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21.12.2011 Official
Journal
of
the
European
Union
L
340/1
II
(Non-legislative acts)
DECISIONS
COMMISSION DECISION
of 20 April 2011
on the measures implemented by Denmark (C 2/03) for TV2/Danmark
(notified under document C(2011) 2612)
(Only the Danish text is authentic)
(Text with EEA relevance)
(2011/839/EU)
THE EUROPEAN COMMISSION,
(2) By
letter
of
5
June
2002,
the
Commission
requested
information from the Danish authorities, who replied
by letter of 10 July 2002. Two meetings with the
Having regard to the Treaty on the Functioning of the European
Danish authorities were held on 25 October 2002 and
Union ( 1 ), and in particular the first subparagraph of
on 19 November 2002. Additional information was
Article 108(2) thereof,
received by letters of 19 November 2002 and
3 December 2002.
Having regard to the Agreement on the European Economic
Area, and in particular Article 62(1)(a) thereof,
(3) By
letter
dated
24
January
2003
( 4 ), the Commission
Having called on interested parties to submit their comments
informed Denmark that it had decided to initiate the
pursuant to the provisions cited above (
procedure laid down in Article 108(2) of the Treaty on

2 ) and having regard to
their comments,
the Functioning of the European Union (TFEU) in respect
of the State financing of Danish public service broad
caster TV2.
Whereas:
I. PROCEDURE
(4) The
Commission
decision
to
initiate
the
procedure
was
published in the Official Journal of the European Commu
(1) By
letter
of
5
April
2000,
the
Commission
received
a
nities of 14 March 2003 ( 5 ). The Commission invited
complaint from the Danish commercial television
interested parties to submit their comments on the
company SBS Broadcasting SA/TVDanmark (hereinafter
measures.
‘SBS/TVDanmark’) regarding the State financing of the
Danish public service television broadcaster TV2/
Danmark (hereinafter ‘TV2’ ( 3 ). A meeting took place
with the complainant on 3 May 2000. By letters of
28 February 2001, 3 May 2001 and 11 December
(5) The
Commission
received
observations
from
the
Danish
2001, the complainant submitted additional information.
authorities by letter of 24 March 2003. The Commission
also received comments from several interested parties.
TVDanmark submitted comments by letter of 14 April
( 1 ) With effect from 1 December 2009, Articles 87 and 88 of the EC
2003. The Association of Commercial Television in
Treaty have become Articles 107 and 108, respectively, of the TFEU.
The two sets of provisions are, in substance, identical. For the
Europe (ACT) sent comments in a letter dated 14 April
purposes of this Decision, references to Articles 107 and 108 of
2003. The commercial television stations Antena 3 TV
the TFEU should, where appropriate, be understood as references to
and Gestevisión Telecinco submitted comments on
Articles 87 and 88 of the EC Treaty.
16 April 2003. The commercial station TV3 submitted
( 2 ) OJ C 59, 14.3.2003, p. 2.
( 3 ) In 2003, TV2 was converted into a limited liability company and its
name changed to TV2/Danmark A/S. For the sake of simplicity,
( 4 ) Commission decision of 21 January 2003, ‘State financing of Danish
‘TV2’ will be used in this decision to refer to the Danish public
public broadcaster TV2 by means of licence fee and other measures’
service television broadcaster TV2/Danmark, irrespective of its legal
(OJ C 59, 14.3.2003, p. 2).
form.
( 5 ) See footnote 2.

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L 340/2
EN
Official Journal of the European Union
21.12.2011
comments in a letter of 14 April 2003. The Commission
(11) By
decision
of
6
October
2004
( 8 ), the Commission
forwarded these comments to Denmark, which
approved the Danish government’s decision to recap
responded by letter of 12 September 2003.
italise TV2 by increasing its capital by DKK 440
million and converting a State loan of DKK 394
million into capital (the ‘recapitalisation measures’).
Both SBS and Viasat took court action against that
decision.
(6) The
Commission
received
further
information
from
the
complainant by letters dated 15 December 2003 and
6 January 2004. A meeting was held between the
complainant and the Commission’s services on
17 December 2003 in order to clarify the information
(12) On
22
October
2008
( 9 ), while confirming the scope of
submitted in the complainant’s letter of 15 December
TV2’s public service mission, the Court of First Instance
2003. The Commission forwarded the information to
(now the General Court) annulled the Commission’s
the Danish Government, which responded by letter
recovery decision (the ‘judgment’). No appeal was lodged.
dated 15 March 2004. A meeting between the Danish
authorities and the Commission’s services took place on
9 February 2004.
(13) Following
the
Court’s
judgment,
the
Commission
now
has to adopt a new decision since it had to reopen the
formal investigation procedure concerning the period
(7) On
19
May
2004,
the
Commission
adopted
a
decision
1995-2002.
on the public funding granted to TV2 between 1995 and
2002 in the form of licence fee resources and other
measures ( 6 ). The decision concluded that the aid was
compatible with the common market, with the
exception of DKK 628,2 million (about
EUR 84,3 million), which had to be recovered together
with interest (the ‘recovery decision’).
(14) In
addition
the
Court
issued
an
order
( 10 ) (the ‘order’) in
the recapitalisation case, stating that there was no need
to take a decision. In paragraph 35 of the grounds, the
Court found there was a close link between the recovery
and the recapitalisation decisions. The Court held that the
annulment of the recovery decision rendered the recap
italisation decision devoid of any substance and meaning.
(8) Legal
actions
against
the
Commission’s
recovery
decision
It stated that ‘[a]lthough the specific circumstances of the
were subsequently brought before the Court of Justice by
present case prompted the Commission to adopt two decisions,
TV2 and the Danish authorities, and by the private
it is apparent that those decisions constitute two aspects of the
broadcasters Viasat and SBS/TVDanmark.
same legal issue relating to the classification as State aid within
the meaning of Article 87(1) EC and, if so, to the deter
mination of their compatibility with the common market, of
the measures implemented by the Kingdom of Denmark for
TV2 and subsequently TV2 A/S’ ( 11 ). The annulment of the
recovery decision therefore called for a ‘fresh examination
(9) The
Danish
authorities
implemented
the
Commission’s
of all the measures implemented by the Kingdom of Denmark
recovery decision. In fact, TV2 repaid DKK 1 050
for TV2’. The order was not appealed.
million ( 7 ).
(15) In line with the Court’s order, the Commission has to
(10) That repayment led to a financial crisis in TV2.
take into account in its assessment in the present
Consequently in 2004 Denmark notified a recapitali
decision the measures implemented by the Danish
sation of TV2.
authorities in 2004 as a result of the recovery ordered
by the annulled recovery decision.
( 6 ) Commission Decision 2005/217/EC of 19 May 2004 on measures
implemented by Denmark for TV2/Danmark (OJ L 85, 23.3.2006,
( 8 ) Commission decision C(2004) 3632 of 6 October 2004 on the
p. 1).
recapitalisation of TV2/Danmark A/S.
( 7 ) The DKK 1 050 million included not only the DKK 628 million plus
( 9 ) Joined Cases T-309/04, T-317/04, T-329/04 and T-336/04.
interest up to the date of recovery, but also a corresponding amount
( 10 ) Case T-12/05, Order of the Court of First Instance of 24 September
for 2003, which the Danish Government reclaimed on its own
2009.
initiative.
( 11 ) Paragraph 43 of the grounds of the order.

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EN
21.12.2011 Official
Journal
of
the
European
Union
L
340/3
(16) It follows from recitals 13, 14 and 15 that the present
present case and its decision in the restructuring case
decision covers only the measures taken by the State in
will be adopted in parallel and simultaneously with the
favour of TV2 for the years 1995-2000 but, in
present decision.
accordance with the Court’s order, the Commission will
also take into account in its assessment in the present
decision the recapitalisation measures taken in 2004,
which resulted from the recovery ordered by the
II. DETAILED DESCRIPTION
annulled recovery decision.
II.1. NATIONAL BACKGROUND
(17) By
a
letter
dated
20
March
2009,
the
Commission
asked
II.1.1. THE DANISH BROADCASTING MARKET DURING THE
the Danish authorities to give their analysis of the impli
PERIOD 1995-2002
cations of the judgment for the case.
(25) In
the
years
1995-2002,
two
public
service
television
broadcasters operated in Denmark, namely Danmarks
Radio (‘DR’) and TV2. DR was almost entirely financed
(18) After
requesting
several
extensions
of
the
time
limit,
the
through the licence fee. TV2 was funded partly through
Danish authorities sent their observations on 26 June
the licence fee, but also through advertising revenue.
2009. As an annex to their letter, the Danish authorities
also submitted comments from TV2.
(26) TV2 was founded in 1986
( 15 ) as an independent
(19) A
number of meetings were held with the Danish
autonomous institution financed by government loans.
authorities and/or TV2, inter alia, on 25 August 2009,
The company started national broadcasting on
7 February 2011 and 4 March 2011.
1 October 1988. It broadcast the terrestrial channel
TV2 and also started broadcasting the satellite channel
TV2 Zulu in 2000. At the end of 2002, TV2 Zulu
(20) The Commission sent additional requests for
changed from a public service channel into a commercial
information, inter alia, on 22 September 2010,
pay-TV channel. In addition, the government approved
28 October 2010, 19 November 2010, 14 January
eight stations as regional TV2 stations. TV2 was required
2011, to which the Danish authorities replied on
to carry broadcasts from the regional TV2 stations on its
17 November 2010, 30 November 2010, 3 February
national terrestrial channel.
2011, 24 February 2011 and 7 March 2011. The
Danish authorities also submitted various items of
information in March and April 2011.
(27) Between 1995 and 2002 two commercial broadcasters,
TVDanmark and TV3/3+, were active on the Danish
(21) The
Commission
also
received
comments
from
third
nationwide television broadcasting market, in addition
parties, in particular from SBS/TVDanmark on
to the public broadcasters. The commercial broadcasters
7 February 2011.
competed with TV2 on the nationwide television adver
tising market. TVDanmark is part of SBS Broadcasting
SA and broadcast two channels in Denmark. From
(22) On
4
August
2008
the
Commission
adopted
a
decision
1997 it broadcast TVDanmark2 through a network of
raising no objection to the rescue aid to be granted to
10 local commercial television stations and from 2000
TV2 in the form of a credit facility for DKK 1 000
onwards it broadcast a UK licensed satellite channel,
million ( 12 ). An appeal against the decision was lodged
TVDanmark1. The satellite channels TV3 and 3 +
by TV2’s competitor MTG/Viasat. The General Court
began broadcasting in 1992. They are part of the
decided to stay the proceedings until the Commission’s
Modern Times Group (MTG).
decision in the restructuring case ( 13 ).
(23) On
4
February
2009
Denmark
notified
the
Commission,
II.1.2. LEGAL REQUIREMENTS DURING THE PERIOD
pursuant to Article 108(3) TFEU, of a restructuring plan
1995-2002
regarding TV2 Danmark A/S (hereinafter, the ‘restruc
turing case’). By letter dated 2 July 2009, the
(28) The
legal
provisions
governing
the
public
service
remit
Commission informed Denmark that it had opened
during the period of the investigation from 1995-2002
proceedings in respect of the restructuring case (
are laid down in successive versions of the Radio and

14 ).
Television Broadcasting Act (hereinafter ‘the Broadcasting
Act’) ( 16 ).
(24) The
Commission’s
investigation
in
the
restructuring
case
has taken place in parallel with its assessment in the
( 15 ) By Act No 335 of 4 June 1986, which entered into force on
1 July 1986.
( 16 ) Act No 578 of 24 June 1994, as amended by Act No 666 of 5 July
( 12 ) Commission decision of 4 August 2009 (OJ C 9, 14.1.2009, p. 2).
1996, Act No 75 of 29 January 1997, Act No 138 of 19 February
( 13 ) Case T-114/09, Order of the President of the Fifth Chamber of the
1998, Act No 208 of 6 April 1999, Act No 551 of 20 June 2000,
General Court, 17 May 2010.
Act No 203 of 22 March 2001, Act No 701 of 15 July 2001, Act
( 14 ) OJ C 207, 2.9.2009, p. 2.
No 1052 of 17 December 2002.

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L 340/4
EN
Official Journal of the European Union
21.12.2011
(29) TV2’s
mission
is
to
provide
and
distribute
national
and
programming requirements for licence holders are laid
regional television programmes. Distribution may be by
down in Executive Orders No
874 on European
means of radio equipment, including satellite or cable
content and No
1349 concerning local radio and
systems. The Minister of Culture issues the rules
television ( 21 ). Under those orders, network stations that
governing TV2’s obligations.
obtain a local television broadcasting licence must
transmit local programmes for at least 1 hour a day
and produce a significant share of their programming
in Danish or for a Danish audience. As TV3, 3 + and
(30) TV2
has
a
public
service
obligation.
Under
the
Broad
TVDanmark’s first channel are broadcast under a British
casting Act (1994 — the version in force during the
licence, these rules only apply to TVDanmark2.
period concerned) ( 17 ), TV2 is an independent institution
whose object is to provide and distribute national and
regional television programmes through independent
programme activities. The range of the programmes
II.1.3. TV2’s COMMERCIAL ACTIVITIES
provided must focus principally on quality, versatility
and diversity. Priority must also be given to regional
(35) Between
1995
and
2002,
TV2
engaged
in
a
number
of
relevance in planning programmes for the regional TV2
commercial activities, having been given a separate legal
stations.
basis for this purpose as from 1 January 1997 ( 22 )
allowing it, among other things, to exploit its technical
equipment, establish new companies or make capital
investments in existing companies. Between 1995 and
(31) As
noted
in
the
Court’s
judgment
(
2002, these activities included such things as advertising,

18 ), the precise defi
nition of TV2’s public service mission has changed over
the sale of programmes, letting out of masts, merchan
time, but all the definitions at different points during the
dising, Internet activities, re-sale of sports rights, etc.
period under investigation require ‘quality, versatility and
diversity’, which are the essential qualitative requirements
of the public service activity entrusted to TV2.
(36) From
January
2001,
TV2
was
obliged
to
keep
separate
accounts for its public service operations and ‘any other
operations’ if the latter exceeded 5 % of turnover and
(32) A
further
definition
of
the
public
service
mission
can
be
DKK 3 million per year. Full cost accounting had to be
found in TV2’s Statutes. For example, these specify TV2’s
applied, non-public services/products had to be priced
broadcasting obligations as regards art and culture,
according to market value, and transfers of capital
Danish film production, programmes for children,
between the public service and other undertakings had
young people, and ethnic minorities. TV2 is also
to take place in accordance with the market economy
obliged to broadcast emergency warnings to the popu
investor principle and could not involve licence fee
lation.
resources ( 23 ).
(33) TV2’s
public
service
activities
are
financed
through
its
II.2. THE MEASURES
share of television licence fees, through advertising
income, and through other income. Under the terms of
Licence fee revenue
the Broadcasting Act in force in 1994 ( 19 ) TV2’s overall
activities are financed by resources transferred from the
(37) Between 1995 and 2002, TV2 received
licence fee
TV2 Fund in accordance with the framework budgets
revenue.
established by the Minister of Culture, by income from
the sale of programmes, and through other contributions,
subsidies, etc. It should be noted that for the years 1995
and 1996, TV2 received its share of the licence fees and
(38) The Minister for Culture sets the amount of the licence
the advertising revenue from a special fund (the TV2
fee payable by the owners of radio receivers and
Fund) ( 20 ).
television sets, for one or more years at a time ( 24 ). The
television licence fee is collected by DR and the revenue
is then distributed between DR and TV2 as determined
by the Minister of Culture under a media agreement with
(34) The
provisions
on
broadcasting
by
commercial
television
the Danish Parliament.
stations beyond a single local area are laid down in
chapter 5 of the Broadcasting Act. Chapter 6 deals
( 21 ) Executive Order No 874 of 9 December 1998 concerning radio and
with local radio and television services. The main
television services by way of satellite or cable; Executive Order
requirement is to obtain a broadcasting licence. The
No 1349 of 18 December 2000 concerning local radio and
television services.
( 22 ) Executive order 658 of 18 August 1997, Sections 12-13.
( 17 ) Paragraph 18 of the Broadcasting Act (1994 version).
( 23 ) Order No 740 of 21 August 2001, implementing Directive
( 18 ) Paragraph 119.
2000/52/EC on separate accountancy between Danmarks Radio’s
( 19 ) Broadcasting Act, Section 30 (1994 version).
and TV2’s public service undertaking and any other undertakings.
( 20 ) See recitals 79 ff. of the present decision.
( 24 ) Sections 61-63 of the Broadcasting Act (1994 version).

