Judgments nº T-442/03 of Court of First Instance of the European Communities, June 26, 2008

• Resolution Date: June 26, 2008
• Issuing Organization: Court of First Instance of the European Communities
• Decision Number: T-442/03

In Case T-442/03,

SIC - Sociedade Independente de Comunicação, SA, established in Carnaxide (Portugal), represented by C. Botelho Moniz, E. Maia Cadete and M. Rosado da Fonseca, avocats,

applicant,

v

Commission of the European Communities, represented initially by M. Balta and F. Florindo Gijón, subsequently by Niejahr, J. Buendía Sierra and G. Braga da Cruz, and latterly by B. Martenczuk and Braga da Cruz, acting as Agents,

defendant,

APPLICATION for annulment of the Commission Decision 2005/406/EC of 15 October 2003 on ad hoc measures implemented by Portugal for RTP (JO 2005 L 142, p. 1) inasmuch as that decision declares that certain of those measures do not constitute State aid and that the others are compatible with the common market,

THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Fifth Chamber),

composed of M. Vilaras (Rapporteur), President, E. Martins Ribeiro and K. Jürimäe, Judges,

Registrar: J. Palacio González, Principal Administrator,

having regard to the written procedure and further to the hearing on 22 November 2007,

gives the following

Judgment

Legal context

1 Article 16 EC states:

-Without prejudice to Articles 73 [EC], 86 [EC] and 87 [EC], and given the place occupied by services of general economic interest in the shared values of the Union as well as their role in promoting social and territorial cohesion, the Community and the Member States, each within their respective powers and within the scope of application of this Treaty, shall take care that such services operate on the basis of principles and conditions which enable them to fulfil their missions.-

2 Article 86(2) EC states:

-Undertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly shall be subject to the rules contained in this Treaty, in particular to the rules on competition, in so far as the application of such rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them. The development of trade must not be affected to such an extent as would be contrary to the interests of the Community.-

3 Article 87(1) EC states:

-Save as otherwise provided in this Treaty, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the common market.-

4 The Protocol on the system of public broadcasting in the Member States (OJ 1997 C 340, p. 109, -the Amsterdam Protocol-), introduced by the Treaty of Amsterdam as an annex to the EC Treaty, states:

-[The Member States,] considering that the system of public broadcasting in the Member States is directly related to the democratic, social and cultural needs of each society and to the need to preserve media pluralism, have agreed upon the following interpretative provisions, which shall be annexed to the [EC] Treaty:

The provisions of the [EC Treaty] shall be without prejudice to the competence of Member States to provide for the funding of public service broadcasting insofar as such funding is granted to broadcasting organisations for the fulfilment of the public service remit as conferred, defined and organised by each Member State, and insofar as such funding does not affect trading conditions and competition in the Community to an extent which would be contrary to the common interest, while the realisation of the public service remit of that public service shall be taken into account.-

5 On 15 November 2001, the Commission published a Communication on the application of State aid rules to broadcasting (OJ 2001 C 320, p. 5, -the Communication on broadcasting-) in which the Commission set out the principles to be followed by the Commission in the application of Articles 87 and 86(2) of the EC Treaty to State financing of public service broadcasting (point 4 of that communication).

Facts of the case

6 RTP - Radiotelevisão Portuguesa, SA is a limited liability company with public capital entrusted with providing the Portuguese public television service, pursuant to contracts entitled -concession contracts for public service television-, concluded, successively, on 17 March 1993 and 31 December 1996 (together -the public service contracts-).

7 The applicant, SIC - Sociedade Independente de Comunicação, SA, is a commercial television company which runs one of the main private television channels in Portugal.

8 By three complaints submitted by the applicant, dated 30 July 1993 and 12 February 1994 (NN 133/B/01), 16 October 1996 (NN 85/B/2001) and 18 June 1997 (NN 94/B/99) respectively, the Commission was informed that the Portuguese Republic had implemented a number of ad hoc measures and annual compensation measures in favour of RTP which constituted State aid incompatible with the common market.

