C-288/89

OPINION OF MR TESAURO —CASE C-288/89

OPINION OF MR ADVOCATE GENERAL TESAURO delivered on 18 April 1991 *

Mr President, with the application brought by the Members of the Court, Commission and then derive from that case the answers to the questions put by the Dutch court in Case C-288/89.

1. This Opinion relates to two separate cases: an action brought by the Commission against the Kingdom of the Netherlands 2. With regard to Case C-353/89, the (Case C-353/89) and a request for a Commission asks the Court for a preliminary ruling made by the Raad van declaration that by reserving, entirely or State, The Hague (Case C-288/89). partly, the production of programmes for the Dutch radio broadcasting bodies to a Dutch undertaking and by imposing certain conditions on foreign broadcasters regarding the re-transmission of pro- Both cases raise issues which are to some grammes containing advertising specifically extent identical as regards the consistency intended for the Dutch public, the Kingdom with Community law of Dutch legislation of the Netherlands has failed to fulfil its concerning the production and broadcasting obligations under Article 59 of the Treaty. of radio and television programmes. More specifically, the questions submitted for a preliminary ruling relate to the conditions laid down in Article 66 of the Mediawet 1 for the re-transmission of programmes orig- inating in other Member States containing 3. As I have said, the two provisions chal- advertising specifically intended for the lenged are contained in the Mediawet, Dutch public; in addition to those which came into force on 1 January 1988. conditions, the direct action brought by the Like its predecessor, that law is intended to Commission relates to the obligation safeguard a pluralistic, non-commercial imposed on broadcasting bodies by Article broadcasting system, and it is precisely in 61 of the Mediawet wholly or partly to use relation to that objective that the main the services of a Dutch undertaking for the provisions embodying the system are production of their programmes. formulated, in particular those concerning the right to broadcast and advertising.

The Nederlandse Omroep Stichting (Dutch In the Netherlands most programmes may Foundation for the Broadcasting of Radio be received solely through cable distri- and Television Programmes) is responsible bution. Distributors are authorized to for coordinating programmes broadcast transmit foreign programmes. Nevertheless, nationally and for producing broadcasts of apart from cases where such programmes common interest (e.g. television news). may be received by means of an individual aerial, if they contain advertising specifically intended for the Dutch public, Article 66 of the Mediawet permits their retransmission solely if certain conditions are fulfilled. In principle, the domestic broadcasting bodies have a broad measure of freedom with regard to their own broadcasts. They may buy programmes ready made in the Netherlands or in other countries or produce their own. One group of conditions relates to the broadcasting body itself: it may not be profit-making; it may not enable a third party to make a profit; and it must attribute the management of the advertising activity to a separate legal person. However, under Anicie 61 of the Mediawet, where they produce their own programmes they must use the facilities and technical resources (recording studios, set workshops, technicians, orchestra,. etc.) of the Nederlandse Omroepproduktie Bedrijf The other conditions relate to the actual (NOPB), a company governed by Dutch advertisements: they must be recognizable law, which provides its services at controlled as such; they may not exceed 5 % of total prices. This obligation applies to all radio air time; and they may not be broadcast on programmes and to 7 5 % of television Sundays. programmes.

6. Consequently, the compatibility of The Dutch Government maintains, first, Article 61 of the Mediawet with Article 59 that the obligation laid down in the of the Treaty must be considered without Mediawet is temporary and stems from the taking account of the temporary nature of concern to guarantee a smooth transition the situation. from the previous system, in which the technical resources belonged to the public sector and the obligation in question was absolute, to a system in which the rules of In this respect, the Dutch Government the market apply in full.2 The Dutch maintains that the provision in question is Government maintains that a period of tran- not incompatible with Article 59: it does sition is essential in order to avoid the not, in fact, entail any discrimination collapse of the N O P B and mass redun- between Dutch undertakings other than the dancies and to preserve the cultural N O P B and undertakings in other Member experience of the previous system, first and States. Moreover, undertakings or bodies not operating at the national level may use 2 — The Dutch Government has, in fact, presented a draft law the technical resources of their choice; to the Dutch parliament amending the Mediawet, whereby the obligation laid down in Article 61 would be abolished furthermore, as far as the production of from I January 1991 with regard to television and from 1 January 1992 with regard to radio. This amendment has television programmes is concerned, it is not yet been adopted. However, as far as television obviously possible to use undertakings in programmes are concerned, it is already in operation dt factOy since the obligation in question has been set at 0%. other Member States to the extent of 2 5 % .

