Examination of Witnesses (Questions 200-212)|
MONDAY 10 JUNE 2002
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.
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.
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
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
takingI am sorry, my Lord Chairman, we are going a little
outside television but film is related strongly to thisthe
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.
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
(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.
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
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.
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 appliedto 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
(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.