STATE AID/AUDIOVISUAL POLICY : TERRITORIALITY OF FILM SUPPORT SECURED.

The European Commission has made concessions on the criteria it uses to assess state aid schemes for films and other audiovisual works. In an initial draft revision of the existing rules, which date from 2001 and should have expired at the end of 2012, it planned to restrict states' right to require beneficiaries to spend a given percentage of the budget for the film or TV production on their territory. This led to such an outcry among member state officials and the industry that it was forced to back down.

On 30 April, the Commission launched the third and final public consultation, taking account of earlier comments and with the aim of completing the process by adopting its communication in June(1).

"Today's revised draft rules aim to encourage creation and cultural diversity in all parts of the EU and to foster a genuinely European cinema, where cross-border productions can be set up easily. This new draft also attempts to reconcile the different points of view expressed by member states about what rules are needed at EU level," commented Competition Commissioner Joaquin Almunia.

80% THRESHOLD STAYS

The key point is that the proposed rules secure the states' right to impose a territoriality condition as a means of ensuring that they can keep up a pool of qualified professionals and the technical infrastructures required for film and audiovisual creation. The rules maintain the threshold of 80% of the overall production budget (a state that grants aid may demand that 80% of the production budget be spent on its territory), provided that the aid remains below 50% of the film production budget. This rules out the possibility of a territorial requirement for up to 100% of the aid granted, which risked reducing subsidies, as pointed out in the comments of various European audiovisual stakeholders. If a state granting support could not be assured that the economic impact of the project will be greater than its aid, it would be less inclined to support European productions, which could also have led to certain productions moving outside the EU to countries with less stringent rules.

There is a caveat, though. The Commission prohibits all restrictions on the origin of goods and services, which are incompatible with the fundamental principles of the single market, such as the free movement of goods, services and workers in the EU. This means, for Germany and others, a review of provisions making production support conditional on the...