Court of Justice 06-02-1997 ECLI:EU:C:1997:61

Relevant provisions of Community law

Article 2 of the Television Directive contains the provisions which are central to this case and are worded as follows:

‘1.

Each Member State shall ensure that all television broadcasts transmitted

• by broadcasters under its jurisdiction,

  or

• by broadcasters who, while not being under the jurisdiction of any Member State, make use of a frequency or a satellite capacity granted by, or a satellite uplink situated in, that Member State,

comply with the law applicable to broadcasts intended for the public in that Member State.

2.

Member States shall ensure freedom of reception and shall not restrict retransmission on their territory of television broadcasts from other Member States for reasons which fall within the fields coordinated by this Directive. Member States may provisionally suspend retransmissions of television broadcasts if the following conditions are fulfilled:

1. a television broadcast coming from another Member State manifestly, seriously and gravely infringes Article 22;

2. during the previous 12 months, the broadcaster has infringed the same provision on at least two prior occasions;

3. the Member State concerned has notified the broadcaster and the Commission in writing of the alleged infringements and of its intention to restrict retransmission should any such infringement occur again;

4. consultations with the transmitting State and the Commission have not produced an amicable settlement within 15 days of the notification provided for in point (c), and the alleged infringement persists.

The Commission shall ensure that the suspension is compatible with Community law.

It may ask the Member State to put an end to a suspension which is contrary to Community law, as a matter of urgency. This provision is without prejudice to the application of any procedure, remedy or sanction to the infringements in question in the Member State which has jurisdiction over the broadcaster concerned.

3.

This Directive shall not apply to broadcasts intended exclusively for reception in States other than Member States, and which are not received directly or indirectly in one or more Member States.’

Under Article 3(2) of the Directive, Member States are required ‘by appropriate means, [to] ensure, within the framework of their legislation, that television broadcasters under their jurisdiction comply with the provisions of this Directive’.

Article 22 of the Directive is concerned with the protection of minors. It requires the Member States to ensure that television broadcasts by broadcasters under their jurisdiction do not include programmes ‘which might seriously impair the physical, mental or moral development of minors, in particular those that involve pornography or gratuitous violence’.

Legal position with regard to the television sector in the Flemish Community

In Belgium the Communities are to a large extent responsible for the television sector. The provisions relevant to the present case were originally contained in three legislative measures: the Decree of 28 January 1987 concerning the transmission of radio and television programmes by radio and television cable networks and the licensing of private television broadcasters,^(*) the Decree of 12 June 1991 regulating radio and television advertising and sponsoring^(*) and the Decree of 4 May 1994 on radio and television cable networks, on licences for installing and operating such networks and on the promotion of the dissemination and production of television programmes.^(*) These (and other decrees) have now been consolidated in the Decree of 25 January 1995 coordinating decrees concerning radio and television.^(*)

It appears from these provisions that the Flemish Executive can license only one commercial television broadcaster broadcasting to viewers in the entire Flemish Community. In 1987 such licence was granted to Vlaamse Televisie Maatschappij NV (‘VTM’) for a term of 18 years. Under the same provisions, only one of the radio and television broadcasters broadcasting to the entire Flemish Community may be licensed to transmit advertising. In 1987 a licence for that purpose was issued to VTM for a term of 18 years. In Flanders, therefore, VTM holds a monopoly in commercial television and television advertising.

The Flemish provisions regulating the activity of operators of radio and television cable networks were originally contained in Articles 3, 5 and 10 of the Decree of 4 May 1994.^(*) The Court has already had occasion to examine these provisions in its judgment in Case C-ll/95.^(*) Under these provisions, no person may operate a cable television network in Flanders without an authorization granted by the Flemish Executive in accordance with the conditions laid down by law. Any modifications relating to the transmission of a new programme must be submitted to the Flemish Executive for approval. The decision refusing or approving such modifications must be notified to the cable operator within four months. The programmes of a broadcaster licensed by another Member State may be retransmitted over a cable network ‘provided that the broadcaster concerned is subject, in that Member State, to proper supervision of broadcasters broadcasting to the public of that Member State and the supervision exercised covers compliance with European law (...) and provided that the broadcaster concerned and the programmes which it broadcasts do not undermine public order, morality or public safety in the Flemish Community’.