Consequently, the only derogation that I am convinced that this reasoning — even could apply in the present case is that though it was adopted by the Court in a contained in Article 56 of the Treaty (to case concerning the free movement of which Article 66 refers), whereby any goods 4 — is equally valid with regard to the discriminatory provisions may be justified freedom to provide services. In view of the on grounds of public policy, public security level of Community integration which has or public health. now been attained, the scope of Article 59 cannot be defined as being different from

8. Moreover, even if it were to be considered that the Dutch provision is not based on aspects of formal discrimination Since the Dutch Government itself on grounds of nationality and that the acknowledges that the provision in question resulting restrictions are therefore, in is 'in fact intended to ensure the survival of principle, justifiable on grounds of the the N O P B ' (page 5 of the rejoinder), I general interest, the result would still be the would point out straight away that the same. survival of the NOPB is not necessary in order to guarantee the pluralism and the non-commercial nature of the system itself or the specific requirements relating to the In fact, although the protection of cultural safeguarding of that objective.

8 — In this respect I would observe that, in any event, the non-commercial nature of a broadcasting system cannot be regarded per se as an overriding requirement capable of justifying a restriction on the freedom to provide services; it is merely a means of guaranteeing pluralism. Conse- Lastly, the very fact that the restriction in quently, the non-commercial nature of a broadcasting system may justify restrictions solely in so far as they are question has in fact already been abolished, essential in order to pursue an objective that is worthy of protection at the Community level, such as an objective of at least with regard to the production of cultural policy designed to ensure pluralism. television programmes, suggests that the 9 — See, for example, Case 180/89 Commission v Italy [1991] survival of the NOPB is not indispensable in ECR 1-709, where the Court held that 'the general

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I3 11. Firstly, the first paragraph of Article 59 does not prohibit only restrictions based on nationality, but more generally 'restrictions on freedom to provide services within the Community. . . in respect of nationals of The Court has also stated that Articles 59 Member States who are established in a State and 60 'require the removal not only of all of the Community other than that of the discrimination against a provider of a person for whom the services are intended'. service on the grounds of his nationality but Moreover, provisions containing special also all restrictions on his freedom to arrangements for foreign nationals are provide services imposed by reason of the applicable solely if they are justified 'on fact that he is established in a Member State grounds of public policy, public security or other than that in which the service is to be public health' (Article 56, to which provided'. H T h e Court added that 'in reference is made by Article 66). particular, the Member State cannot make the performance of the services in its territory subject to the observance of all the conditions required for establishment; were it to do so the provisions securing freedom to provide services would be deprived of all practical effect'. 15

Indeed, since the crossing of II — Sec to this effect the Opinion of Mr Advocate General Jacobs in Case C-76/90 Säger, delivered on 21 February 12 — Judgment in Case 33/74 Van Binsbergen v Bedrijfsvere- 1991 and the Opinion of Mr Advocate General Lenz in the niging Metaalnijverheid [\97*] ECR 1299. 'tourist guide' cases (Case 154/89 Commission v France; 13 — See, most recently, Case 205/84 Commission v Germany Case 180/89 Commission* Italy; Case 198/89 Commission [1986] ECR 3755, paragraph 25. v Greece [1991] ECR 1-727).

