State aid control Wouter Pieké* Head of Unit COMP.C.4 Public investment in culture and communications industry Brussels 22 November 2011 State aid control Wouter Pieké* Head of Unit COMP.C.4 *"The views expressed are purely those of the writer and may not in any circumstances be regarded as stating an official position of the European Commission."

Is public investment State aid? Article 107(1) TFEU implies the use of public resources, advantage, selectivity, risk of distortion of competition & effect on trade, for undertakings or productions. General measures – no selectivity, no aid. Market economy investor principle (MEIP) – no advantage, no aid.

Compatibility of aid (1) Culture and communication cover a variety of activities. Article 107(3)c) allows for aid to promote certain economic activities. Article 107(3)d) allows for aid to promote culture. Article 106(2) allows for aid to SGEI.

Compatibility of aid (2) Whether 107(3)c) or 107(3)d): aid must be the adequate instrument and necessary to achieve the goal set, and it must be proportionate to it. The positive effects of the aid need to be balanced with the negative effects on competition and trading conditions.

Compatibility of aid (3) Specific rules in: Broadcasting Communication (2009) Broadband Guidelines (2009 – review) Cinema Communication (2009 – review) SGEI package (2005 – review) Decisions published on website.

Compatibility of aid (4) Undertakings in culture and communication may also benefit from horizontal aid schemes (environment, R&D&I, training, regional development, SME aid). Rules can be found in the GBER and horizontal frameworks and guidelines. “De minimis” aid is also possible.

Fiscal measures The form of the aid is in principle not relevant for compatibility, as long as the aid is measurable. Direct and indirect fiscal aid can be made comparable to grants. Difficulties: profitability, no margin for discretion (entitlement to aid).

Example: tax credits for film industry 2009 Italian tax credits for film production and distribution were found to be compatible under Article 107(3)d). Regarding tax credits for digitisation of cinemas the Commission expressed doubts on necessity, proportionality and adequacy.

Example: tax credits for publishing 2011 In October 2011 the Commission approved a scheme for Italian publishing companies in the form of a 10% tax credit on paper purchased (advertisement excluded). A similar scheme had been approved in 2004 after a full examination and which was prolonged in 2005.

State aid for primary objectives and sectoral aid as % of total aid

Thank you for your attention.