Joint Committee on the Draft Communications Bill Minutes of Evidence

Examination of Witnesses (Questions 200-212)



  200. You seemed to indicate that you thought the way this Bill was approaching the issue was the right one.
  (Ms Reding) I think it is the right one for the simple reason that you want to preserve the cultural diversity in your regions and I think that is the right way to proceed. If you preserve the diversity in your country you preserve the diversity in Europe.

  Lord McNally: We will not call that the third way, my Lord Chairman.

  Chairman: We will turn to radio, Lord Pilkington.

Lord Pilkington of Oxenford

  201. Could I ask you about radio, when you plan to include it, or if you plan to include it in the Directive because relating to what you just said it could be argued that in relation to local culture, certainly in the United Kingdom, radio plays a bigger part than television and with local radio stations all sorts of issues are involved, how Europe is going to direct local radio, the question of ownership of local radio becomes important? Has the Commission given thought to radio in its consultation and its thoughts on the Directive?
  (Ms Reding) My Lord, there are a lot of those who are responsible for radio who ask the Commission this question. European law is only made where necessary. That means when there are cross-border implications. Radio, being a rather national phenomenon, there are no Community objectives tackled and that is why for the moment at least, and if I am not persuaded by an overwhelming majority of other thinking politicians in Europe, I will not take the radio inside.

  202. But do people across frontiers not listen to radio from other countries? For example, does not Southern Belgium and Luxembourg listen to French radio?
  (Ms Reding) There are no obstacles resulting from disparities between national regulations which would justify an action of the Commission. The Commission is not ruling for ruling's sake, it is only ruling when absolutely necessary. That might go against what is written in the press but it is fact.

  Lord Pilkington of Oxenford: You can fool some of us some of the time.

Lord Crickhowell

  203. Can I go to public service broadcasting. The Treaty seeks to reconcile the principles of fair competition with the general freedom of Member States to "confer, define and organise the public service". The draft Bill that we are considering proposes a new statutory definition of public service broadcasting. Do you think that a clearer definition of what public service broadcasting is will make it more likely that competition proceedings may be brought against activities by such broadcasters that appear to be outside that remit?
  (Ms Reding) The Commission has issued a communication on public broadcasting, the date of this was 15 November 2001 and the title is Communication on the Application of State Aid Rules to Public Service Broadcasting. It is a very good example of how the Commission tries to bring together European law and national interests. That is why we took the following line: "Member States are free to confer, define and organise the public service remit and to decide how their public service broadcasters are to be financed", by licence fee, by state funding, by dual funding, whatever, they are free to fix this. It would be in the interest of the Commission if they would fix mostly the remit because the problems we get are when the remit has not been clearly defined by a government and then it can be attacked by private enterprises and so on and so forth and we have trouble defending it. The first thing is freedom for the Member State as to the definition of the remit and how this public service will be financed. It has to be regarded as of general economic interest and the funding scheme has to be proportionate. The Commission has a duty to ensure that these rules are compatible with the Treaty, so the answer is very simple. As long as a government exercises these freedoms in a very clear and precise way then the Commission leaves it to the Government to handle this. There are concrete examples with the BBC news services which are an illustration of this. It has a clear definition, clear financing and the Commission has authorised it without a problem.

  204. I think the position of the Government is very clear. I think your answer suggests that if the remit is very clearly defined and the public broadcaster, in this case, shall we say, the BBC, starts doing commercial things, they may render themselves more likely to action being taken against them because there will be a clear definition of what the public service remit is and what is outside it. Do you agree with that thought?
  (Ms Reding) Yes, I agree with that. Also, there is the Directive on transparency which is applied. That means public service can have a commercial field but then it has to divide the accountancy between the one which is financed with public money for the remit and the one which is purely commercial in a different accountancy so that it is clear and transparent.

Nick Harvey

  205. The Government is proposing in this Bill to remove the existing prohibitions on non-European ownership of broadcasting licences. It says the rules are inconsistent and difficult to apply and they hope that they will encourage inward investment. Indeed, Tessa Jowell, our Secretary of State, said in Parliament "It makes no sense that French, Italian or German companies can own television and radio licences, but Canadian, Australian or United States companies cannot". Do you agree that restrictions on ownership based on nationality are no longer appropriate, and perhaps specifically if we are going to allow, for example, American companies to come in here do you see any sign of reciprocation in other countries, America included?
  (Ms Reding) I find the approach of the Bill bold and sensible. The objectives of plurality and diversity are served by rules designed to ensure that citizens have access and diversity, so everything which guarantees that access and diversity is fine. Why restrict ownership when public policy objectives can be achieved in a less restrictive and more effective way? I think for the first time non-EU companies can compete for media ownership in the UK. For me that is fine and it is encouraging to see that the principle of non-discrimination enshrined in the EU Treaties is carried through to its logical conclusion. Concerning the reciprocity, you mentioned the United States and the problems with the networks. For the time being it does not look like the United States are thinking of changing this restriction but you can be sure that the responsible Commissioners in their talks with the United States will point to the UK example, just as we are going to point to the openness of the European market at large to America and to our view of having this openness in the same way with our main business partners.

