According to the Spanish authorities, the Measure does not constitute State aid, given that the beneficiaries would not receive any advantage when moving to the lower frequency band. From this perspective, the Measure constitutes compensation within the meaning of Article 106(2) of the Spanish Constitution, according to which the State is obliged to indemnify for any damage caused by an administrative action. In any event, if the Measure is found to constitute State aid, it would be compatible with the internal market pursuant to Article 107(2)(b) of the Treaty — as the release of the Digital Dividend is, according to the Spanish authorities, an exceptional occurrence.

Alternatively, the Measure could be declared compatible with the internal market pursuant to Article 107(3)(c) of the Treaty, since according to the Spanish authorities the Measure: (i) supports the European policy on transforming the Digital Dividend into social benefits and economic growth; (ii) remedies a market failure; (iii) is the appropriate instrument, since it will apply only to those broadcasters who are compelled to incur unwanted costs due to the imposition of simultaneous broadcasting and the compensation will be strictly limited to the amount of these exceptional expenses; (iv) has an incentive effect since if there was no aid, broadcasters may be reluctant to take part in the reallocation of spectrum and to ensure simulcast; (v) is proportionate, as it only covers the additional costs incurred by broadcasters due to the reallocation of channels; (vi) is technologically neutral, since other platforms are not affected by the change of channels necessary to liberate the Digital Dividend; and (vii) would not distort competition, since if the broadcasters had to assume the costs without compensation, this would frustrate their expectations of growth and would benefit participants in other markets.

In the opening decision, the Spanish authorities were invited to submit comments concerning the Measure and to provide, inter alia, the following information: (i) documents (such as correspondence with broadcasters, declarations) demonstrating their inability to finance the simulcast period from they own resources; (ii) proof (such as tender, ex ante analysis of the costs/benefits, public consultation on the subject, etc.) which would justify the choice of terrestrial platform (reallocation of the terrestrial broadcasting to lower terrestrial frequency band) to solve the frequency scarcity problem; (iii) a summary of rights and obligations broadcasters have under the current licences, concessions, conditions under which these licences/concession can be modified and the consequences of such modifications (for the State as well as for the broadcasters); (iv) a detailed overview of the costs linked to the adjustment of infrastructure each broadcaster is financing from its own resources; (v) an explanation on the impact of the timing of the release of the Digital Dividend; and (vi) more information about the eligibility of the broadcasters of the pay-TV channels currently broadcasted via DTT.

The Spanish authorities replied that most of this information was already provided prior to the launch of the formal investigation procedure. The Spanish authorities made specific comments on the question regarding the required evidence that would justify the choice of the terrestrial platform to solve the frequency scarcity problem by arguing that this issue goes beyond the assessment of neutrality of the Measure and that they are not obliged to justify intended compensatory measures clearly compatible with Union law. The Spanish authorities maintained the same line of arguments in relation to the private broadcasters' licences in the sense that it is the State's right to impose non-technologically neutral licences to ensure the prescribed 96 % coverage obligation in Area I. They also stated that even if these licences do not foresee the right of private broadcasters to compensation for any costs related to the release of the Digital Dividend, these licences also do not exclude such compensation. Moreover, they have explained that all private broadcasters providing audiovisual services in the public interest without a licence are free to choose from the available platform technologies. This right also applies to private broadcasters holding a licence but only beyond the 96 % coverage obligation and in a complementary manner.

The Spanish authorities concluded that the Measure does not grant to private broadcasters operating on the DTT platform any economic advantage as it limits itself to the reimbursement of the exceptional costs of simulcast that are directly triggered by their obligation to liberate the 800 MHz band.

As mentioned in recital 4, the Spanish authorities submitted observations on the comments of Astra presented during the formal investigation. They have emphasised that Astra does not provide additional information beyond the arguments contained in the opening decision.

As regards their arguments with reference to Decision No 243/2012/EU, they pointed out that according to its Article 6(5) ‘Member States may, where appropriate and in conformity with Union law, ensure that the direct cost of migration or reallocation of spectrum usage is adequately compensated in accordance with national law’. The Spanish authorities read this provision in conjunction with recital 18 which states that ‘Member States should be allowed, where appropriate, to introduce compensatory measures relating to migration costs.’

