Media Ownership Rules - European Union

07 November 2002

Charlotte de Panafieu













EUROPEAN UNION

Introduction

EU legislation does not provide for any legislation dedicated solely to the control of media ownership. Rather, the rules aimed at providing plurality and diversity within the media industry are dealt with at national level and under the supervision of The Commission which checks that national rules do not hinder the achievement towards and functioning of the Internal Market.

However, the acquisition of control of a media entity may fall within the scope of the concentration regime of the EC Merger Regulation (provided it meets certain dimension thresholds) and thereby requires appraisal by The Commission.

Media specific regulation

Currently there are no specific European regulations regarding media ownership, despite a number of initiatives to introduce media rules at the European level, for example, the following initiatives were taken, but ultimately rejected:


1992 - Green Paper on Pluralism and Media Concentration in the Internal Market, where the necessity for and the possibility of achieving a harmonised European approach to media concentration was examined.

1995 – Commissioner Monti intended to submit a draft proposal for a Directive concerning restrictions on media-ownership. The thresholds envisaged, but never actually proposed were:


  • Mono-media ownership - maximum audience share of 30%
  • Cross-media ownership - maximum average (total audience share divided by the number of media types controlled) audience share of 10% per media owned

The Commission decided that, pursuant to the Principle of Subsidiarity, restrictions aimed at preserving pluralism and diversity in the media and protecting cultural interests would be best provided for by Member States, under the general supervision of the Commission. The Commission considers the specifics and national interests of a Member State when implementing its media and cultural policy, and will condone national policies so far as they do not impede the proper functioning of the Internal Market.

Introducing media specific regulation is no longer on the Commission’s agenda.

Foreign Ownership Restrictions

The EC Treaty adopted the principle of free movement of capital therefore any national restrictions on foreign holdings in domestic undertakings must only apply to entities established outside the EU. National restrictions on non-EU ownership of assets are therefore permitted. An undertaking established under the law of a Member State by a non-EU undertaking, can make use of the freedom of establishment in the EU.

EU Competition Law

Media ownership with a ‘community dimension’ may also be affected by EU competition law, which may prevent concentrations in certain circumstances. EU competition law is of general application, rather than being media specific.

In substance, an acquisition by a media company of further media interests shall qualify as a concentration with a Community dimension, therefore falling within the jurisdiction of the European Commission if:

Either:

(a) The combined aggregate worldwide turnover of the undertakings is more than €5,000 million; and

(b) The aggregate Community-wide turnover of each of at least two undertakings is more than €250 million, unless each undertaking concerned achieves more than two-thirds of its Community-wide turnover within the same Member State;

Or:

(a) The combined aggregate worldwide turnover of the undertakings concerned is more than € 2,500 million;

(b) In each of at least three Member States, the combined aggregate turnover is more than €100 million;

(c) In each of the Member States included for the purpose in (b) above, the aggregate turnover of each of at least two of those undertakings is more than €25 million; and

(d) Aggregate Community-wide turnover of each of at least two undertakings is more than €100 million,

Unless:

Each of the undertakings concerned achieves more than two-thirds of its aggregate Community-wide turnover within one and the same Member State.

Should a merger meet these thresholds it must be notified without delay to The Commission before being effected, to determine whether or not it raises serious doubts as to its compatibility with the Common Market.

The Commission will then appraise whether the proposed merger might lead to the creation or reinforcement of a dominant position, as a result of which competition would be significantly impeded in the Common Market. Should The Commission identify competition concerns, conditions are likely to be imposed on the parties to remove them. Few concentrations are prohibited.