Brussels, 9 December 2013 Case No: 74496 Event No: 691094
ORIGINAL
IN THE EFTA COURT
DEFENCE
submitted pursuant to Article 35 of the Rules of Procedure of the EFTA Court by
THE EFTA SURVEILLANCE AUTHORITY
represented by Xavier Lewis, Director, and Maria Moustakali, Legal Officer, Department of Legal & Executive Affairs, acting as Agents
IN CASE E-21/13
The Fédération Internationale de Football Association (FIFA) - Applicant
v
EFTA Surveillance Authority – Defendant
In which the Fédération Internationale de Football Association (hereinafter “FIFA” or “the Applicant”) seeks the partial annulment of Decision no. 309/13/COL (hereinafter “the Decision” or “Decision no. 309/13/COL” or “the contested decision”) adopted by the EFTA Surveillance Authority (hereinafter “the Authority”) on 16 July 2013 on the compatibility with EEA law of measures to be taken by Norway pursuant to Article 14 of Directive 2010/13/EU of the European Parliament and the Council on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the provision of audiovisual media services (Audiovisual Media Services Directive, hereinafter “the Directive” or “AVMSD”)1.
1 Act referred to at point 5p of Annex XI to the EEA Agreement. ______
Rue Belliard 35, B-1040 Brussels, tel: (+32)(0)2 286 18 11, fax: (+32)(0)2 286 18 00, www.eftasurv.int
Page 2
1 INTRODUCTION ...... 3 2 ADMINISTRATIVE PROCEDURE ...... 4 2.1 The pre-notification phase ...... 4 2.2 The Authority’s assessment and the consultation of the Contact Committee ...... 6 3 FIFA’s Application ...... 7 4 Preliminary observations ...... 8 5 FIRST PLEA : Failure to state reasons ...... 10 6 SECOND PLEA: Errors of law ...... 13 6.1 Breach of Articles 14(2) of the Directive and 5(2)(d) SCA ...... 13 6.2 Wrongful reliance on recital 49 of the Directive ...... 17 6.3 Characterisation of “non-prime” matches as events of major importance 19 6.3.1 Traditional broadcast on free-to-air TV ...... 20 6.3.2 Attraction of large TV audiences in Norway ...... 23 6.3.3 Special general resonance in Norway...... 28 6.4 Proportionality of restrictions on the freedom to provide services, on competition and on the Applicant’s property rights ...... 32 6.4.1 Preliminary comments ...... 32 6.4.2 Property rights ...... 34 6.4.3 Freedom to provide services ...... 36 6.4.4 Freedom of competition ...... 37 6.4.5 Proportionality in general ...... 38 7 CONCLUSION ...... 41 8 SCHEDULE OF ANNEXES ...... 42
Page 3
1 INTRODUCTION
1. The Audiovisual Media Services Directive (hereinafter “the Directive” or “Directive 2010/13”) lays down framework conditions to ensure that EEA States are given effective means to prevent broadcasters from transmitting, on an exclusive basis, events which are regarded by that EEA State as being of major importance for society, in such a way that deprives a substantial proportion of the public of the possibility of following these events on free-TV.
2. Each EEA State is entitled to draw up a list of national or non-national events which are seen as being of major importance for society. Recital 52 of the Directive lays down the condition that events of major importance for society should meet certain criteria, i.e. be outstanding events which are of interest to the general public in the EEA or in a given EEA State or in an important component part of a given EEA State and are organised in advance by an event organiser who is legally entitled to sell the rights pertaining to those events.
3. Pursuant to Article 14(2) of the Directive, EEA States shall immediately notify the European Commission (hereinafter “the Commission”) or the Authority of any measures taken or to be taken to that effect. The Commission or the Authority will then verify whether these measures are compatible with EEA law within three months from the notification and after having consulted the so-called “Contact Committee” established according to Article 29 of the Directive.
