Competition Authority recommends notification of European Commission regarding aid to Jornal da Madeira

The Competition Authority (CA) has advised the the Regional Government of Madeira to adopt operating principles that aim to avoid improper distortion of competition in future aid to the regional press and to notify the European Commission of the funding already provided to the enterprise Jornal da Madeira.

The CA's intervention arose from two complaints, one by the fortnightly publication Garajau and the other by the enterprise Diário de Notícias da Madeira (of the Controlinveste Group), in relation to the aid granted by the Regional Government of Madeira to the enterprise Jornal da Madeira Lda, of which the Autonomous Region of Madeira owns the majority share.

In 2007, the cumulative value of the financing granted, in the form of subsidies, by the Autonomous Region of Madeira to the enterprise Jornal da Madeira Lda, amounted to a cumulative total of €23.4 million, according to audit reports by the Madeira Regional Section of the Court of Auditors. The CA's analysis shows that the capital injected into the enterprise Jornal da Madeira by the Autonomous Region of Madeira, involving public resources, may be qualified as state aid in the meaning of Article 87 (1) of the EC Treaty and, thus, assessment of its legality falls exclusively within the competence of the European Commission. Under Article 87 (2) and (3) of the EC Treaty, the European Commission has the exclusive power to evaluate the compatibility of support measures. The legal limit on the Commission's powers to recoup aid considered illegal is set at 10 years from the date on which it was granted to the beneficiary. Even if the aid is granted by the government of an autonomous region, the procedure for notifying the European Commission of state aid is applicable, given that public funds are at stake.

Capital transfers from the state to a public enterprise, irrespective of the form they take, are also covered by Article 87 of the EC Treaty. Under the EC Treaty, financial support is qualified as state aid if it wholly complies with the following criteria: (a) the support is granted by the state or through state resources; (b) it favours certain undertakings or the production of certain goods; (c) it distorts or threatens to distort competition; and (d) it affects the trade between Member States, according to EU case law applied to similar public aid to an organ of the press in other Member States.

In future aid to the press, the CA advises the Regional Government of Madeira to follow a set of principles designed to avoid undue distortions in competition and, possibly, in trade between Member States. Thus, the Regional Government of Madeira should, specifically, define the objectives to be attained with future aid, on the basis of an in-depth diagnosis of the market failures that justify it; ensure that the aid is proportional to the market failure that it intends to address; and guarantee that funding is attributed on the basis of objective, non-discriminatory objectives and in observance of the specific laws for the sector.

Given the regulatory powers of the ERC – Entidade Reguladora para a Comunicação Social (press regulator) in relation to press activity, and the system of cooperation with sectoral regulatory authorities, the present recommendation by the Competition Authority has been reviewed by the ERC.

(Nº: 14/2009)