9 On 3 March 1997, the applicant brought Case T-46/97 before the Court of First Instance for the annulment of the Commission Decision of 7 November 1996 taken without prior initiation of the formal investigation procedure laid down in Article 93(2) of the EC Treaty (now Article 88(2) EC), concerning a proceeding under Article [88] EC on the financing of public television channels, along with the annulment of a decision allegedly contained in a letter from the Commission of 20 December 1996. By that decision and by that letter, the Commission found that certain measures challenged in the complaints did not constitute State aid and requested information from the Portuguese authorities in respect of certain other of those measures.

10 In its judgment in Case T-46/97 SIC v Commission [2000] ECR II-2125), the Court of First Instance noted that serious difficulties remained at the end of the Commission-s preliminary investigation, which had lasted considerably longer than normally necessary, justifying the initiation, by the Commission, of the formal investigation procedure (paragraphs 105 to 109 of the judgment) and annulled the decision of 7 November 1996. By contrast, the Court dismissed as inadmissible the action brought against the letter of 20 December 1996, since that letter did not constitute a decision (paragraph 49 of the judgment).

11 Following that judgment, the applicant sent the Commission three letters dated 26 July 2001 each containing a request to act in respect of a different one of its three complaints and seeking to initiate the formal investigation procedure in respect of the measures of which they complained.

12 Those requests to act were followed by two actions for failure to act brought by the applicant before the Court of First Instance on 6 December 2001 and lodged under case numbers T-297/01 and T-298/01. Following a Commission initiative of 7 November 2001 and that institution-s statements of its position of 13 November 2001 and 30 September 2003 (paragraphs 13 and 14 below), it was held that there was no need to adjudicate in those cases (Joined Cases T-297/01 and T-298/01 SIC v Commission [2004] ECR II-743).

13 By letter of 7 November 2001, the Commission requested, pursuant to Article 10(3) of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article [88] EC (OJ 1999 L 83, p. 1), that the Portuguese Republic communicate information regarding the annual compensation measures mentioned at paragraph 8 above in order to enable it to determine the classification of those payments as new or existing aid. Thus, by letter of 30 September 2003, the Commission notified the Portuguese Republic of a request for observations, in accordance with Article 17(2) of Regulation No 659/1999 and initiated, in so doing, the first stage of the investigation of those measures as existing aid. Those annual compensation measures and the procedure initiated in respect of them by the decision of 30 September 2003 is not the subject of this action.

14 By letter of 13 November 2001, the Commission informed the Portuguese Republic of its decision to initiate the formal investigation procedure pursuant to Article 88(2) EC regarding a number of ad hoc measures adopted by the Portuguese Republic for the RTP between 1992 and 1998. Those measures are the following:

- the exemption from the duties and expenses relating to the registration of the legal document creating the undertaking in the amount of Portuguese Escudos (-PTE-) 33 million (-the tax exemptions-);

- the grant by Portugal Telecom to RTP of payment facilities for the fees for the use of the television broadcasting network (-the payment facilities for the fees-);

- the amicable settlement concluded between the body responsible for social security and RTP, whereby RTP-s debt was rescheduled and the social security body-s claim for default interest was waived;

- the increase in RTP-s capital of PTE 5 400 million in 1993 as compensation for the sale of the television broadcasting network by RTP;

- the issue of bonds in 1994 for PTE 5 000 million, allegedly guaranteed by the Portuguese Republic (-the 1994 bond issue-);

- the protocol between RTP and the Portuguese Ministry of Culture, concluded in 1996, to support promotion of cinema by RTP;

- the restructuring plan for the period from 1996 to 2000;

- increases in RTP-s capital by the Portuguese Republic between 1994 and 1997, amounting to PTE 52 200 million;

- loans granted by the Portuguese Republic to RTP in 1997 and 1998 in the amount of PTE 20 000 million.

15 The decision to initiate the formal investigation procedure was published in the Official Journal of the European Communities (OJ 2002 C 85, p. 9) and was notified to the applicant by letter of 8 January 2002. In that decision, the Commission requested the interested parties to submit their observations.

16 By letters of 8 February 2002 (ref. 1543.003.CA.001) and 9 May 2002 (ref. 1543.003.OB.001), the applicant submitted its...