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 The EPC Members' Newsletter

Legislative up-date 60 Month - April 1997

In this issue we cover:

  • Continued delays on new proposals for a directive on media concentration
  • Public service broadcasters lobby for "special status" in new EU Treaty
  • New text on TV without frontiers directive finally agreed
  • EP discusses Internet regulation and the impact of new technologies on the press
  • Commission launches new initiative on electronic commerce
  • MEPs vote against a common VAT system



    1. Commission: media ownership
    2. Council - Merger Control Regulation
    1. New Protocol to exempt public service broadcasters from the Treaty?
    2. EP and Council - Broadcasting Directive
    1. EP - harmful and illegal content on the Internet
    2. EP - Green Paper on the Protection of Minors and Human Dignity
    1. Commission - Electronic Commerce and the Global Information Society
    2. EP - Information Society Communications
  5. VAT



    5.1 Latest developments in the EP

    1. EP looks at impact of new technologies on the press
    2. CEPI - opposes faster tariff cuts on paper
    3. Commissioner - book pricing
    1. Australia - lacks adequate privacy protection
    1. EP - Commercial Communications
    2. Council - commercial communications
    3. Commission - Loi Evin
    4. Council - tobacco advertising
EP - discrimination against women in advertising
    1. Commission - media concentration



      The Internal market division (DG XV) of the Commission is continuing to make changes to the proposal on media ownership in a final attempt to get a proposal through the full Commission. Mr Monti is rumoured to have taken the proposal off the table during March as he knew that he would not have secured a majority of votes in favour. The Commission has been bombarded with submissions from media companies from all over Europe opposing the idea of a binding European directive. The matter is most likely to come up again in June or even July as the Commission is currently pre-occupied with the Intergovernmental Conference.

      Regarding the detail, DG XV is considering how the multimedia threshold might be raised or whether bands of permitted audience share might be an option. Officials are concerned that anything above 10% might lead to Member States demanding that stricter rules should be applied nationally. The earlier idea of allowing exceptions for a period of ten years has been dropped and replaced by a flexibility clause which will allow Member States to permit companies to exceed limits on a permanent basis. The Commission feels this will provide more legal certainty for companies wishing to make long-term investments and address the problem of regional concentrations although the reaction of media companies is that they don't want to have to rely on an exemption to seek financial backing for new ventures.

      Mr. Monti is committed to pursuing this proposal as he believes that it is necessary to promote economic growth and cross border activity in the media sector. He feels that the existing legislation is archaic and often precludes cross-media ownership above certain levels which is stifling growth and reducing Europe's competitive position vis-à-vis the United States. He can therefore be expected to continue to lobby his Commission colleagues for its adoption.

    3. Council - Merger Control Regulation
The 24 April Industry Council reached a unanimous political agreement on the amendment of the Merger Control Regulation. The agreement will amend the existing Directive to allow Commission competence in cases where a merger has a significant cross-border effect but which, because it would fall below the current threshold, is subject to notification with national authorities in the Member States concerned (multiple national filings). The amendment extends the Commission's competence to merger cases where:
    • the combined aggregate world-wide turnover of all the undertakings concerned is more than ECU 2.5 billion;
    • in each of at least three member states, the combined aggregate turnover of all the undertakings concerned is more than ECU 100 million;
    • in each of the three member states included for the purpose of the above situation, the aggregate turnover of each of at least two of the undertakings concerned is more than ECU 25 million; and
    • the aggregate Community-wide turnover of each of at least two of the undertakings concerned is more than ECU 100 million unless each of the undertakings concerned achieves more than two-thirds of its aggregate Community-wide turnover within one and the same member state.
The agreement also allows for a revision three years after the adoption of the Regulation. This will be based on a Commission report and proposal which will need approval by a Council qualified majority vote.
    1. Proposal for a Public Service Broadcasting exemption in the new EU Treaty



      The European Broadcasting Union (EBU) has lobbied successfully to get a draft protocol on the table for discussion by the Intergovernmental Conference to give special status to public service broadcasting under the Treaty and, in some cases, exempt them from certain provisions.

