Commission Decision (EU) 2021/2034 of 10 June 2021 on the State aid SA.28599 (C 23/2010) (ex NN 36/2010, ex CP 163/2009)) implemented by Spain for the deployment of digital terrestrial television in remote and less urbanised areas (outside Castilla-La Mancha) (notified under document C(2021) 4048)Text with EEA relevance.

(203) As explained in recital (196), in their actions for annulment of the 2013 Decision, various parties claimed that operation of the digital terrestrial network has been attributed as an SGEI by an official act in a given region and brought the relevant documents to the Commission’s attention. Having examined these documents during the Court proceedings, the General Court confirmed the Commission view that none of those documents constituted the required act of attribution

See par. 62-72 of the judgment in T-462/13; par. 60-73 of the judgment in T-465/13; par. 102-115 of the judgment in T-487/13; par. 84-95 of the judgment in T-541/13; par. 66-71 of the judgment in T-461/13. Moreover, in all of the above mentioned judgments the General Court held that Law 11/1998 and Law 32/2003 did not define the transmission services for the broadcasting of television as an SGEI.

. The said General Court judgments have been confirmed by the Court of Justice

See judgment in joined cases C-66/16 P to C-69/16 P; judgment in case C-81/16.

.

(204) It is therefore concluded that under Spanish law the operation of terrestrial networks does not have the status of a public service. This conclusion has been confirmed by the General Court in cases T-462/13

Paragraphs 55-79 of the judgment in case T-462/13.

, T-465/13

Paragraphs 55-80 of the judgment in case T-465/13.

, T-487/13

Paragraphs 89-119 of the judgment in case T-487/13.

, T-541/13

Paragraphs 65-95 of the judgment in case T-541/13.

and in T-461/13

Paragraphs 53-78 of the judgment in case T-461/13.

. Moreover, the said judgments were confirmed by the Court of Justice in joined cases C-66/16 P to C-69/16

See paragraphs 67-76 of judgment in joined cases C-66 to 69/16.

and in case C-81/16

See paragraphs 38-54 of the judgment in case C-81/16.

.

(205) As a result, it has not been established that the first Altmark condition has been satisfied. The fact that the first Altmark criterion is not satisfied in this case, due to the lack of clear and precise definition of the service consisting in the operation of a terrestrial network as a public service, has been confirmed by several judgments of the General Court and the Court of Justice

See judgments in T-451/13 (paragraphs 65-110); T-461/13 (paragraphs 53-78); T-462/13 (paragraphs 55-79); T-465/13 (paragraphs 55-80); T-487/13 (paragraphs 89/119); C-81/16 (paragraphs 38-54); Joined Cases C-66/16 P to C-69/16 P (paragraphs 67-76).

.

(206) The criteria provided by the Altmark judgement are cumulative, i.e. they all have to be fulfilled in order for the measure not to be considered State aid. In the absence of satisfaction of the first criterion, the financing granted to Itelazpi by the Basque Country authorities does not therefore qualify as compensation for the provision of a service of general economic interest. As explained in recital (62), the above assessment does not prejudice the assessment of the new measure introduced in the Basque Country on 2 December 2014 by the Agreement on the Service to extend coverage of national television channels in the Autonomous Community of the Basque Country.

(207) In any event, if the Spanish legislation had declared the operation of a terrestrial network to be a public service (which it had not), this would constitute a manifest error, as explained below.

(208) According to settled case-law, Member States enjoy a broad discretion for defining what they regard as SGEI, and the definition of such services by a Member State can be queried by the Commission only in the event of manifest error.

(209) However, Member States’ power to define SGEIs is not unlimited and cannot be exercised arbitrarily for the sole purpose of removing a particular sector, from the application of the competition rules. Also, the margin of discretion of Member States to define SGEIs cannot be exercised in a way that would contravene the general principles of Union law, such as the principle of equal treatment

See judgment in C-390/06, para. 51.

.

(210) The principle of equal treatment is ensured as regards broadcasting networks operating services by means of the principle of technological neutrality, although this does not mean that selecting a specific technology for broadcasting networks operating services entails in any event a manifest error

See judgment in T-37/15, para. 123 and 124.

.

(211) As explained in recital (176), different platforms other than terrestrial ones, notably satellite, can provide services for the broadcasting of television signal in Area II.

(212) In these circumstances, it is not possible to consider that terrestrial platforms are essential for the broadcasting of the television signal without violating the principle of technological neutrality

See para. 123 of judgment in T-37/15.

.

(213) The possible definition of the operation of a terrestrial platform as SGEI would need to be duly justified in order not to contravene the principle of equal treatment and not to entail a discrimination vis-à-vis other platforms.

(214) In this regard, it has to be recalled that at the time when the regional authorities carried out the extension of coverage, they had the choice of either organising a technologically neutral tender or selecting one particular technology if justified on the basis of the information available at that time.

(215) As explained in recitals (254) to (264), none of the costs studies provided by the Spanish Authorities and the beneficiaries of the aid were produced ex ante by an independent expert and demonstrated that the satellite technology was clearly more expensive or did not fulfil essential qualitative requirements for the extension of coverage in Area II.

(216) Moreover, as already mentioned and explained in detail in recital (176), there is no imperative technical requirements, which exclude the satellite technology for the extension of coverage in Area II.

(217) In any event and as explained in recitals (198) to (204), there has been no act of attribution of the public authority entrusting the terrestrial platform operators with an SGEI mission, including a public service mandate and a clear definition of the tasks and related obligations.

(218) In view of the above and despite the broad discretion of Member States for defining what they regard as services of general economic interest, if the Spanish legislation had declared the operation of a terrestrial network to be a public service (which it had not), this would contravene the principle of equal treatment and therefore constitute a manifest error.

Fourth Altmark condition: ensure the least costs to the community

(219) In the absence of a tender, the fourth Altmark condition requires that the level of necessary compensation must be determined on the basis of an analysis of the costs which a typical undertaking, well run and adequately provided with means of transport so as to be able to meet the necessary public service requirements, would have incurred in discharging those obligations. For this purpose, the relevant revenues and a reasonable profit for discharging the obligations should be taken into account.

(220) In the Autonomous Communities where a public tender has been organised for the extension of coverage and this call did not comply with the principle of technological neutrality and, in particular, was not justified by any prior comparison of costs, such a procedure cannot be considered as satisfying the fourth Altmark criterion. A call for tender that – without any valid reason – hinders the participation of certain interested operators cannot be considered open, transparent and non-discriminatory

Communication from the Commission on the application of the European Union State aid rules to compensation granted for the provision of services of general economic interest (OJ C8, 11.1.2012, p. 4).

. Since the calls for tender were tailor-made for terrestrial operators, other platform operators – that could have carried out the extension of coverage –considered themselves automatically excluded from the procedure. Therefore the Commission concludes that in the areas where a public tender has been organised in breach of the principle of technological neutrality, the fourth Altmark condition cannot be seen as being fulfilled by the existence of a tender.

(221) In the case of the Basque Country where there was no tender, the Basque authorities argue that the criterion is fulfilled due to the fact that Itelazpi itself is a well-run and suitably equipped company to perform the requested activities. On the basis of a cost comparison, the Basque authorities conclude that satellite provision would have been more expensive than upgrading Itelazpi’s terrestrial network

No elements was provided by Itelazpi so as to support its allegation.

. However, to fulfil the fourth Altmark criterion, a comparison with satellite technology is not sufficient to establish that Itelazpi is efficient. There could also have been other terrestrial operators which could have performed this service at lower cost.

(222) In the light of the above it is concluded that in the case of the Basque Country too, the fourth Altmark condition has not been fulfilled. Given that these conditions are cumulative, it cannot be considered that the financing granted to Itelazpi by the Basque Country authorities does not constitute State aid because it fulfils the conditions for being deemed compensation for the provision of a service of general economic interest.

(223) As regards the other cases where there was no tender, the Spanish authorities have provided no analysis of the costs which a typical undertaking, well-run and adequately provided with means to meet the public service requirements, would have incurred.