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EN
21.12.2011 Official
Journal
of
the
European
Union
L
340/5
(39) The
Minister
for
Culture
lays
down
the
rules
on
when
the
State guarantee for operating loans
obligation to pay licence fees comes into effect and when
it ceases, on time limits for payment and enforced
(46) Until
the
end
of
1996
the
Government
issued
guarantees
collection, and on reminder fees etc. Interest is charged
for loans taken out by the TV2 Fund in order to finance
on late payments in accordance with the law on interest.
the operation of TV2. The amount of the guaranteed
Collection of unpaid fees and charges can be enforced by
loans was transferred to TV2 when the Fund was
the Hypotekenbank (Danish Mortgage Bank). Unpaid
wound up. The advantage for TV2 resulting from this
sums can, for example, be deducted from the salary of
guarantee is DKK 9,8 million.
the person concerned in accordance with the rules on
collection of personal taxes as laid down in the
Deduction of Taxes at Source Act.
Fees paid for use of a nationwide transmission
frequency and for a licence to broadcast using local
frequencies in a networked configuration
(40) Until
1997,
TV2
received
its
funding
(advertising
and
licence fee revenue) through the TV2 Fund. Since
(47) During
the
period
under
investigation,
Denmark
had
1997, TV2 has received its share of licence fee revenue
access to three nationwide terrestrial transmission
directly from DR.
frequencies that were reserved for the public broad
casters. One frequency was reserved for TV2, a second
for DR, and a third for digital television.
Transfers from the TV2 Fund and the Radio Fund
(41) In 1995 and 1996, TV2 received advertising revenue
(48) TV2 paid a fee for the use of the reserved nationwide
from the TV2 Fund ( 25 ).
broadcasting frequency to the National IT and Telecom
Agency, a State body under the Ministry for Research,
Technology and Development ( 26 ). The amount of the fee
was laid down in the Danish Finance Act. During the
(42) TV2
also
received
DKK
58
million
from
the
Radio
Fund
for increased commitment to Danish film production.
period under investigation, TV2 paid between DKK 2 and

4 million annually in frequency fees.
(43) In addition, when the TV2 Fund was wound up in 1997,
TV2 received DKK 167 million from the Fund for
(49) Denmark
also
has
frequencies
for
regional
coverage
only.
investment in digitisation of its production systems and
In 1997, the Government introduced the possibility of
DKK 50 million to cover operational costs.
linking up regional frequencies to achieve wider coverage
(networking). Between 1998 and 2001, local commercial
television stations licensed to broadcast in a networked
configuration had to pay an annual fee to the State ( 27 ).
Exemption from corporation tax
TV2’s regional services were not liable for payment of the
fee as those services broadcast in ‘windows’ on TV2’s
(44) TV2
has,
moreover,
been
exempted
from
paying
corpo
national frequency. The commercial television station
ration tax under the Company Act. The resulting benefit
TVDanmark was the only operator that paid this fee,
to TV2 over the period under investigation amounts to
for its second channel. The total fees that it paid
DKK 159,4 million. In January 2001, the Danish State
amounted to DKK 85,0 million.
introduced a mechanism to neutralise the effect of the
tax exemption on TV2’s commercial activities. TV2 has
had to transfer 30 % of the annual surplus from its non-
public service to its public service activities. That rate
Must-carry status
corresponds to the standard corporate tax rate that
Denmark introduced in 2000.
(50) Owners
of
communal
aerial
installations
have
an
obli
gation to relay the public service programmes of TV2
through their installations (must-carry).
Interest-free and repayment-free status of start-up
loans
III. COMMENTS FROM INTERESTED PARTIES AND
(45) Government loans financed the start-up costs and
FROM DENMARK
operating deficit of TV2 during its initial period of
operation. Under the initial loan agreements, TV2 was
(51) Firstly,
the
Commission
received
various
comments
from
to pay interest on the principal and was to repay the
interested parties following its decision to open the
loans in full. However, during the entire period of the
formal investigation procedure. The main points are
investigation, TV2 was exempted from interest payments
summarised below.
and enjoyed a moratorium on repayments. The
advantage resulting from the interest- and repayment-
( 26 ) Section 38 of the Danish Act on Radio Communications and Allo
free start-up and operating loans for the period under
cation of Radio Frequencies and section 48 of the Danish Act on
investigation was DKK 341,8 million.
Radio Frequencies.
( 27 ) Introduced by Act 1208 of 27.12.1996 and incorporated in Section
60(a) of the 1997 version of the Broadcasting Act; abolished on
( 25 ) See recitals 79 ff. of the present decision.
1 January 2002 by Act No 259 of 8.5.2002.

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Official Journal of the European Union
21.12.2011
(52) TVDanmark
considered
that
the
provision
by
the
State
of
alleging that TV2’s unfair competition prevented
a nationwide transmission frequency constituted State
TVDanmark from generating sufficient revenue.
aid, as the State foregoes income on this scarce asset.
TVDanmark also submitted an analysis of pricing for
Competitors had only 77
% coverage at most.
television advertising on the Danish market prepared
TVDanmark argued that because the networking charge
by Copenhagen Economics. The analysis compared
was levied only on TVDanmark2 and not on TV2’s local
average and marginal prices on the market and
stations, even though they were economically and
concluded that there was competition only for the
commercially in the same situation, it constituted State
residual demand and that any comparison should
aid to TV2’s local stations. According to ACT, Antena 3
therefore be based on marginal prices. Moreover,
TV and Telecinco, the EC principle of neutrality regarding
TVDanmark submitted information comparing TV2’s
means of retransmission required that the fee should
advertising prices with those for other types of media
have been imposed on any kind of network.
and with prices in other countries.
(53) Regarding
the
exemption
from
corporation
tax,
ACT,
(56) TV3
stated
that
it
had
to
grant
very
high
discounts
for
its
Antena 3 TV and Telecinco commented that TV2’s obli
advertising slots in order to get market acceptance, as
gation to transfer 30 % of the profit from its commercial
TV2 offered extra marginal discounts on the remainder
activities to its public activities could not be regarded as
of advertiser’s television advertising budgets if they also
equivalent to paying corporation tax to the State, as it
placed it with TV2.
distorted competition within the broadcasting market.
(54) Several
third
parties
held
that
the
definition
of
TV2’s
(57) Secondly,
the
Commission
also
received
comments
from
public service remit was not legitimate. They disputed
the Danish authorities following its decision to open the
that the conditions regarding the transfer of tasks and
formal investigation procedure. The main points are
the proportionality conditions had been met. In
summarised below.
particular, TVDanmark argued that the Commission’s
calculation of overcompensation should take into
account the benefit to TV2 of its exemption from corpo
ration tax, its interest- and repayment-free start-up loans,
the State guarantee for operating loans, and the free use
of a transmission frequency. TVDanmark submitted that
(58) The
Danish
authorities
considered
that
the
transmission
in general the market fluctuations in television adver
frequencies for TV2 could not be considered an
tising income were limited and did not justify TV2’s
advantage as local television stations also had trans
build-up of capital.
mission frequencies reserved for them. Therefore, TV2
had not received special treatment. TV2 had, like other
stations, paid a charge for using the frequency.
(55) Concerning the advertising market, TVDanmark
submitted that TV2’s pricing practices did not allow
commercial operators to recover stand-alone costs.
TVDanmark had to price its TRP around 30-40 %
(59) On the corporation tax exemption, the Danish authorities
below TV2 in order to gain market acceptance (TV2’s
observed that the profit on commercial activities was
TRP and GRP are more valuable because its coverage is
quite limited and that the method chosen to neutralise
better) (
the effect of TV2’s exemption from corporation tax on its

28 ). Thanks to TV2’s unique position in terms of
coverage and programming budget, an advertiser would
commercial activities meant that it did not derive any
always place a certain part of his budget with TV2 to
financial benefit from the exemption.
obtain a maximum impact in terms of the number of
contacts, reach, and/or frequency with a given budget.
TVDanmark supplied figures illustrating that its
operations made a loss between 1997 and 2002,
( 28 ) Advertisers can purchase advertising time on the Danish TV stations
(60) On the proportionality issue, the Danish authorities
in two ways: on the basis of gross rating points (GRPs), which
stated that the transfer of DKK 167 million from the
relate to the total audience aged 12 years and over, or on the
TV2 Fund was allocated to digitising the broadcasting
basis of target rating points (TRPs), which relate to a narrower
target group. TV2 is the only station in Denmark to sell GRP as
network. Therefore, it could not be described as free
well.
capital.

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EN
21.12.2011 Official
Journal
of
the
European
Union
L
340/7
(61) The Danish authorities also stated that surplus for the
authorities did not confirm the figures put forward by
years 1995-2002 reflected a reasonable rate of return
the Commission, but explained that the calculation of
in relation to TV2’s turnover. Moreover, the capital was
advertising revenue for 1995 and 1996 had to take
needed as a buffer in the case of sudden drops in adver
into account the fact that part of the money from the
tising revenue and under the law TV2 was not allowed to
TV2 Fund was used to finance the TV2 regions, and that
take out loans exceeding 4 % of annual turnover. In
this part could only be financed from licence fee
addition, according to the Danish authorities, the State
resources. However, the Danish authorities conceded
was acting in accordance with the ‘market economy
that advertising revenue should in any case be taken
investor principle’, as TV2’s own capital did not exceed
into account for the purposes of calculating the net
what a normal market investor would have injected. Such
cost of the public service remit and that it constituted
capital was not contrary to the Treaty, provided it was
income generated by public service activities.
not used to cross-subsidise TV2’s commercial activities.
(67) The
Danish
authorities
and
TV2
also
pointed
to
the
(62) Regarding
TV2’s
behaviour
in
the
advertising
market,
the
Court’s judgment as proof that the conditions of the
Danish authorities pointed out that TV2 had consistently
Altmark judgment of 24 July 2003 ( 29 ) were met. They
set its prices so as to maximise revenue. Prices were set
recalled that, like the BUPA case ( 30 ), the TV2 case
purely according to supply and demand. They were set
concerned circumstances already in existence prior to
annually on the basis of estimates by TV2’s advertising
the date of the Altmark judgment. They contended that
division of the commercial audience share (21-50 years
when applying the Altmark criteria, the spirit and the
old), the programme schedule, economic developments
purpose of the criteria had to be observed so that the
and the competitive situation on the market. TV2’s
facts of the particular case were taken into account. In
operating costs were not a factor in the estimate, nor
their view, it followed from the judgment that the only
was the amount of licence fee revenue. TV2’s prices
requirement the Court had imposed on the Danish State
were the highest on the Danish market and therefore
was that it should, ‘in essence’, comply with the Altmark
there was no question of undercutting prices, with an
conditions.
increased need for State funding as a result.
(68) More
specifically,
the
Danish
authorities
and
TV2
held
(63) The
Danish
authorities
submitted
a
report
prepared
by
that the procedure used to set the licence fee was trans
RBB Economics on competition on the Danish television
parent and complied with the requirements of the second
advertising market. The report concluded that the average
Altmark criterion, at least in essence, and in their view
net prices charged by TV2 were in fact higher than the
this was sufficient in the light of the Court’s judgment.
prices charged by its competitors and that the differences
They considered that the third criterion was also met in
in advertising rates charged by TV2 and TVDanmark
so far as TV2 was allowed to keep a reasonable profit.
were explained by differences in their relative strength
Concerning the fourth Altmark condition, they high
in terms of programming and the ability to attract
lighted the extensive controls which applied to TV2
audiences.
and argued that the BUPA case and the Court’s
judgment supported their claim that in this particular
instance the test should be relaxed somewhat or should
only be met in essence. Citing the Chronopost case ( 31 ),
they also pointed out that in practice it was not possible
(64) Thirdly, following the Court’s judgment, the Commission
to compare TV2 with a typical well-run undertaking. In
asked the Danish authorities to give their analysis of its
addition, the Danish authorities reiterated their view that
implications for the case.
under the market economy investor test, the compen
sation should be approved.
(65) The
Danish
authorities
sent
their
observations
and
also
submitted comments from TV2. The main points are
(69) The
Danish
authorities
and
TV2
argued
further
that
the
summarised below.
State aid should be declared compatible. They explained
the process that led to the build-up of capital in TV2 and
highlighted the different reasons why this capital was
necessary for TV2 to fulfil its public service tasks.
(66) Concerning
advertising
revenue
for
1995
and
1996,
the
( 29 ) Case C-280/00 Altmark Trans und Regierungsprsidium Magdeburg
Danish authorities and TV2 argued that the Danish State
[2003] ECR I-7747.
( 30 ) Case T-289/03 BUPA and Others v Commission (OJ C 79, 29.3.2008,
had no control over the amounts and therefore it should
p. 25).
not be considered as State resources. The Danish
( 31 ) Joined Cases C-83/01 P, C-93/01 P and C-94/01 P.

