EC court action over Spain’s DTT aid

The European Commission is referring Spain to the Court of Justice under Article 108(2) of the Treaty on the Functioning of the European Union (TFEU). The move follows Spain’s failure to recover subsidies it granted to finance the transition from analogue to digital terrestrial television (DTT) in remote areas of, respectively, Castilla-la-Mancha and the rest of Spain which were deemed incompatible with EU State aid rules.

Under the principle of technological neutrality such public financing must be available to all transmission platforms, including terrestrial, satellite, cable or the Internet, without discrimination. The Spanish measures only benefitted terrestrial digital technology, in breach of this principle. They also discriminated between different terrestrial operators. As a result, some terrestrial operators received a selective advantage over their competitors. The restrictions may have deprived consumers of possible benefits, such as more choice and lower prices. The Commission decisions In October 2014 and June 2013 ordered that the subsidies be paid back to the relevant Spanish authorities.

More than three and a half years after the first decision and more than two years after the second one, the Spanish authorities have only recovered a small fraction of the aid (approximately 2 per cent of the estimated amount under the first decision and nothing under the second one). Spain also continues to pay for the operation and maintenance of parts of the DTT network, in breach of the decisions.

As a result of the delay in implementing the decisions, the distortion of competition in the relevant market continues. The Commission is particularly concerned by the continuous payments of illegal subsidies to the detriment of other operators, and therefore decided to refer Spain to the Court of Justice.

In 2015, the EU General Court rejected all seven actions for annulment against the Commission’s 2013 decision (cases T‑461/13; T‑462/13; T-463/13 and T‑464/13; T-465/13; T‑487/13; T-541/13). Appeals against these judgments are pending before the Court of Justice.

On 15 December 2016, the General Court (joined cases T-37/15 and T-38/15; T-808/14) also rejected the actions for annulment of the 2014 decision, thus confirming the Commission’s assessment in the case.

In any event, Spain’s obligation to implement the two Commission decisions is not suspended by the actions for annulment against them. Spain remains bound to recover the incompatible aid and to suspend all ongoing payments of such aid.

As part of the recovery process, the Commission has discussed with national authorities to establish the precise recovery amount. The Commission concluded in its 2013 decision that the aid granted amounted to €260 million. Only €5.5 million have been recovered so far. Nothing has been recovered out of the €43.8 million due under the 2014 decision.

According to the EC, recovery of incompatible aid is vital to remedy the distortion of competition created by the unlawful subsidy and restore effective competition. If a Member State does not implement a recovery decision, the Commission may refer the matter to the Court of Justice under Article 108(2) of the Treaty on the Functioning of the European Union (TFEU) that allows the Commission to directly refer cases to the Court for violations of EU state aid rules.

If a Member State does not comply with the judgment, the Commission may ask the Court to impose penalty payments under Article 260 TFEU.

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