    3. EP and Council - Broadcasting Directive
    On 16 April, the European Parliament and the Council of Ministers reached an agreement on the revision of the TV Without Frontiers Directive which, basically, reinforces the status quo. The advertising and media industry can heave a quiet sigh of relief because no major changes have been introduced which adversely affect our business. After over 2 years of haggling, the directive will retain its flexibility clause on quotas requiring broadcasters to devote at least 50% of their programming to European-originated programmes "where practicable". Attempts by the European Parliament to extend the scope of this directive to new on-line services failed as did various attempts to restrict advertising to children. The text is due to be adopted formally by a majority of Europe's Culture Ministers at their meeting on 30 June. The agreed text is available upon request.
    1. EP - harmful and illegal content on the Internet
The Civil Liberties Committee report on harmful and illegal content on the Internet (Rapporteur: Pierre Pradier, ARC, F) was adopted by the EP during the 23-24 April Plenary Session. Included in the Report were the following points and recommendations based on a combination of self-regulatory and statutory rules:
    • everyone has the right to communicate freely or receive information using any medium, subject to the limitations specified in Article 8 and Article 10(2) of the European Convention on Human Rights;
    • the concerns being addressed should not take precedence over the actual and potential cultural revolution made possible by the Internet;
    • calls on the Commission to draw up a European quality rating system for providers of Internet services and to support international co-ordination of such ratings. This must guarantee that service providers do not work with persons who disseminate illegal and harmful information;
    • urges national governments to introduce suitable forms of instruction for children in their education systems - and emphasises the parental role;
    • notes that the introduction of filtering software (PICS) will not solve the problem until questions of classification and coding have been sufficiently clarified;
    • considers that EU intervention in an area that simultaneously affects both the free movement of services (under the first pillar of the Treaty) and civil liberties and justice (under the third pillar of the Treaty of EU) must take into account of the principles of subsidiarity and proportionality;
    • urges competent national authorities to co-operate in order to reach an international agreement defining issues which are clearly illegal and therefore to be prosecuted wherever the provider is based;
    • proposes that this "horizontal" co-operation at the political level be matched by systematic "vertical" co-operation between the political decision makers, industry, users' associations. The Commission should act as a co-ordinator;
On illegal content it:
    • calls on the Commission to propose a common framework for self-regulation on illegal content, to include:
      • the objectives to be achieved in terms of the protection of minors, consumer protection interests and human dignity;
      • principles governing the representation of the industries concerned at European level and the decision making procedures;
      • measures to encourage industries involved in telematic networks to develop message protection and filtering software, which should be made available automatically to subscribers;
    • calls on the Commission to submit proposals for a common regulation of liability for Internet content;
    • stresses the need for international co-operation between the EU and international partners - notably to avoid duplication of effort;
On harmful content it calls for:
    • the Commission to encourage the development of a common international ratings system compatible with the PICS protocol, and sufficiently flexible to accommodate cultural differences;
    • calls for a start to be made with measures at European level that will impose unique sender recognition codes for all providers of data over the Internet and commit access and service providers to minimum standards:
      • in respect of data made available by themselves, to accept full responsibility, including full criminal-law responsibility;
      • in respect of the criminally unlawful content of third-party services provided by them, to accept responsibility if they are expressly aware of the specific contents and if it is technically possible and reasonable for them to prevent their use;
      • in the case of non-criminal content, access and service providers must establish effective mechanisms of voluntary self-regulation;
    • calls on the Council to take action to encourage the use of parental control systems using newly developed filtering techniques, self-regulation initiatives and the setting-up of European rating systems which make downstream control by parents possible, as well as the establishment of reporting mechanisms;
    • calls on the Council to review progress by October 1997, especially in relation to the effectiveness of filtering and ratings systems, given the rapid rate of technological change.
During the debate prior to the EP vote, the Rapporteur pointed out that
    • although freedom of expression and right to private life must be protected, the protection of minors must be a priority.
    • Many other MEPs also commented. The general theme was that although measures must be developed to address illegal and harmful content on the Internet, these must not infringe the principle of freedom of expression of the development of the network.
Speaking for the Commission, Mr. Bangemann emphasised that the Commission paper addresses the measures which should be taken to stop that content being disseminated and that member states decide what is acceptable and what is not. He pointed out that harmful content can be marked on the web-sites and the users may themselves decide whether they want to get that particular material. However, he added that illegal content presents a more difficult problem, because it has to be defined, who is responsible for the material, who can be taken to the court in an extreme case and how can all this be done in technical and legal terms in practice. He went on to say that since the nature of the Internet is profoundly international, better transborder co-operation will be needed.