6.2.1.5.

Distortion of competition

(224) Spain and Abertis claim that DTT and satellite technology are two different markets. DTT is the main platform for free-to-air terrestrial television where the number of operators in the national market is determined by the number of licences granted by the Spanish government. Funding for free-to-air terrestrial television channels comes from advertising. As for satellite television, a large number of channels are available on the only pay-television platform in Spain, for which Astra is the network operator. These channels are funded by subscriptions, generally for a package of channels. The Spanish authorities also point out that in Spain the cost of satellite distribution for broadcasters is much higher than the cost of terrestrial broadcasting and therefore the free-to-air broadcasters, including regional and local broadcasters, are not interested in switching to this platform.

(225) For several reasons it is concluded that the terrestrial and satellite platforms operate in the same market.

(226) Firstly, in 2008 Astra competed for the extension of coverage of digital television in Cantabria and won the tender. In 2008, Astra held a series of meetings with the Autonomous Communities to present its offer to broadcast digital television channels, which had hitherto been broadcasted via terrestrial platform. Even though the contract with Cantabria was later terminated by the authorities, the interest of the satellite operator in providing services in competition with the terrestrial platform suggests that there is a possibility for satellite operators to provide similar services.

(227) Secondly, the satellite operator Hispasat (subsidiary of Abertis) provides services in some parts of Area II

Hispasat provides these services in support of the DTT network in Area II.

and the satellite platform is exclusively used in Area III. Other Member States also use satellite services to cover more remote areas of their countries with the free-to-air channels

As, for example, France.

.

(228) Thirdly, several public and private channels distributed via the terrestrial platform, and which reach all the country, are also broadcasted via satellite platforms, including Astra itself

For example, Antena 3, Cuatro, Telecinco, La Sexta, La Siete, Teledeporte, TVE, La2, Canal 24 horas.

.

(229) Fourthly, concerning the regional channels, some of them are available or were available in the recent past via satellite platform. This contradicts the statement that the regional broadcasters are not interested in satellite.

(230) Fifthly, the Commission also notes Astra’s argument concerning the capacity of satellite to deliver 1380 channels and delimitate them geographically. Astra claims that there are no limitations for satellite to broadcast such a number of channels. Moreover, the figure of 1380 regional channels seems to be inflated. While this is the maximal number of frequencies available throughout Spain for national, regional and local channels, the number of licences granted was in fact much lower (see footnote 24). In addition, not all the broadcasters that received a license actually broadcast on the frequencies assigned.

(231) Sixthly, some broadcasters have declared a preference for terrestrial transmission because they have acquired rights to broadcast content only for the terrestrial platform. This, however, does not mean that there are different markets for terrestrial and satellite transmission. As they have acquired content rights for the terrestrial platform, if necessary, broadcasters could do the same for the satellite. Furthermore, if a satellite platform is selected on the basis of a public tender, as in the case of Area III, a must carry obligation could be imposed on the broadcasters. Moreover, according to Article 31 of the General Law 7/2010 on the audio-visual media services, licensees of audio-visual media services are required to negotiate the sale of their main broadcasting channels to television broadcasting service providers using any technology. Broadcasters have an obligation to negotiate with platform operators and any dispute arising out of such negotiations may be brought before the CNMC (see recital (184)).

(232) Finally, according to data from May 2010

Analysis of the television market submitted by Spain in the notification of the measure: Compensation for damages for liberation of the digital dividend in Spain, SA.32619 (2011/N).

, the coverage of DTT in Spain reaches 98,85 % of the population while only 93,5 % of the households watch television via the terrestrial platform. Thus, 5 % of households have access to DTT but choose not to use it, as most of them are subscribed to pay-TV via satellite.

(233) In conclusion, as satellite and terrestrial broadcasting platforms are in competition with each other, the measure, for the deployment and operation and maintenance of DTT in Area II entails a distortion of competition between the two platforms. It should be noted that other platforms, especially IPTV, are also disadvantaged due to the measure. Although broadband has not yet reached the entirety of Area II, it is very likely that in the future it will extend its coverage significantly.

6.2.1.6.

Effect on trade

(234) The measure has an impact on intra-Union trade. According to case law of the Union Courts, when State financial aid or aid from State resources strengthens the position of an undertaking as compared with undertakings competing in intra-Community trade, the latter must be regarded as affected by that aid

T-55/99 Confederecaión española de transporte de Mercancias (CETM) v Commission of the European Communities, ECLI:EU:T:2000:223.

.

(235) Network operators are active in a sector in which trade exists between Member States. Abertis forms part of an international group of companies that competes in intra-Community trade, so does the complainant, Astra. The measure for the deployment and operation and maintenance of DTT in Area II therefore affects trade between Member States.

6.2.2.

Conclusion on the presence of aid

(236) In view of the arguments put forward above, the Commission considers that the measure fulfils the criteria laid down in Article 107(1) TFEU. Under these circumstances, the measure has to be considered as State aid within the meaning of Article 107(1) TFEU.

6.3.

Compatibility assessment

6.3.1.

General considerations

(237) The Commission actively supports the transition from analogue to digital broadcasting. The advantages of the digital switchover were underlined in the Action Plan eEurope 2005 and in the two Communications on the digital switchover

COM(2002)263 final, eEurope 2005: An information society for all, COM(2003)541 final, Communication from the Commission on the transition from analogue to digital broadcasting (from digital switchover to analogue switch-off)’ and COM(2005)204 final, Communication from the Commission on accelerating the transition from analogue to digital broadcasting.

. The Commission also recognises that the digital switchover could be delayed if left entirely to market forces.

(238) Member States may use aid to overcome a specific market failure or to ensure social or regional cohesion

See Less and better target state aid: a roadmap for state aid reform 2005-2009, COM(2005)107 final.

. However, it must be shown in each specific case that the aid in question is an appropriate instrument to address the problem, is limited to the minimum necessary and does not unduly distort competition. Similarly, the Switchover Communication provides that in the specific area of digitisation, public intervention would be justified under two conditions: firstly, where general interests are at stake; secondly, in the event of a market failure, that is, market forces alone fail to deliver in terms of collective welfare. It also specifies that in any case, public intervention should be supported by a sound market analysis.

(239) The Switchover Communication also indicates that the transition to digital broadcasting represents a major industrial challenge that must be led by the market. In principle, each network should compete on its own strengths. In order to safeguard this principle, any public intervention should aim to be technologically neutral. Exceptions from this principle can be envisaged only if the intervention targets a specific market failure or imbalance and is at the same time appropriate, necessary and proportionate to overcome these difficulties.

(240) If left to the market, in view of their disadvantaged social situation, there is a risk that not all parts of the population can benefit from the advantages of digital television. With respect to this social cohesion problem, Member States may want to make sure that all citizens have access to digital television once analogue television is switched off. Since the digital switchover entails costs for consumers and requires a change in habits, Member States may want to assist in particular the disadvantaged groups of society such as elderly people, low-income households or people living in peripheral regions.

(241) In several State aid decisions, based on the Communications on the digital switchover, the Commission applied the State aid rules in this sector

See, amongst others, N622/03 Digitalisierungsfonds – Austria (OJ C 228, 17.9.2005, p.12); Commission Decision 2006/513/EC of 9 November 2005 on the State Aid which the Federal Republic of Germany has implemented for the introduction of digital terrestrial television (DVB-T) in BerlinBrandenburg (OJ L 200, 22.7.2006, p. 14); Commission Decision 2007/258/EC of 20 December 2006 on the measure No C24/04 (ex NN 35/2004) implemented by Sweden for the introduction of digital terrestrial television (OJ L 112 of 30.4.2007, p. 77); Commission Decision 2007/374/EC of 24 January 2007 on State aid C 52/2005 (ex NN 88/2005, ex CP 101/2004) implemented by the Italian Republic for the subsidised purchase of digital decoders (OJ L 147, 8.6.2007, p. 1); N270/06 Subsidies to digital decoders with API – Italy, (OJ C 80, 13.4. 2007, p.3); N107/07 Subsidies to IdTV – Italy (OJ C 246, 20.10.2007); Commission Decision 2008/708/EC of 23 October 2007 on the State aid C 34/06 (ex N 29/05, ex CP 13/04) which the Federal Republic of Germany is planning to implement for the introduction of digital terrestrial television (DVB-T) in North Rhine-Westphalia (OJ L 236, 3.9.2008, p. 10); SA.28685 Captación de Televisión Digital en Cantabria – Spain, , (OJ C 119, 24.4. 2012).