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L 340/8
EN
Official Journal of the European Union
21.12.2011
(70) Some
third
parties
also
submitted
comments
following
(76) In
its
judgment,
the
Court
held
( 34 ) that the Commission
the Court’s judgment. In essence, they argued that the
had not stated sufficient reasons why the 1995 and 1996
Altmark conditions should not be found to be met, in
advertising revenue should be considered State resources.
particular, because the economic reports referred to by
the Court were not sufficient to demonstrate that the
second and fourth criteria were satisfied. They also
contended that the Commission should maintain its
(77) In light of the PreussenElektra ruling
( 35 ), the
conclusion in the annulled recovery decision, i.e. that
Commission has to demonstrate whether the advertising
the aid was not compatible.
revenue for the years 1995 and 1996 can be classed as
State resources. For this purpose, it has to assess whether
this revenue was under the control of the Danish State.
IV. ASSESSMENT OF THE MEASURES
IV.1. STATE AID WITHIN THE MEANING OF
(78) In this respect,
the Commission takes note of the
ARTICLE 107(1) TFEU
following factors relevant for deciding whether the
1995 to 1996 advertising revenue constituted State
(71) Article
107(1) TFEU provides that ‘Save as otherwise
resources.
provided in the Treaties, any aid granted by a Member State
or through State resources in any form whatsoever which
distorts or threatens to distort competition by favouring
certain undertakings or the production of certain goods shall,
(79) In 1995 and 1996, TV2 received the advertising revenue
in so far as it affects trade between Member States, be incom
from the TV2 Fund, which itself received the advertising
patible with the internal market’.
revenue from TV2 Reklame A/S.
(80) TV2
Reklame
was
a
separate
State-owned
vehicle
inde
(72) The
Commission
has
to
assess
whether
the
measures
pendent from TV2. The company was set up to act as an
described above constitute State aid within the meaning
agent for the sale of advertisements on TV2 on a
of Article 107(1) TFEU.
commercial basis ( 36 ). TV2 Reklame had a contractual
relationship with its advertising customers.
IV.1.1. STATE RESOURCES AND ATTRIBUTION OF RESPON
SIBILITY
(81) There
was
no
obligation
to
transfer
revenue
from
TV2
Reklame to the TV2 Fund. The transfer was instead
(73) The
Commission
has
to
assess
whether
the
measures
in
decided by the Danish State ( 37 ). The Minister of
question involve State resources.
Culture decided what part of TV2 Reklame’s profits
was to be transferred to the TV2 Fund. The decision
was taken for one or more years at a time with the
approval of the Danish Parliament (the Finance
(74) Concerning
the licence fee, the Commission takes note
Committee). The Minister of Culture could decide that
of the Court’s findings in its judgment (
non-transferred profit should be used for repayment of

32 ). In particular,
the amount is determined by the Danish authorities; the
the State guarantee issued previously for TV2 Reklame or
obligation to pay the licence fee does not arise from a
for cultural purposes.
contractual relationship between TV2 and the person
liable to pay but simply from the fact of owning a
television or radio receiver; where necessary, the licence
fee is collected in accordance with the rules on the
(82) In
practice,
in
1995
and
1996,
the
full
amount
of
TV2
collection of personal taxes; and, lastly, it is the Danish
Reklame’s profits was transferred to the TV2 Fund.
authorities that determine TV2’s share of the income
from licence fees. The Court concluded that licence fee
( 34 ) Paragraph 167.
resources are available to and under the control of the
( 35 ) Case C-379/98 PreussenElektra AG v Schleswag AG [2001] ECR
Danish authorities and that they therefore constitute
p. I-02099; judgment delivered on 13 March 2001.
(
State resources.

36 ) Section 31, Broadcasting Act (1994 version).

( 37 ) Section 29 of the Broadcasting Act (1994 version); see also the
4/94 report, paragraph 4: ‘The Minister of Culture decides in
agreement with the Finance Committee [of Parliament] what
share of the advertisement company’s profit and what share of
the license fees should be paid annually into the TV2 Fund. If
(75) Concerning
the advertising revenue for 1995 and
insufficient funds go into the TV2 Fund, the Fund can — with
1996, the Court pointed out in its judgment that the
the Minister’s approval — take out State guaranteed operating
licence fee and advertising revenue are different in
loans. The size of the guarantee is determined by the Minister in
nature (
agreement with the Finance Committee. In line with the framework

33 ).
budgets set by the Minister of Culture, funds are transferred from
the TV2 Fund to finance the broadcasting enterprise constituted by
( 32 ) Paragraphs 158 and 159 of the grounds.
a nation-wide television station — TV2/Danmark — and 8 regional
( 33 ) Paragraph 165 of the judgment.
stations.’

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EN
21.12.2011 Official
Journal
of
the
European
Union
L
340/9
(83) The
TV2
Fund
was
set
up
with
the
aim
of
providing
TV2
or all of the advertising revenue was to be transferred to
with income from the licence fee resources and adver
the TV2 Fund and to TV2; (ii) in 1995 and 1996 TV2
tising revenue. The TV2 Fund belonged to the TV2
did not receive all the advertising revenue; and (iii) the
group. It was administered by TV2’s board of directors.
advertising revenue that was not transferred accumulated
in the TV2 Fund, where it was, in practice, merged with
the licence fees.
(84) There
was
no
obligation
to
transfer
money
from
the
TV2
Fund to TV2 every year. Rather, the transfer to TV2 was
decided by the Danish State. For under the law the TV2
Fund was obliged to transfer funds to TV2 in accordance
(90) For
these
reasons,
the
Commission
considers
that,
in
this
with the framework budgets laid down by the Minister of
specific case, the advertising revenue for the years 1995
Culture (
and 1996 that was transferred to TV2 via TV2 Reklame

38 ).
and the TV2 Fund constitutes State resources.
(85) In
practice, TV2 did not receive all the advertising
revenue from the TV2 Fund in 1995 and 1996.
(91) But
even
if
the
advertising
revenue
were
not
classed
as
State resources (quod non), it would make no difference to
the amount of State aid that could be considered
compatible. In line with the Commission’s constant
practice and the 2001 Broadcasting Communication ( 40 ),
(86) In
addition,
no
distinction
was
made
in
the
TV2
Fund
income derived from public service activity, such as
accounts between advertising revenue and licence fee
advertising revenue, must be taken into account when
resources. Revenue that was not transferred to TV2
calculating the net costs of the public service, which
accumulated in the TV2 Fund. It was transferred to
means that such revenue, even if not regarded as State
TV2 when the TV2 Fund was wound up.
resources, reduces the need for public financing. The
Danish authorities share this view ( 41 ).
(87) According to TV2 and the Danish authorities, the adver
tising revenue belonged to TV2 and TV2 was legally
entitled to it. They referred to a letter from the
(92) The
ad-hoc
transfer
of
resources
to
TV2
from
the
Radio
Minister of Justice dated 22 November 2003, which
Fund involved licence fee revenue that was made
stated that TV2 Fund’s resources could only be used to
available to TV2 after a decision by the State. The
cover TV2’s activities. According to TV2 and the Danish
same is true of the ad-hoc transfer from the TV2 Fund
authorities, there was therefore a legal obligation to
when it was wound up, since quite apart from the fact
transfer the advertising revenue from the TV2 Fund to
that the Danish State exercised control over the TV2
TV2 eventually. However, as indicated above, there was no
Fund, as mentioned earlier, the resources from the TV2
obligation under the law to transfer all the advertising
Fund were made available to TV2 by decision of the
revenue to TV2 and it was for the Minister to take a
State. As those resources remained under public
specific decision on whether money was to be transferred
control, they have to be regarded as State resources.
to TV2, and if so how much.
And since the advertising revenue is regarded as State
resources and the transfer to TV2 at the time of the
winding-up was in any event decided by the State, the
Danish authorities’ claim that the lump sum transferred
to TV2 when the TV2 Fund was wound up derived
(88) Concerning
TV2,
it
should
be
added
that
the
broadcaster
exclusively from advertising revenue does not alter this
had no contractual relationship with advertisers and no
conclusion.
influence on advertising activities
( 39 ). The Danish
government confirmed that the anticipated advertising
revenue for the coming year was determined inde
pendently of TV2.
(93) Concerning the other State measures, the Commission
considers that the corporate tax exemption constitutes
use of public resources, since foregoing tax revenue is
equivalent to the consumption of State resources in the
(89) On the basis of the above information, the Commission
form of fiscal expenditure (
considers that the Minister had control over the funds in

42 ).
TV2 Reklame and the TV2 Fund. In particular, it is noted
that (i) it was the Danish State that decided whether part
( 40 ) Point 57 of the 2001 Broadcasting Communication.
( 41 ) Reply from the Danish Government in point 3 of its letter of
26 June 2009.
( 38 ) Sections 30-33 of the Broadcasting Act (1994 version); see also the
( 42 ) Point 10 of the Commission Notice on the application of the state
4/94 report, paragraph 4, quoted above.
aid rules to measures relating to direct business taxation (OJ C 384,
( 39 ) Letter from the Danish authorities, 24 March 2003, p. 8.
10.12.1998, p. 3).

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L 340/10
EN
Official Journal of the European Union
21.12.2011
(94) The interest- and repayment-free loans granted to TV2
(100) All the abovementioned measures are attributable to the
are directly provided by the State and allocated from the
Danish State because, as described above, they involved a
State budget. By foregoing the interest and repayments
decision by the Danish State in one way or another.
on these loans, the Danish State foregoes income and
therefore these funds constitute State resources.
Furthermore, it is the Danish State that guarantees the
operating loans. The benefit of a State guarantee is that
IV.1.2. SELECTIVE ADVANTAGE AND DISTORTION OF
the risk associated with the guarantee is carried by the
COMPETITION
State. The fact that the State carries the risk should
normally be remunerated by an appropriate premium.
(101) The Commission considers that the licence fee revenue,
Where the State foregoes such a premium, there is
the transfers from the TV2 Fund (including advertising
both an advantage for TV2 and a drain on the
revenue for 1995 and 1996) and the Radio Fund, the
resources of the State ( 43 ).
exemption from corporate tax, the interest- and
repayment-free loans, and the State guarantee for
operating loans, together with access to a nationwide
frequency on favourable terms, gave TV2 an economic
(95) Moreover,
the
State
has
reserved
a
nationwide trans
mission frequency for TV2, for which TV2 pays a
and financial advantage, relieving it of operating costs
frequency fee to a State body. The annual fee that TV2
that it would normally have had to bear through its
paid varied between DKK 2 million and DKK 4 million
budget. Furthermore, TV2’s competitors did not receive
during the period under investigation.
the same funds.


(96) In the absence of a basis of comparison for the fee paid
(102) However, State measures compensating the net additional
for the nationwide frequency, it can only be compared
costs of a service of general economic interest (SGEI) do
with the fee paid for the permit to reach a larger share of
not qualify as State aid within the meaning of
the population through a network configuration. The
Article 107(1) TFEU when the four conditions set out
frequency fee paid by TV2 for nationwide coverage is
by the Court of Justice in the Altmark case ( 45 ) are
significantly lower than the networking fee that was
fulfilled:
imposed on TVDanmark, which varied between DKK 5
million in 1997 and DKK 30 million in 2001 even
though the network of TVDanmark’s regional frequencies
only attains a 77 % coverage. Thus, TV2 has been able to
— first, the recipient undertaking must actually be
reach a larger share of the Danish population at a lower
required to discharge public service obligations and
price.
those obligations must be clearly defined,
(97) The
Commission
therefore
considers
that
the
frequency
fee does not reflect market conditions and that by not
— second, the parameters on the basis of which the
asking for the market rate for the asset, the State has
compensation is calculated must be established
foregone revenue that should have gone to the State
beforehand in an objective and transparent manner,
budget.
(98) In contrast,
since TV2 does not broadcast using a
— third, the compensation must not exceed what is
configuration of local frequencies in order to create a
necessary to cover all or part of the costs incurred
national network, it is not liable to pay the networking
in discharging the public service obligations, taking
fee. As the State was not entitled to collect this fee from
into account the relevant receipts and a reasonable
TV2, it did not forego revenue and hence State resources
profit for discharging those obligations,
are not involved here.
— fourth, where the undertaking that is to discharge
(99) Similarly,
the
Commission
cannot
discern
any
element
of
State resources in the legal obligation on owners of
public service obligations is not chosen in a public
common aerial installations to relay public service
procurement procedure, the level of compensation
programmes through those installations (must-carry) as
needed must be determined on the basis of an
the State is neither forgoing any income nor actively
analysis of the costs which a typical undertaking,
transferring funds to such operators. This access rule
well run and adequately provided with means of
does not confer on TV2 any financial advantage from
production so as to be able to meet the necessary
State resources (
public service requirements, would have incurred in

44 ).
discharging those obligations, taking into account the
relevant receipts and a reasonable profit for
( 43 ) Point 2.1.2 of the Commission Notice on the application of Articles
discharging the obligations.
87 and 88 of the EC Treaty to State aid in the form of guarantees
(2000/C 71/07).
( 44 ) See Aid No NN 70/98, ‘State aid to public broadcasting channels
( 45 ) Case C-280/00 Altmark Trans and Regierungsprsidium Magdeburg
“Kinderkanal and Phoenix” ’ (OJ C 238, 21.8.1999, p. 3).
[2003] ECR I-7747.

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EN
21.12.2011 Official
Journal
of
the
European
Union L
340/11
(103) As will be described more fully in the section of the
(109) In-depth economic analyses were carried out in 1995
present decision dealing with the compatibility of the
and in 1999 by KPMG, a firm of auditors. For the
measures (recitals 160 ff. of the present decision), it
1999 report KPMG was assisted by a follow-up group
follows from the Court’s judgment that the first
consisting of representatives of the leading players in the
Altmark condition is met.
market, including TV2’s competitors. Particular attention
was paid to information on potential income from
sources other than the licence fee, such as advertising
revenue.
(104) As regards the second Altmark criterion, whereby the
parameters used to calculate the compensation must be
established beforehand in an objective and transparent
manner, the Commission has to assess the legal and
economic conditions under which the licence fee
(110) In points 164 and 165 of their letter of 24 March 2003,
revenue payable to TV2 was determined during the
the Danish authorities stated that the KPMG consultancy
period under investigation. In that connection the
studies, which were meant to forecast the likely trend of
Commission notes that the procedure was as follows.
advertising turnover in the Danish advertising market
and TV2’s sources of income, and to identify the uncer
tainties associated with those estimates, were drawn up in
order to give the Danish Government and Parliament a
(105) According to points 29 and 30 of the Danish authorities’
better basis for determining and allocating licence fee
letter of 24 March 2003, the Radio and Television Broad
revenue in the negotiations on media policy.
casting Act applicable during the period under investi
gation ( 46 ) laid down how the TV2 station as a whole
was to be financed (licence fee resources, advertising
revenue, and other sources of income) and assigned
responsibility for determining TV2’s and DR’s share of
(111) According to the Danish authorities, the documents used
the licence fee and therefore the amount of compen
to determine the compensation were publicly available.
sation to be granted to TV2 to the Minister for
The media agreements were published in press releases
Culture. It should be noted that for the years 1995
and the Official Record of Parliamentary Proceedings
and 1996, TV2 received its share of the licence fee
(Folketingstidende). The legislation that was to implement
from the TV2 Fund.
the media agreements was published in the Danish
Official Gazette (Lovtidende). TV2’s accounts were also
published, together with the abovementioned economic
analyses.
(106) In accordance with established practice, the size of the
compensation was determined by the Minister in consul
tation with the Finance Committee of the Danish
Parliament within the framework of a media agreement
concluded with a majority of the political parties in the
(112) In light of the Court’s judgment, the Commission has to
Parliament. At the time in question, there were 3 media
assess whether, given the procedure described above, it
agreements: the media agreement for 1994 to 1997,
can be concluded that the second Altmark criterion is
concluded on 16 September 1993, the media
met.
agreement for 1997 to 2000, concluded on 10 May
1996, and the media agreement for 2001 to 2004,
concluded on 28 March 2000.
(113) On the one hand, the Commission takes note that in its
judgment ( 47 ), the Court stated that ‘(…) conceivably, the
(107) The licence fee revenue was thus fixed for a fairly long
above procedure for determining the amount of licence fee
time. During the period under investigation, the compen
income payable to TV2 was objective and transparent given,
sation granted to TV2 was not subject to any subsequent
in particular, that it involved the Danish Parliament, that it
review, even when TV2’s revenue was falling. For
was based on economic analyses prepared by a firm of auditors
example, although TV2’s advertising income suffered a
assisted by a follow-up group of experts in which TV2’s
major decline in 1999, the compensation was not
competitors participated, and that those analyses were
adjusted to reflect this fact.
published, as were TV2’s annual accounts. Accordingly, it
cannot be ruled out that a serious analysis of that procedure
might lead to the conclusion that, even before the Altmark
conditions were laid down by the Court of Justice, the
(108) According to the Danish authorities, the compensation
was determined through price and wage indexing of
Kingdom of Denmark had, in essence, complied with the
TV2’s budget and accounts, and through economic
second of those conditions’. The Court also held that ‘the
analyses.
amount of the licence fee income payable to TV2 was

calculated on the basis of the specific assumption that TV2
would continue to benefit from those other State measures’ ( 48 )
( 46 ) Act No 578 of 24 June 1994, as amended by Act No 666 of 5 July
(i.e. tax exemption, etc.).
1996, Act No 75 of 29 January 1997, Act No 138 of 19 February
1998, Act No 208 of 6 April 1999, Act No 551 of 20 June 2000,
Act No 203 of 22 March 2001, Act No 701 of 15 July 2001 and
( 47 ) Paragraph 228 of the judgment.
Act No 1052 of 17 December 2002.
( 48 ) Paragraph 229 of the judgment.

