State aid approval for French news channel CFII

European Commission letter (PDF, 17 pages, in French) dated 7 June 2005, published 10 October 2005, giving reasons for the approval of French State aid to a proposed new 24-hour international television news channel, CFII (Chaîne française d'information internationale). The channel is to be almost entirely State-funded, and jointly managed by the State broadcaster France Televisions and the major investor-owned television operator TF1.

The Commission rejects a French Government claim that the Altmark conditions were met (i.e. that the funding was remuneration for a service procured by the State rather than State aid under Article 87(1)), as it was not satisfied with the cost benchmarking work undertaken as the basis for payments to CFII and in lieu of a competitive tender for the award of the contract to a TF1/France Televisions joint venture. However, it considers the aid to be necessary and proportionate to a legitimate public service purpose, albeit not one covered by the Amsterdam protocol on public service broadcasting. The approval was therefore given under Article 86(2).

An anonymous third party complained about the risk that TF1's LCI commercial news channel (targeted to a French audience) may unduly benefit from the State funding given to CFII, and about the fact that CFII would not compete with LCI in France. The Commission dismissed these concerns on the basis that it could rely on the arrangements for transfer pricing to be established between TF1 and CFII and on the French merger control system; it also said that the State aid approval did not cover the possibility of future changes to the ownership or governance of CFII.

For further information or advice please contact Franck Latrémolière.

Filed under DG Competition, Media, State aid.

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