Facts of the case

VT4 Ltd is a company incorporated under English law having its registered office in London. According to its articles of association, its main object is the broadcasting of radio and television programmes. All the shares of the company are held by Scandinavian Broadcasting Systems SA, which has its registered office in Luxembourg. The United Kingdom authorities have authorized the transmission of VT4's programme by granting it a non-domestic satellite service licence.^(*)

VT4 broadcasts to Flemish viewers. Its programmes are transmitted or subtitled in Dutch. It has a branch^(*) at Nossegem, in Flanders. There it maintains contact with firms wishing to have their advertising broadcast by VT4. In Nossegem news items are also collected for the news programmes.

On 16 January 1995 the Flemish Minister of Culture and Brussels Affairs adopted a decision prohibiting the retransmission of the VT4 programme by cable network operators in Flanders. The decision was based mainly on two arguments. VT4 was to be regarded as a Flemish broadcaster which had been established in another Member State for the sole purpose of circumventing application of the Flemish Community legislation. Under the relevant provisions, however, only one commercial broadcaster, i.e. VTM, was licensed in Flanders. Even if it were assumed that VT4 was a broadcaster established in the United Kingdom, a licence for the retransmission of its programmes could not be issued because it did not fulfil the conditions laid down in Article 10 of the Decree of 4 May 1994, in particular the requirement that it be subject to the proper supervision of the other Member State, i.e. in this case the United Kingdom.

On 24 January 1995 the Belgian Raad van State (Council of State) suspended implementation of the decision of 16 January on an interlocutory application by VT4. As a result, VT4 was able to have its programme distributed by cable in Flanders. This decision was confirmed by the Raad van State by judgment of 2 March 1995. The action on the main issue in this matter forms the context of the reference for a preliminary ruling.

The main action relates primarily to the interpretation of Article 2 of the Television Directive. Before the Raad van State, VT4 argued, on the basis of Article 59 of the EC Treaty and Article 2 of the Television Directive, that the disputed decision prohibited the retransmission of a television programme from another Member State. The defendant in the main action, the Flemish Community, contends on the other hand that VT4 is in reality a broadcaster established in Flanders. Consequently there can be no question of infringement of Community law as this is a purely internal matter.

In the proceedings before the Raad van State, the defendant referred to the report, submitted by the Commission, on the application of the Television Directive [COM(95)86 final-95/0074(COD)] and the Commission proposal for the amendment of the Directive, which was submitted at the same time.^(*)

According to the proposal, the following provision was to be added to the Television Directive (as a new Article 2(2)):

‘The broadcasters under the jurisdiction of a Member State are those established in the territory of that Member State, in which they must have a fixed establishment and actually pursue an economic activity.’

The preamble to the proposal contains the following observations on this point:

‘Whereas the application of Directive 89/552/EEC has revealed the need to clarify the concept of jurisdiction as applied specifically to the audiovisual sector; whereas, in view of the case-law of the Court of Justice of the European Communities, the establishment criterion should be made the principal criterion determining the jurisdiction of a particular Member State;

Whereas the concept of establishment, according to the criteria laid down by the Court of Justice in its judgment of 25 July 1991 in Case C-221/89 Factortame involves the actual pursuit of an economic activity through a fixed establishment for an indefinite period;

Whereas the establishment of a television broadcasting organization, for the purpose of Directive 89/552/EEC, as amended by this Directive, may be determined by a series of practical criteria such as the location of the head office of the provider of services, the place where decisions on programming policy are usually taken, the place where the programme to be broadcast to the public is finally mixed and processed, provided that a significant proportion of the workforce required for the pursuit of the television broadcasting activity is located in the same Member State’.

The Flemish Community took the view that this proposal had an ‘interpretative character’. VT4 replied that the text provisionally adopted by the Council of Ministers on 20 November 1995 as a ‘Common Position’^(*) reads differently.

According to the ‘Common Position’, the following provision was to be added to the Television Directive (as a new Article 2(3)):

For the purpose of this Directive, a broadcaster shall be deemed to be established in a Member State in the following cases:

1. the broadcaster has its head office in that Member State and the editorial decisions about programme schedules are taken in that Member State;

2. if a broadcaster has its head office in one Member State but editorial decisions on programme schedules are taken in another Member State, it shall be deemed to be established in the Member State where a significant part of the workforce involved in the pursuit of the television broadcasting activity operates; if a significant part of the workforce involved in the pursuit of the television broadcasting activity operates in each of those Member States, the broadcaster shall be deemed to be established in the Member State where it has its head office; if a significant part of the workforce involved in the pursuit of the television broadcasting activity operates in neither of those Member States, the broadcaster shall be deemed to be established in the Member State where it first began broadcasting in accordance with the system of law of that Member State, provided that it maintains a stable and effective link with the economy of that Member State;

3. ...’.