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L 340/12
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Official Journal of the European Union
21.12.2011
(114) The Commission considers that the involvement of the
level of compensation was determined on the basis of
Danish Parliament in the process for setting the licence
the costs which a typical undertaking, well run and
fee ensured a certain degree of transparency and objec
adequately provided with means of production, would
tivity. Moreover, the media agreements setting the
have incurred in discharging the public service obli
amount of licence fee resources to be allocated to TV2
gations.
were decided in advance for several years, and thereafter
TV2’s compensation was never adjusted during the
period under investigation.
(120) The economic and legal conditions in which the
compensation to TV2 was set have been described
(115) However, the economic reports prepared by KPMG only
above. In the light of the Court’s judgment and taking
gave estimates of the amount of advertising revenue
account of its finding that the procedure used by the
accruing to TV2 (i.e. the income side). They said
Kingdom of Denmark to determine the amount of
nothing about the cost side of the compensation calcu
licence fee revenue payable to TV2 between 1995 and
lation, and it seems to the Commission that the media
2002 involved, inter alia, economic analyses drawn up
agreements were based solely on indexation of TV2’s
with the help of TV2’s competitors, the Commission
costs in the previous years. Indeed, the Danish authorities
must take particular account of the 1995 and 1999
stated that the compensation was determined on the
KPMG reports in assessing whether TV2’s costs were
basis of price and wage indexing of TV2’s budgets and
compared with those of a typical well run operator.
accounts and on the basis of the economic analyses,
which only assessed the income side and did not deal
with the period covered by the media agreement
concluded on 16 September 1993.
(121) The KPMG reports consider various scenarios of how the
advertising market might develop over the respective
licence fee periods. The reports contain no information
(116) In addition, there was no indication of the parameters to
on TV2 as such (e.g. on its financial situation or its
be used to calculate the compensation. The amount of
operating costs); they illustrate how advertising revenue
the compensation was set in advance, but the second
might develop and how much of the general advertising
Altmark criterion requires that the parameters used to
market might result in revenue for TV2. By estimating
calculate the compensation must themselves be estab
how advertising turnover in the Danish advertising
lished beforehand in an objective and transparent
market was most likely to develop and identifying the
manner.
uncertainties associated with these estimates, the reports
were part of the procedure used by the Danish
authorities to determine the licence fee to be granted
to TV2.
(117) In the light of the foregoing, the Commission considers
that the second Altmark criterion is not met. In any
event, the Altmark criteria are cumulative and the
Commission finds that the fourth criterion is not met
(see below).
(122) The KPMG reports do not assess any of TV2’s costs or
the costs of other operators, limiting themselves to
considering the development of the advertising market
and TV2’s share of advertising revenue. It should also
be noted that the reports do not cover the first years
(118) The fourth Altmark criterion requires that ‘[the] public
of the period under investigation, which was covered by
service provider should be chosen according to a public
the 1993 media agreement.
procurement procedure or the level of compensation needed
[should be] determined on the basis of an analysis of the
costs which a typical undertaking, well run and adequately
provided with means of production so as to be able to meet
the necessary public service requirements, would have incurred
in discharging those obligations, taking into account the
(123) To a certain extent, competitors were involved in
relevant receipts and a reasonable profit for discharging the
drawing up these reports. The 1995 report states that
obligations’.
‘many stakeholders’ were involved, but it is not clear
from the report who they were. The 1999 KPMG
report mentions a follow-up group of experts that did
indeed involve competitors of TV2. However, the fact
that these economic reports were to some extent
(119) In the present case, the public service provider TV2 was
drawn up with the help of TV2’s competitors does not
not chosen following a public procurement procedure.
prove by itself that an analysis of the competitor’s costs
The Commission therefore has to assess whether the
was carried out.

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EN
21.12.2011 Official
Journal
of
the
European
Union L
340/13
(124) In other words the reports include no analysis of the
(129) The Danish authorities pointed in particular to the 2000
costs which a typical undertaking, well run and
report from the Danish National Audit Office, in which
adequately provided with means of production, would
the change in TV2’s productivity was to some extent
have incurred in discharging public service obligations,
compared with that of DR and certain foreign public
but instead dealt with the more general issue of the
service broadcasters (British Broadcasting Corporation
outlook for the advertising market as well as the
(BBC), Sveriges Television ‘SVT’ and Norsk Riksring
amount of TV2’s future advertising revenue. It should
kastning ‘NRK’). In the report, the National Audit
also be added that prices on the advertising market are
Office found that both DR and TV2 improved produc
determined by a variety of factors, such as audience
tivity between 1990 and 1999. DR reduced its hourly
shares, and not only on the basis of costs.
costs for first broadcasts by more than TV2, but in 1999
those costs were still 53 % higher than TV2’s. DR’s
overall hourly broadcasting costs in 1999 were
approximately 29 % higher than TV2’s. The National
Audit Office also found that DR’s and TV2’s productivity
(125) The Danish authorities and TV2 also put forward legal
improvements were better than or equal to the produc
and factual arguments in relation to the fourth Altmark
tivity increase of the other three public service broad
condition.
casters.
(126) Firstly, Denmark cited the BUPA case, arguing that the
fourth Altmark condition did not necessarily apply, or at
least that the Commission, in light of the Court’s
(130) However, that report is not sufficient proof that the
judgment, should only assess whether it was met in
fourth condition was fulfilled.
essence. The Commission takes the view that the
situation in the BUPA case was rather special in that
the scheme in question, which concerned the provision
of health services, was not cost-related but was based on
customers’ risk profiles, unlike in other public service
(131) Indeed, the report was produced after the media
sectors. In that instance there was thus no possibility
agreements that set the amount of compensation and
for the operator to improve efficiency by way of its
therefore did not show that the compensation was
costs. However, for public service broadcasters, it is
determined on the basis of the costs that a typical under
possible to calculate the compensation on the basis of
taking would have incurred in fulfilling its public service
costs and revenue.
mission.
(127) Secondly, with reference to the Chronopost ( 49 ) case,
Denmark argued that a public service provider like TV2
(132) Furthermore, the report made a comparison with other
could not be compared to a private operator. However,
public service broadcasters and therefore did not deal
the Commission takes the view that unlike the issue at
with the costs of a ‘typical’ broadcaster. For example, it
stake in the Chronopost case, which was cost allocation
did not establish that the costs of DR, which is not
in the context of a compatibility assessment, the essence
allowed to generate income through advertising and
of the fourth Altmark criterion is precisely that, in the
whose level of compensation was determined under the
absence of a tender, the costs of the public service
same media agreement as TV2, were those of a typical
provided should be compared with those of a typical
undertaking. For the purposes of the fourth Altmark
undertaking, well run and adequately provided with
criterion, it is therefore impossible to draw any
means of production.
conclusions from the comparison with DR’s costs.
(128) In addition, Denmark argued that the National Audit
Office (Rigsrevision) carried out financial and management
(133) As regards the comparison with foreign public service
audits of TV2’s accounts as part of its routine appraisals
broadcasters, the report only compared the development
of TV2 and that routine checks were made, including on
of TV2’s productivity with one of the other public service
efficiency. However, the Commission does not consider
broadcasters, but was silent on the level of efficiency as
that the fact that TV2’s accounts were submitted for
such, and hence on the costs themselves. In particular, a
approval by the Ministry of Culture is sufficient proof
lower productivity increase could be due to many factors,
that TV2’s costs were those of a typical well-run under
for instance because efficiency was higher at the
taking. In addition, it is doubtful whether ex post controls
beginning of the period or because the broadcaster was
can be relevant for fulfilment of the fourth criterion if no
not able to increase its broadcasting time. For example,
analysis of the costs was made before compensation was
paragraph 51 of the report states that ‘During the period in
set.
question, the BBC and SVT saw an almost identical rise in
costs, an increase of approximately 50 % in real terms, while
( 49 ) Joined Cases C-83/01 P, C-93/01 P and C-94/01 P.
NRK’s costs increased by approximately 60 % in real terms. As

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Official Journal of the European Union
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mentioned above, DR’s costs increased by 23 % in real terms,
(‘MEIP test’). The Danish authorities and TV2 argued that
and TV2’s by 63 %. Since, as already stated, SVT’s and the
the measures do not qualify as State aid because the
BBC’s broadcasting time did not grow as much as that of the
conditions of the MEIP test are fulfilled. In particular,
other broadcasters, this cost increase meant that SVT and the
they held that it was perfectly justified under the MEIP
BBC did not improve their productivity in the same manner as
test to leave the surplus in TV2 so as to build up capital.
the other three public service broadcasters’.
(134) The Commission also notes that paragraph 50 of the
report states that ‘As the National Audit Office has not
(138) In this respect, it should first be noted that the question
examined the foreign public service broadcasters’ accounts in
of whether the measures were justified under the MEIP
any greater detail, there may be differences between those
test is not the same as the question of whether they
broadcasters’ activities and between the calculation methods
could be considered necessary in order to fulfil public
used for individual accounting items. What this means is
service tasks (see the compatibility assessment below),
that the costs used, and the unit costs derived from these, do
since the fact that TV2 necessarily had to have a
not necessarily pertain to identical activities and that they have
certain level of reserves and capital to perform its
not necessarily been calculated according to identical accounting
public service tasks does not mean that a private
principles. As a result, unit cost levels do not lend themselves to
investor would have put money into the company and
ready comparison. Because the purpose of including the foreign
not have sought a return.
broadcasters is to compare productivity “development”, rather
than the level of productivity as such, the National Audit
Office has taken the view that the data pertaining to the
foreign television broadcasters may nevertheless, in its current
form, serve as a reasonable indicator of development’.
Paragraph 53 of the report also points out that ‘The
National Audit Office has not examined the causes of the
(139) The Commission, in accordance with settled case-law,
above developments in any greater detail because, as stated
must determine whether, in similar circumstances, a
above, the development of the stated unit costs is dependent
private investor of a size comparable to bodies
on the content of the broadcasters’ programme offering and
managing the public sector could be expected to be
because the analysis presupposes, at any rate, that the quality
willing to make capital injections of the same order of
has remained unchanged. As this presents an immediate
magnitude ( 50 ). Although the behaviour of a private
difficulty in terms of drawing comparisons between the public
investor that is being compared with the public investor’s
service broadcasters concerned, the findings of the analysis
behaviour need not be the conduct of an ordinary
should be interpreted with some caution. In this respect, the
investor laying out capital with a view to realising a
Ministry of Culture has stated that it agrees with the described
profit in the relatively short term, it must at least be
unit cost developments and that the comparison of DR’s, TV2’s
the behaviour of a private holding company or a
and the foreign public service broadcasters’ unit costs should be
private group of undertakings pursuing a structural
interpreted with some caution’.
policy and guided by prospects of profitability in the
longer term.
(135) For the above reasons, the Commission takes the view
that the report does not show that TV2’s costs were
those which a typical well-run undertaking would have
incurred in performing the public service missions.
(140) Furthermore, according to settled case-law, the MEIP test

must be applied at the moment the decision is taken and
not ex post ( 51 ).
(136) To conclude, in view of the foregoing the Commission
considers that the fourth Altmark criterion is not met,
and because these criteria are cumulative, the compen
sation granted to TV2 does not satisfy the conditions set
(141) In the present case, as Denmark is the only stakeholder
by the Court in the Altmark judgment. In any event, as
in TV2, it is both the first and the last creditor to be
will be shown below, the Commission considers that the
reimbursed in the event of the company’s failure. So,
compensation can be considered as compatible with the
from the point of an investor, the Danish State could
internal market.
seek a return on its investment either by asking for
remuneration in the form of interest on a loan or a
return on a capital stake.
( 50 ) Case C-261/89 Italy v Commission [1991] ECR I-4437; Joined Cases
(137) The Commission also has to assess whether the measures
C-278/92 to C-280/92 Spain v Commission etc. [1994] ECR I-4103.
at issue could meet the ‘market economy investor test’
( 51 ) Case T-16/96 Cityflyer [1998] ECR II-757, paragraph 76.

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(142) The Commission notes that during the period in
inefficiencies, resulting in a larger drain on State
question, Denmark waived its claim to interest on the
resources, it is far from certain that increased funding
loans and allowed a moratorium on repayments.
produces a corresponding improvement in results.
Moreover, the Danish State did not ask for any remun
eration on the capital that was built up in TV2.
Therefore, the Danish State did not ask for a normal
return on its investment as any creditor or owner of a
company normally would.
(146) Thus the Danish authorities cannot be held to have acted
as a market economy investor. Nevertheless, the
Commission considers that the compensation can be
considered compatible, as will be explained in detail
below. As already mentioned, the MEIP test is a
(143) Furthermore, the Danish authorities have not advanced
different issue from the question of whether it was
any valid arguments to justify why it would make sense
justified for the Danish State to allow TV2 to keep the
strategically to reinvest the surplus in TV2 instead of
surplus so as to build up the capital necessary for its
asking for remuneration in the form of interest or
public service tasks.
dividends. Such a decision would normally be taken by
an investor only if he thought that reinvestment would
increase the value of his initial investment.
(147) In conclusion, the Commission takes the view that,
during the period under investigation, TV2 benefited by
the measures. In the television broadcasting market, TV2
(144) In the present instance, it has not been established that
there was a business plan or a clear overall business
competes with other broadcasters who did not receive
strategy suggesting that this was the case. Nor have
the same advantages. Therefore, the measures have to
there been any other indications that TV2 was
be regarded as selective and as distorting competition
planning to develop its activities to produce such
within the meaning of Article 107(1) TFEU.
added value. In saying this, the Commission is not
trying to use formalistic arguments in order to refute
the Danish authorities’ argument on the MEIP test but
is merely attempting to assesses whether a market
economy investor would have decided to leave the
funds in TV2 on the basis of the information available
IV.1.3. EFFECT ON TRADE
to him at the time when he took the decision. However,
(148) State measures are caught by Article 107(1) TFEU in so
taking into account the information available at the time
far as they affect trade between Member States. This is
when the funds were left in TV2 ( 52 ) and leaving aside
the case whenever the activities concerned are an object
any considerations regarding TV2’s public service tasks,
of intra-Community trade.
which a private investor would not have been taken into
account, the Commission considers that there was no
business plan and no investment project or any other
element on the basis of which a rational private
investor would have thought that the reinvestment
would increase the value of his initial investment and
(149) The Court of Justice has developed a wide interpretation
would therefore have decided to leave the money in
of this notion. It is established case-law that when aid
TV2 instead of asking for some sort of remuneration.
strengthens the position of an undertaking compared
with other undertakings competing in intra-Community
trade, those undertakings must be regarded as affected by
that aid ( 53 ). The fact that the undertaking in question
does not engage in exports does not rule out the possi
(145) In addition, the Danish authorities have used the return
bility that trade might be affected. When a Member State
on turnover as a benchmark in order to show that they
grants aid to an undertaking, its domestic activities may
acted as a private investor when reinvesting money into
be supported or even boosted thanks to the aid, which in
TV2. However, in the present case, it has to be
turn reduces the scope for other undertakings to establish
emphasised that the Danish Government already acts as
themselves on the market. The aid consequently allows
a financer of TV2, in that it provides it with significant
the recipient to maintain a market share that might
funds to cover part of its operating costs. The amount of
otherwise have been captured by competitors from
these funds has a direct effect on the results that TV2 is
other Member States ( 54 ).
able to generate. In practice, this ratio can be boosted
simply by increasing the amount of State funding.
( 53 ) Cases 730/79, Philip Morris Holland v Commission [1980] ECR 2671,
However, as excess funding normally also leads to
paragraph 11; C-303/88, Italy v Commission [1991] ECR I-1433,
paragraph 17; C-156/98, Germany v Commission, [2000] ECR I-
6857, paragraph 33.
( 52 ) This information is described in detail in recitals 205 ff. of the
( 54 ) See cases 102/87, France v Commission [1988], ECR 4067 and
present decision.
303/88 Italy v Commission [1989] ECR 801.