As for the arguments concerning the Authorisation Directive, the Spanish authorities argued with Astra's reading of Article 14. According to this provision, ‘Member States shall ensure that the rights, conditions and procedures concerning general authorisations and rights of use or rights to install facilities may only be amended in objectively justified cases and in a proportionate manner’. This article also prescribes that ‘Member States shall not restrict or withdraw rights to install facilities before expiry of the period for which they were granted except where justified and where applicable in conformity with relevant national provisions regarding compensation for withdrawal of rights’.

With a view of the planned liberation of the 700 MHz band by 2020, the Spanish authorities are of the opinion that a negative Commission decision on the Measure can create an obstacle for the smooth running of that EU initiative.

The privately owned satellite operator Astra considers that the Measure clearly constitutes State aid, is in breach of the principle of technological neutrality and would strengthen the dominant DTT platform operator Abertis. It considers Abertis as an indirect beneficiary of the Measure.

As for the impact of the Measure, Astra believes that notwithstanding its limitation to the simulcast compensation, in practice it would cover all expenses of broadcasters related to the release of the Digital Dividend.

Astra agrees with the Commission that the obligation of private broadcasters to simulcast results from national law (regulatory measure) and as such does not trigger the right to compensation. According to Astra, the NTP provides that public authorities can establish special conditions for broadcasting not foreseen in the licences as a consequence of market regulation or technical development without the right to compensation.

Astra also points to the fact that the DTT broadcasters were aware of the release of the Digital Dividend and the related transfer of frequencies before the adoption of Royal Decree 365/2010. The Measure would exclusively benefit these broadcasters, to the detriment of broadcasters using other platforms.

Concerning the legal assessment of the Measure, Astra disagrees that the Measure constitutes an exceptional occurrence that would justify the application of Article 107(2)(b) of the Treaty. It also disagrees that the Measure fulfils the requirements of Article 107(3)(c) of the Treaty, as it would distort competition between platform operators due to its non-technologically neutral character. In this respect, Astra highlights that the direct beneficiaries of the Measure have clear incentive to simulcast without compensation in order to keep their audience and publicity revenues; not taking into account their additional advantages from the release of the Digital Dividend (e.g. which offers the possibility to view TV through mobile telephony on the freed 800 MHz band). Astra also argues that the Spanish authorities have failed to produce an independent study justifying the Measure as appropriate, necessary and proportionate aid.

In conclusion, Astra favours the opening of the Spanish TV market in Area I and allowing competition on the merits between alternative technological platforms.

Similarly to the Spanish authorities, Abertis also does not qualify the Measure as State aid due to the lack of selective economic advantage and distortion of competition. If the Commission would decide to qualify the Measure as State aid, it should declare it compatible under Article 107(3) of the Treaty.

Abertis informs that it would neither benefit nor loose from the choice of technology used by broadcasters during simulcast. It considers that the simulcast compensation could actually increase competitiveness between the platforms to the benefit of the broadcasting market and consumers.

Abertis defends the effectiveness of the DTT technology but does not agree that the use of this particular technology during the simulcast will determine the platform to be used by the broadcasters in the future. On the other hand, Abertis admits that the DTT signal will continue to be transmitted exclusively via the DTT technology under the conditions enshrined in the broadcasters' licences.

In conclusion, Abertis does not agree with the preliminary conclusions of the Commission on the Measure.

Also the EBU does not consider the Measure to constitute State aid. If the Commission would decide to qualify the Measure as State aid, it should declare it compatible under Article 107(3) of the Treaty as it respects the principle of technologically neutrality.

The EBU requests the Commission to limit the assessment to the factual objective and effects of the Measure, i.e. ensuring the simulcast during the DTT migration process in the context of release of the Digital Dividend. According to the EBU, the Digital Dividend is not a consequence of a regulatory act by the relevant public authority for the broadcasting sector: it does not relate to the way the DTT service has to be provided, it does not derive from the market or technological development and it does not necessarily affect the whole DTT industry.

The EBU does not agree that the Measure could confer any real advantage to DTT broadcasters or platform operators and requests the Commission to take into account the significant investment that the Spanish broadcasters have already made in adopting their services to the DTT technology and infrastructure during the switch from analogue to digital TV.

According to the EBU, private DTT broadcasters have legitimate expectations to the simulcast compensation as such compensation was provided for in national law and valid licences.

