EC confirms Spain DTT aid broke rules
June 10, 2021
By Colin Mann
The European Commission has concluded that the aid received by terrestrial operators for the digitisation and extension of the terrestrial television network in remote areas of Spain was against EU State aid rules. Following the annulment of a 2013 Commission decision, the additional investigation has confirmed that, between 2005 and 2008, the operators of terrestrial platforms received an incompatible selective advantage over their competitors using other technologies, in breach of the principle of technological neutrality. Spain now has to recover the incompatible aid.
Following an additional in-depth investigation, the Commission confirmed that the measures adopted by Spain between 2005 and 2008 to facilitate the switch from analogue to digital television constitute incompatible State aid. The aid was granted for the digital switch-over as well as for the operation and maintenance of the digital television network. In particular, the measures lack technological neutrality, since they envisage digital terrestrial television (DTT) as the only technology for the subsidised digital switch-over. Alternative technologies (such as satellite) could not benefit from the aid measures. The measures are selective because they benefit only DTT operators, although DTT and satellite technologies are in a comparable factual and legal situation (satellite technology could have been used for the digital switch-over in remote areas).
On this basis, the Commission concluded that the scheme cannot be considered compatible with the internal market on the basis of Article 107(3)(c) or Article 106(2) of the Treaty on the Functioning of the European Union (TFEU).
As a matter of principle, EU State aid rules require that incompatible State aid is recovered without delay in order to remove the distortion of competition created by the aid. There are no fines under EU State aid rules and recovery does not penalise the companies in question. It simply restores equal treatment with other companies.
Spain will determine the amount to be recovered from each individual beneficiary, in line with the methodology set out under the Commission decision. Therefore, the final figures on the number of companies subject to recovery and on the total aid amount to be recovered cannot be known at this stage.
Between 2005 and 2008, Spain adopted various regulatory measures to facilitate the switch from analogue to digital television. The Spanish authorities divided the territory in three distinct areas:
In Area I, which includes the vast majority of the Spanish population, the costs of the switch-over were borne by the broadcasters;
In Area II, which is composed of remote areas representing about 2.5 per cent of the population, broadcasters had no commercial interest in providing the service. Therefore, the Spanish authorities decided to compensate the operators for the switchover costs born. This is the measure concerned by the decision;
In Area III, which includes mountainous areas and where therefore terrestrial transmission cannot be provided, the satellite technology was chosen.
Following a complaint by a satellite operator, SES Astra, the Commission opened a formal investigation in 2010. The investigation concerned exclusively the measures taken for Area II. In 2013, the Commission adopted a decision, finding that the aid granted to the operators of the terrestrial television platform for the deployment of the DTT network, as well as for the maintenance and operation of such network was incompatible with EU State aid rules and had to be recovered.
Following legal challenges by Spain and by some of the beneficiaries, in December 2017, the Court of Justice annulled the 2013 Commission decision for inadequate reasoning as to the selectivity of the measure (case C-70/2016). Therefore, the Commission carried out an additional investigation, during which it has re-assessed the evidence concerning the selectivity of the measures, including new evidence submitted by Spain and by some of the beneficiaries. Following the additional investigation, the Commission maintained the conclusion that the measures give a selective advantage to the beneficiaries and that the aid granted is incompatible aid that needs to be recovered by Spain.
In a related case concerning the implementation of the digital transition plan specifically in the Area II region of Castilla-La Mancha (SA.27408), the Commission concluded in 2014 that the aid was incompatible and had to be recovered. The Court of Justice fully confirmed that Commission decision in September 2018 (case C-114/17). Since Spain only partially recovered the aid, the Commission initiated proceedings before the Court of Justice. In April 2021, the Court held that Spain has failed to recover the aid (C-704/19). The recovery of this aid is ongoing.