Newsroom / News / Media / Info Magazine LGP NEWS 01/2022 / Media promotion in the light of state aid law

Media promotion in the light of state aid law

Media promotion in the light of state aid law

With the exception of broadcasting and film subsidies, media subsidies in Austria have scarcely been the focus of EU state aid law. While the state assumed that these subsidies did not fall under the ban on state aid, based on the position of the European Commission, this assessment could soon change. 

The media subsidy, which is much debated and has taken many different forms, is currently the subject of legal scrutiny from various angles, including legal policy considerations on changing the legal situation in this respect. Some see the Press Subsidies Act 2004 at the foreground of this: this Act is the foundation on which the federal government supports Austrian daily and weekly newspapers in the form of financial contributions, namely for the purposes of distribution (approx. 2 million euros for 11 daily newspapers), the preservation of regional diversity (over 3 million euros for 4 newspapers), and quality and the future (training and research). Not to be forgotten, however, are the advertising contracts (especially newspaper advertisements) from the public sector. In this context, it is important to remember the requirements and instruments of state aid law, which could have potentially explosive legal consequences in terms of violating these regulations and the special legal protection options. 

For example, people rarely consider that measures taken by the state which favour a particular undertaking or sector through the provision of state resources distort, or threaten to distort, competition and affect trade between Member States, constitute state aid within the meaning of European Union law. This concept is so broad that it does not only cover subsidies to media undertakings, such as press subsidies and various broadcasting subsidies: it also encompasses advertising contracts, in particular advertisements and media cooperations, if the media undertaking receives an advantage from them. This can be mainly because the price is higher than the market value, which would be the so-called aid element. 

Even if the existence of this aid does not imply that it is unlawful, this fact does trigger certain obligations. In principle, there is an implementation ban, i.e. the measure may not be taken or the aid may not be granted, and, sometimes, even the creation of a claim to its granting is inadmissible. First, the European Commission must be notified of this kind of measure. Apart from a few exceptions, this is not necessary if notification has been given of the regulatory framework (aid regime). Sometimes, notification has already been given of individual aid and aid frameworks for (daily) newspapers and the European Commission has examined this, taking into account the safeguarding of quality and pluralism, in particular, as well as the amount of aid. As a result, it is quite likely that a transparent aid regime will be approved. However, this presupposes that notification was given of this. Against this backdrop, it may come as a surprise that this has not yet been the subject of further problems and legal disputes with regard to the various subsidies given to media companies, like it has in the area of public service broadcasting. 

It has been argued in Austria that the actual circulation of daily and weekly newspapers is predominantly limited to the national territory in question, meaning that trade between Member States is not affected. For a long time, this was also in line with the European Commission’s legal view that subsidies for news media with a limited audience did not constitute state aid. However, this view is beginning to erode. If it is also considered that the high-circulation periodicals in Austria are published in German and that the activity of foreign media groups in this sphere is a reality, including through holdings in media companies, this assessment does not appear so clear-cut. Cross-border activity is not required, either; the fact that the newspaper in question is published in Austria is sufficient. In addition, the legal opinion of the European Commission does not have a binding impact on the Union Courts. And even if the European Commission does not pursue this kind of aid on its own initiative (infringement proceedings), the matter can still reach the Court of Justice of the European Union (CJEU). This is done by means of a request for a preliminary ruling from an Austrian court, which can, or in certain cases even must submit questions to the CJEU on the interpretation of the concept of state aid. 

One special circumstance with regard to financial contributions to the media is transparency, which differs from that of other procurements, and the special control associated with this, including by outsiders. One supporting pillar in this system is the information provided by the Media Cooperation and Promotion Transparency Act. The aim of this law is to make the flow of payments from public bodies to the media transparent and comprehensible to the public. KommAustria, which is both the regulator for certain media and the provider of subsidies for print media, acts as the supervisory authority in this context. Other bodies of practical relevance as far as control goes are the Court of Audit ex post and, to a lesser extent, the competition authorities, especially in connection with mergers. Legal protection varies widely, but generally is considered to be weak. There is, however, the option (albeit little used) of referring the matter to a civil court. As a consequence, there is an actionable claim to the granting of a subsidy, provided that the conditions laid down in the subsidy regulations are met. Here too the principle of equality must be observed, which is why exclusion from a grant is only permissible for objective reasons related to the purpose of the grant. In the case of an arbitrary refusal, the disadvantaged individual can enjoy a direct claim to benefits. 

The Federal Act Against Unfair Competition offers ways of enforcing the prohibition of state aid under EU law before Austrian civil courts. In this context, a breach of law is asserted, namely the violation of the prohibition of implementation under state aid law. This allows a media company to sue for the elimination of the favourable treatment, specifically against competing companies to which aid has been unlawfully granted or against the legal entity of the body granting the aid. The CJEU can also be involved in these proceedings, often in order to interpret the concept of aid or the scope of the prohibition on implementation. 

If the subsidy has not yet been paid out, there is a claim for injunctive relief, which can also be secured by means of an interim injunction. In this regard, the disadvantaged party benefits from the fact that the danger to which they have been exposed does not have to be certified and the justifiable legal opinion, to which the opposing party often objects, is judged against strict criteria. As a result, any expert opinions are insufficient; the risk of the violation of a prohibition of implementation is sufficient. Furthermore, there is a claim for damages against the grantor and the recipient of the grant. The state’s obligation to recover aid granted in breach of EU law is also not forgotten. However, legal protections to control excessive prices for advertisements are still in their infancy. 


AUTHOR:

Univ.-Doz. Dr. Dr. Alexander Egger, Attorney at Law and Head of EU, Regulatory, Public Procurement & State Aids at LGP

My documents

Add page
  • [Translate to english] Diverse Artikel

    • Medienförderung im Lichte des Beihilfenrechts (1) Remove page
Get documents