Lord McNally

  206. Commissioner, one of our great concerns is the massive dominance of American media corporations, their dominance of our culture, of our entertainment industries. Without more than a "look how honest we are" approach, surely they are just going to grab what they can and continue to protect their home market which seems to me a very supine, very cowardly approach from the Commission towards the United States behaving in a very protectionist way.
  (Ms Reding) I do not think that the Commission in its talks in the WTO has ever been cowardly. Commissioner Lamy, who is responsible for foreign trade, is very clear in defending the WTO exemption on the media so that we can continue in our Member States to help develop the regional and national media products. When you look at the whole action the Commission is taking—I am sorry, my Lord Chairman, we are going a little outside television but film is related strongly to this—the whole of the programmes we are doing in order not to block Europe and to make a fortress Europe but in order to strengthen the European production, the Media Plus Programme has, together with national incentives, led to the fact that in 2000 the number of spectators for national films has grown by 27 per cent and the number of spectators for European films, so non-national European films, has grown by 21 per cent. We are progressing strongly but we have not yet arrived there. I do not believe in closing a market in order to protect it, I believe in strengthening our own production. That is why, together with the European Investment Bank, we have launched a whole investment campaign for venture capital so that the private sector starts to invest more into our film business. I believe we have to have both, the public help and the strengthening of the private sector, and both together can and will strengthen our European production. Believe me, if there is something I am very dedicated to it is really strengthening this European production. I can give you an example of what we are doing and I hope that Great Britain is fully participating in this action. Between 15 and 24 November all over Europe we are going to have the Days of the European Cinema where we are going to have a three-fold action. The first action is in 50 cities, together with cinema theatres and the professionals, we are going to reach one million young people to create new audiences on a very specific project, the Internet links between schools, the School Net Project. We are going to have 30,000 schools all over Europe linked together and working on European film. I really would like all the public and private television stations all over Europe during that week to promote our productions because that is most important, to educate our spectators so that they feel the need, the will and the pleasure to go and see European films. I would like to see more European productions, not only national productions, on our national television stations.

Paul Farrelly

  207. Madam Commissioner, you mentioned the WTO exemption on media issues and you will be quite aware that within European matters on the media there is also an exemption on media matters from European competition law in the sense that a national government can request the reference back of any media takeover on issues of national interest, that is one of the exemptions that exists. Do you foresee that regime still continuing when you come to look at a new Directive with regard to regulating the media?
  (Ms Reding) Concerning the WTO there is unanimity among the 15 European countries not to open our media and this unanimity is not under discussion, we stick to this and Commissioner Lamy is not even starting a discussion because we are not willing to open it. The Member States will have the freedom to protect their national production as much as they want to do it with minimum rules. We have also had a communication on state aid to the cinema similar to the communication on state aid to the television giving large freedoms to the national governments to consider their financially investing into European productions.

  208. So in terms of media ownership you do not foresee any change, there has been no discussion of any change from the ability of national governments to take back in this area of media ownership any competition aspects in respect of any takeovers that might be proposed? It is still going to be hands-off leaving it to national governments, is that right?
  (Ms Reding) On media ownership so far the Commission has no intention of further regulation.

