(1)

By Regulation (EU) No 513/2013 (3), the European Commission (‘the Commission’) imposed a provisional anti-dumping duty on imports into the European Union (‘the Union’) of crystalline silicon photovoltaic modules (‘modules’) and key components (i.e. cells and wafers) originating in or consigned from the People's Republic of China (‘the PRC’).

(2)

A group of exporting producers gave a mandate to the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (‘CCCME’) to submit a price undertaking on their behalf to the Commission, which they did. It is clear from the terms of that price undertaking that it constitutes a bundle of individual price undertakings for each exporting producer, which is, for reasons of practicality of administration, coordinated by the CCCME.

(3)

By Decision 2013/423/EU (4), the Commission accepted that price undertaking with regard to the provisional anti-dumping duty. By Regulation (EU) No 748/2013 (5), the Commission amended Regulation (EU) No 513/2013 to introduce the technical changes necessary due to the acceptance of the undertaking with regard to the provisional anti-dumping duty.

(4)

By Implementing Regulation (EU) No 1238/2013 (6), the Council imposed a definitive anti-dumping duty on imports into the Union of modules and cells originating in or consigned from the PRC (‘the products concerned’). By Implementing Regulation (EU) No 1239/2013 (7), the Council also imposed a definitive countervailing duty on imports into the Union of the products concerned.

(5)

Following the notification of an amended version of the price undertaking by a group of exporting producers (‘the exporting producers’) together with the CCCME, the Commission confirmed by Implementing Decision 2013/707/EU (8) the acceptance of the price undertaking as amended (‘the undertaking’) for the period of application of definitive measures. The Annex to this Decision lists the exporting producers for whom the undertaking was accepted, inter alia:

(6)

By Implementing Decision 2014/657/EU (9) the Commission accepted a proposal by the exporting producers together with the CCCME for clarifications concerning the implementation of the undertaking for the products concerned covered by the undertaking, that is modules and cells originating in or consigned from the PRC, currently falling within CN codes ex 8541 40 90 (TARIC codes 8541409021, 8541409029, 8541409031 and 8541409039) produced by the exporting producers (‘product covered’). The anti-dumping and countervailing duties referred to in recital 4 above, together with the undertaking, are jointly referred to as ‘measures’.

(7)

By Implementing Regulation (EU) 2015/866 (10) the Commission withdrew the acceptance of the undertaking for three exporting producers.

(8)

By Implementing Regulation (EU) 2015/1403 (11) the Commission withdrew the acceptance of the undertaking for another exporting producer.

(9)

By Implementing Regulation (EU) 2015/2018 (12) the Commission withdrew the acceptance of the undertaking for two exporting producers.

(10)

The Commission initiated an expiry review investigation under Article 11(2) of the basic anti-dumping Regulation by a Notice of Initiation published in the Official Journal of the European Union (13) on 5 December 2015.

(11)

The Commission initiated an expiry review investigation under Article 18 of the basic anti-subsidy Regulation by a Notice of Initiation published in the Official Journal of the European Union (14) on 5 December 2015.

(12)

The Commission also initiated a partial interim review under Article 11(3) of the basic anti-dumping Regulation and Article 19 of the basic anti-subsidy Regulation by a Notice of Initiation published in the Official Journal of the European Union (15) on 5 December 2015.

(13)

By Implementing Regulation (EU) 2016/115 (16) the Commission withdrew the acceptance of the undertaking for another exporting producer.

(14)

By Implementing Regulation (EU) 2016/185 (17), the Commission extended the definitive anti-dumping duty imposed by Implementing Regulation (EU) No 1238/2013 on imports of the products concerned originating in or consigned from the People's Republic of China to imports of the product concerned consigned from Malaysia and Taiwan, whether declared as originating in Malaysia and in Taiwan or not.

(15)

By Implementing Regulation (EU) 2016/184 (18), the Commission extended the definitive countervailing duty imposed by Implementing Regulation (EU) No 1239/2013 on imports of the products concerned originating in or consigned from the People's Republic of China to imports of the product concerned consigned from Malaysia and Taiwan, whether declared as originating in Malaysia and in Taiwan or not.

(16)

By Implementing Regulation (EU) 2016/1045 (19) the Commission withdrew the acceptance of the undertaking for another exporting producer.

(17)

The undertaking stipulates that the Commission may withdraw the acceptance of the undertaking during its period of application, if monitoring and enforcement prove to be impracticable, including any change in circumstances.

(18)

In addition, any exporting producer may also voluntarily withdraw its undertaking at any time during its application.

(19)

Both Delsolar and MOTECH have a related party in Taiwan that were granted exemption in the anti-circumvention investigations referred to in recitals 14 and 15.