The EBU believes that no real alternative exists to the DTT technology enabling compliance with the prescribed coverage obligation of broadcasters. The DTT platform represents a separate market from other platforms, as their use and operation are not substitutable.

In conclusion, the EBU does not agree with the preliminary conclusions of the Commission on the Measure.

BNE presents the opinion that the Measure does not constitute State aid. If the Commission would decide to qualify the Measure as State aid, it should declare it compatible under Article 107(3) of the Treaty and in any case technologically neutral.

According to BNE, the costs of release of the Digital Dividend for broadcasters do not only include the additional costs of broadcasting during simulcast (to be paid to the respective DTT platform operator) but also costs resulting from the required change of transmission frequencies in the terrestrial network. The DTT platform operators will neither benefit nor be harmed by the Measure, as it would not change the obligation of broadcasters to broadcast on the DTT platform with retained coverage on lower frequencies.

BNE calls on the Commission to limit its assessment to State aid issues and not question the treatment of the DTT technology in comparison with the satellite technology. BNE believes that the broadcasters would lose the incentive to leave the 800 MHz band freed by the Digital Dividend within the foreseen timetable in the absence of the Measure. This would hence lead to a market failure.

In conclusion, BNE does not agree with the preliminary conclusions of the Commission on the Measure.

NET TV requests the Commission not to qualify the Measure as State aid and if yes, then declare it compatible with the internal market.

NET TV doubts that the broadcasters would be obliged to continue fulfilling their public interest obligation in order to keep their licences in the absence of the Measure. This is because they would not receive any advantage from moving to another frequency. Therefore the responsibility of the administration to compensate the broadcasters for the simulcast costs is justified.

The simulcast costs are ‘impossible’ costs for NET TV, considering its low market share and SME status. They claim this could lead to the exit of NET TV from the relevant market.

In conclusion, NET TV does not agree with the preliminary conclusions of the Commission on the Measure.

As already established in recital 39 of the opening decision, the contested Measure is to be funded directly from the Spanish budget through the revenues obtained from the auctioning of the freed frequencies to the telecommunication operators. The Spanish authorities did not contest the finding of the opening decision that the Measure should be funded directly from budgetary resources.

The Measure, as described in Section 2.3, is decided by the State and financed directly from the central State budget. The Commission therefore concludes that it is imputable to the State and involves the use of State resources.

The Spanish authorities and all interested parties apart from Astra consider that private broadcasters do not receive any advantage when moving to the lower frequency band and that they are merely compensated for the extra costs they have to bear following a regulatory change.

The Commission notes in this regard that the initial concessions granted to private broadcasters for the provision of television services, their respective renewals and subsequent licences did not contain any reference to the right to compensation for the cost of migration or reallocation of spectrum usage. Moreover, the NTP provided that the authorities could establish special conditions for broadcasting, not foreseen in the concessions, in the case of necessity to change the mode of broadcasting resulting from the evolution of the market or technological development in line with the practices of other EU Member States. The Commission also notes that the NTP did not establish the right to compensation for private broadcasters in such a case.

In the case at hand, the Measure foresees a compensation of costs that the private broadcasters would normally have to bear from their own budget. The Measure allows those broadcasters to fulfil the obligations imposed on them by law and therefore keep their licences, audience and related advertising revenues. It also significantly reduces their overall transition costs. However, in the absence of the Measure the broadcasters would also be obliged, by the regulatory act, to fulfil the obligation of providing the broadcasting service with continuity and thus to bear all the costs derived from the licences. In these circumstances it may be concluded that they receive an advantage which they would not have in the absence of the Measure.

The Spanish authorities also argued that the compensation of broadcasters for the simulcast is foreseen in Union law, notably in Decision No 243/2012/EU, and therefore does not result in any undue economic advantage to the beneficiaries of aid under the Measure. The Commission notes that Article 6(5) of Decision No 243/2012/EU allows Member States to consider the possibility of granting compensation of direct costs of migration or reallocation of spectrum usage under the following conditions: (i) the compensation must be an appropriate measure and (ii) it has to comply with Union law, including Union law in the area of State aid. In the case at hand, the possibility for the Member State to compensate for the direct costs associated with the migration or reallocation of spectrum usage cannot fall outside State aid control.

The Commission therefore concludes that the Measure confers an economic advantage within the meaning of Article 107(1) TFUE to private broadcasters. They receive a subsidy which effectively reduces the cost they would normally have to bear.