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(150) In paragraph 18 of the Broadcasting Communication, the
(156) The Commission will therefore assess whether
Commission, referring to the Court’s case-law, stated that
Article 106(2) TFEU might apply.
the ‘State financing of public service broadcasters can generally
be considered to affect trade between Member States. This is
clearly the position as regards the acquisition and sale of
programme rights, which often takes place at an international
(157) Article 106(2) TFEU reads: ‘Undertakings entrusted with the
level. Advertising, too, in the case of public broadcasters who
operation of services of general economic interest or having the
are allowed to sell advertising space, has a cross-border effect,
character of a revenue-producing monopoly shall be subject to
especially for homogenous linguistic areas across national
the rules contained in the Treaties, in particular to the rules on
boundaries. Moreover, the ownership structure of commercial
competition, in so far as the application of such rules does not
broadcasters may extend to more than one Member State.’
obstruct the performance, in law or in fact, of the particular
tasks assigned to them. The development of trade must not be
affected to such an extent as would be contrary to the interests
of the Union.’
(151) In this case, the Commission notes that TV2 is active on
the international market and exchanges television
programmes ( 55 ). It is in direct competition with
(158) For a measure to benefit from this derogation, all the
commercial broadcasters that are active on the inter
following conditions must be fulfilled:
national broadcasting market and that have an inter
national ownership structure. The financial resources
made available to TV2 gave it a competitive advantage
as regards the purchase of television rights and
— the service in question must be a service of general
investment in programmes that could subsequently be
economic interest (‘SGEI’) and clearly defined as such
sold. Moreover, the aid measures placed TV2 in a
by the Member State (‘definition’),
favourable position compared with its competitors in
the European Union by reducing their scope for estab
lishing themselves in Denmark.
— the undertaking in question must be explicitly
entrusted by the Member State with the provision
of that service (‘entrustment’),
(152) The Commission therefore concludes that the measures
granted to TV2 had an effect on trade between Member
States within the meaning of Article 107(1) TFEU.
— the application of the competition rules of the Treaty
must obstruct the performance of the particular tasks
assigned to the undertaking and the exemption from
such rules must not affect the development of trade
to an extent that would be contrary to the interests
IV.1.4. CONCLUSION
of the Union (‘proportionality’).
(153) Since all the conditions of Article 107(1) TFEU are
fulfilled, the Commission concludes that the measures
described above in favour of TV2 qualify as State aid
(159) The 2001 Broadcasting Communication ( 56 ) sets out the
within the meaning of Article 107(1) TFEU.
principles and methods which the Commission intends
to apply to ensure compliance with the conditions
referred to above.
(154) As TV2 started broadcasting in 1989, all the measures
for TV2 were taken after Denmark’s accession to the
European Union. Consequently, the measures, including
IV.2.1. DEFINITION
the licence fee resources, constitute new State aid (rather
(160) Under the Broadcasting Act (1994) ( 57 ), TV2 is an inde
than existing aid within the meaning of Article 108(1)
pendent institution whose object is to produce and
TFEU).
disseminate national and regional television programmes
through independent programme activities. The range of
the programmes provided must principally focus on
quality, versatility and diversity. Regional relevance
IV.2. COMPATIBILITY OF THE AID WITH THE INTERNAL
must also be given priority in the planning of
MARKET
programmes for the regional TV2 stations. The public
service mission is specified in more detail in TV2’s
(155) The Commission considers that Article 107(2) and
Statutes, which state that TV2 has to provide
Article 107(3)(a), 107(3)(b), 107(3)(c) and 107(3)(d)
programmes comprising news coverage, information,
TFEU are manifestly not applicable and neither the
entertainment, art and culture to the entire Danish popu
Danish authorities nor TV2 have put forward any
lation ( 58 ).
arguments to this effect.
( 56 ) OJ C 320, 15.11.2001, p. 5.
( 55 ) See Joined Cases T-185/00, T-216/00, T-299/00 and T-300/00, M6
( 57 ) Paragraph 18 of the Broadcasting Act (1994 version).
and others v Commission [2002] ECR II-3805.
( 58 ) Section 4 of Executive Order 658 of 18 August 1997.

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(161) The Commission takes note that the Court discussed the
(168) Furthermore, the Court made it clear that the
public service that TV2 is obliged by law to provide in its
Commission does not have to compare TV2’s
judgment ( 59 ).
programming with that of the commercial stations. To
make the definition of the public service mission
dependent on the range of programming offered by the
commercial broadcasters — through a comparative
(162) First, the Court recalled that Member States enjoy broad
analysis of programming — would deprive the Member
discretion when defining what they regard as services of
States of their power to define the public service. In the
general economic interest. Thus the definition of such
final analysis, the definition would depend on the
services by a Member State can be queried by the
commercial operators and their decisions as to whether
Commission only in the event of manifest error ( 60 ).
or not to broadcast certain programmes.
(163) Furthermore, as stated in paragraph 33 of the Broad
casting Communication, it is for the Member States to
define the public service remit of a public broadcaster.
(169) The Court ( 65 ) also confirmed that the obligations
imposed on commercial broadcasters are not comparable
with the public service obligations imposed on TV2. The
aim of those public service obligations is to provide the
(164) More specifically, as regards SGEIs in the field of broad
entire Danish population with varied programming that
casting, the case-law of the Court has recognised that
satisfies the requirements of quality, versatility and
Member States could legitimately define an SGEI so as
diversity. Those public service obligations determine all
to cover the broadcasting of full-spectrum
of TV2’s broadcasting activities and do so more inflexibly
programming ( 61 ).
than the minimal obligations prescribed by Danish law
for the granting of a broadcasting licence.
(165) When the Member States stated in the Amsterdam
Protocol ( 62 ) that ‘the system of public broadcasting in the
Member States is directly related to the democratic, social and
cultural needs of each society and to the need to preserve media
(170) The Court therefore concluded ( 66 ) that ‘the definition
pluralism’, they were making a direct reference to the
chosen by the Danish authorities is broad since, being
public service broadcasting systems they had introduced
essentially qualitative, it leaves the broadcaster free to
and the organisations entrusted with broadcasting full-
establish its own range of programmes. None the less, it
spectrum television programmes for the benefit of the
cannot be called imprecise. On the contrary, TV2’s mandate
entire population of those States.
is perfectly clear and precise: to offer the entire Danish popu
lation varied television programming which aims to provide
quality, versatility and diversity’.
(166) In its judgment, the Court ruled that the Member States’
power to define broadcasting SGEIs in broad qualitative
terms, so as to cover the broadcasting of a wide range of
programmes, cannot be disputed, nor can the Member
States’ freedom to use advertising revenue to finance such
(171) In view of the foregoing, and given the specific nature of
SGEIs ( 63 ).
the broadcasting sector, the Commission considers that a
‘broad’ definition entrusting a broadcaster with the task
of providing balanced and varied programming in
accordance with its remit, is legitimate under
(167) The possibility open to Member States to define broad
Article 106(2) TFEU in the light of the interpretative
casting SGEIs broadly so as to cover the broadcasting of
provisions of the Protocol. Such a definition would be
full-spectrum programming cannot be called into
consistent with the objective of fulfilling the democratic,
question by the fact that the public service broadcaster
social and cultural needs of a particular society and guar
also engages in commercial activities, in particular the
anteeing pluralism, including cultural and linguistic
sale of advertising space. Indeed, the question of the
diversity.
definition of the public service remit must not be
confused with the question of the financing mechanism
chosen to provide that service ( 64 ).
( 59 ) Paragraphs 101-125 of the judgment.
( 60 ) Paragraph 101 of the judgment.
(172) Therefore, on the basis of the foregoing, the Commission
( 61 ) Paragraph 103 of the judgment.
considers that the definition of the public service
( 62 ) With the entry into force of the Amsterdam Treaty on 1 May 1999,
provided by TV2 can be accepted.
a Protocol on the system of public broadcasting in Member States
was annexed to the Treaty.
( 63 ) Paragraph 113 of the judgment.
( 65 ) Paragraph 121 of the judgment.
( 64 ) Paragraphs 107 and 108 of the judgment.
( 66 ) Paragraph 117 of the judgment.

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(173) It should be added that, during the period under
(177) In this connection, the Commission notes that in 2000
consideration, TV2 operated an Internet site as part of
the National Audit Office carried out a specific investi
its public service mission. The Internet site informs users
gation into the substance and nature of TV2’s public
about TV2’s public service television programmes. The
service obligations and how they were met in practice.
Commission can accept that the Internet site that is
The investigation found no failure on the part of TV2 to
limited to informing users about TV2’s public service
comply with its public service obligations. Moreover,
television programmes falls within TV2’s public service
between 2001 and 2002, a Public Service Council
broadcasting tasks. Therefore, treating the operation of
existed to ensure that TV2 complied with its public
this site as part of the public service remit cannot be
service obligations, although that body never published
termed a manifest error. In addition, TV2 operated a
any reports on this question during its short lifetime. Nor
commercial Internet site with games etc. This commercial
has the Commission found any indication that TV2 failed
Internet service should be regarded as a purely
to comply with its obligations or that its performance
commercial activity, as it offers interactive products on
was such that its activities could no longer be considered
individual demand, such as games or ‘chat rooms’, which
an SGEI under Article 106(2) TFEU.
do not differ from similar commercial products. These
latter activities therefore fall outside the scope of TV2’s
public service mission.
(178) As regards financial control of the public broadcasting
IV.2.2.
service, the Commission notes that the National Audit
ENTRUSTMENT
Office audited TV2’s accounts throughout the entire
(174) In order to benefit from the exemption under
period under investigation. The audits included both
Article 106(2) TFEU, TV2 should be assigned its public
financial audits and management audits, although the
service remit by means of an official legal act. The
National Audit Office had no power to prevent overcom
Commission notes that the Broadcasting Act
(
pensation of TV2’s public service costs.

67 )
formally assigns a public service television broadcasting
mission to TV2. The Commission also takes note of the
Court’s judgment, in which it held that ‘[i]t is obvious that
TV2 was entrusted with such a [public service] remit’ ( 68 ).
(179) The Commission does, however, have the power assess
the proportionality of the State aid. The Commission
notes that the Transparency Directive has been
(175) However, as the definition in the law does not make it
transposed in Denmark. It has also received data from
sufficiently clear which kinds of other services are
the Danish authorities enabling it to assess whether or
allowed as public services, a formal remit must be
not the State funding is proportionate.
given prior to any additional activity that TV2 wants to
embark on as a public service. The Commission notes
that TV2 did not offer any other services beyond its
public service broadcasting mission in the period under
investigation. The Internet site offering other services
such as games was operated as a commercial activity,
IV.2.3. PROPORTIONALITY
while the Internet site that simply informed users about
TV2’s public service television programmes can be
(180) In light of the Court’s judgment and the 2001 Broad
considered part of its public service broadcasting remit,
casting Communication, the proportionality assessment
as it cannot be separated from the broadcasting service.
that the Commission must carry out is twofold.
The Commission therefore concludes that the public
service broadcasting remit was legitimately entrusted to
TV2 during the period under investigation.
(181) First, the Commission has to calculate the net cost of the
public service mission entrusted to TV2 and verify
(176) However, as stated in paragraphs 41 to 43 of the 2001
whether or not this cost has been overcompensated
Broadcasting Communication, not only should the public
compared with TV2’s needs in order to fulfil its public
service be formally entrusted to the broadcaster, it must
service tasks.
also be delivered as prescribed in the act by which it is
entrusted. Since it is not for the Commission to judge
whether any quality standards have been met, it is
desirable that an appropriate monitoring authority
should exist, and it is for the Member State to choose
the mechanism to ensure effective supervision, provided
(182) Second, the Commission has to analyse TV2’s behaviour
that the authority is independent from the undertaking
in the advertising market. The 2001 Broadcasting
entrusted with the service.
Communication points out that, if a drop in revenue
were covered by State aid, a public service broadcaster
( 67 ) Chapter 4, Broadcasting Act (1994 version).
might be tempted to depress its prices for advertising or
( 68 ) Paragraph 120 of the judgment.
other commercial activities on the market so

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as to reduce competitors’ revenue. The Commission
as separable from the public service activities. The losses
therefore considers that whenever a public service broad
that TV2 has made on its commercial Internet activities
caster undercuts prices in its non-public service activities
since they began in 1997 amount to DKK […] (*)
below what is necessary to recover the stand-alone costs
million.
that an efficient commercial operator in a similar
situation would normally have to recover, this indicates
that overcompensation of the public service obligations
has occurred.
(188) The Commission then deducted the revenue generated
from public service activities (advertising income and
other commercial revenue) from the gross public
service cost to arrive at the net public service cost. The
1. Amount of State aid and assessment of overcompen
cash financing from the State was then deducted from
sation
the net public service cost. The calculation is shown in

the table below.
(183) Under the Transparency Directive
( 69 ), Member States are
required to maintain separate accounts for public service
and non-public service activities. Costs and revenue must
be correctly allocated on the basis of clearly established,
(189) It should be noted that despite numerous requests from
objective cost accounting principles.
the Commission to provide the exact amount of adver

tising revenue in 1995 and 1996, the Danish authorities
and TV2 were not able to provide clear, unambiguous
figures.
(184) The Commission has taken the view that separation of
accounts in the broadcasting sector may not be straight
forward or even feasible on the costs side, as different
(190) In their reply of 26 June 2009, the Danish authorities
activities share the same inputs. In this sector, Member
stated that they were unable to confirm that the adver
States may consider a broadcaster’s entire programming
tising revenue which TV2 received from the TV2 Fund
to be covered by the public service remit while at the
amounted to DKK 400,1 million in 1995 and DKK
same time allowing for its commercial exploitation ( 70 ).
337,7 million in 1996.
(191) In its reply, TV2 indicated that in 1995 and 1996 (i) the
(185) In the present decision, the Commission first needs to
determine the cost of the SGEI fulfilled by TV2.
TV2 Fund received advertising revenue from TV2

Reklame (DKK 824 and DKK 904,5 million) and
licence fees from the State (DKK 330,3 and DKK
356,3 million), and (ii) the TV2 Fund transferred DKK
730,4 and DKK 694 million to TV2, and DKK 269,6 and
(186) As TV2 also carries out commercial activities, it needs to
DKK 275 million to the TV2 regions. The purpose of the
keep separate accounts for its different activities. Since
amounts transferred to the TV2 Fund was to cover the
2001, TV2 has been legally obliged to keep separate
funding needs of TV2 and its regional stations.
accounts for its public service and commercial activities.
(192) In their replies of 26 June 2009, 17 November 2010 and
of 30 November 2010, the Danish authorities confirmed
(187) When calculating the net costs, the Commission has to
deduct from the gross public service costs all the net
TV2’s argument that, with no other commercial income,
benefits from the commercial exploitation of the public
TV2’s regional stations were de facto financed entirely
service activity. The Danish authorities have supplied
through licence fees and that any sums transferred
figures showing the performance of TV2’s commercial
annually to TV2’s regional stations could therefore
and public service activities in accordance with the
originate only from licence-fee revenue transferred to
method set out in paragraph 56 of the Broadcasting
the TV2 Fund. This implies that the licence-fee revenue
Communication. The figures show that most of TV2’s
transferred to TV2 can be considered equivalent to the
commercial activities shared the same inputs as its
maximum amount of licence-fee revenue that was trans
public service activities. As a consequence, no meaningful
ferred to the TV2 Fund in all the years in question minus
allocation of costs to these commercial activities could be
any amounts transferred to TV2’s regional stations. The
made. When this is the case, the Commission deducts net
Danish authorities and TV2 claim that this means that
revenue from commercial operations in order to calculate
the vast bulk of the funding transferred from the TV2
the net public service costs. The commercial Internet
Fund to TV2 in 1995 and 1996 consisted of net adver
activities are the only operations that can be regarded
tising income. According to the Danish authorities this
line of reasoning would imply that TV2 received DKK
60,7 million in licence fees (net after deducting transfers
( 69 ) Commission Directive 2000/52/EC of 26 July 2000 amending
to the regions) and DKK 669,7 million in advertising
Directive 80/723/EEC on the transparency of financial relations
between Member States and public undertakings (OJ L 193,
29.7.2000, p. 75).
(*) In this decision, confidential information that has been omitted is
( 70 ) Broadcasting Communication, point 53.
indicated by […].