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frontiers is not coupled, in the case of the in so far as the general interest is not safe- provision of services, with the creation of a guarded by the rules to which the provider permanent establishment, the principle of of such a service is subject in the Member national treatment might be liable to give State in which he is established; rise to spontaneous restrictions with regard to that aspect of the supply of services. By imposing on foreigners, despite what has been said above, the same conditions as in so far as such requirements are objec- those imposed on nationals, which pre- tively justified, that is to say provided that suppose a permanent connection with the the same result cannot be achieved by less State, the State would end up by substan- restrictive rules. 17 tially nullifying the freedom to provide services and its special features as compared with the freedom of establishment. 16 I shall now examine the conditions laid down in the Mediawet. For practical reasons I shall deal first with those relating to the broadcasting bodies and then with Admittedly the Court has introduced major those concerning advertising. limitations on the wide scope of the prohibition contained in Article 59 by holding that restrictions affecting nationals and Community nationals in the same way — Conditions relating to the broadcasting as a result of the application of national bodies provisions which are designed to protect general interests and hence are binding on all, are lawful. 15. The Commission maintains that, by extending to foreign broadcasters the system applicable to Dutch broadcasters, the Mediawet makes the retransmission of their programmes in the Netherlands impossible 14. However, the Court has stressed the de facto if they contain advertising intended exceptional nature of the possibility of dero- specifically for the Dutch public, essentially gation and stated that since the freedom to since in order to fulfil the relevant provide services is a fundamental principle conditions the foreign bodies would have to of the Treaty it may be restricted solely: be established in a State whose legislation was modelled on that applicable in the Netherlands.

provisions in question are, by virtue of their prevent funds that would otherwise be used very nature, in fact discriminatory. Since the to finance broadcasting from being diverted other Member States do not have a broad- and that such broadcasters should not have casting system similar to that in force in the a profit-making object and that therefore Netherlands, foreign broadcasters cannot in advertising revenue should be used solely to any event be in the same position as finance broadcasting in order 'to provide domestic broadcasters. The 'substantive' foreign broadcasters with opportunities at discrimination essentially arises from the least similar to those existing in the Dutch fact that situations which are in fact not system' (page 24 of the defence) do not comparable are treated in an identical make any sense in relation to the objective manner. pursued. It is obvious that the observance (or non-observance) of those conditions has no effects on the Dutch broadcasting system as such. 16. In this respect, it should be observed that, according to the Court's case-law, 'not only overt discrimination based on the nationality of the person providing a service but also all forms of covert discrimination which, although based on criteria which appear to be neutral, in practice lead to the In fact, the conditions in question do not same result', 1 8 are prohibited. affect programme content. It is true that in so far as they prevent foreign broadcasters from penetrating the Dutch advertising market they prevent the STER from being deprived of some of its advertising revenue. The conditions imposed by the Mediawet Inasmuch as it is sought to argue that such on foreign broadcasters seem to constitute a revenue represents a source of funds for the paradigm case of covert discrimination. This domestic broadcasting bodies and therefore means that they cannot, in any event, helps from that point of view to safeguard reasonably be regarded as being justified on the pluralism of the Dutch system, I would grounds of the general interest. In the final merely observe that it is an objective that is analysis, they make the retransmission of eminently economic and, in any event, programmes coming from other Member excessive in relation to the aim pursued, States impossible in practice, without, particularly when it is borne in mind that moreover, having any effect on the Dutch the funding derived from the revenue of the Government's declared objectives, namely STER constitutes merely a fraction of total safeguarding the pluralism and public funding. non-commercial nature of the broadcasting system.