Finally, he told the EP that the Council has set up a working party led by the Commission which is dealing with these questions and a conference will be organised later this year in Bonn.

    1. EP - Protection of Minors and Human Dignity in Audiovisual and Information Services.
The EP Culture Committee held an initial exchange of views on the Commission's Green Paper on The Protection of Minors and Human Dignity in Audiovisual and Information Services on 16 April. Mr. Whitehead (PES, UK), the Rapporteur, introduced his draft Report and the Green Paper when he emphasised the following:
    • the existence of filtering devices had been highlighted in the Broadcasting Directive debate and DG X (Audiovisual) had quite rightly been impressed by devices such as PICS;
    • smart cards would probably not be particularly effective to protect children as they are generally more computer literate than their parents;
    • if content providers did not screen/classify material in a certain way then they should not be given a licence to continue. The Committee should suggest a series of points to guide further EU work. Specifically, he said that the Culture/Audiovisual Council should outline its thinking on the subject at its 30 June meeting. These suggestions included:
      • to concentrate on the features of electronic commerce;
      • that the EU should undertake a study by comparative analysis of national legislation in relation to the regulation of new communication services;
      • to co-ordinate activities in the field of justice and home affairs;
      • to draft appropriate rules which would apply to each level of provider;
      • to ensure that industrial self-regulatory codes should have a wide definition;
    • he was sceptical about introducing one single system in the broadcasting world - he cited the D-MAC system as one which had been imposed on broadcasters yet which subsequently collapsed;
    • he recognised that children's behaviour needs to be understood better;
    • greater co-ordination was needed between the Commission DGs - especially to ensure full understanding of the new technologies;
    • he said that freedom of speech was the key priority and that the Committee should not intervene just for the sake of it.
The Commission official attending (Xavier Troussard, DG X) said that he was grateful for the comments concerning convergence and inter-service collaboration which he will pass on to his colleagues. Concerning the regulation of the market he said that further work needed to be undertaken to develop suitable regulation together with the technical means to educate parents and children. He emphasised that DG X must work closely with DG XIII in terms of the Communication on Illegal and Harmful Content on the Internet in order to draft a common set of proposals. It was difficult to predict at this stage what the follow-up to the initiatives would be since the consultation process was not yet over. It was also important to assess the content providers' level of responsibility.

Other MEPs then made the following comments:

    • Helmut Kuhne (PES, D) - He said that the term ‘convergence' had to be considered carefully and used precisely stressing the fact that there was a difference between the convergence of transmission paths and convergence of content. There had been trends in the Commission to separate new services from interactive services, namely that ‘new services' were something that had to be paid for. He was concerned that the increased use of informal definitions of new services might impact the long-term effectiveness of the Broadcasting Directive;
    • Mary Banotti (EPP, IRE) - mentioned a leaflet by NCH Action for Children in London which suggested that parents oversee their children's Internet and use suggested appropriate media education and guidelines for simple rules for parents and children to follow. She also supported the use of censorship in order to protect young children and adults;
    • Carole Tongue (PES, UK) - criticised fact that there was only a representative from DG X present and not from DG XIII. She also criticised the awe that some of the new services provoked saying that new regulation should not be formed on the basis of "how wonderful" new technologies were.
The Report will be presented to the Committee during May.

On 22 April, the Civil Liberties Committee discussed its Opinion which is being drafted by Swedish Member of the Green Party, Malou Lindholm for the Culture Committee.

