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  July 2004
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  Francisco Balsemão
  Chairman, EPC
  Chairman and CEO,
  Impresa S.G.P.S.
  Rua Ribeiro Sanches 65
  1200 Lisboa
  Tel: +351 21 392 9782
  Fax: +351 21 392 9788

  Angela Mills Wade
  Executive Director
  c/o Europe Analytica
  26 Avenue Livingstone
  Bte 3
  B-1000 Brussels
  Tel: +322 231 1299

  Press Relations
  Heidi Lambert Communications
  Tel:  +44 1245 476 265

The monthly update on EU media issues

Public broadcaster to repay state aid

TV2, the Danish public broadcaster has been asked to reimburse 84.4 million euros plus interest of state aid following a European Commission investigation.

TV2 was found to have received an amount of state aid disproportionate to the net cost it had to bear in fulfilling its public service obligation during the period 1995-2002, whilst failing to maximise revenue from its commercial activities.

This result supports the findings of the EPC, ACT, AER paper launched in April exposing examples of anti-competitive behaviour by the publicly funded media. The study concluded that publicly funded broadcasters should in future be prevented from having access to commercial revenues when also in receipt of State Aid and should also be subject to independent regulation and financial transparency.

ROME II, Unfair Commercial Practices Directive and Sales Promotion regulation all affected – EPC concerned that country of origin principle under threat
Following the deletion of the country of origin clause from the Common Position on Unfair Commercial Practices in Council, the EPC is dismayed to learn that discussions on Rome II are also leaning towards the decision to remove a clause which currently provides legal certainty to any EU company trading wittingly or indeed unwittingly across EU borders.

The draft directive on Unfair Commercial Practices, designed to improve an apparent lack of consumer confidence in cross-border trading in goods and services by stamping out rogue trading and unfair practices including misleading advertising reached a critical phase last month and saw Commissioner Byrne make huge concessions to consumer groups. The long fought-for "Country of Origin" principle - which means that it is the laws and regulations of the country from where the goods or services are delivered that apply in any legal action, was undermined by a last minute addition to the Irish compromise. New article 3.3 states that the Directive is "without prejudice to international private law rules". If combined with article 5.1 of the Rome II proposals on applicable law the Internal Market clause will be destroyed and rendered completely meaningless by making companies potentially liable under legislation in 25 countries.

The European Publishers Council has always said that it will only support this directive, which will impact advertising regulation to a great extent, if it is based on internal market objectives and includes the country of origin principle. The latest change to the text marks a complete change in the legislation that would make businesses trading across EU borders potentially liable to 25 different legal frameworks.

This marks a complete turnaround in the position of the Commission, leaving businesses facing legal uncertainty – something which the directive set out to avoid from the outset. The Common Position provides a "permanent derogation" from the principle of country of origin and allows Member States to introduce stricter, new rules on consumer health grounds. This wide remit means that harmonisation is impossible and makes a mockery of the internal market.

Supporters of Country of Origin included the UK, Luxembourg, Estonia, Slovenia and the Netherlands.

The Common Position will go to the new European Parliament for its Second Reading after the elections.
Rome II

The new European Parliament will also be responsible for continuing discussions on Rome II where Country of Origin is also under threat. Rome II concerns applicable law concerning non-contractual obligations (e.g. libel and defamation). Meanwhile, Member States are firming up their positions. Sweden is opposing inclusion of the media on constitutional grounds and the French Government is considering supporting this position. 

The UK is still consulting with media companies. However, after the success of a majority of Member States in deleting the country of origin clause from the Unfair Commercial Practices directive, publishers remain concerned that here again legal uncertainty will be introduced and will prove a serious obstacle to the internal market.

Sales promotions

Uncertainty about the possible legal uncertainties introduced by the country of origin debate prevented the Competitiveness Council in May from reaching any political agreement on the Regulation on Sales Promotion which seeks to regulate cross border pricing and marketing. The European Parliament has always been hostile to County of Origin in the context of this regulation.

Marketing food to children comes under spotlight

An WHO report on the regulatory environment surrounding marketing children coincides with a UK parliamentary report on obesity which recommends tough action by the advertising industry to tighten their rules on advertising certain foodstuffs to children. The WHO report looks at six techniques widely used to promote foodstuffs to children: TV advertising, in-school marketing, sponsorship, product placement, Internet marketing and sales promotions.

The report identifies TV advertising as the most popular promotional tool – and the most strictly regulated. 85% of the 73 countries surveyed had specific restrictions on the timing and content of TV ads aimed at children with two countries and one province having introduced a complete ban on children’s advertising. The report also states, however, that there is currently no evidence to demonstrate the effects of these restrictions and/or bans on children’s diets.

EPC expresses concerns over plans for eco-labelling of printed matter

A Commission proposal on the eco-labelling of printed matter, whilst still at "brainstorming phase" is nonetheless of concern to the EPC. The next working group will meet in September and whilst details have not been agreed, the impression is that the Commission is determined to introduce some kind of eco-label in this area.

For more information on any of the following issues, contact Heidi Lambert Communications
 Tel: +44 1245 476 265
 Internet regulation
 Market Abuse
 Tobacco advertising
 Children's advertising
 Jurisdiction and applicable law
 Duty to Trade Fairly
 Sales Promotion


 Angela Mills, Director of  EPC: Tel: +44  1865 310 732
 Heidi Lambert Communications: Tel: +44 1245 476 265

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