commission's Competition Directorate-General met with Mediaset, which submitted a document in which it stated that the objective of its complaint was inter alia to limit RAI's access to advertising resources. However, according to the communication, public service broadcasters should try to maximise advertising revenues, if only to reduce the need for State compensation. In addition, Mediaset asserted that RAI had violated its advertising limits in 1998 as it sought more financial resources.

(72) An annex to the complaint of 19 October 1998 contains a collection of public statements by RAI's managers that tend to demonstrate RAI's intention to maintain a high audience share in order to continue to generate high advertising revenues. Indeed, it appears that the maximisation of advertising revenues is a declared policy of RAI, as reaffirmed in different circumstances by RAI's management (see, for example, the ordine di servizio of 26 June 1998 (pp. 4 and 5) attached to the correspondence from the Italian authorities of 16 June 1999). Advertising indeed became an increasingly important source of revenue for RAI in the 1990s.

(73) Letter of 25 May 2001, mentioned above.

(74) As admitted by Mediaset itself, the figures for the average discount are not significant when it comes to proving the existence of price undercutting (see footnote 67).

(75) The Commission refers to the economic results of RTI SpA, the legal entity holding the three television concessions and one of RAI's competitors.