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Official Journal of the European Union
21.12.2011
revenue (net) in 1995, and DKK 81,3 million in licence
(194) It should also be noted that for the years 1997 to 2002
fees and DKK 612,7 million in advertising revenue
the Commission has included the licence fees that were
in 1996.
transferred to the TV2 regions via TV2. The Commission
considers that because these sums were received by TV2
(193) The Commission is not convinced by TV2’s and the
and then transferred to the regions, they should be
Danish authorities’ reasoning on the amount of the
included in the calculations as both revenue and expen
advertising revenue for the years 1995-1996. In
diture, which in practice means that they do no affect the
particular, the Commission notes that the TV2 Fund
Commission’s calculation below.
kept no separate accounts for advertising revenue and
licence fees, and therefore all these revenues were
(195) Concerning the capital injection transferred to TV2 for
mixed together. The Commission regrets that the
digitisation, it is shown in 1997 as income. The corre
Danish authorities have not provided clear and unam
sponding reductions have been taken into account as
biguous figures for the amount of advertising revenue
costs when the investments were implemented. The
in 1995 and 1996. However, in this specific case it
costs for digitisation are public service costs. So as not
considers that there is no need to investigate the issue
to count the same costs twice, the depreciation corre
further as it does not pose a major problem since the
sponding to the investments made have been deducted
Commission, as already stated, considers that the adver
from the gross public service cost. Despite TV2’s
tising revenue for the years 1995-1996 constitutes State
criticisms on this point, the Commission is of the
resources which must in any event be deducted from the
opinion that, in line with its constant practice when
gross public service cost. In the table below, the adver
calculating State compensation, revenue from the State
tising revenue transferred from the TV2 Fund for the
or from a public fund must be taken into account in the
years 1995 and 1996 is therefore shown in the same
year when they are granted and not in the year when
column as the licence fees.
they are spent or used.
Table 1
Public service cost and compensation measures 1995-2002 on the basis of the accounts
(million DKK)
Year 1995 1996 1997 1998 1999 2000 2001 2002 Total
Gross public service cost –
755,8 –
856,2 –
1
415,2 –
1
475,3 –
1
439,1 –
1
531,6 –
1
518,5 –
1
604,1 –
10
595,8
Investment in digitisation
0
0
0
0 –
10,3 –
4 –
56,7 –
23,9 –
94,9
Net advertising revenue directly
0
0 1
091,9 1
118,4 1
014,4 1
089,9 1
006,8 1
028,3 6
349,7
received by TV2
Other revenue 83,2 121,6 97,3 76,3 50,9 65,4 58 73,8 626,5
Net public service cost –
672,6 –
734,6 –
226,0 –
280,6 –
384,1 –
380,3 –
510,4 –
525,9 –
3
714,5
Licence fee and net advertising
730,4 694 328,5 357,5 414,6 449,2 537,3 556,2 4
067,7
revenue received in 1995-1996 from
the TV2 Fund
Transfer when Radio Fund was
0
0
8 10 15 25
0
0 58
wound up
Transfer when TV2 Fund was wound
0
0 217
0
0
0
0
0 217
up
Total of (i) the licence fees and
57,8
– 40,6 327,5 86,9 45,5 93,9 26,9 30,3 628,2
revenue from the TV2 and Radio
Funds indicated above, and (ii) the
net public service cost
Source: TV2’s yearly profit-and-loss accounts.

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(196) As can be seen from the table above, the financing exceeds the costs by DKK 628,2 (EUR 84,4)
million.
(197) The Commission takes note of the fact that TVDanmark considers that the other measures that
benefited TV2, such as its exemption from interest payments and tax as well as access to a
nationwide transmission frequency on favourable terms, should be taken into account for the
assessment of the overcompensation. These benefits are summarised in the table below:
Table 2
Estimated benefits from corporate tax exemption, interest waiver, and transmission frequency
(million DKK)
1995 1996 1997 1998 1999 2000 2001 2002 Total
Corporation tax exemption 19,7 –
13,8 54,6 30,1 16,7 29,7 18,5 3,9 159,4
Accrued interest on establishment
44,5 39,2 36,9 41,3 37,5 45,1 51,7 45,6 341,8
loan
State guarantee operating loans 2,4 2,1 1,7 1,4 1,0 0,7 0,4 0,1 9,8
Transmission frequency fee (*) 2,3 7,9 12,6 21,4 26,0 70,2
Total 66,6 27,5 95,5 80,7 67,8 96,9 96,6 49,6 581,2
(*) The difference in the frequency fee that TV2 paid and the networking fee paid by TVDanmark.
(198) The Commission agrees that these measures must be
(200) In this connection, it should first be noted that the
considered in the present investigation. However, when
Amsterdam Protocol ( 72 ) emphasised the specificities of
calculating the overcompensation, it is not appropriate to
the broadcasting sector compared with other SGEI,
include them in the calculation in Table 1. In line with
because ‘the system of public broadcasting in the Member
the Commission’s position in the RAI case ( 71 ), these
States is directly related to the democratic, social and cultural
additional benefits can be considered as compensating
needs of each society and to the need to preserve media
costs that would otherwise have had to be financed.
pluralism’. These special features should be taken into
Thus, in assessing the proportionality of the State
account in the Commission’s compatibility assessment
funding of the public service costs, these additional
in the present decision.
advantages should not be included, since having to pay
the costs in question would have resulted in a corre
sponding increase in the initial costs of the public
service entrusted to TV2. In terms of the net result, it
(201) Moreover, in previous decisions the Commission has
would make no difference. However, it has to be ensured
accepted that a certain capital base was justified to
that these advantages only benefit the public service tasks
secure the provision of a public service by broadcasters.
and do not spill over to the commercial activities. This
For example, in the Austrian broadcasting case ( 73 ), the
point is addressed in recitals 234-237 below.
Commission stated that ‘Under Article 86(2) EC, as inter
preted by the Amsterdam Protocol, Member States may in
principle provide as much public financing to public service
(199) The Danish authorities and TV2 advanced various
broadcasters as needed to safeguard the performance of the
arguments to justify the excess funding calculated in
public service. This not only concerns the running cost of
recital 196. In particular, in light of the Court’s
performing the SGEI but also equity capital’.
judgment, the Commission has to assess whether the
excess funding was in fact necessary for TV2 to be
able to fulfil its public service mission.
( 72 ) With the entry into force of the Amsterdam Treaty on 1 May 1999,
a Protocol on the system of public broadcasting in Member States
was annexed to the Treaty.
( 71 ) Commission Decision of 15 October 2003 on the measures imple
( 73 ) Commission decision, E 2/2008, 28 October 2009, Financing of
mented by Italy for RAI SpA (OJ L 119, 23.4.2004, p. 1).
ORF.

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(202) As the Court held in its judgment ( 74 ), ‘the Commission
converting the start-up loans. This would give TV2
cannot base its decision to order the recovery of all the sums
capital of approximately DKK 350 million and a
which, according to the Kingdom of Denmark, constituted a
solvency ratio of around 50 %. The recommended
reserve which it was necessary to set aside for public service
solvency ratio of approximately 50 % was equivalent to
needs, on an alleged failure to carry out adequate checks, since
that of privately owned undertakings such as TV2 Norge
it was perfectly possible, given the information available to the
(Norway) and TV4 (Sweden).
Commission, to examine seriously all the legal and economic
conditions that governed the build-up of those reserves during
the period under investigation and impossible, without such an
examination, to take a valid decision as to whether those
reserves were in fact necessary — as a whole or even only in
(208) Following this report, the State auditors — the members
part — to provide the public service’.
of the Danish Parliament appointed to be responsible for

a critical audit of, among other things, the accounts of
State-owned undertakings — asked the Ministry of
Finance for its opinion on the question of whether
TV2 should build up capital. In August 1995, in
(203) The Court added ( 75 ) that purely formal requirements
such as an obligation for the reserves to be specific
response to the National Audit Office proposal that
and transparent could not justify a recovery order, and
TV2 should be given a capital injection, the Ministry of
the fact that TV2 did not in practice have to draw on its
Finance stated that ‘[b]oth when establishing new under
reserves did not support the inference that those reserves
takings and when converting existing state-owned undertakings,
had to be regarded as disproportionate to the funding
the undertaking must have the necessary capital base. But at
needs of providing the public service (
the same time the State must not make too large an injection

76 ).
of capital, firstly because this would signify an unnecessary
expense for the State and secondly because it could give the
undertaking an unfair competitive advantage. The undertaking
must be neither under- nor over-capitalised’. On this basis the
(204) Therefore, the Commission has to assess all the factors
taken into account by the Danish authorities when
Danish State considered that capital should be built up in
setting the compensation granted to TV2 for the years
TV2. However, it was decided that the State would not
1995-2002 and deciding to build up reserves. With
contribute the capital all at once. TV2 would instead
regard to this issue, the Commission would refer to its
itself build up the necessary capital through ongoing
earlier assessment of the procedure used to set the licence
surpluses.
fee, in recital 105.
(209) The requirement for a capital base was included in TV2’s
(205) As regards the considerations that led the Danish
Statutes in 1997. Since then, TV2’s statutes have clearly
authorities to build up a reserve for the fulfilment of
specified that, from 2001 onwards, TV2’s free capital
the public service mission of TV2, the following factors
must amount to at least DKK 200 million and that it
cited by the Danish authorities should be considered.
should be used to offset the broadcaster’s operating
loss ( 78 ). The executive order of 18 August 1997
stipulated that to finance any possible operating loss,
the free capital — i.e. capital minus reserves and other
(206) When TV2 was established in 1988, no capital was
tied resources — for nationwide activities should amount
injected. Its operations were financed solely by a start-
to at least DKK 200 million by the end of 2000. The free
up loan of DKK 510,8 million, which enabled TV2 to
capital was to be built up so that it would total at least
purchase its production equipment, buildings etc. TV2
DKK 50 million by the end of 1998 and at least DKK
was therefore thinly capitalised because it was capitalised
100 million by the end of 1999. From 2001, the free
with abnormally large loans and abnormally low capital.
capital at any one time was to be at least DKK 200
As a result, TV2 quickly faced financial difficulties.
million, based on the latest accounts. If capital was
expected to fall below these figures, the matter was to
be put before the Minister of Culture. In special cases the
Minister of Culture can, after consulting the National
(207) The National Audit Office, an independent institution
Audit Office, approve a lower amount of capital, to
under the Danish Parliament, has the task of carrying
which he may attach specific conditions.
out both accounting and management audits. It
concluded in 1995 that a substantial proportion of
TV2’s financial problems could be attributed to the
station having been established without an injection of
capital (
(210) The 1997 executive order issued by the Minister setting

77 ). The main recommendation made by the
National Audit Office was that the State should inject
the minimum free capital was published in the Danish
approximately DKK 530 million of capital into TV2 by
Official Gazette (Lovtidende). In addition, from 1998
onwards, the build-up of capital in accordance with the
requirements of the Statutes was specifically mentioned
( 74 ) Paragraph 220 of the judgment.
in TV2’s published annual accounts.
( 75 ) Paragraph 221 of the judgment.
( 76 ) Paragraph 223 of the judgment.
( 77 ) National Audit Office Report 4/94, Section VIII, in particular
( 78 ) Executive order No 658 of 18 August 1997, Chapter 6, Section 32,
paragraph 72.
paragraph 4.

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(211) According to the Danish authorities, failure to observe
(214) However, the Commission wonders whether the entire
with the minimum capital requirement of DKK 200
amount of the reserves was really justified and necessary,
million under its Statutes would be expected to result
i.e. whether the full amount of the capital base built up
in TV2 being placed under State administration.
by the end of 2002 was really necessary for the
performance of TV2’s public service mission.
(212) The Commission considers that the crucial issue is to
determine if and to what extent the capital base
attained through the compensation was indeed
necessary for the performance of TV2’s public service
(215) In the Commission’s view, the size of the capital base
mission.
that could be considered proportionate and necessary to
guarantee the provision of the public service depends on
the facts and the legal framework of each individual case.
(213) Having regard to the above description of the procedure
and the reasons that led to the build-up of TV2’s reserves
in the form of a capital base, and in the light of the
Court’s judgment, the Commission considers that the
build-up of a reserve was indeed necessary for TV2 to
(216) The figures available to the Commission regarding TV2’s
fulfil its public service mission.
capital base are shown in the table below:
(million DKK)
1995 1996 1997 1998 1999 2000 2001 2002
Earmarked capital
167,0 167,0 156,7 152,6 96,6 72
(digitisation)
Free capital –
97,8 –
138,4 22,1 110,7 173,3 270,3 418,7 478,5
Total capital –
97,8 –
138,4 189,1 277,7 330,0 422,9 515,3 550,5
Total liabilities 770,3 746,9 1
244,7 1
363,3 1
311,8 1
423,0 1
409,5 1
409,1
Solvency ratio (*) –
13 –
19
2
8 13 19 30 34
(*) In this table, the solvency ratio is calculated as free capital/total liabilities.
(217) On 31 December 2002, TV2 had built up capital of DKK
under investigation, these sums were clearly entered in
550,5 million, including DKK 72 million of earmarked
TV2’s accounts as earmarked capital that could only be
capital (digitisation), which corresponds to a solvency
used for the purpose of digitisation and, as the Court
ratio of 34 %. The amount of free capital at the end of
stated in its judgment, the fact that TV2 did not in
2002 was DKK 478,5 million.
practice have to draw on a reserve does not support
the inference that this reserve had to be regarded as
disproportionate to the funding needs of providing the
(218) First the Commission notes that part of the capital was
public service ( 80 ).
not free capital. Indeed, according to TV2’s annual
accounts for 1997 ( 79 ), the Media Committee had
decided that TV2 should digitise its production
equipment before the end of 2000. DKK 300 million
(219) It should also be noted that at 31 December 1994 (at the
was earmarked for the digitisation of both TV2 and the
start of the period covered by the present decision) TV2’s
regional stations. In 1997, DKK 167 million was trans
capital was negative (minus almost DKK 156 million)
ferred to TV2 for this purpose. The Commission
and that in 1995 and 1996, TV2 had a negative
therefore considers that this amount was necessary for
solvency ratio and negative capital, which explains why
TV2’s public service needs. The fact that the funds that
the total capital at the end of 2002 was lower than the
had not been invested in digitisation by 1 January 2003
compensation received. It was only at the end of 2000
(a balance of DKK 72 million) were ultimately released
that TV2’s free capital rose above the required minimum
does not alter this conclusion because, during the period
threshold of DKK 200 million.
( 79 ) Page 58.
( 80 ) Paragraph 223 of the judgment.

