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IRIS 2003-1:4/4

Court of First Instance: Decision on Media II Programme for Development and Distribution of European Audiovisual Works

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Tarlach McGonagle

Institute for Information Law (IViR), University of Amsterdam

The Court of First Instance recently delivered a judgment concerning the Media II Programme (1996-2000)the forerunner to the European Union's current Media Programme (see IRIS 2000-1:6, IRIS 2001-1:3 and IRIS 2002-6:6). The case involved an application for the annulment of a decision of the European Commission on the issue of recognition of eligibility for the purposes of Media II.

This programme, created by Council Decision 95/563/EC on the implementation of a programme encouraging the development and distribution of European audiovisual works (Media II - Development and distribution) (1996-2000), evolved to include the so-called "Support for the Transnational Distribution of European Films and the Networking of European Distributors - The Automatic Scheme". The scheme involved two stages: the determination of distributors' eligibility for the European Community subsidies on offer and the actual granting of the said subsidies. Awarded by the European Commission, the subsidies in question were intended for the purpose of "reinvestment".

Central to the instant case was a dispute over the Commission's interpretation of the guidelines for the submission of proposals to obtain financial support under the Automatic Scheme. The applicant company, Scanbox Entertainment A/S, held the exclusive distribution rights for a certain number of specified films in Denmark, Norway and Sweden. On 30 June 2000, the Commission informed the applicant company that its claim to be recognised as the distributor of those films for the purposes of the Automatic Scheme had been rejected in favour of a similar claim by Svensk Filmindustri AB ("SF"). The latter had been contractually bound to the applicant for the local distribution of the films in question until 27 October 1999.

According to the Court, the Commission's decision was vitiated by several errors of assessment. First, it took the view that the applicant should have been recognised as the distributor for the purposes of the Automatic Scheme as it held the (exclusive) distribution rights and also because it, in effect, bore all of the distribution costs. Furthermore, it was held that the applicant's line of activity corresponded more to the objectives of the scheme, which were to encourage the distribution of European films outside their country of origin. As such, the subsidies are intended for distributors rather than for cinema operators. In this connection, SF was deemed to have played a subordinate distribution role (i.e. as sub-distributor) to that of the applicant insofar as the relevant films were concerned. As set out in the guidelines in explicit terms, sub-distributors (or physical distributors) cannot be considered as distributors proper. The Court also found that SF did not "negotiate" the release date for the films in question - another requirement set out in the guidelines for the scheme.

Judgment of the Court of First Instance (Fifth Chamber) of 15 October 2002 in Case T-233/00, Scanbox Entertainment A/S v. the Commission of the European Communities EN