(20)

The Commission analysed the implication of these exemptions on the practicability of the undertaking. The exemptions represent a change in circumstances compared to those at the time of accepting the undertaking. Their objective is to exempt imports into the Union of the products concerned which were manufactured by the related parties of Delsolar and MOTECH in Taiwan. Such imports fall outside the scope of the undertaking.

(21)

The Commission considers that this exemption for imports into the Union creates a high risk of cross-compensation. In fact, the related parties exempted in the anti-circumvention investigation may sell the product concerned to the same Union customers to whom the product covered is sold and the prices for such transactions could be set in a way to compensate for the Minimum Import Price under the undertaking. The Commission is not in a position to monitor the sales to the same Union customers under the undertaking and from Taiwan.

(22)

Therefore, the Commission concluded that the above exemptions render the monitoring of Delsolar's and MOTECH's undertaking impracticable.

(23)

LERRI Solar notified the Commission in March 2016 that it wished to withdraw from the undertaking.

(24)

Xi'an LONGi and CNPV notified the Commission in May 2016 that they wished to withdraw from the undertaking as well.

(25)

Interested parties were granted the opportunity to be heard and to comment pursuant to Article 8(9) of the basic anti-dumping Regulation and Article 13(9) of the basic anti-subsidy Regulation. Delsolar and MOTECH submitted comments.

(26)

Delsolar contested that the exemption granted to its Taiwanese related party represents a change in circumstances. Delsolar notified the Commission on the merger with the Taiwanese company in the original investigations referred to in recital 4 which the Commission did not object. As the product concerned produced by Delsolar's Taiwanese related party has neither before nor after the anti-circumvention investigations been subject to the measures, the situation does not differ from the one that existed prior to the anti-circumvention investigations.

(27)

The Commission cannot accept this argument.

(28)

First of all, the Commission recalls that the market share of imports from third countries excluding the PRC into the Union was 6,8 % of the Union market during the investigation period. In particular, the market share of imports from Taiwan was 0,8 % (Table 12 of Regulation (EU) No 513/2013). It follows from those figures that the exports from the existing production facilities of companies producing in Taiwan and related to Chinese companies having offered the undertaking were marginal.

(29)

However, as a result of the granting of the exemptions under Article 13(4) of the basic anti-dumping Regulation and Article 23(6) of the basic anti-subsidy Regulation, it can be expected that Delsolar's Taiwanese related party will export significant volumes of modules and cells to the Union.

(30)

The decision to withdraw the acceptance of the undertaking is due to risk of cross-compensation that the Commission cannot monitor. The issue of whether goods produced in third country facilities are subject to measures is not relevant in the assessment of monitoring risks. The exemption concerns the imports of the product concerned manufactured by Delsolar's Taiwanese related party that are specifically destined to the Union market. Therefore, it creates a high risk of cross-compensation. The assessment of monitoring risks is also case specific and might evolve during the lifetime of the undertaking, as certain risks materialize, new risks emerge and the Commission can better assess the practical aspects of case-specific monitoring. Again, in this relation, it is irrelevant whether the imports prior to the anti-circumvention investigation were subject to the measures.

(31)

Delsolar also claimed that the mere exemption of its related Taiwanese party does not warrant the conclusion that the monitoring of Delsolar's undertaking becomes impracticable. In Delsolar's view, the increased risk of cross-compensation is purely hypothetical. As the undertaking prohibits sales to the same customers, any violation could lead to the withdrawal of Delsolar's undertaking. In this regard, Delsolar stated that it does not sell the product covered to the same customer to whom its Taiwanese related party sells the product concerned. The compliance can be verified by on-spot visits at the premises of Delsolar and its Taiwanese related party. In addition, Delsolar claimed that the Commission, in the anti-circumvention investigations referred to in recitals 14 and 15, considered its Taiwanese related party as a genuine producer not circumventing the measures. Hence, any allegation on the potential risk of cross-compensation is purely speculative.

(32)

The Commission rejects this argument. The anti-circumvention investigations referred to in recitals 14 and 15 established that Delsolar's Taiwanese related part did not engage in circumvention practices in the meaning of Article 13 of basic anti-dumping Regulation and Article 23 of the basic anti-subsidy Regulation. However, the scope of those investigations did not include considering the risks related to Delsolar's undertaking. Neither those findings imply that no circumvention of the undertaking in the meaning of price cross-compensation took place. On the contrary, the exemption granted to the Delsolar' Taiwanese related party increases significantly the circumvention risks related to Delsolar's undertaking. Such exemption implies specific intention to sell to the Union. Hence, it would require the Commission to monitor the sales both under the undertaking and from Taiwan. This renders the monitoring of Delsolar's undertaking impractical. The Commission also recalls in this regard that the monitoring of the undertaking has increasingly become more difficult during its implementation, in particular with regard to the circumvention practices found in Malaysia and Taiwan. The Commission is not in position to monitor the sales from Taiwan that fall outside the scope of the undertaking. In addition, the Commission recalls that it offered options to Delsolar to keep its undertaking practicable, which Delsolar refused to consider.