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(220) In order to demonstrate that the level of capital in TV2
(224) The Danish Parliament’s Finance Committee approved
was justified, the Danish authorities submitted an
the conversion of TV2 into a limited company and the
opinion prepared by PricewaterhouseCoopers dated
setting of its capital. TV2’s conversion into a limited
18 November 2002. That opinion stated that TV2’s
company took place with retroactive effect from
solvency ratio at the end of the period of investigation
1 January 2003. In the wake of TV2’s change of legal
was lower than that of other Scandinavian broadcasters
status and its conversion into a company, a number of
comparable to TV2 in terms of size, activities, structure
measures in favour of TV2 were abolished, such as the
and the markets in which they operated. For instance,
interest- and repayment-free loans and the tax
TV2’s solvency ratio was lower than that of TV2 Norge
exemption. In 2005, privatisation was postponed but
(36 %) and considerably lower than that of TV4
TV2 no longer received licence fees after 2004.
(Sweden), whose solvency ratio was 65 %, almost twice
that of TV2. According to the opinion, TV2’s solvency
ratio was below that of its peers and therefore could not
be considered excessive. The opinion also pointed out
that there was no reason to believe that the capital
structure of those comparable broadcasters was not
optimised. PricewaterhouseCoopers also indicated that a
(225) In view of the foregoing, the Commission considers that
solvency ratio of less than 30 % over time would be
one of the factors it must take into account in assessing
unusual and would render the company vulnerable to
the compatibility of the reserves is the fact that during
income fluctuations.
the last part of the period under investigation the Danish
authorities already planned to change TV2’s legal status,
which implies the need for a capital base.
(221) The comparison with other operators should be inter
preted with caution since they do not perform the
same public service tasks as TV2, are not financed in
the same way, and do not have the same legal status.
(226) In its decisions, the Commission’s practice is to look
Nevertheless, the opinion gives some indication and can
favourably in principle on schemes to convert State
be taken into account alongside other elements.
entities that compete with commercial enterprises into
limited company form, since doing so may reduce
distortions of competition by replacing unlimited State
advantages with a limited amount of capital and by
creating a clear distinction between the role of the
State as a public authority and its role as an entrepreneur
(222) In this connection the Commission notes that the Danish
seeking a return on its investment.
authorities submitted information showing that, during
the last part of the period under investigation, they
planned to convert TV2 into a public limited company
and privatise it. As part of the conversion process, an
analysis was also made of how the licence fee funding
could be phased out, as the Danish authorities intended
to abolish funding via licence fees after TV2’s privati
(227) In addition, among the other factors to be taken into
sation.
account, the Commission considers that the level of
TV2’s reserves should be viewed in the light of fluc
tuations in revenue from the advertising market.
(223) To this end, in June 2002 the Danish government
entered into an agreement with a majority in Parliament
on a thorough liberalisation of Danish media policy.
Under the agreement, TV2 was to be converted with a
(228) TV2 was indeed vulnerable to the revenue fluctuations
view to privatisation as soon as possible. An analysis was
that are an inevitable aspect of the advertising market.
made of the financial basis for converting TV2 into a
For example, in one year (1998 to 1999) TV2
limited company. The Minister of Culture appointed a
experienced a drop in advertising revenue of
steering group in the summer of 2002 with represen
approximately DKK 104 million. According to the
tatives from the Culture Ministry, the Finance Ministry
Danish authorities, the only way for TV2 to be able to
and the Attorney General (Kammeradvokat) in order to
cope with falls of this size was by having a very
clarify the economic basis for privatising TV2 and
considerable amount of free capital, as licence fee
converting it into a limited company. To support its
revenue was fixed in advance for several years. Even
work, the steering group engaged an auditing firm and
though TV2 was less dependent on advertising revenue
a financial advisor in order, for example, to calculate the
than TV2 Norge and TV4, which do not receive licence
level of capital needed by TV2. The auditing firm
fees, funding via advertising nevertheless constituted an
concluded that TV2’s capital should be set at DKK 640
important source of financing for TV2’s operations
million.
during the period in question.

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(229) In this respect, the Commission takes note that the Court
part of the proportionality assessment, that in this
made it clear in its judgment ( 81 ) that ‘[t]he fact that TV2
specific case, having regard to the Amsterdam Protocol
did not have to draw on its reserves in 1999 does not support
and the Court’s judgment, the amount of capital
the inference that those reserves had to be regarded as dispro
accumulated at the end of 2002 (i.e. DKK 550 million)
portionate to the funding needs of providing the public service.
was necessary for TV2 to fulfil its public service mission.
It is in the very nature of a reserve which is built up to deal
The sum of DKK 628 million received for that purpose
with an uncertainty that it does not necessarily have to be
therefore satisfied the criteria of proportionality and
used.’
necessity under Article 106(2) TFEU.
(230) The Commission agrees with the Danish authorities that
(234) Although the present decision does not assess possible
in assessing TV2’s needs it must also take account of the
State aid granted to TV2 in 2003 and 2004 other than
fact that TV2 experiences substantial fluctuations in
the recapitalisation measures, the Commission also notes
liquidity both in the course of a single year and from
that the Danish authorities submitted information docu
one year to the next, since major sports events such as
menting the fact that in 2004, TV2’s capital amounted to
the Olympic Games only take place at intervals of several
DKK 640 million. A sum of DKK 96 million was
years and programme rights are typically offered under
invested in commercial activities and it cannot be
multi-year contracts. For example, it can be seen from
determined whether this was financed through capital
the annual report for 1995 ( 82 ) that the surplus for 1995
or outside funding. Assuming that only capital was
was carried forward to 1996 to cover the expected deficit
used, this would imply that DKK 544 million of capital
for that year, when there was particularly high expen
was available for TV2 to carry out its public service
diture in connection with the Olympics and the
broadcasting activities.
European Football Championships.
(235) With regard to what was stated in recital 198 above, it
(231) In addition, it should also be noted that during the
should be noted that TV2 also performs a number of
period under investigation, TV2 was precluded from
commercial activities. These are fairly marginal compared
using ordinary loan financing. Investment loans were
with TV2’s overall activities. The costs for these
permitted for up to 4 % of revenue, based on the most
commercial activities have been allocated based on the
recent accounts. TV2 was prohibited from taking out any
method presented in the 2001 Broadcasting Communi
other forms of loans, guarantees, or finance lease obli
cation ( 84 ), under which, contrary to the approach
gations, apart from general operating credit. TV2’s
generally adopted in other utilities sectors, costs that
limited opportunities for loan financing meant that in
are entirely attributable to public service activities while
principle its liquidity needs had to be covered by
also benefiting commercial activities need not be appor
liquidity from operations.
tioned between the two and can be entirely allocated to
those public service activities. The 2001 Broadcasting
Communication considered there was a risk that a
strict breakdown of such costs between the two activities
would be arbitrary and not meaningful. As for the
(232) Finally, the level of capital is shown in the published
advantage that TV2 receives from its access to the trans
accounts. During the period in question, the National
mission frequency, the Commission notes that this is
Audit Office audited TV2’s accounts. The audits
inseparably linked to the public service mission. The
included both financial and management audits,
Commission also considers that in line with the Broad
although the National Audit Office had no power to
casting Communication, the financing costs (interest
prevent overcompensation of the public service costs of
advantages) can be fully attributed to the public service
TV2. As the Court held in its judgment ( 83 ), the fact that
activities.
this auditing body did not have any power to prevent
overcompensation does not permit the conclusion that
the Danish authorities did not carry out checks. On the
contrary, the Danish authorities indicated that, had the
(236) To neutralise the effect of the tax exemption that the
National Audit Office drawn the conclusion that the
public service activities enjoy, 30 % of the profits from
capital base was too large, this might, for example,
commercial activities are transferred to the public service
have resulted in licence-fee resources payable to TV2
side. This has only been done since 2001. The
being reduced in the next media agreement.
Commission therefore recognises that there may have
been a distortion on the broadcasting market in that
TV2 did not have to take the corporate tax rate into
account in setting its commercial prices. However, in
(233) In view of all the foregoing considerations taken as a
future the advantage should no longer exist, given that
whole, the Commission considers, as regards the first
the share of the transfer corresponds to the actual
taxation rate thanks to this ‘neutralisation’ mechanism.
As for the past, this does not pose a problem when it
( 81 ) Paragraph 223 of the judgment.
( 82 ) Annual report for 1995, in particular page 14.
( 83 ) Paragraph 219.
( 84 ) Paragraphs 53 to 56.

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comes to establishing the amount of overcompensation,
the operator’s results with average results in the Member
since the total income from commercial activities was
State. The analysis has to take into account the different
used to reduce the net cost of the public service activities.
size of the undertakings and their specific cost structures.
However, as stated earlier, operators on the Danish
market cannot be said to be in a comparable situation
so as to enable a direct comparison of performance
(237) TV2 engaged in loss-making commercial Internet
ratios. Therefore, the Commission is of the opinion
activities. As these activities fall outside the public
that an analysis of such ratios on the Danish market is
service broadcasting mission, no State funding is
not appropriate in the present case.
possible. Moreover, as no other activities were operated
on a ‘stand-alone’ basis, there is no surplus from
commercial activities to cover the losses on Internet
activities.
(243) Instead, the Commission has analysed data on the
financial performance of TVDanmark and SBS Broad
casting. As a result of its analysis, the Commission
cannot establish with certainty whether the losses
2. Assessment of TV2’s behaviour in the advertising
incurred stem from the fact that TVDanmark had high
market
initial start-up costs which it has not yet been able to
recover or whether it is in fact not performing efficiently.
(238) Paragraph 58 of the Broadcasting Communication states
Despite several requests, the Commission was not able to
that ‘a public service broadcaster, in so far as lower revenues
obtain data on the financial performance of the third
are covered by the State aid, might be tempted to depress the
operator, TV3, to allow a comparison with the third
prices of advertising or other non-public service activities on the
operator on the market. Consequently the Commission
market, so as to reduce the revenue of competitors (…).
cannot conclude with certainty whether TVDanmark’s
Whenever a public service broadcaster undercuts prices in
losses are a result of TV2’s pricing behaviour or
non-public service activities below what is necessary to recover
whether they are due to other factors over which
the stand-alone costs that an efficient commercial operator in a
TVDanmark itself had some control.
similar situation would normally have to recover, such practice
would indicate the presence of overcompensation of public
service obligations (…)’.
(244) Since it cannot be established with certainty whether or
not TVDanmark is an efficient operator and since a direct
comparison of the two operators is not possible, the
Commission is of the opinion that any such assessment
(239) TVDanmark submitted information showing that it could
not cover the stand-alone costs of its television
is inconclusive in the present case.
operations with the advertising prices that TV2 charges.
TVDanmark compared its costs with the TRP 21-50
advertising prices that TV2 was charging.
(245) The Commission therefore decided to undertake a more
detailed analysis of TV2’s pricing policies and of the data
available concerning the advertising market in order to
assess whether or not TV2 acted with a view to maxi
(240) For this comparison to be valid, the Commission must,
mising its advertising revenue during the period under
as a first step, establish whether or not TVDanmark can
investigation.
be considered to be in a similar situation to TV2 and
whether or not it is an efficient operator.
(246) First, the Commission compared the prices of the two
operators and analysed the pricing policies of TV2. The
analysis focused on the years 1998–2002, the period
(241) First, the Commission has to assess whether TVDanmark
is in a similar situation to TV2. The Commission notes
during which the complainant alleged that TV2 started
the following. For the period under investigation, TV2’s
applying ‘dumping’ prices on the advertising market.
audience share was in the region of 35 % whereas the
Second, it analysed Danish advertising spending in the
corresponding figure for TVDanmark was approximately
EU context and in comparison with the other Scandi
15 %. Their shares of the advertising market also differed
navian countries in particular. Third, a comparison of
significantly. TV2’s market share was in the range of
contact prices was made across all the Scandinavian
60 %, whereas TVDanmark’s was around 8 %. TV2’s
countries and media types.
advertising turnover was approximately five times that
of TVDanmark. Moreover, TV2 is the only station that
reaches 100 % of the population, whereas TVDanmark2
(247) The Commission notes that TV2’s behaviour in the
has a coverage of 77 % and TVDanmark1 even less. In
advertising market was investigated by the Danish
view of the above, the Commission considers that
competition authorities. On 21 December 2005, the
TVDanmark cannot be directly compared to TV2.
Danish Competition Council held that TV2 had
infringed Article 102 TFEU and the corresponding
national legislation by applying loyalty rebates on the
advertising market. This decision was quashed by the
(242) Secondly, the Commission has to establish whether or
Competition Appeals Tribunal on 1 November 2006
not TVDanmark is an efficient market operator. An
but then upheld on appeal to the Eastern High Court
efficient operator can be determined by analysing
on 22 June 2009. That ruling was appealed to the
commonly used accounting ratios and by comparing
Supreme Court, which confirmed the High Court’s

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ruling on 18 March 2011. This followed a decision by
mechanism of stations are all factors that affect the
the Competition Council on 29 November 2000 in
nature of competition in the advertising market. As a
which it had found that TV2’s rebates for the year
result, prices vary between different broadcasters.
2000 constituted abuse of a dominant position. In this
Stations also sell a range of differentiated ‘products’
connection, the Commission notes that the Danish
that fetch different prices ( 85 ).
competition authorities’ investigation covered the years
2000-2005, in other words only the last years of the
period covered by the present decision. Most notably, a
loyalty rebate does not necessarily imply the existence of
cross-subsidies within the meaning of the 2001 Broad
casting Communication (‘Whenever a public service broad
(249) The prices charged by the stations include significant
caster undercuts prices in non-public service activities below
discounts. It is therefore not relevant to compare listed
what is necessary to recover the stand-alone costs that an
prices in television advertising. Most television advertising
efficient commercial operator in a similar situation would
(approximately 90 % of all nationwide advertising) is
normally have to recover, such practice would indicate the
governed by annual agreements under which television
presence of overcompensation of public service obligations’).
channels grant annual rebates. In addition, there are a
In fact, as explained below, on average, TV2 charged
number of other discounts (for new advertisers, less
significantly higher prices than its competitors.
attractive advertising slots, additional volume rebates
Moreover, the loyalty rebates imply that customers
etc.). The agreements are negotiated and facilitated by
placed a larger part of their annual advertising budgets
so-called media agencies.
with TV2 than they would have done under other
circumstances. The allegation therefore implies that TV2
increased its advertising revenue by way of the rebate
scheme, which would actually have reduced need for
licence fee funding. In any event, the Commission is
not bound by the decisions of the Danish competition
(250) To allow the different stations to be compared, an
authorities.
average of the different prices charged has to be
determined. The table below shows the average prices
Advertising prices
for the target group TRP 21-50. The average prices
were obtained by dividing the relevant stations’
(248) Audience shares and composition, programming content,
turnover from national spots by the number of
the rules on advertising time, and the funding
national TRP 21-50 delivered ( 86 ):
1998 1999 2000 2001 2002
TVDanmark EUR
283 EUR
270 EUR
252 EUR
251 EUR
211
TV2 EUR
480 EUR
409 EUR
364 EUR
381 EUR
325
Difference EUR
197 EUR
139 EUR
112 EUR
130 EUR
114
TVDanmark CPP as share of TV2 CPP ( 1 ) 58,9
% 66,0
% 69,3
% 65,9
% 64,9
%
TV2 average CPP for TRP 21-50 EUR 336 EUR
286 EUR
255 EUR
267 EUR
228
weighted for coverage (by 0,7)
TVDanmark CPP as share of TV2
84,2 % 94,3
% 99,0
% 94,1
% 92,7
%
weighted CPP
( 1 ) CPP = cost per point. The cost per point expresses the costs of advertising per rating point, i.e. either per GRP or per TRP.
(251) From the figures above it can be seen that TVDanmark’s TRP 21-50 price was around 30-40 % lower
than TV2’s price. As the Commission held in its decision on State aid for France 2 and France 3,
there is a positive relationship between the average number of contacts and the average net price per
contact in the television advertising market ( 87 ). Thus any price difference between broadcasters could
be explained by the relative strength of the stations in terms of their ability to attract viewers. In such
a situation, it is relevant to establish whether or not the actual price difference reflects conditions on
the market.
( 85 ) Different categories of rating points, spot campaigns etc.
( 86 ) The Gallup-meter system records how many gross rating points each station actually delivers. This figure has then
been adjusted by the station to reflect TRPs delivered.
( 87 ) Case C 60/1999 (ex NN 167-1995) — France, State aid in favour of France 2 and France 3, 10 December 2003.

