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4. Under the 'gross' principle, which is The facts and the main proceedings supported by Pro Sieben, the duration of the advertisements is to be included in the duration of time according to which the permissible number of interruptions is calculated. Under the 'net' principle, which is supported by the ARD, the advertise- 2. The applicants are eleven public law ments are not to be included in such time: broadcasting institutions of the German that is, the relevant duration relates only to Länder grouped together in the Arbeitsge- the length of the film itself. The difference meinschaft Deutscher Rundfunkanstalten is that, in certain circumstances, applica- ('the ARD'). Under the German Basic tion of the gross principle would permit a Law, television broadcasting falls within greater number of interruptions than would the competence of the Lander. Those insti- be allowed by the net principle. tutions are collectively responsible for the ARD television channel. The defendant, PRO Sieben Media AG ('Pro Sieben'), is a private television broadcaster.

* Original language: English. 1 — Council Directive 89/552/EEC of 3 October 1989 on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities, 5. The ARD has raised the issue before the OJ 1989 L 298, p. 23. Amended by Directive 97/36/EC of German courts by taking proceedings the European Parliament and of the Council of 30 June 1997, OJ 1997 L 202, p. 60: see paragraph 8 below. against Pro Sieben for unfair competition.

'(1) Does Article 11(3) 3of Directive 97/36/ Question 1 EC of the European Parliament and of the Council of 30 June 1997 amending Council Directive 89/552/EEC ("the Television Amending Directive") or the identical Article 11(3) of Council Directive 89/552/EEC of 3 October 7. On the first question, the Member States which have presented observations to the Court are divided : France, Netherlands and 2 — Article 26(4) of the Staatsvertrag der 16 Bundesländer über den Rundfunk im vereinigten Deutschland of 31 August Portugal advocate the net principle; Italy, 1991. That provision was replaced by Article 44(4) of the Luxembourg and the United Kingdom Dritter Staatsvertrag zur Änderung rundfunkrechtlicher Staatsverträge, which entered into force on 1 January 1997. advocate the gross principle, as does the 3 — This reference to Article 11(3) is incorrect: the new text of Commission. Sweden answers only the Article 11(3) of Directive 89/552 was introduced by Arti- cle 1(13) of Directive 97/36. second question.

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12. Article 11(3) provides as follows: 15. Articles 12 to 20 contain other provi- sions on advertising and sponsorship, to certain of which it will be necessary to refer below.

'The transmission of audiovisual works such as feature films and films made for television (excluding series, serials, light entertainment programmes and documen- taries), provided their scheduled duration is more than 45 minutes, may be interrupted 16. The effect of Article 11(3) will depend once for each period of 45 minutes. A on whether the gross principle or the net further interruption shall be allowed if their principle applies. If for example a film lasts scheduled duration is at least 20 minutes 40 minutes, on the net principle it could not longer than two or more complete periods be interrupted by advertisements, while on of 45 minutes.' the gross principle it could be interrupted by six minutes of advertisements. But that is subject to the overall limits prescribed by Article 18: Article 18(2), for example, gov- erns the maximum length of advertising within a one-hour schedule. Thus, although application of the net principle would 13. In general, advertising slots within a permit fewer interruptions than the gross programme must be separated by a period principle, there will be no effect on the total of at least 20 minutes (Article 11(4)). volume of advertising if the maximum prescribed by Article 18 is exploited to the full. Thus the issue may be between more frequent, but shorter, interruptions on the gross principle and less frequent, but longer, interruptions on the net principle. 14. Article 11(5) provides: Nevertheless the issue is one of much concern in several Member States, and appears to be of considerable importance both commercially and as a matter of broadcasting policy.

21. However, other explanations have also been advanced for the use of that term. One 18. Both the proponents of the gross prin- explanation is that feature films made for ciple and the proponents of the net princi- the cinema are transmitted on television at ple rely heavily on the text of Article 11(3). a slightly different speed: it was necessary therefore to specify that it was not the duration of the original work, but the duration of the film as scheduled for television, that was decisive. A different 19. A first argument advanced in support explanation, which is perhaps at least as of the net principle is that, in several plausible, is that the term 'scheduled' was although not all language versions of necessary to provide for the possibility that Article 11(3), the duration is expressed to the version of the film as transmitted might relate to the audio-visual works (the films) turn out to be shorter than as scheduled, themselves, as distinct from the transmis- owing to cuts or other modifications which sion of the film. It is argued that by it might not have been possible to foresee; referring to the duration of the films, the it was considered that the broadcaster provision should be understood as specify- should not be subject to the risk of ing the film excluding any advertising penalties for minor divergences of that breaks, whereas a reference to the trans- kind, and so the relevant criterion should mission of the film might more readily be be the duration as scheduled, not the understood as comprising the film together duration as transmitted. Both of those with the advertising breaks. 6 explanations are consistent with the net principle; consequently I do not think it would be safe to attach too great impor- tance to the term 'scheduled' as supporting the gross principle.