Mr Lansley

  209. Can I just follow up that point. As I understand not least your speech in March on the forthcoming revision of the Directive, essentially you were saying that one of the principal freedoms under the Treaty is the freedom to provide services and that has to be weighed against specific public interest objectives, principal amongst which are things like pluralism and cultural diversity. Those are not necessarily expressed in the Treaty so there could be a contest between pressure to deliver greater freedoms to providers of services within the European Union across frontiers using Treaty rights that are provided to them unless they are codified in some way and the limitations are codified by a Directive. To come back to the point you were just making, does that not therefore mean that it is necessary for the Television Without Frontiers Directive to address the issue of cross-media ownership because if it does not do so will it not leave open the possibility that if competition policy is sufficient to deliver media pluralism, cross-media ownership rules that any individual Member State might wish to apply will be inconsistent with the Treaty?
  (Ms Reding) Because television is not a purely economic factor purely economic rules also in competition law are not enough and it is very clear that in the two communications I have just quoted, the one on public funding for TV and on public funding for the film industry, they are passing over the general rules which are applied to economic factors, so the Commission really does treat in a different way the television as it treats the steel industry, to give you an example, because it is not at all the same. That is why the rules for protection which are set up inside a country, for instance the rules you have set up for guaranteeing pluralism in cross-media ownership, newspapers, radio and television, seems to us a very sensible way of proceeding, most of all because you innovate in a certain way by not counting so much the investment but counting the influence on the public. Maybe my English is not very good. In most countries it is the point of investment in the company which counts and the point of ownership and not so much the part of the public you reach. I think the way you proceed by counting the part of the public you reach for your diversity measures is a very interesting and right way to proceed and I am sure it is a way that is going to be widely discussed also when the European Ministers meet and discuss this kind of subject.

  210. Does that not therefore imply that when one looks to the next Directive it will have to bear upon cross-media ownership to the extent that measures taken to promote pluralism or cultural diversity will have to be geared not to ownership, and specifically not to the nationality within the European Union of ownership, but very much to the control of market share, plurality of voice, extent of regional or cultural diversity in programming and production and so on? So there will need to be a test of those cross-media ownership rules to see whether they are, in fact, delivering the diversity objectives or might be a covert means of impeding the creation of the Single Market.
  (Ms Reding) For the time being we have left these considerations fully to the national states which does not mean if there is a need felt in Europe to regulate in this direction that the Commission will not listen. For the time being we do not see a need to regulate on ownership.


  211. Could I ask a question which you will not necessarily want to answer but if you can take the question back and maybe get back to us it would be very helpful. The Commission as a whole, and not to state the obvious, is clearly paradoxical. The most aggressive market driven environment in the United States is the one that is least open at the moment or the most protectionist in terms of media ownership, that is a paradox. If we make this concession without clear reciprocity where on earth is the leverage to negotiate the further opening up of the American marketplace? The reason I say this is because I have a suspicion that within the Commission there is a sense that these are baskets of negotiated components, steel etc., but you have made it very clear, Commissioner, that what we are discussing this evening is not trade, it is culture. I am sure the Committee would be terribly reassured to have a sense from the Commission that they understand (a) the difference and (b) if there is no leverage there are no rules. I think I speak for all the Committee when I say that we are very puzzled by this present suggestion and the direction it is taking. Please, it is a thought and maybe you can take it back.
  (Ms Reding) I am now going out of the television business alone but you know that Europe at large, that means the different countries, has difficulties with a very protectionist US policy which we see not only in media ownership but on steel, on Kyoto and so on and so forth. The Commissioners in their day-to-day business are taking a very hard line on this because it is certainly not the way we would like to see the world function. For us multilateralism is an important rule. At the world level we would not like to see that replaced by bilateralism which certain political movements are trying to implement. The Commission is very clearly defending the rules of Europe, the openness of Europe, in this respect. You have not seen the Commission say because our partners make a mistake, we make a mistake multiplied by ten, no, we very clearly keep to what we think is right, an open market, an open space, multilateralism and an equilibrium in the way the globalised world should function. So what is true for us in the media is true for us also in the economic and in the social and in the environmental fields, but unfortunately the feedback we get at the moment from our American partners is one of not wanting to open their market.

Paul Farrelly

  212. Very quickly, madam Commissioner, I fully understand the Commission's historic and current mood, because it would be political dynamite for the Commission to try to tell individual governments how or who should own their media, but there is one other question I would be grateful if you would take back and perhaps give us a few thoughts on, and that is this. Once the public service broadcasting remit, in an ideal world, has been defined so that competition rules can be applied to each public service broadcaster in each country, would the Commission's view be that for the rest of the ownership of the television sector consistent rules should be applied—to give you an example, that there should not be one rule for a Channel 3 broadcaster which is independent or for a Channel 5 broadcaster which is also independent?
  (Ms Reding) If there is one regulator, then it shows that there are going to be common rules. We believe that each country, each State, should do this regulating business in a way which is adapted to the cultural roots of this country. It will certainly be done in a different way in this country than in France or in Finland. The results are the ones which count, not the way to arrive at those results. We have very different ways of regulating in Europe. You certainly have analysed those. For us it is not important what the ways are. For us it is important that television is functioning well, that it is reaching the public, that there is pluralism, that there is a great exchange, and that the cross-border relations are functioning. So we are caring for that and leaving it up to the different governments to make the policy they consider to be best suited for their country.

  Chairman: Thank you very much indeed, Commissioner.

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