. Member States have several possibilities to grant public funding for the switchover to ensure that all geographical areas continue to have appropriate television coverage. This includes funding for the roll-out of a transmission network in areas where otherwise there would be insufficient television coverage

See Decision 2006/513/EC, recital 132.

. Such funding may however be granted only if it does not entail an unnecessary distortion between technologies or companies and is limited to the minimum necessary.

6.3.2.

Legal basis for assessing the compatibility of the envisaged measure

(242) The Spanish authorities have invoked Articles 107(3) (c) and 106 (2) TFEU to justify the measure if it was found to constitute State aid in accordance with Article 107(1) TFEU. Below, the Commission assesses the compatibility of the measure in the light of these provisions, taking into account the general considerations outlined above.

6.3.3.

(247) In the opening decision, the Commission recognised that there is a market failure in that the broadcasters are unwilling to bear the additional costs of the extension of coverage beyond their statutory obligations. Moreover, neither the satellite platforms nor private households have carried out investments ensuring the reception of digital channels via satellite by all the inhabitants of Area II. Therefore, the Commission recognises that people whose usual residence is in a rural area may be totally excluded from the free-to-air digital television signal reception if the digital coverage is left entirely to market forces and that public intervention can be beneficial through financial supports to individuals.

Technological neutrality, appropriateness and proportionality of the measure

(248) In digital switchover cases, the principle of technological neutrality is well enshrined in several Commission decisions

See above, footnote 148.

. It has been upheld by the General Court and the Court of Justice

Cases T-8/06 - FAB Fernsehen aus Berlin GmbH v Commission, Judgment of 6 October 2009 (paragraphs 70-84), ECLI:EU:T:2009:386; C-544/09P - Germany v Commission, Judgment of 15 September 2011 (paragraphs 77-83), ECLI:EU:C:2011:584; T-177/07, Mediaset SpA v Commission, Judgment of 15 June 2010 (paragraph 109), ECLI:EU:T:2010:233; and C-403/10 P – Mediaset SpA v Commission, Judgment of 28 July 2011 (paragraphs 100 – 108), ECLI:EU:C:2011:533.See also judgments in cases T-462/13 (paragraphs 102-139), T-465/13 (paragraphs 94-117), T-487/13 (paragraphs 128-140), T-541/13 (paragraphs 119-129) and T-461/13 (paragraphs 94-112) which judgments were upheld by the Court of Justice in joined cases C-66/16 P to C-69/16 and in case C-81/16. See also judgment in T-808/14 (paragraphs 139-149) and judgment in joined cases T-37/15 and T-38/15 (paragraphs 157-166) which judgments were upheld by the Court of Justice in C-91/17 P, C-92/17 and C-114/17P.

.

(249) The choice of technology should normally be established by a technologically neutral tender, as happened in other Member States

See footnote 21.

. As pointed out in Section 2.2, the vast majority of tenders have not been technologically neutral, since they refer either explicitly through the definition of the object of the tender and/or implicitly, in the description of the technical specifications, to terrestrial technology and DTT. Only DTT operators could fulfil these requirements (and only such operators have in fact participated in these tenders). Spain argues that tender references to DTT, or specifications referring to DTT equipment and transmission centres do not mean that the use of such centres was compulsory for the bidders. These references cannot reasonably be interpreted as indicated by Spain.

(250) First, according to the 2019 Itelazpi Study, the Spanish government policy had imposed a restriction on Area II, requiring the use of DTT. The 2019 Itelazpi Study states that in order to operate another technology, a regional government would have had to discuss with the national government the removal of this restriction for Area II

FTI Consulting: Providing Digital Television Services in the Basque Region of Spain, page12, 20, 44, 9.5.2019. Provided by Itelazpi.

. No regional government has made an attempt to discuss such a removal of the restriction.

(251) Second, Spanish central government’s favouring of the DTT technology and the tender references to DTT prevented any bidder to make a proposal based on another technological solution. Thus, the Spanish government’s formal argument ignores the commercial reality. Participating in tenders is resource intensive and therefore costly for any bidder. Splitting up the intervention in Area II in several hundred individual tenders has multiplied the costs, which amount to a significant entry barrier to any bidder wishing to cover the entire Area II. The combination of central government interventions in favour of DTT technology, as explained in recitals (138) and (139), specific tender references to DTT and the need to enter into hundreds of different tender procedures therefore sent a strong signal to other platform operators that participating in such tenders would not be commercially justified. It is therefore concluded that these references in the vast majority of cases made it impossible for operators of other platforms to compete

Although in the technologically neutral initial tender of Cantabria three consortia put in a bid which was built on a satellite solution (Castilla-La-Mancha Telecom, Telefónica and Astra), none of these companies – or any other non-DTT platform operator – participated again in any of the subsequent tenders.

.

(252) The advantage of a technologically neutral tender is that the aid granting agency could have chosen between different bids, including possible discounts offered by the bidders. On the other hand, dispensing with such a tendering procedure may be justified if an ex-ante study demonstrates that, taking into account all possible discounts which could be envisaged from potential bidders, any other technology was clearly more expensive or did not fulfil essential qualitative requirements

Such a study served as a justification for a choice of a particular technology in a broadband case, see Commission Decision N222/2006 – Aid to bridge the digital divide in Sardinia, (OJ C 68, 24.3.2007).

. Such a cost study should be carried out by an independent expert and it has to fulfil certain quality requirements (it should demonstrate a significant cost difference, the study’s results have to be robust and the data has to be verifiable). In that case the authority could avoid the cost and loss of time of going through a public tender procedure

The United Kingdom chose DTT for the provision of local television on the basis of an ex-ante study carried out by its regulator OFCOM and on the basis of an ex-ante consultation of market players. On this basis, the Commission did not insist on carrying out a technologically neutral tender. SA.33980 (2012/N) – Local television in the UK, http://ec.europa.eu/competition/state_aid/cases/244689/244689_1425664_116_2.pdf.

.

(253) This holds even more so in the current case, as in 2008 the satellite operator Astra had already won a tender of the Autonomous Region of Cantabria over other bidders (see recital (13)). As that tender was technologically neutral, this provides evidence that at the time DTT probably did not have such a required cost or quality advantage. Furthermore, satellite technology is used for transmission in the entire Area III and in Area II as a support service to DTT infrastructure

For instance, in the case of Itelazpi and Cellnex, some DTT transmission sites are unable to receive multiplex signals over the terrestrial network and receive multiplex signals from Hispasat satellites. Compare 2015 Itelazpi Study, page 20.

. This also seems to indicate that in principle satellite technology is suitable for the transmission of television signals in Area II.

(254) Against that evidence which contradicts the assumption that DTT technology would have a clear cost advantage, a cost study to support a decision favouring a particular technological solution by avoiding a technologically neutral tender, should be particularly unequivocal. It should fulfil at least the following five cumulative conditions: (1) the study has to be carried out ex-ante

Only if the study is carried out before making the choice of a particular technological solution (ex-ante), an authority can claim that its decision to forego a technologically neutral tender has been based on such a study.

, (2) it should be carried out by an independent expert, (3) it should demonstrate a significant cost difference

Cost estimates are based on assumptions and therefore entail uncertainty. To justify an ex-ante technological choice, the cost estimates have to be conservative. They have to include possible cost reductions which may be achieved by potential bidders on the basis of their market position or possible synergies. They should also reflect possible discounts a bidder may offer to enter a new market.