(33)

Finally, Delsolar submitted that its situation is comparable to any other company party to the undertaking that has related companies with production facilities in countries not subject to the measures. Hence, the mere existence of the relationship does not per se render the monitoring of the undertaking impracticable.

(34)

The Commission rejects this argument and recalls its reasoning set out in recitals 27 and 29.

(35)

Similarly to Delsolar, MOTECH argued that the relationship to its Taiwanese related party was known to the Commission during the original investigations referred to in recital 4. By accepting the undertaking from MOTECH, the Commission confirmed that no circumvention existed.

(36)

First of all, the Commission refers in that regard to the rejection of the similar arguments made by Delsolar.

(37)

Furthermore, the Commission also rejects this argument for the following reasons. At the time of the acceptance of the undertaking the Commission indeed conducts an overall analysis of monitoring risks. The acceptance per se does not imply that no circumvention exists. The Commission considers that the exemption granted to MOTECH's Taiwanese related party increases the risk of cross-compensation as referred to in recital 21. The Commission recalls in this regard that the monitoring of the undertaking has increasingly become more difficult during its implementation, in particular with regard to the circumvention practices found in Malaysia and Taiwan. The Commission is not in position to monitor the sales to the same Union customers under the undertaking and those from Taiwan.

(38)

MOTECH also submitted that by granting exemption to its Taiwanese related party, the Commission confirmed that no circumvention and cross-compensation exist in relation to MOTECH and its Taiwanese related party. The Commission could monitor the imports from MOTECH and its Taiwanese related party as both companies import into the Union under separate TARIC additional codes.

(39)

The Commission rejects this argument. The exemption granted in the anti-circumvention investigations referred to in recitals 14 and 15 confirms that MOTECH's Taiwanese related party was not found to be engaged in circumvention practices. However, this finding is irrelevant to the assessment on the practicability of the undertaking set out in recitals 21 and 22. The Commission analysed the implication of this exemption and concluded the risk of cross-compensation has increased. The Commission also took into account the experience gained during the monitoring of the undertaking when concluded that it is not in position to monitor the sales to the same Union customers under the undertaking and from Taiwan.

(40)

Therefore, in accordance with Article 8(9) of the basic anti-dumping Regulation, Article 13(9) of the basic anti-subsidy Regulation and also in accordance with the terms of the undertaking, the Commission has concluded that the acceptance of the undertaking for Delsolar, CNPV, MOTECH, Xi'an LONGi and LERRI Solar together with their related companies in the Union shall be withdrawn.

(41)

Accordingly, pursuant to Article 8(9) of the basic anti-dumping Regulation and Article 13(9) of the basic anti-subsidy Regulation, the definitive anti-dumping duty imposed by Article 1 of Implementing Regulation (EU) No 1238/2013 and the definitive countervailing duty imposed by Article 1 of Implementing Regulation (EU) No 1239/2013 automatically apply to imports originating in or consigned from the PRC of the product concerned and produced by Delsolar (TARIC additional code: B792), CNPV (TARIC additional code: B813), MOTECH (TARIC additional code: B852), Xi'an LONGi (TARIC additional code: B897) and LERRI Solar (TARIC additional code: B898) as of the day of entry into force of this Regulation.

(42)

For information purposes the table in the Annex to this Regulation lists the exporting producers for whom the acceptance of the undertaking by Implementing Decision 2013/707/EU is not affected,

(1)

On 14 January 2009, the Commission received a complaint from Radiodifusión Digital SL (hereinafter referred to as ‘Radiodifusión’) and on 18 May 2009 a complaint from SES Astra S.A. (hereinafter referred to as ‘Astra’). Both complaints regard an aid scheme that the Spanish authorities had adopted in relation to the switching from analogue television to digital television in remote and less urbanised areas of Spain. The contested scheme has its origin in the Law 10/2005, of 14 June 2005, on Urgent Measures for the Promotion of Digital Terrestrial Television, Liberalisation of Cable TV and Support of Pluralism (1). Further legislation adopted with respect to the digital terrestrial transition process includes, amongst others: Royal Decree 944/2005 of 29 July 2005 on the approval of the National Technical Plan for Digital Terrestrial Television (hereinafter: ‘National Technical Plan’) (2); Royal Decree 945/2005 of 29 July 2005, approving the General Regulations for the delivery of the digital terrestrial television service; Order ITC/2476/2005 of 29 July 2005, approving the Technical Regulations and regulations relating to the delivery of the digital terrestrial service and Royal Decree 920/2006, of 28 July 2006, approving the General Conditions for the delivery of the radio and cable television broadcasting.