In view of this, the Raad van State has referred the following question to the Court for a preliminary ruling pursuant to Article 177 of the EC Treaty:

‘At the time of the contested decision, may regard be had, for the purposes of interpreting Article 2 of Council Directive 89/552/EEC of 3 October 1989 with regard to its scope ratione personae, to the abovementioned report and proposal of 31 May 1995 of the Commission and to the abovementioned text provisionally adopted by the Council of Ministers on 20 November 1995? If so, what meaning overlapping the three different texts must be inferred for the purposes of that interpretation?’

Relevance of the question referred

In the judgment in Case C-ll/95 the Court ruled that the Flemish provisions in question here, to the effect that the retransmission by cable of television broadcasts from other Member States must receive prior authorization, are contrary to Article 2(2) of the Television Directive.^(*) At the hearing before the Court, VT4 concluded from this that it was unnecessary for the question from the national court to be answered. It argued that the decision of 16 January 1995 being challenged in the main action was adopted on the basis of a provision which had now been held to be unlawful. It followed that the said decision must also be unlawful and there was no need to answer the question.

I cannot agree. It must be left to the national court to decide what specific conclusions concerning the main action are to be drawn from the judgment in Case C-ll/95. So far, at least, as the present case is concerned, it must be observed that the Raad van State did not withdraw its request for a preliminary ruling after judgment in that case was given. It follows that the national court still appears to consider that a reply to the question is necessary. In my opinion, therefore, the Court must give that reply.

The actual question referred

There is no difficulty in answering the question as it stands. In my view, there can be no reasonable doubt that the proposal for an amending directive and the Council's Common Position on the proposal have no binding effect whatever so far as interpretation of the Television Directive is concerned. The German Government correctly points out that, from the viewpoint of the time factor alone, it would have been impossible‘at the time of the contested decision’, i.e. on 16 January 1995, to take account of documents which were not published until a later date. Above all, however, it must be observed that they are merely preparatory acts. Only the proposed amending directive itself would have had binding effect. It has also been correctly observed that these preparatory acts could still have been altered at any time, which is what in fact happened.^(*)

It is clear from the judgment in Case C-222/94 Commission v United Kingdom that the term ‘jurisdiction’ used in the first indent of Article 2(1) of the Television Directive must be construed by reference to establishment. Consequently, the Member State having jurisdiction over a broadcaster is the Member State in which that broadcaster is established.^(*) Both documents referred to by the national court attempt to answer the question of what ‘establishment’ means in this context. Like the German Government and the Commission, I take the view that these documents give useful guidance on this point, as I shall show. However, they are no more binding for interpretation of the Television Directive than other declarations of the institutions involved in the. adoption of the amending directive.^(*)

Interpretation of ‘establishment’ for the purposes of the Television Directive

Nevertheless, it is clear from the order for reference that the Raad van State has requested a preliminary ruling in connection with determining the jurisdiction within which VT4 falls. In other words, the national court wishes to know how ‘establishment’ is to be construed in this particular situation. The Court should therefore examine this aspect in more detail in order to provide an answer which is as helpful as possible for the national court.

The Court has consistently held that the concept of establishment within the meaning of Article 52 et seq. of the EC Treaty involves the actual pursuit of an economic activity through a fixed establishment in another Member State for an indefinite period.^(*)

In its judgment in Case C-222/94 Commission v United Kingdom the Court accepted that use of the criterion of establishment may lead to difficulties because a broadcaster may have more than one establishment in the Community.^(*) However, these difficulties may be overcome. As the Court observed in the abovementioned judgment, the Commission had explained that Member States could find a solution to this problem ‘by interpreting the criterion of establishment as referring to the place in which a broadcaster has the centre of its activities, in particular the place where decisions concerning programme policy are taken and the programmes to be broadcast are finally put together’. The Court observed at the same time that this point had not been contradicted by the United Kingdom as defendant.^(*)

I agree with the Commission's view expressed at the hearing that, in the passage I have cited above, it was not the Court's intention to lay down an interpretation of ‘establishment’ which would apply generally. This is indicated by the fact that the Court does not expressly adopt the view taken by the Commission in that case, but referred to it as only a possible solution. Above all, however, regard must be had to the context in which the Court made these observations. The passage in question is concerned with the problems arising from the fact that a broadcaster may have establishments in more than one Member State.