, (4) the results have to be robust

The cost comparison is robust if the overall result does not change if underlying assumptions change within a reasonable range.

and (5) the data have to be verifiable.

(255) During the investigation, the Spanish authorities have presented various cost studies allegedly showing that the use of DTT technology would be less costly than the use of satellite technology. All of these cost comparisons suffer from the fact that they only focus on the installation cost. Most of them do not take into account Operation and Maintenance cost (O&D) at all. Following the deployment of DTT, however, it has become clear that the use of the latter technology has produced significant O&D expenditures which the Spanish authorities have financed by granting continuous O&D aid to DTT operators (until today). A cost comparison of different technologies should take into account all relevant cost, i.e. including also such O&D expenditure.

(256) The ex-ante 2007 Spain Study, as discussed in recital (119), does not sufficiently demonstrate the superiority of the terrestrial platform over satellite. On the contrary, the study concludes that the choice of a particular technological solution for the extension of coverage is to be analysed on a region-by-region basis, taking into account the topographic and demographic particularities of every region. This conclusion advocates instead the need to carry out a technologically neutral tender to determine which platform is the most suitable. The General Court confirmed that the 2007 Spain Study did not sufficiently demonstrate the superiority of the terrestrial platform over the satellite platform. Moreover, the General Court held that that the analysis carried out in the 2007 Spain Study did not justify the failure to observe the principle of technological neutrality

See judgment in case T-461/13 (par. 118-120); judgment in case T-462/13 (par. 113-114) ; judgment in case T-465/13 (par. 104-105); T-541/13 (par. 132-133).

.

(257) In the course of the investigation, some of the Autonomous Communities submitted internal calculations comparing the costs of using both technologies to extend the coverage. However, in addition to uncertainty about the date of these calculations

The internal calculations do not have a date and may well have been carried out ex post. They were provided to the Commission long after the investigation had started and years after the measure was put into effect (i.e. Galicia in 2010, Navarra, Madrid, La Rioja, Valencia in 2011, Aragon in 2012).

, none of them was detailed and robust enough to justify the choice of terrestrial technology to extend the coverage

Murcia provides a cost comparison of 15 October 2008 which allegedly demonstrates that, compared to DTT, costs of deploying satellite exceed by 70 % for the municipality and 100 % for citizens. However, the cost comparison is not verifiable, as it provides no annexes with data and calculations. The comparison does not take into account that in a tender (as in the case of Cantabria), a satellite operator can offer discounts and it does not take into account that in the case of DTT technology, apart from installation, there arise significant O&D cost.

. What is more, none of them was carried out by an independent expert. In November 2010, the Autonomous Region of Galicia reported on meetings held with Astra in 2009 and provided a cost comparison which included data provided by ASTRA in such discussions. That cost comparison has been subject of the appeal brought by the Autonomous Region of Galicia against the 2013 Decision and the General Court did not accept these calculations as justifying that the terrestrial technology was superior to the satellite technology

See the reasoning of the General Court in case T-463/13 Comunidad Autónoma de Galicia v. Commission, par.128-129.

. That cost comparison does not take into account the cost of providing DTT reception equipment to end-customers. Such costs are significant, as the switch to DTT required that each household receives an antenna and a decoder.

(258) Concerning the two cost studies submitted by Cellnex (Abertis), it has to be noted that they were performed in 2010, long after the investigated measures were put into effect. Irrespectively of whether they could be considered independent and sufficiently robust, the fact that they are subsequent to the contested measures means that such studies cannot be cited in support to the argument that the Spanish government failed to hold a technologically neutral tender. In addition, the results of these studies are contradicted by cost estimations provided by Astra which allegedly demonstrate that satellite technology is more cost effective

Itelazpi’s submission of 13 June 2019 acknowledges Astra’s cost studies. It claims that these studies have several defects without, however, explaining what defects there are and to what extent they would be decisive for Astra’s overall conclusions. In its submission of 13 June 2019, Cellnex Telecom criticises in more detail several of Astra’s cost assumptions (page 24-26). As the Commission does not rely in particular on any specific report they are not further discussed.

.

(259) Another study was submitted by the Spanish authorities on 8 November 2012, thus more than 4 years after the Spanish government had launched aid for the DTT infrastructure

Analysys Mason: Evaluación de los costes sobrevenidos de las diferentes tecnologías para poder recibir la cobertura actual del servicio de televisión tras la liberación del dividendo digital. 20 de septiembre de 2012.

(2012 Spain Study). The Commission notes that the 2012 Spain Study has been submitted in the context of another case

SA.32619 (2012/C (ex 2011/N)) notified by the Kingdom of Spain for the compensation of certain costs for the release of the digital dividend (OJ L 361, 31.12.2016, p. 1).

and it was registered in the present case at the request of the Spanish authorities. The study compares the cost of adapting the television reception equipment in each dwelling, for the entire Spanish population, as a result of making the digital dividend available. The 2012 Spain Study is not relevant in this case, since it does not relate to the extension of DTT coverage in Area II or to any of the costs financed by the aid under consideration. Moreover, the timing prevents that the government’s decision in favour of DTT was based on the 2012 Spain Study. In addition, the 2012 Spain Study also has the deficiency that it does not provide the data source. Thus, the data used are not verifiable.

(260) Further ex-post studies were submitted in 2019, i.e. about 10 years after the Spanish government took the measures to roll out DTT in Area II. The Cataluña Study assessed the different technologies envisaged for the provision of digital television in Area II. The study is based on data for the year 2008. The study came to the conclusion that the most viable technologies were terrestrial and satellite; and that between these two technologies the DTT technology was the least expensive for the citizens.

(261) That study was carried out in 2017, well after the investigated measures were put into effect. The fact that it is posterior to the contested measures excludes such study from justifying the Spanish government’s omission of a technologically neutral tender. In addition, the findings of the study are not robust

For instance, there is a non-rigorous analysis for the instalments costs in individual houses. The study assumes that all individual houses have almost all the equipment for the DTT access, in contrast with satellite. The consequence of this assumption is an increase in costs for satellite technology compared to DTT. Although it is mentioned in the study that the instalment equipment required for both technologies are similar, for DTT the study calculates only EUR 30 costs for a decoder, while for the satellite technology it takes into account a cost of EUR 588. Of this EUR 588, EUR 270 are included for the purchase of two satellite receivers. The difference of treatment of DTT and satellite also becomes apparent in the total cost calculations. Over EUR 71 million are accounted for the adaptation of individual houses for satellite, while zero are the adaptations costs for DTT technology.

.

(262) On 13 June 2019, the beneficiary of DTT aid of the Autonomous Region of the Basque country, Itelazpi, provided two studies allegedly demonstrating that the cost of providing digital television signals via a DTT network is more cost efficient than providing such signals via a satellite network. The first study had been prepared for Itelazpi in 2015 while the second one is from 2019.

(263) The 2015 Itelazpi Study estimates the incremental costs of providing coverage for national multiplexes via DTT and satellite options (excluding regional services). The study excludes common costs of both national and regional services, as Itelazpi’s existing site infrastructure, management and other support services. It includes transmission equipment, consumer set-top boxes and communal antenna systems.

(264) Also these studies have been prepared a long time after the actual decision had been made. Irrespective of the validity of their results, they therefore cannot be taken as a basis for the government’s initial selection of a particular technology

Indeed, Itelazpi did not claim that either the central government or the regional government of the Basque Country had based its decision on the data used in this study.