23. The final argument to be considered at this stage is suggested by a normal, com- Legislative history mon-sense reading of Article 11(3). It may seem paradoxical to read the expression 'scheduled duration', which is laid down by that provision as the yardstick for deciding the permissible number of interruptions, as 26. The legislative history of a Community including the interruptions themselves. instrument has not been very frequently Logically it may seem that one first needs used by the Court as a guide to its meaning, to ascertain the length of the film itself, and and is generally regarded as only a supple- only then can one determine how many mentary means of interpretation. The interruptions there may be. Court has placed greater emphasis on the scheme of the instrument and its legislative context (systematic interpretation) and on the aims and purposes of the instrument. Nevertheless the Court has accepted that the legislative history can provide helpful guidance; and in the RTI case 7the Court referred, in examining the legislative his- tory of the directive in issue in the present case, to the same elements as are invoked in 24. At first sight that may seem a strong the present case, namely the European argument in support of the net principle. It Convention on Transfrontier Television has to be recognised, however, that the and the position taken by the Community provision can be read, and has been read, institutions during the legislative process. the other way. Moreover, elsewhere in the directive the basis for calculating the adver- tising breaks includes the advertisements 7—Joined Cases C-320/94, C-328/94, C-329/94, C-337/94, C-338/94 and C-339/94 RTI and Others v Ministero delle themselves. That is so, for example, with Poste e Telecomunicazioni [1996] ECR I-6471.

27. The first item relied upon to throw 29. It is possible to draw different conclu- light on the legislative history of the sions from the relationship between the directive is the European Convention on directive and the Convention. On the one Transfrontier Television, 8adopted within hand it may be said that the difference of the Council of Europe shortly before the wording must reflect a difference in the directive was enacted, and containing very intended meaning. On the other hand it similar provisions. Work on both instru- may be said that the difference of wording ments had proceeded simultaneously, and should be overlooked, since it is unlikely the European Council, meeting at Rhodes that the same States, negotiating at the on 2 and 3 December 1988, stated: same time (admittedly in the somewhat wider framework of the Council of Europe and including also other States which are parties to the European Cultural Conven- tion), would have agreed on inconsistent provisions. 'The European Council considers it impor- tant that the Community's efforts should be deployed in a manner consistent with the Council of Europe Convention.' 9 30. Although Article 14(3) of the Conven- tion does not speak of the 'scheduled duration', the explanatory report to the Convention (which is not authoritative) does so. 10 Moreover the Convention has Moreover the Convention is referred to in recently been amended by a Protocol 11 so the preamble to the directive. as to refer to the 'scheduled duration' in Article 14(3); according to the Commis- sion's observations in the present case, that amendment is designed to facilitate acces- sion by the Community to the Convention. In any event, the amendment certainly 28. Article 14(3) of the Convention is in identical terms to Article 11(3) of the 10 — Transfrontier television: explanatory report on the Eur- directive, except that it refers to 'duration' opean convention (5 May 1989), paragraph 191. How- rather than 'scheduled duration'. The same ever, paragraph 192 refers to the duration of the film. The explanatory reports of Council of Europe conventions are difference appears in both the authentic adopted by the intergovernmental committee which adopts the text of the convention in question, but are not adopted by the Committee of Ministers of the Council of Europe and are expressed not to be authoritative. 11 — Protocol amending the European Convention on Trans- 8 — European Treaty Series No 132. frontier Television, European Treaty Series No 171, 9 — EC Bulletin, No 12/1988, p. 8 at p. 10. 1 October 1998.