In any particular case, therefore, the first question is whether a broadcaster has an establishment at all in a Member State. For this purpose, it is necessary to refer to the case-law relating to Articles 52 and 59, according to which, as I have already mentioned, the concept of establishment within the meaning of the EC Treaty involves the actual pursuit of an economic activity through a fixed establishment in another Member State for an indefinite period.^(*) If a broadcaster has such an establishment in only one Member State, the broadcaster is subject to the jurisdiction of that State pursuant to Article 2(1) of the Television Directive. To this extent there is no difficulty.^(*)

On the other hand, if a broadcaster has establishments in more than one Member State, other factors must be taken into account to decide under whose jurisdiction the broadcaster falls. This is necessary because otherwise the system of single-State supervision of the broadcaster underlying the Television Directive would be jeopardized.

In the present case, VT4 says that it is a company incorporated under English law and that its registered office is in London. The central administration and the place where programming decisions are taken are also said to be located in the United Kingdom. In addition, a large part of the workforce is said to be employed in the United Kingdom.

The Flemish Executive, on the other hand, takes the view that all the essential activities of VT4 are carried out in Belgium. The company management is also located there. The staff of VT4 also work in Belgium.^(*) VT4 programmes are said to be made in Belgium and then taken to the United Kingdom, from where they are transmitted. VTM takes the same view. It claims that the decisions on VT4's programmes are taken in Belgium, which is where all its senior executives work. The final mixing and processing of programmes also take place in Belgium. In the United Kingdom VT4 has only a letterbox address. Both parties add that VT4's programmes are aimed exclusively at the Flemish public.

As the French Government and the Commission correcdy observe, the answer to the question of the Member State having jurisdiction over VT4 depends to a large extent on the assessment of factual matters which the national court alone is competent to undertake. The Court can, however, give the Raad van State some guidance in this connection which may be helpful to it. For example, it must be emphasized that the fact that VT4's programmes are aimed at Flanders is in itself of no significance. An undertaking established in one Member State may be exercising its freedom to provide services even if it is not offering services in the State of establishment itself.^(*) The distinction between services envisaged by Article 59 and establishment under Article 52 of the EC Treaty, to which VTM attached so much importance at the hearing before the Court, is likewise of no significance for the present case. In particular, the fact that VT4's broadcasting activities are permanent activities cannot justify the conclusion that VT4 does not supply services and that Article 52 is relevant. The Court has consistently held^(*) — and quite rightly — that the transmission of television signals must be regarded as a provision of services within the meaning of Article 59 of the EC Treaty.^(*) Yet it is also clear that the issue of a licence by a Member State cannot confer jurisdiction over the television broadcaster if it is not established in the Member State concerned.

Without wishing to anticipate the judgment of the Raad van State, it may in any event be inferred from the order for reference and from the parties' submissions that VT4's activity has connections with both the United Kingdom and Belgium. Even if the contentions of the Flemish Executive and VTM were correct, the fact would remain that VT4 is a company incorporated under English law having its registered office in the United Kingdom and that it broadcasts from there. Consequently, even if all the other activities were carried out in Belgium, in my opinion VT4 would have an establishment in the United Kingdom within the meaning of the case-law to which I have already referred, even if — as VTM contends in the alternative — it is only a branch. Under the Treaty, however, a branch also constitutes an establishment (see Article 52, first paragraph, of the EC Treaty). Therefore the Flemish Executive's claim that this is a purely domestic matter to which Community law does not apply seems to me unfounded in any case.

With regard to the criteria to be applied, if necessary, by the Raad van State, I think I can be brief. The Commission's proposal of 31 May 1995 and the Common Position of the Council refer to respectively three and four auxiliary criteria for ascertaining, in cases of doubt, the ‘establishment’ which determines the Member State having jurisdiction. These are the head office of the broadcaster, the place where decisions concerning programme schedules are taken and the place where programmes are finally mixed and processed. A further criterion is the place where a significant part of the workforce is employed. In fact, these may well be the appropriate criteria in the present connection. However, VT4 rightly points out that the Commission's proposals differ somewhat from those of the Council. The Common Position of the Council lays down a clear hierarchy, whereas the Commission basically gives only a list which does not give priority to any one of the criteria. Furthermore, the place where programmes are finally mixed and processed, to which the Commission refers in its proposal, is mentioned by the Council in the tenth recital of the preamble to the Common Position, but not expressly referred to in the relevant passage in the text itself.^(*)