. Moreover, the results of the cost studies are mainly driven by underlying assumptions which are not robust

For instance, the 2015 and 2019 Itelazpi Studies assume that the provision of satellite services would be done on the basis of renting existing satellite transponder capacity from the satellite platform and operate the satellite connection itself. They do not consider the possibility that, as in the Cantabria tender, a satellite operator may enter the market itself. The calculation is therefore biased against satellite technology as it excludes the possibility of any quantity discounts or possible price negotiations which would typically happen in a tender process. In the case of an open tender, as demonstrated in relation to the Cantabria tender, the satellite operator could base its bid on a completely different price calculation. More specificly, the cost calculations are biased. For instance, they use current satellite set-top boxes prices in the calculation of satellite costs which are significantly higher than the costs in some other EU countries (page 10 of the 2015 Itelazpi Study and page 45 of the 2019 Itelazpi Study). It thereby neglects the possibility of quantity discounts a satellite operator may benefit from if it operates in several Member States.

. They also do not fulfil the quality requirements set out above in recital (254)

The cost calculations cannot be verified. With regard to DTT cost, the study refers to Itelazpi internal data. Such data have not been annexed to the study. With regard to satellite cost, the study refers to Astra without, however, indicating where and in what context Astra has provided such data.

.

(265) To conclude, the Spanish government did not carry out technologically neutral tenders. Its choice of the DTT technology was not based on an independent, robust ex-ante study which would justify the absence of an open tendering procedure.

(266) Furthermore, the investigated measure cannot be considered appropriate.

(267) The fact that some households in Area II receive free-to-air channels via satellite

Hispasat, co- owned by Abertis and by the Spanish government, provides services in certain Autonomous Communities in parts of Area II. For example, in the Canary Islands 16 villages located in Area II receive free-to-air television via satellite. In Castilla y Leon the same concerns around 9000 people. As Abertis is in charge of the control of the satellite receivers in all terrestrial sites and it does not allow other satellite operators to interconnect with such receivers, only Hispasat can offer such DTT transport services to feed terrestrial towers.

demonstrates that terrestrial technology is not always the most efficient and appropriate platform. It is also noted that satellite solution has been used in some other Member States

E.g. France, United Kingdom, Italy, Slovakia.

.

(268) Moreover, the fact that Astra competed in and won the technologically neutral tender for extension of digital television coverage in Cantabria suggests, at least, that satellite platform can provide this service

As further underlined by the judgement of the national court. See above, footnote 16.

.

(269) The appropriateness of the measure is still being questioned. While the transition from analogue television to DTT in the 800 MHz band was completed in Spain on 3 April 2010, in 2011 it was decided to auction the 800MHz band frequencies. As a result, it was necessary to transfer broadcasts to other channels located below 790 MHz, no later than by 1 January 2014. As this created additional costs, on 5 November 2011 Spain notified two measures for households and broadcasters with a budget of EUR 600-800 million in Area I. In August 2016, the Commission found that these measures constituted incompatible aid

See Decision (EU) 2016/2395.

. Such cost would not have arisen if other platforms (IPTV, cable or satellite) had been chosen.

(270) What is more, it had been pointed out that new mobile services (LTE, 4G) use a frequency that is close to the spectrum used by DTT and therefore these mobile services might interfere with DTT signals, as a result of which households need to buy costly filters to protect their DTT signal from this interference

Ofcom, Second consultation on coexistence of new services in the 800 MHz band with digital terrestrial television, http://stakeholders.ofcom.org.uk/consultations/second-coexistence-consultation/.

. It cannot be ruled out that similar interferences are a more general problem undermining the future appropriateness of terrestrial broadcasting, especially in the context of greater and wider roll-out of NGA networks.

(271) Spain put forward two other arguments in support of the view that satellite transmission would be more expensive than DTT. Firstly, in their agreements with certain providers, broadcasters have territorial restrictions. To ensure such conditional access would be more expensive for satellite technology. Secondly, satellite technology would not be equipped to broadcast a large number of regional channels. These allegations have not been substantiated and are contradicted by the fact that Astra’s Cantabria contract contained a professional system of conditional access. Moreover, according to Astra’s cost calculations, satellite technology would still be cheaper even if separate agreements had to be entered into with each of the Spanish regions. As regards regional broadcasting, Astra maintains that the Spanish government’s number of 1380 channels is hugely inflated

According to Astra’s estimations, the total number of local channels currently broadcasted is limited to 415 channels. The Commission’s own calculations suggest that the number of channel stated by Spain is somewhat overstated.

. Again, according to its own calculations, the satellite option would be cheaper even if regional and local channels were included.

(272) There is also evidence that the regional governments were aware that a technological alternative existed to the extension of the terrestrial platform. The investigation revealed that early in the process some regions met Astra representatives. At these meetings, Astra presented to them a proposal for a satellite solution, which, however was not further explored by the regional governments.

(273) As regards proportionality, when designing the intervention for Area II, it would have been appropriate for the central government to first carry out a cost comparison (or tender) at the national level. As the main cost of the satellite network arises from its satellite capacity, this platform operates with significant economies of scale

The satellite signal can be broadcast over the entire Spanish territory. However, in the case of the terrestrial platform, geographic extension requires the installation of additional repeaters and/or relay towers.

. Astra’s negotiations with the regional governments show that it offered significant price reductions if several regions jointly entered into a contract. Further price reductions could therefore have been expected if a national tender had been carried out. Instead, by carrying out decentralised and non-harmonised measures, sometimes even at the municipal level, a technology with such economies of scale was already put at a significant disadvantage. As a result, the total amount of State aid necessary to provide digital television services to households in Area II increased. While it is for Spain to decide on its administrative organisation, when providing central government funding, instead of pushing for the use of DTT, the Spanish government could at least have encouraged the Autonomous Communities to take into account in their tenders possible cost saving efficiencies available from particular platforms.

(274) In conclusion, the Commission considers that the investigated measure did not respect the principle of technological neutrality. As explained above, the measure is not proportional and it is not an appropriate instrument for ensuring the coverage of free-to-air channels to the residents of Area II. The conclusion that the measure did not respect the principle of technological neutrality has been confirmed by the judgments in cases T-462/13

See paragraphs 102-139.

, T-465/13

See paragraphs 94-117.

, T-487/13

See paragraphs 128-140.

, T-541/13

See paragraphs 119-129.

and T-461/13

See paragraphs 94-112.

which judgments were confirmed by the Court of Justice in joined cases C-66/16 P to C-69/16 P and in case C-81/16 P.

6.3.3.3.

Operation and maintenance of network

(275) Concerning the financing granted for operation and maintenance of the subsidised networks, following the completion of digitisation and until the period indicated in Section 2.3 (i.e. until the time when the measures under investigation have been modified), as this is ancillary to the deployment aid, it cannot be considered technologically neutral. It has been directed to the conservation of the centres that broadcast a signal via terrestrial platforms. Such aid is therefore also incompatible.

6.3.3.4.

Avoiding unnecessary distortions

(276) While public intervention might be justified in view of the existence of certain market failures and possible cohesion problems, the way the measure is designed gives rise to unnecessary distortions of competition.

6.3.3.5.

Conclusion regarding Article 107(3)(c) of TFEU

(277) It is concluded that the investigated measure, including the on-going aid, is not an appropriate, necessary and proportionate instrument to remedy the identified market failure.

6.3.4.

6.5.

Conclusion

(282) It is considered that the financing granted by Spain (including aid granted by the Spanish Autonomous Communities and the local corporations) to terrestrial network operators for the upgrade and digitisation of their network to provide free-to-air television channels in Area II constitutes aid within the meaning of Article 107(1) TFEU. The aid is not compatible with the common market, to the extent the criteria of technological neutrality was not complied with. Furthermore, the aid was not notified

With the exception of Murcia, that notified the measure after it had already been implemented.

to the Commission as required by Article 108(3) TFEU and was unlawfully put into effect without Commission authorisation. It must therefore be recovered from the terrestrial network operators.

(283) In addition, the Commission considers that the aid for operation and maintenance of the digitised network granted without tenders or following technologically non-neutral tenders, granted until the period indicated in Section 2.3 (i.e. until the time when the scheme under investigation has been modified) is also incompatible. Furthermore, this aid was not notified to the Commission as required by Article 108(3) TFEU and was unlawfully put into effect without Commission authorisation.