advertising from influencing programme in the Debauve case 19 and in the Bond van content; it is therefore intended to secure Adverteerders case,20 where it held essen- consumer protection from the point of view tially that until the national provisions of the quality of the programmes them- governing this field are harmonized, selves. However, the Dutch Government non-discriminatory restrictions must be states that it does not require such a sepa- regarded as being compatible with the ration to be laid down in the legislation in Treaty. force in the Member State where the broadcast is made. It is enough that, within the broadcasting undertaking in question, the programme production department and the department selling advertising time are legally separate. In other words, a mere In the Debauve judgment the Court stated 'fiction' would satisfy the requirement laid that 'in view of the particular nature of down by the Dutch Government. It goes certain services such as the broadcasting and without saying that such an arrangement transmission of television signals, specific cannot be regarded as suitable to guarantee requirements imposed upon providers of that the advertising does not influence the services which are founded upon the programmes. application of rules regulating certain types of activity and which are justified by the general interest and apply to all persons and undertakings established within the territory of the said Member State cannot be said to 18. In the final analysis, the conditions be incompatible with the Treaty to the imposed on foreign broadcasters by the extent to which a provider of services estab- Mediawet cannot quality for any derogation lished in another Member State is not from the freedom to provide services. They subject to similar regulations there' are therefore incompatible with Article 59 of (paragraph 12). the Treaty.

Consequently, the Court essentially regarded the restrictions resulting from the application of certain conditions concerning That conclusion is substantially confirmed advertisements as justified by the general by the judgment in Bond van Adverteerders, interest; it is precisely the conformity of in which the Court held that Article 4 of the those conditions with Article 59 of the Kabelregeling was incompatible with Article Treaty that is now being challenged by the 59 of the Treaty with regard to the Commission. prohibition imposed on foreign broadcasters against transmitting advertising intended especially for the Dutch public and against the subtitling in Dutch of programmes retransmitted in the Netherlands, but the 21. The Commission maintains that the fact Court also confirmed that prohibitions that those conditions do not have to — or, imposed by a Member State on grounds of in any event, may not — be complied with the public interest (requirements of cultural in the case of advertising not specifically policy in the case in question) were not per intended for the Dutch public means that se incompatible with the Treaty, provided they were not adopted in the general that they were not discriminatory and their interest, for instance to protect viewers or scope was not disproportionate to the listeners from excessive advertising. intended objective.

In the present case, it is evident that the provisions in question apply in a non-discriminatory manner to both Dutch and foreign broadcasting bodies and are not 22. In this respect I would observe that disproportionate to the objective pursued (in legislation such as that at issue may, in any fact, it has not been proved that the result event, make it more expensive and more sought by the Dutch Government could be difficult for foreign broadcasters to transmit achieved by means of less restrictive rules). programmes containing advertising speci- fically intended for the Dutch public, if only because they will have to adapt their programmes in order to fulfil the conditions Of course, this means that it is the law of in question. In other words, conditions such the State in which the broadcast is received as the 5% limit and the prohibition on which prevails rather than that of the State advertising on Sundays amount to special in which the broadcast is made, as should rules applicable to broadcasters in the other normally happen in a liberalized system of Member States, since they alone have to cut the kind envisaged by the Treaty and, in out parts of their programmes. general terms, by the Court.

26. With regard to Case C-288/89, I propose that the Court give the following answers to the questions submitted by the Raad van State, The Hague:

'(1) Restrictions on the freedom to provide services imposed by national provisions applicable without distinction are compatible with Article 59 solely if they are justified by overriding requirements relating to the general interest and those requirements cannot be satisfied by less restrictive conditions.

(2) The pursuit of an objective of cultural policy, such as the preservation of a pluralistic broadcasting system, may, in principle, constitute an overriding requirement justifying a restriction on the freedom to provide services.

(3) Article 59 of the Treaty must be interpreted as meaning that it precludes the application of a national provision (even if it is applicable without distinction) such as Article 66 of the Mediawet, which makes the cable distribution of programmes originating in other Member States and containing advertising specifically intended for the Dutch public subject to the conditions that the broadcaster must not have a profit-making object and must not enable a third party to make a profit and that the advertising activity must be managed by a legal person separate from the broadcaster; whereas, in the absence of harmonization, the conditions that advertisements may be transmitted solely if they are recognizable as such, that they must not exceed 5 % of air time and that they must not be broadcast on Sundays, are justified by overriding requirements relating to the general interest.'