(2)

These measures concern the entire territory of Spain. However, the Commission opened two different procedures, one for all of Spain with the exception of the region of Castilla-La Mancha and one specifically for the region of Castilla-La Mancha. While the State aid measure is the same for both cases and raises the same concerns, Castilla-La Mancha features some particular issues which are of less (or no) importance to the general case. In particular, the complaint from Radiodifusión only concerns the case of Castilla-La Mancha, the regional government of Castilla-La Mancha implemented the aid scheme in a particular way, when compared to the pattern in the other regions, and in the case of Castilla-La Mancha it was necessary to carry out an in-depth assessment of an economic study.

(3)

In both cases, the Commission opened the formal investigation procedure on 29 September 2010, alleging that the State aid scheme discriminates between platform operators. The decision opening the formal investigation (hereinafter: ‘opening decision’) was published in the Official Journal of the European Union on 11 December 2010 (3). Comments were received from three interested parties: Radiodifusión on 11 January 2011, Abertis and SES Astra S.A. (hereinafter: ‘Astra’) on 4 February 2011.

(4)

On 19 January and 9 February 2011 the comments were transmitted to Spain, who was given the opportunity to react. On 18 February 2011 and 8 March 2011 the Permanent Representation of the Kingdom of Spain submitted observations of the Authorities of the Castilla-La Mancha Region (Junta de Comunidades de Castilla-La Mancha, hereinafter: ‘JCCM’) to third parties' comments. On 27 May 2011 and 9 August 2012 the Commission submitted requests for information to Spain, to which Spain (JCCM) replied on 10 June 2011 and 10 September 2012, respectively. On 20 August 2011 the Commission addressed a request for information to Radiodifusión who replied on 29 September 2011. On 14 October 2011, 15 November 2011 and 6 December 2012 JCCM submitted additional information on its own motion. In addition, the Commission held a meeting with Spanish and JCCM authorities on 18 May 2011.

(5)

On 15 May 2013, the JCCM provided information on the organisation of a tender for operation and maintenance aid, on 20 December 2013 it provided information on ongoing sanction procedures in Spain against Radiodifusión and its parent company INGEST and comments on ongoing discussions between the Commission and Spanish authorities regarding SA.28599. On 6 June 2014, the JCCM provided comments to demonstrate that its actions were in line with a ‘market economy operator’ and that it complied with EU public procurement rules. In addition, there have been several fact finding exchanges between the Commission and the JCCM.

(6)

On 20 June 2013, the Commission adopted a final negative decision on SA.28599 for the deployment of digital terrestrial television in remote and less urbanised areas in Spain (outside Castilla-La Mancha) (4).

(7)

Radiodifusión is a local telecom and terrestrial television platform operator, registered with the Spanish national regulatory authority for telecommunications (Comisión del Mercado de las Telecomunicaciones, hereinafter: ‘CMT’) for the management of a public telecommunications network and for the provision of electronic communications services, in particular the provision of radio and TV broadcasting transmission services.

(8)

Radiodifusión complained that the financing schemes in Castilla-La Mancha targeted platform operators already operating a network with national coverage. In this way all alternative networks (e.g. local network operators) were excluded. According to Radiodifusión, the contested scheme would hinder both actual competition at local level and potential competition at regional and national level.

(9)

Radiodifusión also argued that the bulk of the funds invested by the region of Castilla-La Mancha were not used for upgrading existing analogue emission centres but for building new ones. Radiodifusión supported this allegation by comparing the list of municipalities receiving the funds with the list of those hosting an analogue emission centre. Approximately 80 % of the receiving municipalities were not hosting any analogue emission centre before the scheme was put in place. Radiodifusión also emphasised that the mere digitisation of the terrestrial network would not make a massive construction of additional centres necessary. The amount of funds destined to such upgrade thus would be disproportionately high.

(10)

From the above, Radiodifusión inferred that the actual purpose of the subsidies was not the mere digitisation of the existing network, but rather building a better and extended network allowing the incumbent operators (mainly TelecomCLM and Abertis) to compete more actively on the market for transmitting services of local broadcasters and for mobile television. Under such circumstances, Radiodifusión considered that the failure to adopt open and transparent procedures for the award of the subsidies is unjustified, as any network operator could have built the new centres. Radiodifusión therefore also points to a distortion in the market for network operators.