After welcoming the Green Paper, Mrs Lindholm made the following points:

    • she expressed scepticism about the V-Chip saying that other methods of control through parental guidance and education were more important;
    • it was important that the right balance be struck between the freedom of speech and the protection of minors;
    • it is important to draw a distinction between ‘harmful' and ‘illegal' content as they required a different response in terms of regulation and legislation. Consideration should be given to the debate of moral issues in schools as parents often did not fully understand the access to harmful and illegal content on the Internet.
The only intervention was made by German Member of the Green Party, Claudia Roth, who stated that the distinction between "illegal" and "harmful" would need to be clarified to avoid liberal interpretation. The timetable for Mrs Lindholm's draft Opinion is:
    • vote on draft Opinion: 20 May
    • Culture Committee vote on draft Report: 21 May
    1. Commission - Electronic Commerce and the Global Information Society
At the 24 April Industry Council, Commissioner Bangemann presented the Communications on the "First Action Plan for Innovation in Europe", "A European Initiative in Electronic Commerce" and the rolling action plan "Europe at the forefront of the Global Information Society".

As the Communication on Electronic Commerce (defined as on-line ordering and payment; electronic ordering of goods supplied which are then supplied by traditional means; electronic fund transfers, share trading etc.; direct marketing and after-sales services) was adopted by the Commission on 16 April, Commissioner Bangemann explained to the Council that it is designed to develop a framework of technological, regulatory and support actions by the year 2000 and that it considers a series of new Community Directives to lift obstacles to electronic commerce in the EU. These will cover electronic payments, contracts negotiated at a distance for financial services, copyright and neighbouring rights, legal protection and digital signatures. Concurrently, the Commission proposes to step up support for pilot projects encouraging best practices, and to expand awareness campaigns to promote electronic commerce in a variety of sectors.

The Communication makes clear that its aim is not to "regulate for the sake of regulating", but to act where legal questions need to be resolved. The approach will be co-ordinated with other Commission initiatives - for example the Green Paper on Commercial Communications. The objectives of the Communication are:

    • to provide widespread affordable access to electronic services;
    • to create a favourable regulatory framework for electronic commerce based on existing single market principles whilst ensuring that general interest objectives (consumer protection, protection of minors, and public health) are met;
    • proposals for legislation will be launched on: distant selling of financial services; copyright and neighbouring rights; legal protection and conditional access services; and digital signatures;
    • global agreements will be sought on data protection, data security, taxation and technical standards;
    • a Commission/Ministerial conference will be held on 6-8 June in Bonn on Global Information Networks;
    • an international conference will be held in October 1997 on building the Global Information Society for the 21st Century.
The Council then unanimously adopted conclusions on the Competitiveness of the Information and Communication Technology Industries (ICT). These included:
    • that debate between the institutions has confirmed the crucial importance of the ICT industries for the European economy, the creation of new employment, the competitiveness of most industrial and service sectors and the development of the information society;
    • that European ICT industries are facing intense global competition and political attention and therefore political action is needed to allow them to keep pace in the dynamic evolving industry, specifically in respect of research and development, standardisation processes, internal market completion, support to SME'S, education and training, and access to global markets;
    • that the programmes and initiatives set out in "Europe at the Forefront of the Global Information Society, A Rolling Action Plan" will have an important impact on the competitiveness of the ICT and that some of the actions should be strengthened.
    1. EP - Information Society Communications
On 16 April, the Economic and Monetary Affairs Committee (EMAC) discussed the draft Report by Johanna Boogerd-Quaak (ELDR, NL) on the recent Commission Communications on:
    • "The information Society: From Corfu to Dublin, The New Priorities" (COM/96/0385);
    • "The implications of the Information Society for European Union Policies" (COM/96/0395);
    • "European at the forefront of the Global Information Society: Rolling Action Plan" (COM/96/0607).
Her Report included the following points:
    • convergence: she has called on the Commission to assign high priority to the many convergence aspects of the information society as there is increasingly no longer any legal base for the differences in telecommunications and broadcasting between member states which hinder cross-border activities and integration;
    • regulation at Member State level of the information society: she has called on the Commission and the Council to improve the co-ordination of national regulatory bodies, to define the role of these bodies clearly and to establish a broadband network among them which can be used to exchange information electronically on a large scale.
The draft Report also focused on the following issues in light of the information society:
    • education: she has called for improved access to information and communications technologies (ICT) for schools and universities;
    • enterprise: she has called for member states to provide a better financial and tax environment for newly-established enterprises which employ new technologies and market new products;
    • social dimension: she has urged the Commission to devote special attention to those excluded from the information society, to examine how social security systems can be reformed so that people can easily re-train in order to improve their employment prospects;
    • research: she welcomed the Commission's initiatives in telematics research projects but wanted more attention paid to their completion and follow-up.
In the brief debate that followed, Mr Herman (EPP, Belgium), said insufficient attention was being focused on the fact the EU was falling behind the US and Japan as far as regards infrastructure.