32. As part of the legislative history, reli- ance is placed on an amendment to Arti- 31. The Commission and the United King- cle 11(3) proposed by the European Parlia- dom Government refer to the minutes of ment on 14 February 1996 during the the Council of 3 October 1989 12 (the date procedure which led to the adoption of upon which the original directive was the amending directive. The proposed adopted), which as quoted by them contain amendment was as follows: a declaration by the Council and Commis- sion that the durations provided for by paragraphs 3 and 5 of Article 11 must be calculated on the basis of the scheduled duration of the broadcasts. The Court has generally been reluctant to rely upon such a 'The transmission of audiovisual works declaration to interpret a legislative provi- such as feature films and films made for sion unless the content of the declaration is television (excluding series, serials, enter- reflected in the text of the provision being tainment programmes and documentaries) interpreted. 13 In the present case the may be interrupted once for each complete declaration closely reflects the text. Indeed period of 45 minutes. A further interrup- it may be said that the declaration begs the tion is allowed if their scheduled duration, question of what 'scheduled duration' exclusive of all interruptions, is at least 20 means, which is precisely the issue at stake minutes longer than two or more complete in the present case. Again it shows, how- periods of 45 minutes' (emphasis added). 14 ever, the significance attached to the term. Moreover the declaration refers to the scheduled duration of the broadcasts ('la durée programmée des émissions') which as pointed out above might more readily be Thus it appears that the Parliament wished to make it clear that the net principle 12 — Cited by the Commission and the United Kingdom as Council document SN 3063/89. In the French original the text reads: 'Le Conseil et la Commission déclarent que les durées prévues aux paragraphes 3 et 5 doivent être 14 — Proposal for a European Parliament and Council Directive calculées sur la durée programmée des émissions'. amending Council Directive 89/552/EEC on the coordina- 13 — See Case C-292/89 Antonissen [1991] ECR I-745, para- tion of certain provisions laid down by law, regulation or graph 18 of the judgment; compare Case C-106/96 United administrative action in Member States concerning the Kingdom v Commission [1998] ECR I-2729, paragraph pursuit of television broadcasting activities, OJ 1996 C 65, 29. p. 96, at p. 107.

34. It is not possible, in my view, to read much into the above incidents in the legislative history of the amended directive. The Parliament's proposed amendment Systematic interpretation shows that the Parliament sought to achieve some explicit recognition of the net principle. 37. Under the head of systematic interpre- tation it might seem useful to interpret Article 11(3) in the light of Chapter IV of the directive ('Television advertising, spon- 35. The Commission's reply shows that it sorship and teleshopping') taken as a considered that the phrase 'scheduled dura- whole. The provisions of the other articles, tion' can include interruptions by adver- however, do not seem material. tisements. It shows also that the Commis- sion favoured the gross principle. The Commission had taken the same position previously, as was illustrated in May 1995 in its report on the application of the directive, 16 in which it stated that, in its 38. The main argument, which was opinion, the gross principle was the mini- stressed in particular by the Netherlands in its written observations and by France at the hearing, concerns the relationship 15 — Amended proposal for a European Parliament and Council Directive amending Council Directive 89/552/EEC on the between Article 11(1) and Article 11(3). It coordination of certain provisions laid down by law, will be recalled that Article 11(1) lays regulation or administrative action in Member States concerning the pursuit of television broadcasting activities, down the general rule that advertisements COM(96) 200 final. 16 — Report on application of directive 89/552/EEC, C0M(95) are to be inserted between programmes, but 86 final. accepts that, provided the conditions set

out in paragraphs 2 to 5 of the article are case it is, if anything, the gross principle fulfilled, advertisements 'may also be which seems more consistent with the inserted during programmes in such a way realisation of a basic freedom: it is the net that the integrity and value of the pro- principle which imposes a greater restric- gramme ... and the rights of the rights tion on the freedom of the broadcaster and holders are not prejudiced'. of the advertiser. Such restrictions may of course be desirable for the protection of the viewer, among other reasons; but they cannot be justified, in my view, merely on the principle of interpretation which has been invoked. 39. The Netherlands and France argue that, since Article 11(1) sets out the general rule that advertisements should be inserted between programmes, the interruption of programmes permitted by Article 11(3) constitutes an exception, which, as a dero- 42. However, there is in my view another gation from a general rule, must be inter- conclusion to be drawn from a systematic preted narrowly, that is, according to the interpretation. Since Article 11(1) lays net principle. down a general rule, it seems to me that, whether it is the gross principle or the net principle which applies under Article 11(3), advertisements which interrupt the trans- mission of films under that provision must in all circumstances comply with the 40. I do not think that that conclusion requirements that the integrity and value follows. In concrete terms, what is in issue of the film are respected and that the rights is essentially, as explained above, a choice of those holding rights in the film are not between the possibility of more frequent, prejudiced. but shorter, interruptions and less frequent, but longer, interruptions. A general argu- ment based on the principle of restrictive interpretation of derogations does not in my view go far to resolve that specific issue. 43. A further structural argument relies on the use of the same term 'scheduled dura- tion' in Article 11(5) of the directive, on the footing that the term should be interpreted in the same way in both provisions. That 41. In any event the premiss itself seems argument is advanced in particular by the doubtful. A derogation should certainly be United Kingdom Government, whose main interpreted narrowly where it derogates argument in relation to Article 11(5) raises from a fundamental freedom. In other somewhat different issues from those which circumstances it may be more correct to are the focus of the present case. It submits give a derogation whatever scope is appro- that the effect of the net principle as applied priate in the light of its own terms and its to Article 11(5) would be to undermine the own object and purpose. And in the present scheduling policy of UK commercial broad-