(11)

The second complainant is the satellite platform operator SES Astra. Set up in 1985, it was the first private satellite operator in Europe. Astra offers a comprehensive portfolio of broadcast and broadband solutions for customers in Europe and beyond. It broadcasts television and radio programmes directly to millions of homes and provides internet access and network services to public and private users.

(12)

Astra argues that the measure infringes the principle of technological neutrality as it supports only terrestrial transmission for digitisation. To demonstrate that the satellite platform would indeed be an alternative, Astra refers in particular to the case of Cantabria. In January 2008, the regional government of Cantabria had launched a tender for extension of coverage of digital television for the whole territory of Cantabria. It then selected Astra to provide free-to-air channels via its platform. However, in November 2008 that contract was terminated by the regional government. According to Astra, the authorities only terminated the contract once they had been informed that the central government would finance the upgrade of the analogue terrestrial network. In fact, a letter of the Cantabrian authorities dated 7 November 2008 explained the termination of the contract with the fact that in the meantime the central government had taken decisions relative to the extension of coverage of digital television to the totality of the Spanish territory (5). Thus, the case of Cantabria would demonstrate that, firstly, Astra could compete in that market and secondly, that the decisions of the central government made this competition impossible.

(13)

The case concerns the broadcasting sector. Many players are active in this sector at different level of the broadcasting services product chain.

(14)

Broadcasters are the editors of television channels who purchase or produce in-house TV contents and bundle them in channels. The channels are then provided to the public through various platforms (i.e. satellite, DTT, cable, IPTv). In Spain, broadcasting services have been qualified as a public service by the legislator and are provided both by State-owned broadcasters (RTVE) and by private broadcasters holding concessions from the State (6). These so-called ‘free-to-air’ (FTA) channels are provided free of charge to the viewers. In order to ensure that the population can effectively benefit from this public service, the law attaches minimum coverage obligations to both the mission entrusted to the public broadcaster and to the concessions held by the private operators. Indeed, the public broadcasters have the obligation to cover at least 98 % of the Spanish population, while private broadcasters shall cover at least 96 % of the population. In Spain, national broadcasters do not own a national broadcasting network. Therefore, they enter into agreements with platform operators to have their content transmitted and to accomplish their coverage obligations.

(15)

Hardware suppliers are manufacturers and/or installers of infrastructures and devices necessary to build the various platforms.

(16)

Platform operators (or network operators) are private or publicly controlled entities operating the infrastructure necessary to transport and broadcast the signal of the broadcasting channels. At the dawn of the television industry, the only platform available was the analogue terrestrial platform. As the technology developed, more platforms have become available on the market, namely: the satellite platform, the cable platform and, most recently, the IPTv (7), which exploits broadband connection to transmit the TV signal.

(17)

In terrestrial broadcasting, the television signal is sent from a TV studio to a transmission centre (head-end), usually belonging to and operated by a network operator. Then the signal is transported and distributed from a transmission centre (head-end) to the broadcasting centres run by a network operator (e.g. a tower). Sometimes this transport is done via satellite. At the end, the signal is broadcasted from the broadcasting centres to homes. To digitise the analogue terrestrial network, it is necessary to replace the transmitters on the ground. However, as the digital signal has a lower range than the analogue and therefore the new technology requires a more capillary network, the extension of coverage requires in some cases also the building of new transmission centres. The viewer has to be equipped with a decoder, which may already be integrated in the TV set.

(18)

In satellite broadcasting, the signal is sent to a transmission centre (head-end) and then transported to a satellite that broadcasts it to homes. As an alternative, the signal could be sent directly from a TV studio to the satellite, if the TV studio has appropriate devices. The viewer has to be equipped with a satellite dish and a decoder. To expand satellite coverage in a region, the latter ground equipment needs to be installed on the customer's premises. In terms of geographic coverage, the satellite platform could reach almost 100 % of the Spanish territory while the terrestrial platform covers about 98 %.

(19)

The investigated measure must be examined in the context of the digitisation of broadcasting that the terrestrial, satellite and cable platforms have undergone or are currently undergoing. In comparison to analogue broadcasting, digitised broadcasting has an increased transmission capacity due to a more efficient use of the radiofrequency spectrum. This is especially relevant for terrestrial broadcasting, where the available frequency spectrum is limited and therefore broadcasting competes with mobile telecommunications for scarce bandwidth. Satellite transmission instead has the advantage of working in a completely different frequency band where there is no scarcity of frequency.