I am unable to see a natural, virtually predetermined order of precedence for these criteria. Any such order can only be laid down by the legislature. Therefore I think it is clear that the sequence in the Common Position cannot be used for determining the Member State having jurisdiction for the purposes of the Television Directive before the Council's views have become law. Otherwise, one would be applying a substantive new rule before it enters into force, which would be highly objectionable from the viewpoint of legal certainty. On the other hand, there is no reason why the national court should not be given the task of determining, on the basis of all the relevant criteria, which Member State has jurisdiction over a television broadcaster.

In my opinion, the test suggested by the Commission in Case C-222/94 and mentioned by the Court in its judgment is particularly appropriate for this purpose because it summarizes what the abovementioned criteria should do — ascertain the Member State in which the broadcaster has the ‘centre of its activities’. Although this phrase does not expressly refer to the head office of the undertaking or the question of where broadcasting staff are employed, I think these aspects may easily be inferred from the basic test. It seems to me, therefore, that where a broadcaster has establishments in more than one Member State, the Member State having jurisdiction for the purposes of the Television Directive is the one where the broadcaster has the centre of its activities and, in particular, the one where decisions on programme policy are taken and where the final mixing and processing of programmes to be broadcast takes place.

It should be possible to find a satisfactory solution for each individual case on this basis. However, it would not be sufficient to leave it at that: a national court may, even after the most scrupulous examination of a case by reference to the proposed test, be unable to reach a clear conclusion. If the expectations of the national court are not to be disappointed, the Court should provide for this eventuality also and lay down a clear, handy criterion.

For this purpose I think it best to consider the Member State where the broadcaster begins transmission in the technical sense. This would also satisfy the requirement of legal certainty which VT4 is quite right to demand. If, therefore, a broadcaster decides to transmit from a particular Member State, it must at least expect that it could be subject to the jurisdiction of that State. Of course, this would apply especially in the present case, as this criterion would mean that the United Kingdom, from which VT4 transmits, has jurisdiction. The general applicability of this criterion as an aid to reaching a decision in cases of doubt which could not otherwise be resolved is shown by the fact that the Common Position adopts a similar standpoint.^(*)

The Flemish Executive contends in the alternative that VT4 is improperly seeking to rely on the Television Directive. It claims that VT4 has become established in the United Kingdom solely in order to evade the application of the legislation applying in Flanders. A similar claim is made by VTM. VT4 replies — correctly — that the national court has referred no question on this point. Nevertheless it seems to me that the Court should examine the questions associated with this problem in order to provide the national court with a reply which is as helpful as possible.

In its judgment in Case-11/95 Commission v Belgium the Court left open the question ‘whether, in the light of Directive 89/552, a Member State is still entitled, on the basis of Article 59 of the Treaty, to take measures to prevent a person providing services whose activity is entirely or principally directed towards its territory from exercising the freedoms guaranteed by the Treaty for the purpose of avoiding the rules which would be applicable to him if he were established within that State’.^(*) The question here is whether the relevant case-law, which the Court last affirmed in 1994 in the TV 10^(*) case, is still applicable after the entry into force of the Television Directive.

In Case C-11/95 my reply to this question was in the affirmative. At the same time, I made it clear that this case-law is applicable only if there is any abuse on the part of the broadcaster in question, and that this must be examined strictly.^(*) I maintain this view with which the Commission also expressly agrees.

In the present case, I cannot see, from the information available, that any such abuse has occurred. It may well be that VT4 has become established in the United Kingdom simply to order to evade the Flemish legislation concerning the activity of television broadcasters, but it must be remembered that this does not of itself constitute an abuse. Anyone exercising his freedom of establishment under the EC Treaty is quite certainly not perpetrating an abuse on that account alone. For this, the national provisions being evaded must protect important legal interests that are also recognized in Community law. The TV10 case concerned a national Law intended to establish and maintain a pluralistic, noncommercial radio and television broadcasting system and thus to safeguard freedom of expression. In the TV10 case, the broadcaster in question had the right to broadcast its programme from the Netherlands provided that it fulfilled the requirements of Dutch law. This would not be possible in the present case because no other commercial broadcaster can operate in Flanders by reason of VTM's monopoly. Consequently there can be no question of an abuse in the present case.