(284) Any future State aid for maintenance and operation needs to be notified and has to respect the principle of technological neutrality.

1. RECOVERY

7.1.

Need to eliminate aid

(285) According to the Treaty on the Functioning of the European Union and the established case law of the Union Courts, the Commission is competent to decide that the Member State concerned is to alter or abolish aid when it has found that it is incompatible with the internal market

Judgment of 12 July 1973, Commission v Germany, C-70/72, ECLI:EU:C:1973:87, paragraph 13.

. The Court has also consistently held that the obligation on a Member State to abolish aid regarded by the Commission as being incompatible with the internal market is designed to re-establish the previously existing situation

Judgment of 21 March 1990, Belgium v Commission, C-142/87, ECLI:EU:C:1990:125, paragraph 66.

.

(286) In this context, the Court has established that this objective is attained once the recipient has repaid the amounts granted by way of unlawful aid, thus forfeiting the advantage which it had enjoyed over its competitors on the internal market, and the situation prior to the payment of the aid is restored

Judgment of 17 June 1999, Belgium v Commission, C-75/97, ECLI:EU:C:1999:311, paragraphs 64 and 65.

.

(287) In line with the case law, Article 16(1) of Regulation (EU) 2015/1589 states that where negative decisions are taken in cases of unlawful aid, the Commission shall decide that the Member State concerned shall take all necessary measures to recover the aid from the beneficiary.

(288) Thus, given that the financing of the digitisation of terrestrial platform and subsequent maintenance and operation were implemented in breach of Article 108(3) TFEU, and are to be considered as unlawful and incompatible aid, it should be recovered in order to re-establish the situation that existed on the internal market prior to their granting. Recovery should cover the time from the date when the aid was put at the disposal of the beneficiary until effective recovery. The amount to be recovered should bear interest until effective recovery, to be calculated in accordance with the provisions of Chapter V of Commission Regulation (EC) No 794/2004

Commission Regulation (EC) No 794/2004 of 21 April 2004 implementing Council Regulation (EC)No 659/1999 laying down detailed rules for the application of Article 93 of the EC Treaty (OJ L 140, 30.4.2004, p. 1).

.

7.2.

State aid recipients and quantification of the aid

(289) Platform operators are direct beneficiaries where they directly receive funds for the upgrading and extension of their networks and for the operation and maintenance. Where the aid was paid to public undertakings which subsequently carried out tenders for extension of coverage, the selected platform operator is considered to be the indirect beneficiary. The unlawful and incompatible aid should be recovered from the platform operators whether they are direct or indirect beneficiaries.

7.2.1.

Qualification of the tenders

(290) A technologically neutral tender is a tender which fulfils two cumulative conditions: (i) the tender explicitly refers to extension of coverage of digital television (and not to digital terrestrial television) and (ii) the technical specifications admit technologies other than terrestrial. A tender cannot be considered technologically neutral if its technical specifications require the purchase or use of hardware for the transmission or transport of digital terrestrial television signal.

(291) In the cases where the unlawful aid was granted following a technologically non-neutral tender, the Member State must qualify the tenders as falling into category of supply of hardware or extension of coverage, according to the conditions set out below.

(292) Tenders for the extension of coverage entrust the winning company with the mission of providing (including building) an operative DTT network. To this end, necessary tasks include design and engineering of the network, transport of the signal, deployment of the network and supply of the necessary equipment. Tenders for extension of coverage also include the cases where a supply of equipment takes place and the network operator is entitled to operate, use or take advantage of that equipment, irrespective of the ownership of the equipment. Moreover, the tenders for extension of coverage usually include ancillary contracts related to the digitisation of transmission centres or the building of new transmission centres (such as for example housing adaptation works, supply of energy, strict maintenance, leasing contracts, safety and health studies.)

(293) In tenders for the supply of hardware, the winning company is requested to provide equipment necessary for the upgrading of the network. To this end, necessary tasks include the supply, installation and activation of the equipment, as well as training of the staff. No recovery is required for these tenders of supply of equipment. In other words, mere hardware providers are under no obligation to pay back the aid. However, whenever a tender results in the digitisation of an existing terrestrial network, including as the case may be the provision of equipment which is operated, used or taken advantage of by a network operator, that aid shall be recovered from the network operator, since that tender should be qualified as a tender for extension of coverage.

(294) Having classified these tenders for an extension of coverage, Spain has to recover the aid granted following a technologically non-neutral tender. Apart from the tenders, which the Commission itself considers technologically neutral, if Spain considers that other tenders fulfil the two conditions, it will provide the Commission the related tender documents.

Example

Amongst the tenders revised by the Commission, a tender organised by the Autonomous Community of Extremadura is provided as an example of technologically non-neutral tender for extension of coverage

Supply, installation and start-up of the necessary equipment to provide the service of transport and broadcasting of DTT, for 6 national multiplexes (state global network, single frequency network) and an autonomous community multiplex, in locations in Extremadura under Phase II of the National Plan for Transition to DTT. Case SU-28/2009.

. Despite the title of the tender, which only refers to the supply of hardware, the object of the tender did in fact include the design and deployment of the network

Supply, installation and start-up of the necessary equipment to provide the service of transport and broadcasting of DTT for 6 national multiplexes (Red Global Estatal (state global network) Red de Frecuencia Unica (single frequency network)) and an autonomous community multiplex (hereinafter RGE, SFN and AUT) in locations under Phase II of the National Plan for Transition to DTT. It includes the following activities: (a) design of the technical broadcasting and distribution networks that will support the service; (b) planning of supply of the necessary equipment for the proposed network; (c) roll-out of the network, including the installation and start-up of the necessary equipment and infrastructure. This supply will be made on a turnkey basis.

. The specifications of the tender make it technologically not neutral

Page 2, paragraph 5 – ‘The main objective to be pursued is to extend and guarantee a percentage as close as possible to 100 % of coverage of Digital Terrestrial Television (DTT) to all citizens in the districts coming under Extremadura Phase II. No limitations are established as regards the network architecture or the technology/ies to be used provided the minimum requirements established are met.

Page 10 paragraph 7 – Bidders should include in their bids the architecture of the proposed distribution network, which must be consistent with the broadcasting network. For each multiplex, the best solution for this service is sought, always subject to criteria of economic and technological optimisation.

, despite the insertion of a clause that is at first sight a clause of technological neutrality

Other tenders identified by the Commission as falling into the same category are tender 2009/000127 organised by the Junta de Andalucía and tender S-004/10/10 organised by Junta de Extremadura.

.

Another example of a technologically non-neutral tender for extension of coverage is the tender organised by the public undertaking Agencia de Informática y Comunicaciones de la Comunidad de Madrid (AICCM) in the Autonomous Community of Madrid

Technical specifications for the contract for Drafting of projects, supply, installation and start-up of the necessary infrastructure and communications for extension of the Digital Terrestrial Television (DTT) signal coverage in the Madrid autonomous community. To be concluded by the ordinary simplified procedure on a multi-criteria basis. File reference (número de expediente) ECON/000572/2008.

. In this case, both the title and the contents of the tender imply that it is a tender for extension

Page 3, paragraph 3 - (…) supply, installation and start-up of the necessary infrastructure and communications for extension of the Digital Terrestrial Television (DTT) signal coverage in the Madrid autonomous community, including all the work relating to performance of the related technical projects, measurement, maintenance, operation and management of the installations making up the service for the infrastructure deployed, and work necessary to disseminate institutional information to promote Digital Terrestrial Television.

Page 9, paragraph 8 – The broadcasting network proposed to provide digital terrestrial television coverage, based on the timetable for switch-off and the budget allocation available, will be specified.

only directed to the terrestrial platform

Page 4, paragraphs 2 and 8 - The main objective to be pursued through the execution of the work detailed below is to extend and guarantee a percentage as close as possible to 100 % of coverage of Digital Terrestrial Television (DTT) to all citizens in the autonomous community of Madrid. To facilitate DTT reception in the coverage areas, it is advisable for the broadcasting centres to have sites compatible with the orientation of the existing satellite dishes in buildings, so that citizens do not have to install new dishes or reorientate the existing dishes. Bidders should therefore state how they will address this issue in the proposed solution. Page 12, paragraph 4 - The micro broadcaster/micro transmitter will be designed in accordance with the following specifications...