(20)

The switch-over from analogue to digital television releases a significant amount of high quality radio spectrum referred to as ‘the digital dividend’ which will be free for the deployment of electronic communication services. This digital dividend, and especially the frequency of 790-862 MHz (‘800 MHz band’), can boost the electronic communication industry, have a major impact on competitiveness and growth and provide a wide range of social and cultural benefits (8).

(21)

The ‘digital dividend’ could be reaped either by switching from terrestrial to a different platform or by moving from analogue to digital terrestrial broadcasting. Also, a mixed solution combining different platforms could be envisaged (9).

(22)

However, in the case of terrestrial broadcasting, the scarcity of frequencies remains an issue even after digitisation. Shortly after the termination of the switch-over from analogue to digital TV in April 2010, the Spanish government had to relocate broadcasters from the 800 MHz band to a lower frequency band (10). The relocation of DTT multiplexes assigned to broadcasters led to additional costs and additional State aid, which the Commission is currently examining in a formal investigation procedure (11).

(23)

With regard to TV broadcasting, terrestrial digital transmission will remain a major distribution platform for the foreseeable future, but broadband technology, as next generation networks (NGA), is likely to become an important alternative as the leading transmission technology. For the time being, however, in Spain the geographical coverage of such NGA networks in not universal.

(24)

In Spain there exist today four broadcasting platforms: DTT — digital terrestrial technology (DVB-T), satellite (DVB-S), cable (DVB-C) and IPTv. DTT is the main platform for the free-to-air public and private Spanish channels (12). The main operator of the terrestrial network is Abertis. Abertis also controls the satellite operator Hispasat. There exist as well a number of local telecommunications operators carrying DTT signals who are usually interconnected with Abertis' national network. In Castilla-La Mancha, the main regional operator is TelecomCLM (13). As for the pay TV channels, they are broadcasted mainly via satellite, cable and IPTv. Astra and Hispasat are the main satellite operators.

(25)

In order to switch from analogue to digital television, Spain adopted in the period of 2005-2008 a series of regulatory measures that concerned the terrestrial network, as described in section 2.2. They divide the Spanish territory into three distinct areas:

(26)

The investigated scheme is based on a complex system of legal provisions put in place by the Spanish central authorities as from 2005. On the basis of these provisions, State aid for the deployment of the DTT in Area II was granted in the years 2008-2009 by the Autonomous Communities and municipalities. The latter channelled the funds from the central budget and from their respective budgets to the recipients. Moreover, since 2009 ongoing aid has been granted by the Autonomous Communities for maintenance and operation of the networks in Area II.

(27)

The regulation of the transition to the digital television technology started with the adoption of Law 10/2005 of 14 June 2005. It mentions the need to promote a transition from analogue to digital terrestrial technology and required that the government take the appropriate measures to ensure the transition from analogue terrestrial to digital terrestrial television.

(28)

Following this mandate, with Royal Decree 944/2005 the Council of Ministers approved the National Technical Plan that fixed the date of the analogue switch-off in Spain for 3 April 2010 (14).

(29)

As regards Area II and III, the Twelfth Additional Provision of the National Technical Plan already provided for the possibility that the local and regional authorities extend the coverage in the range between 96 % and 100 % of the population. In this regard, the Technical Plan explicitly refers to digital terrestrial television (DTT) and establishes six conditions under which the local authorities could carry out such extension. Condition (e) requires that such local installation must be in conformity with the Technical Plan for digital terrestrial television.

(30)

Subsequently, on 7 September 2007, the Council of Ministers approved the National Plan for the Transition to Digital Terrestrial Television (hereinafter: ‘Transition Plan’) (15) that implements the National Technical Plan. The Transition Plan divided the Spanish territory in ninety technical transition projects (16) and established a deadline for the switch-off of analogue broadcasting for each of these projects.

(31)

On 29 February 2008, the Ministry of Industry, Energy and Tourism (hereinafter: ‘MIEyT’) adopted a decision aimed at improving the telecommunications infrastructures, establishing the criteria and the distribution of the funding of the actions aimed at developing the Information Society under the Plan Avanza for 2008 (17). The budget approved by this decision amounted to EUR 558 million and was partly allocated to development of broadband, and partly to digitisation of television in remote and less urbanised areas of Spain falling outside the statutory obligations of the commercial broadcasters (18). The digitisation in those areas was commonly referred to as ‘extension of coverage’. It was subsequently implemented through a series of addenda to existing framework agreements (19) signed by MIEyT and Autonomous Communities between July and November 2008 (‘the Addenda to the 2006 Framework Agreements’, published in the Spanish Official Gazette separately for each Autonomous Community). The wording of these agreements in the majority of cases points to digital terrestrial technology as to the only technology to be funded. As a result of the agreements, MIEyT transferred funds to the Autonomous Communities who committed to cover the remaining costs of the operation from their budgets. These addenda also included the obligation of the local authorities to comply with the provisions of the Twelfth Additional Provision of the National Technical Plan.

