Last July, the European Commission, Parliament and Council officially started the final round of negotiations on the EU’s audiovisual reform, before leaving Brussels soon after for their respective holidays destinations. They reconvened as usual in September, with the next round taking place on September 28th.
The start of these negotiations follows the adoption of the European Parliament’s report and of the European Council’s general approach last May. Unfortunately, several crucial issues we identified last February were not addressed by these institutions, and new ones appeared. Will they – including those listed below – be addressed before it’s too late and the Digital Single Market (DSM) is strongly distorted?
1) The Country of Origin Principle Must Be Preserved
One crucial issue of the European Commission’s proposal was the undermining of the Country of Origin (COO) principle with the introduction of national levies, thereby unravelling the DSM (see here for more details on the COO).
Unfortunately, neither the Parliament nor the Council chose to fix this provision – despite it contradicting the entire European Union’s strategy on digital growth. In fact, the European Parliament preserved the COO principle for linear video services (i.e., for television channels) but eliminated it for emerging on-demand services with respect to national levies. Such discrimination among audiovisual media service (“AVMS”) providers tilts the playing field in favor of established providers and ensures the European Union will trail the global marketplace in innovation. To remedy this, the final text should preserve a level playing field for AVMS providers, ideally maintaining the decades-old COO framework.
Additionally, and remarkably, no consideration was given to the implementation of national levies. If the COO principle were discarded with respect to national levies, should AVMS providers have to handle potentially conflicting and burdensome financial and reporting obligations with up to 28 national authorities? At the very least, the negative effects of introducing levies should be minimized as much as possible by creating a coordinating role for the audiovisual media service’s home state authority.
The preservation of the COO principle is also extremely important for video-sharing platforms (VSP) and social networks. Any move from a COO to a country of destination principle would create a complicated regulatory environment, detrimental to European innovators wishing to scale up their activities across the single market or to any new business establishing itself in the European Union. Such a move would clearly signal the death of the DSM.
2) Minimum Harmonisation Generates Additional Fragmentation
Minimum harmonisation of national legislations means more – not less – fragmentation within the European Union because Member States can adopt stricter rules than the ones adopted at the European level. Unfortunately, both European Parliament and the European Council have adopted positions supporting minimum harmonisation for several provisions of the audiovisual reform, thereby making it easier for diverging regulations to be adopted in the Member States. If this issue is not fixed in the three-way talks, the European audiovisual market could become so fragmented that any start-up wishing to offer its services to all Europeans could find itself hopelessly mired in legal fees.
3) Additional Clarity on Intermediaries’ Liability Regarding Ads Is Necessary
In its general approach, the European Council stated that when audiovisual commercial communications are “marketed, sold or arranged” by VSP providers, Member States shall ensure that these providers comply with articles 9 and 10 of the directive – i.e. with advertising requirements such as no subliminal techniques or no cigarettes and other tobacco products. In its final report, the European Parliament has adopted a similar provision.
However, how should an intermediary know and ensure, for example, that an ad does not use subliminal techniques? The advertiser is the one who makes the ad – and by definition an intermediary would not be aware of any subliminal technique…
In short, these provisions undermine the limited liability regime of intermediaries. The three-way talks should address this issue and bring the final provision in line with the current European legislation and case law.
4) The Devil Is in the Details
It is of course impossible to list all existing issues with this reform within the inevitably restricted context of a blog post. However, many small details here and there in the European Parliament’s report and the Council’s general approach make both proposals unimplementable. For example, the Parliament’s report introduces:
- the extension of the requirement on protection of cinematographic works to VSPs, thereby arguably violating the e-Commerce Directive, an unnecessary new rule better dealt within the reform of the copyright directive;
- the right for Member States to impose obligations for appropriate prominence of very poorly defined “content of general interest” and “audiovisual media services of general interest” – leaving the door open to very differing national interpretations and thus more fragmentation;
- overbroad restrictions on the modifications of audiovisual media services that would impede, for example, the provision of contextual information on content (e.g. on actors, statistics, etc.) or of close-captioning content (e.g. crowdsourced subtitles) that could be offered by VSP.
To conclude, it’s difficult to say at this stage when the three-way talks between the European Commission, Parliament and Council will conclude. The European Commission seems to wish for the talks to end quickly, so as to show significant progress on the DSM agenda. We at DisCo hope that the three institutions will take time to review in depth all outstanding issues, so that endless (and costly) legal uncertainties do not become the new norm for the European audiovisual sector.