46. Various other economic goals are men- Teleological arguments: the aims of the tioned in the preamble, such as the esta- directive blishment of fair competition 17 and the promotion of European productions. 18 Thus the directive has a variety of compet- ing concerns. Moreover, it is far from clear whether the net principle or the gross principle would best further the various 44. I turn finally to the aims of the objectives, and economic arguments have directive. Arguments based on the aims of been advanced on both sides. the directive, as set out in its preamble, are adduced on both sides. Thus, pursuant to the 27th recital of its preamble, the direc- tive seeks to ensure that the interests of consumers as television viewers are fully and properly protected, and therefore that television advertising is subject to a certain 47. It is argued, for example, that the gross number of minimum rules and standards. principle would harm consumers because it That is said to justify a narrow interpreta- would permit programmes to be inter- tion of Article 11(3) and so to support the rupted more frequently for advertisements. net principle. In addition the wider availability of poten- tially cheaper advertising space would reduce the remaining demand on the part of advertisers. That would create a high barrier to entry for potential new broad- casters, whose revenues would necessarily

45. On the other hand, Pro Sieben argues 17 — Third recital. that the directive is based on the premiss of 18 — 20th, 22nd and 24th recitals.

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49. According to a study commissioned by Pro Sieben, interruptions of such a length 51. No clear conclusion emerges from the would have two effects: first, viewers arguments that have been adduced, whe- would tend to change to other channels ther based on textual analysis, on the once such breaks began, and secondly, the legislative history, on a systematic interpre- recognition factor of single advertising tation, or on the aims or possible effects of spots within such breaks would be lost. 19 the directive. Although the legislative his- That would mean that, in practice, broad- tory perhaps favours the gross principle, casters would have to reduce the volume of the arguments are by no means conclusive. advertising in order to make their interrup- tions acceptable both to viewers and to advertisers. The reduction in advertising volume would have a negative impact on the revenues of private broadcasters. On the other hand from the standpoint of the 52. As a consideration of principle, in those advertisers — and here there may be some circumstances it seems to me that, where a contradiction in the analysis — it is sug- directive is open to two interpretations, it gested that there would be a decrease in the would be wrong to adopt the more restric- supply of advertising space, leading to tive interpretation. Where a legislative measure seeks to impose a restriction on an activity, such a restriction should be 19 — Publieurope International Ltd, Memorandum zu den clearly expressed. That principle must have Auswirkungen des Nettoprinzips auf ausländische Werbe- treibende, p. 3. greater force where the activity in question

55. But that consideration of principle is, I 20 — Case C-412/93 Leclerc-Siplec ν TFI Publicité and M6 think, reinforced by one important feature Publicité [1995] ECR I-179; RTI, cited in note 7; and Joined Cases C-34/95, C-35/95 and C-36/95 Ko ν De of the directive which has not received Agostini and TV-Shop [1997] ECR I-3843. sufficient attention. 21 — 13th recital.

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sion broadcasters under their jurisdic- ruptions must in any event comply with the tion'. 22 general requirements laid down by Arti- cle 11(1).

24 — See paragraph 35 above; on the relevance of the Commis- sion's position to the issue of legitimate expectations, see 22 — 27th recital. Case 43/75 Defrenne v Sabena [1976] ECR 455, para- 23 — 44th recital. graphs 72 and 73 of the judgment.

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63. A negative answer to that question is down in Article 11(2) to (5)... in respect of advocated only by Pro Sieben. An affirma- broadcasts intended solely for the national tive answer is advocated by the applicants, territory which may not be received, by the French, Italian, Netherlands, Swed- directly or indirectly, in one or more other ish and United Kingdom Governments, and Member States.' It appears that Article 20 by the Commission. cannot apply to the facts of the present case since the broadcasts of Pro Sieben can be received in other Member States.

64. The second question can be considered in two parts: (a) whether Article 11(3) in conjunction with Article 3(1) of the direc- tive permits Member States to prescribe the 67. Article 3(1) provides more generally net principle; and (b) whether the net that 'Member States shall remain free to principle is compatible with primary Com- require television broadcasters under their munity law. jurisdiction to comply with more detailed or stricter rules in the areas covered by this Directive'. The wording of that general provision might seem conclusive.