(32)

In parallel, on 17 October 2008, the Council of Ministers agreed to allocate further EUR 8,72 million to extend and complete DTT coverage within the transition projects to be completed during the first half of 2009, Phase I of the Transition Plan. The funding was granted following the signing of new framework agreements between MIEyT and the Autonomous Communities as of December 2008 (‘the 2008 Framework Agreements’). These agreements refer to the aforementioned financing of EUR 8,72 million and were entitled ‘Framework Collaboration Agreement between the Ministry of Industry, Tourism and Trade and the Autonomous Community of […] for the Development of the National Transition Plan to DTT’. They foresee a list of activities that will be financed by the central and regional authorities in order to reach the coverage of digital television equal to the existing analogue coverage. These activities are related to the deployment of digital terrestrial television.

(33)

On 29 May 2009, the Council of Ministers approved the criteria to distribute EUR 52 million for the funding of DTT transition actions, aimed at financing the extension of coverage of Phase II and III projects of the Transition Plan (20). The agreement of the Council of Ministers established a direct link with the Transition Plan given that it stated that ‘in order to achieve the target set in the National Transition Plan to the DTT, a similar DTT coverage to that of the current terrestrial coverage with analogue technology, the financial support of the public authorities is needed’ and then that ‘the implementation of this cooperation will be formalized within the framework set by the National Plan for the Transition to the DTT’.

(34)

Last, between October and December 2009, addenda to the 2008 Framework Agreements (mentioned in recital 32) were published in the Spanish Official Gazette, including the funding for the coverage extension of Phases II and III of the Transition Plan. These addenda define what should be understood by ‘action to extend the coverage’, by making explicit reference only to the terrestrial technology (although not formally excluding other technologies) (21).

(35)

Following the publication of the 2008 Framework agreements and above-described addenda (22), the governments of the Autonomous Communities started implementing the extension. They either organised public tenders themselves and/or charged a public undertaking with carrying out of the tender. The subsidies were partly agreed upon with MIEyT and therefore funded from the central budget, partly funded by the Autonomous Communities themselves. In certain cases the Autonomous Communities mandated the municipalities to carry out the extension.

(36)

In contrast to the majority of other Autonomous Communities, the Castilla-La Mancha authorities did not organise regional tenders for the extension of coverage of digital television. This apparently was due to time constraints, as it had to upgrade more than 400 transmission centres (23). Instead, the JCCM followed a particular procedure to select telecom operators to digitise broadcasting centres, established in the Decree 347/2008 of 2 December 2008 (hereinafter: ‘the Decree’).

(37)

The Decree mandated the direct attribution of the funds necessary for the digitisation to the owners of the existing (analogue) emission centres. It therefore did not require any open tender procedure. The JCCM had to follow a particular procedure: (i) technical analysis of the centres providing analogue coverage at the time, (ii) analysis of the digital coverage to achieve, (iii) selection of the emission centres to digitise, (iv) identification of the owner of the emission centres, (v) proposal by the regional government to the owner of the emission centres, and (vi) adjudication of the subsidies.

(38)

The Decree was implemented accordingly. The owners of existing emission centres were directly contacted. They were informed about the requirements for benefitting from the public financing. Three different scenarios can be distinguished. First, in most cases the emission centres are owned by the municipalities which are responsible for the operation and maintenance of the centre. After having received the funding from the JCCM, on the basis of a technical and economic offer, the municipalities bought the digital equipment from Abertis or TelecomCLM and subcontracted the installation, operation and maintenance of the equipment to these two companies. Only these two companies were contacted by the authorities and only they submitted technical proposals to apply for the aid. Second, in around a quarter of cases the selected centres belong directly either to TelecomCLM or to Abertis. In these cases the two companies received the aid to upgrade their equipment. Finally, as a third category, some new emission centres had to be built. While they were publicly funded, they are now owned by TelecomCLM.

(39)

The JCCM entered into 147 collaboration agreements (‘convenios’) with the two operators and into 475 collaboration agreements with municipalities. About 84 % of installations covered by these ‘convenios’ were for DTT installations and 16 % for satellite household receivers. Satellite receivers have been used to ensure DTT channels coverage for very small villages. For that purpose, the JCCM decided to use the satellite platform of Hispasat (24). At the end of the process, the information about the upgrading of the existing centres was published on the Town Halls' Notice Boards.

