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The European Commission will investigate public service broadcasting's use of new media to determine whether state aid to broadcasters is unfair to commercial competitors.

The commission has said it will look into a 2001 set of rules on what subsidies countries are allowed to give to public sector broadcasters. It said an update was needed because new media and digital technologies had changed the media landscape so much.

The commission said it would re-examine the rules in the light of its duty to preserve fair competition. "This implies in particular the need for a clearly defined public service mission as well as a limitation of state aid to what is necessary for the fulfilment of this mission, excluding overcompensation and possible cross-subsidies into commercial activities," a commission statement said.

"[The process] offers the opportunity to evaluate the extent to which developments that have occurred since the adoption of the 2001 Broadcasting Communication require further clarification or changes to the existing rules.

"In particular [it will look at] the implications for public service broadcasting of market developments in the delivery of audiovisual content and the emergence of new media services requires broad discussions with Member States and stakeholders."

State aid to all industries is limited by the commission in an attempt to foster free market competition both within and between nations. Countries can fund public service broadcasting, but commission rules are designed to stop that process skewing the market for commercial broadcasters.

A commission discussion paper said that one of the main changes that new rules would have to consider would be the new Audiovisual Media Services (AVMS) Directive. That law was passed last month, though EU member states have until 19 December 2009 to implement its provisions into their national laws.

The directive extends control of the broadcasting industry into some internet services.

"The commission's overall objective is to design an appropriate legal framework for the future financing of public service broadcasting in a new media environment," the commission paper said. "This should take into account the importance of public service broadcasting and the necessity for public support on the one hand and possible adverse effects on competition on the other.

"The rules should strike a balance between the necessity to have sufficiently clear and precise requirements at EU level and the freedom of Member States to design their system of public service broadcasting according to their legal traditions."

The consultation process ends in March, and the commission said if it needed to issue a new set of rules, a proposed set would be published later this year.

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OUT-LAW.COM is part of international law firm Pinsent Masons.

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