The Commission then briefed the MEPs on various developments in this area over recent years and said that a Green Paper on Convergence would be produced by the end of the summer.

The timetable was set as:

    • deadline for amendments: 6 May;
    • vote in committee: 22 May;
    • Plenary Session: June.
  1. VAT
    1. EP - VAT
Mrs Randzio-Plath's Report was adopted by the Economic and Monetary Affairs Committee of the Parliament on 23 April.

The key elements of the final Report are:

    • transition to the common system: the Commission should delay the introduction of the common system of VAT - based on the country of origin principle - as it is "not opportune at this time". The Commission should, therefore, "devote all its energy to improving the present system";
    • greater harmonisation of the standard rate: an amendment was adopted which stated that it "considers it politically difficult for the current band of standard tax rates to be widened or narrowed";
    • zero-rating: an amendment was adopted to delete reference to the possibility of zero-rating of any transactions;
    • reduced rate: the Rapporteur's Corrigendum amendment was adopted which "considers it necessary for the reduced tax rate to be fixed at 5% and for there to be a binding definition of all transactions falling into this category";
    • tax exemptions: the Rapporteur's call for the abolition of all tax exemptions to VAT was defeated;
    • shift of taxation from labour-intensive services: Corrigendum 7 (to Para 17) (which was adopted) "calls on the Commission to provide in its future proposals for reduced tax rates for accurately defined labour-intensive services."
The Report will be voted on at the EP's mini-Plenary Session in Brussels on 28-29 May.

The EPC will attempt to re-introduce the notion of zero-rating by way of an amendment.

    1. EP - Report on the impact of new technologies on the press
The EP Culture Committee discussed on 15 April a working document for an own-initiative report (Draftswoman Katerina Daskalaki) on the impact of new technologies on the press in Europe. The draft report is available but a new document will be produced for July. The draft report covers a number of areas:
    • the special role of the press in a democracy;
    • the crisis facing the written media (in terms of competition with audiovisual but also increases in costs and, interestingly, in her view the general crisis of confidence in political and public life and the indifference of a substantial proportion of the public which used to be interested via the press;
    • advertising (in terms of reduced readership/reduced revenues, competition between audiovisual and print, the failure of audiovisual sector to apply the rules of the Broadcasting directive in terms of advertising time and scheduling);
    • funding (in terms of the imbalance of support given to electronic publishing rather than traditional media);
    • the possible need for a common approach to indirect aid, such as tax exemptions;
    • problems facing journalists and press employees - e.g. the need for computer software and hardware expertise, the impact of data processing technologies and audiovisual industry techniques on journalism;
    • the possibility of finding special funds to train and re-train workers in the printed media;
    • the importance of protecting intellectual property rights
    • the role of the regional press (including possibility of selective subsidies, lower postal charges.
Finally, there is a section on proprietorship, concentration and pluralism which does not really come to any conclusions although this is likely to be developed for the next draft. The Draftswoman notes the progress to date of the Commission's plans to introduce legislation on media ownership, and that it has a long way to go before being adopted - if ever. She remarks that this type of regulation will have an impact on the character and future development of newspapers and, as such, will need to be considered within the context of her report.

