Monti claims state aid rules are no threat to film industry

Date: 25/01/01

By Peter Chapman

COMPETITION watchdog Mario Monti is dismissing complaints that he has been too tough on state aid to the EU's struggling film industry, claiming it has been spared the tough justice meted out to other sectors.

His harsh rebuke comes in response to an attack from the film industry lobby, which claims the Commission's pursuit of investigations into government support of European movie production is helping Hollywood score a runaway victory in the battle of the box offices.

European Film Companies Alliance (EFCA) chairman Francois Ivernel recently called on Monti to stop probing national aid schemes aimed at supporting the audiovisual industry and instead encourage investment in the high-risk film sector.

"We have difficulties understanding the objectives of the Commission in investigating this field," Ivernel wrote in a letter to the Italian trust-buster, "whilst the industry being investigated has an average 15% market share on the relevant market, collectively dominated by the major Hollywood studios."

Worse still, said Ivernel, who represents France's Pathe and Studio Canal, Luxembourg's CLT-UFA and the UK's FilmFour among others, the Commission is undermining special provisions in the EU's rulebook allowing aid that promotes culture.

But Monti fired back a reply defending the Commission's actions against national schemes that lure film production from one country to another or discriminate against foreign professionals, saying they distort the single market.

In fact, the Commissioner argued, the film sector is getting a far better deal when it comes to state aid than other sectors of the economy not considered to have the same cultural importance.

"The Commission normally does not authorise schemes of aid to a specific sector because they create an unlevel playing field between member states," he said. "However in view of the specific characteristics of the film sector, the Commission has accepted aid schemes."

He said the film sector has used funds for specific films rather than investment in the industry in general, and pointed out that this would be "unacceptable" for aid to other sectors.

Monti also noted that the Commission has tolerated plans that often require film production funds to be spent in a particular country, which he said could help to ensure the "continued presence of the minimum technical environment required for cultural creation".

Monti, who promised to get tough on state aid when he took over the competition dossier, said he has gone easy on member states that fall foul of the rules "in the special case of aid to culture". Often, he said, he has allowed them to adjust their schemes after bilateral discussions rather than issuing outright prohibitions.

EFCA secretary-general Philippe Kern welcomed Monti's stance, claiming it signalled a softening of competition policy. "Monti is distancing himself from aggressive anti-trust action," Kern said. "He is showing understanding for our position and is trying to give evidence that cinema will continue to be treated differently."

The challenges facing the European film sector were underlined by figures released this week from the EU statistics agency. The Eurostat numbers confirmed that Hollywood's dominance over the Union film market continues unabated - with American movies accounting for 75% of box office receipts in 1998.

Eurostat said this dominance was not challenged in any of the member states for which data were available, with the highest US shares of the film market recorded in the Netherlands (90%), Germany (85%) and the UK (82%). The lowest figures were in France and Italy (both 64%).

Competition watchdog Mario Monti is dismissing complaints that he has been too tough on state aid to the EU's struggling film industry, claiming it has been spared the tough justice meted out to other sectors.