.

(295) The tenders are to be qualified not only according to their title, but above all according to their content, as the title alone does not make it possible to clearly define their scope.

(296) The aid granted after non-neutral tenders for extension of coverage have been held will then be subject to recovery.

7.2.2.

State aid recipients and recovery

(297) Below are the different categories of aid beneficiaries. On the basis of the information received from Spain, the Autonomous Communities and the approximate aid categories are listed in tables. Since Spain has not provided full information on the aid beneficiaries, Spain must classify the beneficiaries in the different categories below and provide the Commission with the relevant supporting evidence. As already underlined in recital (233), the regime as such is discriminatory.

(298) In addition, the vast majority of tenders for extension reviewed by the Commission were qualified as not respecting the principle of technological neutrality. Nevertheless, the Commission has also shown that it cannot be ruled out that in exceptional individual cases the tender was technologically neutral.

(299) Spain must therefore indicate and provide sufficient evidence on particular tenders that were technologically neutral, based on conditions specified in recital (294) above.

(300) Where Autonomous Communities have organised non-neutral tenders for extension of coverage, as in the case of Extremadura referred to in the above example, the winners of such tenders are direct beneficiaries of the unlawful aid subject to recovery. The sum to be recovered equals the full amount received by the winners of the tenders for the extension, and for all ancillary services (such as housing, adaptation works, supply of energy, etc.), if any. For avoidance of doubt, where the same infrastructure or services serve or have served both the transmission of private channels in Area II and public channels in Area I, the Spanish Authorities should not exclude recovery because of the double use of the infrastructure or service but should identify the pro quota expense related to Area II and recover the aid concerned. From the information received from Spain, the Commission has found that (at least) the Autonomous Communities of Andalucía, Extremadura, Murcia, La Rioja and the Valencian Community have carried out non-neutral tenders for the extension of coverage.

Undertakings subject to recoveryRecoveryMethod by which the aid is providedAutonomous Community concerned (at least)

Direct beneficiaries

Winner(s) of the technologically non-neutral tender(s) for extension of coverage organised by the autonomous communities

Full amount received under the technologically not neutral tender(s) for extension of coverageTransfer of funds to the beneficiary selected in the tender(s)

Andalucía

Extremadura

Murcia

La Rioja

Valencian Community

(301) In the cases where unlawful aid was granted for the upgrade of the terrestrial network to town councils acting as network operators, the town councils are direct beneficiaries of the aid. The sum to be recovered equals the full amount received by the town councils from the central and regional authorities for the extension of coverage of their network. On the basis of the information received from Spain, the Commission has found that this applies at least to some of the municipalities located in the Autonomous Communities of Andalucía, Canarias and Murcia (not exhaustive list). If the town council entered into a contract for the extension of coverage, including the supply of the necessary hardware, with a company that is a network operator, then the beneficiary of the aid is the network operator and the sum to be recovered is the full amount of the public funds received by the network operator.

Undertakings subject to recoveryRecoveryMethod by which the aid is providedAutonomous Community concerned (at least)

Direct beneficiaries

Town councils acting as network operators

Full amount received from the authorities for extension of coverageTransfer of funds to the beneficiary

Andalucía

Canarias

Murcia

Example

(302) In Murcia, using the money received from the region and MITyC, the town councils organised almost all of the identified 143 tenders. To the extent that the tenders have not been assigned to network operators and are not de minimis, they would fall under this category.

(303) In the cases of Autonomous Communities where a public undertaking acting as a network operator carried out the extension of coverage of the network, such an undertaking is considered to be direct beneficiary and is subject to recovery. The Commission has identified Aragón telecom, Gestión de Infraestructuras Públicas de Telecomunicaciones del Principado de Asturias, S.A., Multimedia de les Illes Balears S.A., Instituto Tecnologico de Canarias, Sociedad Regional de Cantabria I+D+I (IDICAN), Fundación Centro Tecnológico en Logística Integral de Cantabria (CTL), Promoción de Viviendas, Infraestructuras y Logística, S.A in Castilla y León (Provilsa), Redes de Telecomunicación Galegas Retegal, S.A. (Retegal), Obras Publicas y Telecomunicaciones De Navarra, S.A. (Opnatel), Itelazpi S.A., Centre de Telecomunicacions i Tecnologies de la Informació (CTTI) in Cataluña and Agencia de Informática y Comunicaciones de la Comunidad de Madrid (AICCM) to be companies falling into this category. The sum to be recovered is the full amount of funds received from the authorities for the extension.

(304) In these cases, however, it is not ruled out that the public undertakings carried out part of the extension themselves, and partly contracted the extension to a network operator through a tender. In the latter case the unlawful aid was actually transferred to the companies who won the tenders, and they are therefore effective, although indirect, beneficiaries of the aid. Thus, to avoid double recovery, the unlawful aid is to be recovered from the effective beneficiaries, i.e. (a) from the public undertaking for the amount received for the extension minus funds transferred to network operators following technologically non-neutral tenders for extension of coverage and (b) from the network operators for the amounts contracted following a technologically not neutral tender for extension of coverage organised by the public undertaking concerned.

Undertakings subject to recoveryRecoveryMethod by which the aid is providedAutonomous Community concerned/ public undertaking concerned/ approximate amount received by the public undertaking for the extension of coverage

Direct beneficiaries

Public undertaking

Full amount received from the authorities for extension of coverage (minus funds transferred to network operators following technologically non-neutral tenders for extension of coverage, if applicable)Time of transfer of funds from the authorities

Aragón (Aragón Telecom, EUR 9 million)

Asturias (Gestión de Infraestructuras Públicas de Telecomunicaciones del Principado de Asturias SA, EUR 14 million)

Balearic Islands (Multimedia de Illes Balears SA, EUR 4 million)

Canary Islands (Instituto Tecnológico de Canarias, EUR 3,7 million)

Cantabria ( Idican; CTL, EUR 3 million)

Castilla y León (Provilsa, EUR 44 million)

Cataluña (CTTI, EUR 52 million)

Galicia

In Galicia, although the municipalities were registered as network operators, Retegal was the undertaking that acquired the equipment and carried out the extension of coverage of the network. Therefore Retegal should be considered as the beneficiary of the aid.

(Retegal, EUR 17 million)

Madrid (AICCM, EUR 3,6 million)

Navarra (Opnatel, EUR 7 million)

Basque Country (Itelazpi, EUR 10 million)

AND if applicable

Indirect beneficiaries

Winner(s) of the technologically non-neutral tenders for extension of coverage organised by the public undertaking

Full amount received under the technologically not neutral tenders for extension of coverageTransfer of funds to the beneficiary selected in the tender

Example

(305) In the case of Madrid, where a tender organised by the public undertaking (AICCM) was provided by the Commission as an example of a technologically non-neutral tender for extension of coverage (see recital (294), the amount of EUR 3622744 granted to the contracted company Retevisión S.A. must be recovered in its entirety from Retevisión, as winner of the non-neutral tender, and subtracted from the amount to be recovered from AICCM, the public undertaking which is the direct beneficiary

Other tenders identified by the Commission as falling into the same category are, amongst others, two tenders organised by Provilsa in March 2009 won by Retevisión SA and Telvent Energía S.A.; tender SE/CTTI/06/08 organised by CTTI and won by Abertis S.A., tender Contratación del suministro de la fase II y III para la extensión de la TDT en Aragón organised in June 2009 by Aragón Telecom and won by Abertis.

.

(306) Regarding the aid for the maintenance and operation of DTT networks the Commission considers that the operators of these networks are the beneficiaries of maintenance and operation aid. The aid has therefore to be recovered from those network operators.