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Official Journal of the European Union
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(252) In contrast to the situation in France, in the present case
rating points and thus on marginal prices. TVDanmark
observations can only be analysed for two operators. The
claims that these prices were even lower than the average
slope of the linear regression line would therefore have
prices shown in the table above.
to be calculated on the basis of those two operators’
prices and would be of little statistical relevance. Thus
it would not be possible to draw any conclusion on
(255) Leaving aside the question of whether this claim is
whether or not the slope of the line is ‘appropriate’.
correct, the Commission considers that such behaviour
would be possible given TV2’s strong position on the
market. However, the present investigation has to
establish whether or not TV2, through its behaviour on
(253) In order to verify whether or not the actual price
the advertising market, attempted to maximise its
difference between the two operators could be said to
revenue. On this question, the possibility cannot be
reflect market conditions, a correction factor was
ruled out that TV2 kept its prices low in order to
therefore applied in an attempt to neutralise TV2’s
maintain a high market share, but that does not mean
stronger position in the market. The weighting factor
that it did not attempt to maximise income.
was obtained from calculations made by media
agencies and reflects the difference in coverage of the
desired target group that can be attained by purchasing
TV2’s pricing behaviour during the period under
100 TRP 21-50 from TVDanmark and from TV2. On
investigation
average TVDanmark’s coverage is just under 70 % of
TV2’s (on purchasing 100 TRP 21-50). When this
(256) The foregoing shows that TV2’s prices were higher than
factor is applied, the prices are more closely convergent,
TVDanmark’s during the period under investigation. It is
although TV2’s price is still slightly higher than
also clear that, despite increases in listed prices, the actual
TVDanmark’s. The price difference therefore seems to
price level was declining during that time. TV2 raised its
reflect market conditions. However, this result must be
discounts substantially.
treated with caution, as it has to be borne in mind that a
correction factor of this kind cannot possibly take
account of all the differences between the stations.
(257) However it is not possible to establish from an analysis
of prices whether or not the price trend actually
contributed to reducing the total income from adver
tising, thereby increasing the need for state funding. To
(254) The Commission also notes that the complainant
address this issue, the Commission has analysed TV2’s
maintains that competition in the television advertising
pricing behaviour and the impact this had on its
market is actually played out neither through the listed
overall level of advertising income.
prices nor through the average GRP or TRP prices as
presented above. Instead, TVDanmark argues that the
operators compete on so-called marginal prices. These
(258) As the following recitals show, TV2 applied a number of
marginal prices, it is claimed, derived from TV2’s
price increases and price reductions (by granting higher
stronger position in the market. For advertisers to
discounts) during the period under investigation. The
achieve their campaign goals, they have to buy a
table below gives an overview of the trend in TV2’s
certain quota of rating points exclusively from TV2. As
overall level of advertising income (million DKK) from
there was no competition for these so-called infra-
1998 to 2002, the period during which the complainant
marginal units, TV2 was able to make excess profits on
alleges that TV2 was forcing down prices on the Danish
them. As a result, the operators competed on the residual
market:
1998 1999 2000 2001 2002
National advertising income 1
008 884 959
879
884
(– 11,3 %)
(+ 8,5 %)
(– 8,3 %)
(– 0,6 %)
(259) In 1997, TV2 took the strategic decision not to expand capacity utilisation but to increase its prices
in 1998. Another price increase was made in 1999. The Danish authorities contend that by 1999 the
competitive situation had become so intense that TV2 suffered as a result of the price increase and its
advertising revenue fell by around 10 % from the previous year.
(260) In 2000, TV2 expected competition to intensify and did not raise its prices. Actual prices did indeed
fall because of the new rebate scheme introduced by TV2. As a result, TV2 expanded its capacity
utilisation by 33 % over the previous year. However, the pricing measures led to an 8,4 % increase in
its nationwide advertising turnover. In 2001, TV2 again raised its prices. Despite the price increase,
its advertising revenue and capacity utilisation dropped back to the 1999 level. In 2002, TV2 cut
prices yet again and experienced a slight drop in total turnover. However, overall turnover in the
advertising market shrank even more.

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(261) From the above it can be concluded that the use of
market were too low. A depressed level of prices could
extensive rebates brought about a reduction in the
stem from TV2 having used its stronger position to bring
actual price level. TV2 was able to offset the fall in
down the overall level of spending on television adver
prices by expanding its capacity utilisation. As its
tising below what it would have been under normal
competitors did not have the same capacity reserve,
competition.
they did not have that option. In order to gain market
acceptance, they had to follow TV2’s lead. During years
when TV2 increased prices, its total advertising turnover
fell. By contrast, when TV2 reduced prices, it was able to
increase its total turnover. The Commission therefore
(263) To address this issue, the Commission has analysed
concludes that TV2’s price cuts actually resulted in
economic data on the advertising market in all EU
higher overall income. Consequently, TV2’s pricing
countries and compared them with Denmark. As
behaviour cannot be said to suggest that it did not
Danish television advertising is most closely comparable
seek to maximise revenue.
with other Nordic countries, the Commission also
compared the data for Denmark and the other Nordic
countries (Finland, Sweden and Norway) ( 88 ). The key
TV advertising spending in Denmark compared with
figures on television advertising spending that were
the EU as a whole
analysed were: (1) television advertising expenditure as
a percentage of total advertising expenditure; (2)
(262) Comparing prices between the Danish operators and
television advertising expenditure per capita; (3) television
analysing TV2’s pricing gives no indication of whether
advertising expenditure as a proportion of GDP. The
or not overall prices on the Danish television advertising
table below gives an overview of these key figures:
Key figures on television advertising spending in Denmark, the EU and other Nordic countries
1995 1996 1997 1998 1999 2000 2001
TV advertising spending as
DK 27
% 29
% 29
% 30
% 28
% 27
% 27
%
% of total advertising
spending
EU 35
% 37
% 37
% 37
% 37
% 37
% 37
%
Nordic 24
% 25
% 26
% 27
% 27
% 27
% 26
%
TV advertising spending
DK 39 44 48 51 46 47 44
per capita (million EUR)
EU 37 40 45 49 53 60 58
Nordic 32 36 41 44 45 54 49
TV advertising spending as
DK 1,49
‰ 1,61
‰ 1,70
‰ 1,77
‰ 1,51
‰ 1,45
‰ 1,34
‰
‰ of GDP
EU 2,20
‰ 2,34
‰ 2,46
‰ 2,58
‰ 2,70
‰ 2,88
‰ 2,71
‰
Nordic 1,45
‰ 1,51
‰ 1,62
‰ 1,72
‰ 1,66
‰ 1,73
‰ 1,55
‰
Source: European Audiovisual Observatory, Eurostat.
( 88 ) Both the Danish authorities and the complainant think that the
prices in Denmark can best be compared with other northern
countries, as the market conditions are similar (size, viewing
behaviour).

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(264) The table above shows that television advertising
(268) However, the Commission cannot verify the reliability of
accounted for a smaller proportion of total advertising
the data provided and no such data are publicly available.
expenditure in Denmark (27 %) than the EU average
Since the information is rather limited and does not take
(37 %). However, the figures show that there is a
possible cultural differences into account, the
general north-south divide in Europe
( 89 ). In the
Commission cannot draw any valid conclusions on the
southern Member States, spending on television adver
level of contact prices for the different media in the
tising is considerably higher than in the northern
Scandinavian countries.
Member States ( 90 ). The same pattern can be seen for
television advertising spending as a proportion of
GDP ( 91 ). Television advertising expenditure per capita
also shows a marked difference between the Member
States (
(269) The Commission therefore concludes that TV2 had the

92 ). Looking at the Nordic figures, the Danish
spending pattern is in line with the other Nordic
highest price on the Danish market during the period
countries.
under investigation, being able to price its product

15-40 % higher than its competitors depending on the
reach in the relevant target group. Compared with
Sweden and Norway, prices are approximately 20 %
lower in Denmark.
(265) In view of the above, the Commission concludes that
there is no clear, unequivocal evidence that the Danish
television advertising market was systematically and
consistently depressed as a result of TV2’s pricing
(270) In the light of the above analyses, the Commission
behaviour.
concludes that, from a State aid perspective, there is no
clear evidence that TV2 did not attempt to maximise its
advertising revenue or that its behaviour in the adver
tising market led to an increased need for State funding.
Inter-media prices
(266) The complainant also submitted comparative data on
contact prices (expressed in CPM ( 93 )) across borders for
V. CONCLUSION
one media type and across all media types in one
particular country. The data submitted by the
The Commission finds that Denmark unlawfully implemented
complainant compares the cost for contacting 1 000
the aid in question in breach of Article 108(3) of the Treaty on
individuals by an advertisement either in print or on
the Functioning of the European Union.
television in Denmark, Norway and Sweden ( 94 ).
However, in the light of the Court’s judgment and on the basis
(267) The data shows that television advertising is less
of the considerations set out above, the Commission considers
expensive in Denmark than it is in Sweden and
that the aid is compatible with the internal market on the basis
Norway ( 95 ), whereas the opposite is true for print
of Article 106(2) of the Treaty on the Functioning of the
media ( 96 ).
European Union.
( 89 ) A major reason for the divide is the significantly smaller amount of
time people in Nordic countries spent watching TV. In Denmark
average daily viewing per capita was 156 minutes in 2002, whereas
In the light of the Court’s order, the question has to be
the figure for the EU was 192 minutes.
( 90 ) In the EU in 2001, it accounted for the highest proportion in the
examined whether the above finding might result in overcom
southern Member States Portugal (60 %), Italy (54 %), and Greece
pensation of TV2, since the DKK 628 million reclaimed from
(49 %). In the Netherlands (23 %), Finland (24 %), Austria (26 %),
TV2 by the Danish State with interest in 2004 is now deemed
and Ireland (26 %) it turned out to be lower than in Denmark. In
compatible with the internal market and might be repaid to
Sweden the percentage matched the figure for Denmark.
TV2 by the State. Repayment of that sum could conceivably
( 91 ) TV advertising expenditure as a proportion of GDP was high in
result in overcompensation in view of the recapitalisation
southern countries such as Portugal (6,66 ‰), Greece (4,04 ‰),
Italy (3,22 ‰), and Spain (3,21 ‰).
measures that were actually implemented in 2004 (case N
( 92 ) Per capita TV advertising expenditure in 2001 was lower in Finland
313/2004) because of TV2’s financial needs following
(EUR 42) and Sweden (EUR 43) and the same as in the Netherlands
recovery. As paragraphs 34 and 35 of the Court order
(EUR 45). It was highest in the UK (EUR 90), Portugal (EUR 80) and
indicate, the recovery obligation was indeed a necessary
Belgium (EUR 73).
prerequisite for the 2004 recapitalisation measures, given that
( 93 ) CPM (cost per thousand) represents either the cost to generate
1 000 gross impressions within the group or the cost to reach
the Danish authorities chose not to allow TV2 to go into bank
1 000 different individuals of the group.
ruptcy. As the Court stated in paragraph 43 of its order,
( 94 ) The TV contact prices for Norway and Denmark are estimated on
‘[a]lthough the specific circumstances of the present case prompted
the basis of information from local SBS station. The print estimates
the Commission to adopt two decisions [the annulled recovery
were provided by a media agency.
and recapitalisation decisions], it is apparent that those decisions
( 95 ) CPM for TV is respectively 13 in Denmark, 14 in Sweden and 18 in
constitute two aspects of the same legal issue relating to the classifi
Norway.
( 96 ) CPM for print is respectively 21 in Denmark, 17 in Sweden and 12
cation as State aid within the meaning of Article 87(1) EC and, if so,
in Norway.
to the determination of their compatibility with the common market, of

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the measures implemented by the Kingdom of Denmark for TV2 and
HAS ADOPTED THIS DECISION:
subsequently TV2 A/S. The annulment of Decision 2006/217/EC
therefore entails for the Commission a fresh examination of all the
measures implemented by the Kingdom of Denmark for TV2 and
Article 1
subsequently TV2 A/S’. Because of their close link due to the
recovery issue, the 2004 recapitalisation measures in favour of
The measures implemented by Denmark in favour of TV2/
TV2 should be seen in conjunction with the State aid granted
Danmark between 1995 and 2002 in the form of the licence
between 1995 and 2002 so as to ensure that there is no risk of
fee resources and other measures discussed in this Decision are
TV2 receiving overcompensation.
compatible with the internal market within the meaning of
Article 106(2) of the Treaty on the Functioning of the
In this connection, the Commission notes the following. After
European Union.
the recovery decision, the Danish authorities actually recovered
DKK 1 050 million (i.e. more than the DKK 628 million plus
interest). As indicated in the Court order, following the Court’s
Article 2
annulment of the recovery decision, the reason for recovering
the DKK 628 million plus interest ceased to exist. However, the
This Decision is addressed to the Kingdom of Denmark.
Danish authorities submitted a declaration undertaking not to
repay the sum recovered to TV2, or if certain cumulative
conditions were met, to repay TV2 a sum equivalent at most
to the difference between the amount (including interest) that
Done at Brussels, 20 April 2011.
was actually recovered from TV2 in respect of the period
1995-2002 and the amount of the recapitalisation measures.
In line with the Court Order, given the above commitment,
For the Commission
there is no risk of TV2 being overcompensated in terms of
the State aid for the years 1995-2002 seen in conjunction
Joaquín ALMUNIA
with the 2004 recapitalisation measures,
Vice-president

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