The second question, first part

72. Having established that the adoption of the net principle by a Member State in relation to television broadcasters under 70. As the Court observed in Leclerc- their jurisdiction would not be contrary to Siplec, 25 in relation to Article 19 of the the terms of the directive, I turn to the original directive, neither the recitals in the question whether the adoption of that preamble nor the objective of the directive principle would be compatible with the requires the directive to be interpreted as Treaty and with general principles of law. divesting Member States of the freedom conferred on them by Article 3(1); 26 more- over, the attainment of the directive's objective of ensuring freedom to provide broadcasting services complying with the minimum rules it lays down is in no way 73. The Oberlandesgericht, Stuttgart, affected where Member States impose refers to Articles 5, 6, 30, 59, and 85 of stricter rules on the television broadcasters the Treaty (as they were then numbered) under their jurisdiction. 27 and to the general principle of equality.

74. Although Article 3(1) of the directive 71. I accordingly consider that Article 3(1) permits the adoption of more detailed or of the directive affords Member States the stricter rules (and hence the net principle) possibility of applying a regime, such as the in the areas covered by the directive only in net principle, which is stricter than the relation to broadcasters under the jurisdic- gross principle, to broadcasters under their tion of the State wishing to impose such rules, the adoption of the net principle by one Member State pursuant to Article 3(1) 25 — Case C-412/93, cited in note 20. might be argued to have a cross-border 26 — Paragraph 42 of the judgment. effect on services and goods for the follow- 27 — Paragraph 44 of the judgment. ing reasons.

77. However, the arguments that the Treaty is thereby infringed can be dismissed fairly summarily. To turn first to Article 30 (now, after amendment, Article 28 EC), it will be recalled that in Leclerc-Siplec 29 the Court ruled that a prohibition of televised adver- tising in a particular sector (distribution) did not fall within the scope of that article. Since the restriction on advertising in question in the present case is of a similar kind to that at issue in Leclerc-Siplec, but of a lesser extent, I conclude that the application of the net principle does not 76. Secondly, the case-law of the Court has fall within the scope of that article. established, and the preamble to the direc- tive recognises, that the provision of broad- casting services in general and the broad- casting of television advertisements in par- ticular come within the Treaty rules relat- ing to services. 2 8The ability of the broadcasters to offer their broadcasting 78. As for the application of Article 59 services for the purposes of relaying adver- (now, after amendment, Article 49 EC), to tisements for clients (i.e. advertisers) estab- the extent that the net principle restricts the lished in other Member States is arguably freedom to provide services within the affected if the number of attractive slots meaning of that article, such restrictions which they are entitled to offer is limited. are in any event, in my view, capable of A broadcaster under the jurisdiction of a justification on the grounds of consumer State which imposes the net principle might protection. be said to be placed at a competitive disadvantage in comparison with a broad- caster under the jurisdiction of a State practising the gross principle (assuming that both broadcasters can transmit into each other's States) since he will have a 79. The Court has already accepted that certain restrictions on the broadcasting of advertisements, including a limitation of 28 — See in particular the early Case 155/73 Sacchi [1974] ECR 409, paragraph 6 of the judgment; see also Joined Cases C-34/95, C-35/95 and C-36/95 De Agostini, cited in note 20, paragraph 48 of the judgment and paragraph 106 of my Opinion. 29 — Case C-412/93, cited in note 20.

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83. There is no discrimination on grounds has accepted that such consequences are a of nationality within the meaning of Arti- necessary feature of harmonisation provi- cle 6 of the Treaty (now, after amendment, sions which lay down minimum require- Article 12 EC). Any difference between the ments and cannot be regarded on that treatment by Germany of its domestic account as unlawful. 32 broadcasters and the more favourable treatment by other Member States of their broadcasters does not fall within the scope of that article, since that article does not require a Member State to treat its own broadcasters in the same way as other Member States treat their broadcasters. 31

85. Finally, it is difficult to see how Arti- cle 85 (now Article 81 EC) and Article 5 (now Article 10 EC) might be relevant 84. Nor can it be said that the general since an agreement between undertakings principle of equality is infringed. Although has not been identified. It has not been broadcasters in different Member States suggested that the application of the net may be subject to different conditions, with principle would require or encourage the the result that some inequalities persist in conclusion of an agreement between under- the conditions of competition, such takings or reinforce the effects of such an inequalities seem an inherent feature of agreement, nor has it been suggested that legislation providing for minimum stan- the contested law delegates responsibility dards. Indeed in other contexts the Court for regulating television advertising to private undertakings.

(2) Subject to the same conditions Member States are free, pursuant to Article 3(1) of the directive, to provide with regard to broadcasters under their jurisdiction for the net principle, that is, to provide that, in calculating that period, the duration of the advertisements should be excluded.

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