The quantifiable advantage to the direct beneficiaries, private DTT broadcasters, would represent the total amount of the public funds made available for carrying out the simulcast obligation.

It can be argued that the DTT platform operators are in a similar position to that of the coal mines' owners in the Spanish coal case where the Spanish authorities imposed an obligation on generators (here broadcasters) to buy coal from Spanish coal mines (here to contract simulcast services with DTT platform operators).

Against this background, in the opening decision the Commission considered the DTT platform operators to be potential indirect beneficiaries of the Measure. The formal investigation has confirmed that position, in particular on the basis of the following considerations.

In the present case, the DTT platform operators benefit from the fact that private broadcasters are compensated for the provision of the simulcast service via DTT and that they will continue using the DTT platform. Hence, any compensation to broadcasters for the simulcast TV transmission generates a perpetuation of that advantage since the broadcasters pay the DTT platform operators for simultaneously transmitting their programmes on the 800 MHz and 700 MHz bands during the transition period.

Because the Measure guarantees the benefits resulting from the provision of the simulcast services to broadcasters, and given the additional advantage for DTT platform operators in the form of guaranteed revenues, the Commission concludes that the DTT platform operators are indirect beneficiaries of the Measure.

In accordance with Article 107(1) of the Treaty, to be considered State aid, a measure must be specific or selective in that it favours only certain undertakings or the production of certain goods.

The Measure is selective since it is specifically aimed at private undertakings that currently operate in the sector of television broadcasting transmission services via the DTT technology. As a result, the contested Measure only benefits companies operating on the DTT platform as compared to other companies that operate on alternative platforms such as satellite or cable.

Hence, the Commission concludes that the Measure providing for the compensation for additional costs incurred due to the simulcast obligation constitutes a selective measure within the meaning of Article 107(1) of the Treaty.

As explained above, the Measure favours the DTT broadcasters and indirectly the DTT platform operators. The beneficiaries of the contested Measure compete with other alternative providers (satellite, cable, IPTV) that will not benefit from State funding. Therefore, the Measure will result in distortions of competition among broadcasters and among platform operators.

Broadcasters operate on the advertising markets and purchase content rights across borders, competing with companies from other Member States. The Spanish markets for broadcasting and operation of television networks also host foreign players (e.g. content providers and advertisers).

Platform operators compete on a cross-border level with each other as well as with other platform operators of electronic communications.

In light of the above, the Commission concludes that the Measure distorts competition and has an effect on trade between Member States within the meaning of Article 107(1) of the Treaty.

On account of the preceding considerations, the Commission concludes that the Measure fulfils the criteria laid down in Article 107(1) of the Treaty and must be considered State aid within the meaning of that Article.

However, aware of the risks associated with the digitisation process, the Commission has repeatedly stressed that regulation in this area should neither impose nor discriminate in favour of the use of a specific digital platform, but abide by the principle of technological neutrality. This means that each platform should compete according to its capabilities, in particular its ability to offer the maximum benefit to consumers.

Article 107(2)(b) of the Treaty states that aid ‘to make good the damage caused by natural disasters or exceptional occurrences’ is compatible with the internal market. In the case at hand, the Spanish authorities argue that the release of the Digital Dividend should be considered as an exceptional occurrence.

Therefore the Commission does not share the view that the Measure aims to make good costs incurred by exceptional occurrences and therefore it does not consider the Measure compatible under Article 107(2)(b) of the Treaty.

Article 107(3)(c) of the Treaty states that ‘aid to facilitate the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest’ may be considered to be compatible with the internal market.

1. (1)

   Is the aid measure aimed at a well-defined objective of common interest (i.e. does the proposed aid address a market failure or other objective)?

2. (2)

   Is the aid well designed to deliver the objective of common interest? In particular:

   1. (a)

      Is the aid measure an appropriate instrument, i.e. are there other, better placed instruments?

   2. (b)

      Is there an incentive effect, i.e. does the aid change the behaviour of firms?

   3. (c)

      Is the aid measure proportional, i.e. could the same change in behaviour be obtained with less aid?

3. (3)

   Are the distortions of competition and the effect on trade limited, so that the overall balance is positive?

The Commission is of the view that the principle of technological neutrality is also relevant in relation to the release of the Digital Dividend. Consideration of that issue will form part of the assessment of the case at hand.