(307) In the cases where the individual beneficiaries received funding not exceeding thresholds specified in the Regulation (EC) No 1998/2006

Regulation (EC) No 1998/2006 has been replaced by Regulation (EU) No 1407/2013 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to de minimis aid (2013 de minimis Regulation). The 2013 de minimis Regulation shall apply to aid granted before its entry into force if the aid fulfils all the conditions laid down in that Regulation. According to Article 7(3) of the 2013 de minimis Regulation, any individual de minimis aid granted between 1 January 2007 and 30 June 2014 and which fulfils the conditions of Regulation (EC) No 1998/2006 shall be deemed not to meet all the criteria in Article 107(1) of the Treaty and shall therefore be exempt from the notification requirement in Article 108(3) of the Treaty.

, such funding is not considered State aid if all the conditions set by this Regulation are fulfilled, and is not subject to recovery.

(308) Recovery should be put into effect from the time when the advantage occurred to the beneficiaries, i.e. when the aid was put at the disposal of the beneficiary and should bear recovery interest until effective recovery.

(309) It has to be noted that, as mentioned in recital (9), after the adoption of the 2013 Decision, the Commission gave time to Spain until 31 October 2014 to organise technologically neutral tenders, on the condition that all Autonomous Communities organised such tenders within the deadline. However, this condition has not been fulfilled and therefore the above transitional period has no relevance for the purposes of recovery: the unlawful aid granted between 19 June 2013 and 31 October 2014 has to be recovered by Spain.

1. CONCLUSION

(310) The Commission finds that the Kingdom of Spain has unlawfully implemented the aid for the operators of the terrestrial television platform for the extension of coverage of digital terrestrial television in remote and less urbanised areas of Spain in breach of Article 108(3) TFEU. The aid, including the (on-going) aid for operation and maintenance, is to be recovered from the platform operators which are the direct or indirect beneficiaries. This includes local corporations where they act as a platform operator.

HAS ADOPTED THIS DECISION:

Article 1

The State aid granted to the operators of the terrestrial television platform for the deployment, maintenance and operation of the digital terrestrial television network in Area II, unlawfully put into effect by Spain in breach of Article 108(3) of the Treaty on the Functioning of the European Union is incompatible with the internal market, except for the aid which was granted in compliance with the criterion of technological neutrality.

Article 2

Individual aid granted under the scheme referred to in Article 1 does not constitute aid if, at the time it is granted, it fulfils the conditions laid down by the regulation adopted pursuant to Article 2 of Council Regulation (EU) No 994/98

Council Regulation (EC) No 994/98 of 7 May 1998 on the application of Articles 92 and 93 of the Treaty establishing the European Community to certain categories of horizontal State aid, OJ L 142, 14.5.1998, p. 1. This Regulation has been replaced by Council Regulation (EU) 2015/1588 of 13 July 2015 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to certain categories of horizontal State aid (OJ L 248, 24.9.2015, p. 1).

which is applicable at the time the aid is granted.

Article 3

1. Spain shall recover the incompatible aid granted under the scheme referred to in Article 1 from the beneficiaries.

1. The sums to be recovered shall bear interest from the date on which they were put at the disposal of the beneficiaries until their actual recovery.

1. The interest shall be calculated on a compound basis in accordance with Chapter V of Regulation (EC) No 794/2004.

1. Spain shall cancel all outstanding payments of aid under the scheme referred to in Article 1 with effect from the date of notification of this decision.

Article 4

1. Recovery of the aid granted under the scheme referred to in Article 1 shall be immediate and effective.

1. Spain shall ensure that this Decision is implemented within 4 months following the date of notification of this Decision.

Article 5

1. Within 2 months following notification of this Decision, Spain shall submit the following information:

(a) the list of beneficiaries that have received aid under the scheme referred to in Article 1 and the total amount of aid received by each of them under the scheme, broken down into the following categories: (i) winners of the technologically non-neutral tenders for extension of coverage organised by the autonomous communities and town councils, (ii) town councils acting as network operators; (iii) public undertakings acting as network operators; (iv) winners of the technologically non-neutral tenders for extension of coverage organised by the public undertaking;

(b) the total amount (principal and recovery interests) to be recovered from each beneficiary;

(c) a detailed description of the measures already taken and planned to comply with this Decision;

(d) documents demonstrating that the beneficiaries have been ordered to repay the aid.

1. Spain shall keep the Commission informed of the progress of the national measures taken to implement this Decision until recovery of the aid granted under the scheme referred to in Article 1 has been completed. It shall immediately submit, on simple request by the Commission, information on the measures already taken and planned to comply with this Decision. It shall also provide detailed information concerning the amounts of aid and recovery interest already recovered from the beneficiaries.

Article 6

This Decision is addressed to the Kingdom of Spain.

Done at Brussels, 10 June 2021.

For the Commission

Margrethe Vestager

Member of the Commission

Annex

ANNEX

Public spending in Area II on DTT deployment, by Spanish regions (Autonomous Communities, except Castile-La Mancha)

Amounts reported by the Spanish central and regional authorities during the investigation. For the period 2012-2018, only a few regional authorities reported information on recurring costs: Galicia reported that no costs were incurred; Andalusia reported EUR 6 422 670,89; Asturias EUR 3 943 818,48; Catalonia EUR 22 879 421,63; Murcia EUR 521 968,10 and La Rioja EUR 5 223 287,03 respectively.

Amount of funds transferred to the winners of the tenders notified to the Commission.

Only the data from four regions (in green) allow the amount of State aid to be defined precisely since (i) the declared amount of funds granted by the authorities and (ii) the total of the funds transferred following the tenders communicated to the Commission are the same. Given the difficulty of obtaining precise information from other regions, the amount of State aid granted in a particular region is assumed to be the higher of the two declared amounts: (i) the total of the funds granted by the authorities or (ii) the total of the funds transferred following the tenders communicated to the Commission.

BUDGET (in EUR)Region (Autonomous Community)Ministry of Industry, Trade and Tourism Direct subsidiesMinistry of Industry, Tourism and Trade Preferential loansRegional fundsLocal fundsRecurring cost (2009-2011)Total fundsTotal amount of tenders organisedTotal public expenditureANDALUSIA4668500,001220690,008712873,00491203,002250479,0015093266,003678242,1715093266,00ARAGON5900000,008700000,005400000,00-5000000,0020000000,0016281754,3020000000,00ASTURIAS-13430787,00353535,00-2129698,0013784322,0013784322,0013784322,00BALEARICS--913034,00-763034,00913034,003294429,023294429,02CANARY ISLANDS2905766,261130595,851792402,57--5828764,685284331,675828764,68CANTABRIA3229500,003851949,80622449,00-860850,007703898,806355613,687703898,80CASTILE AND LEON13830850,0020316585,7310324906,71-6716000,0037756342,4437756342,4437756342,44CATALONIA13838368,0026024223,00NO DATANO DATA-39862591,0052316794,3452316794,34CEUTA54000,0091786,1710000,00-NO DATA155786,1750000,00155786,17EXTREMADURA2238250,007800000,0018718,00--10056968,009549379,7410056968,00GALICIA6083300,005000000,006003336,00-873000,0017086636,0012644112,9817086636,00MADRID554200,00-3068444,00--3622644,003622744,003622644,00MELILLA254000,00NO DATA2000,00NO DATANO DATA256000,00-256000,00MURCIA135750,00-2478700,0040188,00212371,002654638,002788407,322788407,32NAVARRE316850,00-6675028,00-4256508,396991878,006991878,006991878,00RIOJA1229350,003000000,003737425,00-944000,007966775,005766775,007966775,00

BASQUE COUNTRY2487800,00-9802703,002425000,001508308,0014715503,00179000,0014715503,00COMMUNITY OF VALENCIA1822250,0013384248,94818280,30586234,17679500,0016611013,4115412499,0016611013,41