(40)

The Commission was informed that in total around EUR 46 million of public money was spent for the upgrading of transmission centres, out of which EUR 32,6 million went directly to the municipalities owning 355 broadcasting centres (25). The collaboration agreements between JCCM and the municipalities provide that the latter are responsible to contract a selected operating company which would carry out the installation and maintenance services (26). Different selection procedures were chosen by the individual municipalities. Some municipalities sent letters directly to TelecomCLM and Abertis and some published the information on the Notice Board of the City Hall inviting operators to present their technical proposals.

(41)

Under the collaboration agreement the JCCM pays for the acquisition of digital equipment, its installation and the Operation and Maintenance (O&M) for the first 2 years for each of the (digitised) emission centres. As the collaboration agreement did not oblige the operator to pay for O&M thereafter, TelecomCLM transferred the equipment to the JCCM (27). Thereafter the JCCM became responsible to pay for the O&M of DTT equipment.

(42)

Out of the total EUR 46 million of public funds spent, the Commission was informed that at least EUR 13,5 million were transferred to platform operators: EUR 13,2 million to TelecomCLM which owns 138 of the transmission centres and around EUR 250 000 to Abertis who owns 3 of them. TelecomCLM and Abertis digitised their centres with their own equipment. In some cases, the equipment used to digitise TelecomCLM masts still belong to the public authorities. In these cases the operator does not have to pay for the use of such equipment. In addition, the total amount of funds spent in the years 2009-2011 on operation and maintenance of the digitised centres (ongoing aid) was of at least EUR 6,5 million.

(43)

However, the mere upgrading of the existing centres was not sufficient to complete coverage of the extension area. Therefore, 20 new centres were built with public funds. Without carrying out an open tender, TelecomCLM was contacted directly by the authorities and asked to execute this task. According to the information provided to the Commission, a total of EUR 2,26 million were spent for the construction of the new sites, out of which around EUR 751 000 for the construction of six centres which were later transferred to TelecomCLM. The ownership of the remaining 14 centres remained with the municipalities.

(44)

Finally, as pointed out in recital 39, where a DTT centre would be too expensive to deploy, satellite transmission has been used instead. For that purpose, 100 agreements were concluded to install satellite receptors at individual homes. Satellite receptors are part of the satellite transmission network.

(45)

As a result of the procedure, in total 622 agreements were signed by the authorities with the municipalities and operators concerned. Based on the information provided to the Commission, the amounts were distributed as follows:

(46)

In the opening decision, the Commission noted that the measure described seems to meet all the criteria of Article 107(1) TFEU and could, therefore, be regarded as State aid. The contested measure seems to entail discrimination in favour of terrestrial platform operators, in breach of the technological neutrality principle (30). Furthermore, the contested measure seems to discriminate against platform operators which provide broadcasting transmission services to regional and local terrestrial broadcasters. This would be to the advantage of national broadcasters and platform operators.

(47)

The Commission reached the preliminary conclusion that the scheme may have created a potential or actual distortion of competition between terrestrial and satellite platforms and between terrestrial platforms themselves. It did not see any grounds on which such measures could be compatible with the internal market, since no derogation seemed to be applicable.

(48)

For additional factual details it should be referred to the opening decision which is to be considered an integral part of this Decision.

(49)

In its defence to the opening decision, Spain and the Autonomous Community of Castilla-La Mancha have put forward numerous arguments. Broadly speaking they fall into two categories. First, the Spanish authorities put forward that there would be no advantage granted to the aid recipients. Second, if one considers nevertheless that State aid has been granted, in any event it would be compatible (31). These arguments are summarised in what follows.

(50)

According to the authorities of Castilla-La Mancha, the investigated measure does not contain State aid as there is no advantage to undertakings. The direct transfers of funds come from a combination of funds from the Spanish State and the Autonomous Communities to the recipients' acting in their official capacity or as public authority (32). These contested subsidies were exclusively used to digitise 141 pre-existing analogue emission centres, and to build 6 new centres. The digitisation of the emission centres was carried out after a thorough assessment of a technical report submitted by the operators owning those centres. Only on the basis of such technical reports the Collaboration Agreement was signed with the owners of the centres (33). This ‘negotiated procedure’ should be regarded as open, transparent and non-discriminatory, also because of the publication on City Halls' notice boards (see recital 39).

(51)

The national authorities claim that, to the extent that platform operators received public funding, this was only for the operation and maintenance of the electronic transmission equipment owned by the municipalities. They acted as mere suppliers and installers of the technical equipment necessary to upgrade and adapt those centres, but not as platform operators (34). Where they provide services in Area II after the public funding, it is only for the provision of the terrestrial TV signal as a basic and public service.