The European Court of Justice: TV2 has received illegal state aid   

On 9 November 2017, the ECJ delivered a final judgment in the action concerning illegal state aid to TV2. The ECJ ruled that the advertising revenue that TV2 received from 1995-1996 from the TV2 Foundation was to be characterised as government funds. Consequently, the advertising revenue constituted illegal state aid.

TV2 and the Danish Broadcasting Corporation (DR) are both publicly owned TV broadcasting companies, but as opposed to DR, TV2 may receive revenue from advertising.

In 1995 and 1996, TV2’s advertising time was not sold by TV2, but by the company TV2 Reklame. The revenue from this was transferred to TV2 via the TV2 Foundation. TV2 Reklame as well as the TV2 Foundation are public companies owned by the Danish state. TV2 Reklame and the TV2 Foundation were therefore responsible for the administration of the advertising revenue and the transfer thereof to TV2.  

Already in 2000, the scheme for financing of TV2 was being investigated by the European Commission due to a complaint. In a decision from 2011, the European Commission stated that the advertising revenue granted to TV2 from 1995 to 1996 was characterised as aid with government funds, but that the advertising revenue and other measures initiated to the advantage of TV2 were consistent with the single market. The European Commission’s decision was appealed against to the Court of First Instance, which annulled the European Commission’s decision as regards the classification of the advertising revenue as government funds. The case was then brought before the European Court of Justice.

THE EUROPEAN COURT OF JUSTICE RULES THAT ADVERTISING REVENUE CONSTITUTED ILLEGAL STATE AID

The European Court of Justice only decided on whether the advertising revenue could be characterised as government funds.

The European Court of Justice found that the concept of aid not only covers advantages granted directly by the state, but also advantages granted by public and private bodies appointed or established by the state to administer the aid. The European Court of Justice further found that, in accordance with firm case law, it is sufficient that the funds are permanently under the public authorities’ control and thereby available to the authorities.

The European Court of Justice pointed out that, in the present case, companies appointed especially by the public authorities and the state - TV2 Reklame and the TV2 Foundation - were to administer TV2’s advertising revenue under the law. Consequently, the advertising revenue was under public control and available to the state. On this basis, the European Court of Justice concluded that the revenue was characterised as government funds, and that the transfer of the revenue constituted illegal state aid. In this connection, the European Court of Justice explicitly rejected that the assessment may be changed due to the revenue originating from private bodies as the revenue originated from advertisers.  

With this judgment, the European Court of Justice has put a stop to this case.

contacts

Andreas Christensen

Partner

Mia Anne Gantzhorn

Attorney

Leah Elkan

Assistant Attorney