During the discussion a number of MEPs spoke about the need for supporting the press, including the possibility of tax incentives. On behalf of the Commission, in response, Mr. Armstrong from DG X said that the EU had nothing to do with national newspaper industries. By definition a newspaper was a national product and that the press was a good example of subsidiarity!

B CEPI - opposes faster tariff cuts on paper During April, the Confederation of European Paper Industries (CEPI) criticised the American paper industry which accused Finland of resorting to unfair trade practices and the EU of opposing their demand for faster tariff cuts in the paper trade. The US industry is calling for the time-frame for tariffs to be reduced to zero within 5 years rather than the 10 agreed during the Uruguay Round. C. Commissioner - book pricing At the 7-8 April Informal Culture Council, Commissioner Van Miert (responsible for competition policy) spoke briefly about uniform book prices and the role of the Commission. Although he said he favoured cultural policy he noted that exemptions from Article 85 may be allowed only if there is proof that a uniform price system offers enough advantages to compensate significantly for its anti-competitive impact. VII. DATA PROTECTION
    1. Australia - lacks "adequate" privacy protection
The question of adequate third country protection as required under the EU Data Protection directive for data transfers from the EU to non-EU countries has been raised recently in Australia. Opposition is mounting in Australia against the Australian Government's planned rejection of strict national privacy laws. The opposition stems from concerns that Australian businesses would suffer if Australian privacy law were weaker than EU law. The Directive's provision on third party protection prevents data flows to third countries where privacy laws do not meet EU standards. Companies believe that if Australia does not establish adequate laws in the eyes of the EU at national or state level, Australian companies would have to draw up privacy contracts with European partners to ensure they were not excluded from international data transfers. VIII. ADVERTISING POLICY
    1. EP - Commercial Communications
The Economic and Monetary Affairs Committee of the EP held an exchange of views on Jessica Larive's Report (ELDR, NL) on the Green Paper on 21 April.

The discussion included the following issues:

    • The proposed ‘tripartite' Committee of representatives of Council, the industry and consumers: the Commission had some reservations concerning this proposed Committee since it believed that member states would not support it. However, the Commission agreed with the EP that the conclusions of any such Committee should be made public.
    • Self-regulation: the Commission is calling for self-regulatory systems to be applied according to Internal Market principles. The confidence of consumers in the functioning of the Internal Market was essential. Therefore, the possibility to appeal was essential in the country of origin;
The deadline for amendments to her report was set at 29 April. The Committee will then vote on 21 May followed by a plenary debate and vote in June.
    1. Council - commercial communications



      Although the Green Paper was due to be discussed at the 20 May Internal Market Council it seems that the Presidency has changed its mind as Parliament will not have delivered its opinion by then. Accordingly, it may not be discussed at Council level until the 27 November Internal Market Council under the Luxembourg Presidency.

    3. Commission - Loi Evin



      The Commission has for the time being dropped its planned infringement proceedings against to the Loi Evin's ban on alcohol advertising in French football stadiums for the 1998 World Cup. The Commission will however, consider the matter further in June. Commissioner Monti had wanted to pursue the action but he was overruled by a majority of the Commissioners who took the view that the ban was justified on health grounds. It is thought that this position stems from the Commission's poor handling of the BSE crisis and that it is not willing to face further criticism of doing too little on health matters. The Commission will also not support Anheuser Busch's (one of the main sponsors of the 1998 World Cup) complaint that the Loi Evin will make it difficult to get its product's name across to the public during the tournament.

    5. Council - tobacco advertising



      The Dutch Presidency has not put the tobacco advertising ban proposal on the agenda of the next Health Council Working Group and as a result, a common position will not be possible under the Dutch Presidency. Instead, the Presidency has tabled the Commission Communication on measures to combat tobacco consumption for an orientation debate at the working party's meeting on 5-6 May.

    7. EP - discrimination against women in advertising
This own-initiative report, being drafted by Marlene Lenz (EPP, Germany) is next due to be discussed at the meeting of the Women's Rights Committee scheduled for 17-18 June. Mrs Lenz, and the administrator responsible in the committee secretariat (Mrs Bausch) are continuing to consult representatives of the advertising industry and that a draft report will be ready in time for the June meeting.
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