4. The core purpose is the mutual recognition of lists of major events. EEA States must ensure that broadcasters under their jurisdiction respect the lists of other EEA States which are notified to the Commission or to the Authority (and regardless of whether this EEA State has drawn up such a list itself or not).2
5. In the case at hand, by letter dated 22 April 2013, received by the Authority on 23 April 2013, Norway notified the Authority of measures to be taken pursuant to Article 14(1) of the Directive.
2 So far, the following EU Member States have adopted lists of major events: Italy, Finland, Denmark, Lithuania, the UK, Belgium, Austria, Germany, France and Ireland.
Page 4
6. In the present Defence, the Authority will first present to the Court the administrative procedure, as it took place before and after the Norwegian notification, leading to the adoption of the Authority’s decision no. 309/13/COL on 16 July 2013.3 It will then reply to the specific pleas brought up by the Applicant.
2 ADMINISTRATIVE PROCEDURE
7. The administrative procedure leading to Decision no. 309/13/COL consisted of basically two phases: first, the pre-notification discussions with the Norwegian Ministry of Culture (hereinafter “the Ministry” or “the Norwegian authorities”); and second, the three month period starting from receipt of the formal notification by Norway of the draft measures that, pursuant to Article 14(2) of the Directive, the Authority has at its disposal in order to assess the notified national measures. Within this three month period, the Authority is also required to consult the Contact Committee.
2.1 The pre-notification phase4
8. The pre-notification discussions between the competent authorities of the EEA State intending to adopt a list of events of major importance on the one hand and the Commission or the Authority constitute, according to the established practice of the Commission, an essential part of the process before the formal notification under Article 14 of the Directive. The reason for the pre-notification phase is that the EEA States’ notifications must include all necessary elements in order to enable the Commission or the Authority to carry out, within a three-month deadline, a comprehensive assessment of compatibility with EEA law.5 For this
3 OJ 2013 L 296, p. 51. 4 The process in the pre-notification phase as well as the Authority’s assessment of the Norwegian pre-notified measures are illustrated in the Authority’s internal memo dated 5 February 2013 (Event no. 661783) attached as Annex D.1 to the present Defence. 5 See Commission’s Working Document CC TVSF (97) 9/3: Implementation of Article 3A of Directive 89/552/EEC (as modified by Directive 97/36/EC). Evaluation of national measures,
Page 5
reason, the Authority commenced pre-notification discussions with Norway when the Norwegian authorities announced that they intended to notify a list of major events.
9. The pre-notification process with the Ministry started in April 2011 and lasted, due to certain delays in the process unrelated to the Authority’s assessment of the pre-notified draft measures, almost for two years, i.e. until the date of the formal notification in April 2013.6
10. In the outset of the pre-notification discussions, the Ministry explained that the digitisation of television had resulted in an increase in pay-TV services in Norway. This had led to an increase in competing for the rights to major sporting events and brought about the risk that free-TV channels would lose out in the competition with premium television channels for the rights to broadcast events of major importance for society. The Ministry found that it was important to stay one step ahead of such a development out of public interest considerations. Therefore, the Ministry considered it appropriate to adopt a Royal Decree designating the events of major importance for society that must be broadcast on free television and reach a substantial proportion of the public.
11. In the course of the pre-notification discussions, the Authority cooperated closely with the Norwegian authorities and consulted the Commission: on the one hand, the Authority had to ensure that the Norwegian authorities would provide all necessary information for the Authority’s assessment as well as they would run the public consultation process in the most objective and transparent manner; on the other hand, the Authority intended to follow exactly the same procedure for its assessment that had been followed by the Commission for the approval of the lists of events of other EEA States. It was necessary to follow the same procedure for two reasons. First the lists are mutually recognised across the EEA upon the Commission’s or the Authority’s decisions.7 Second the Commission’s procedure
attached as Annex D.2 to the present Defence (accompanied by the Commission’s Discussion Paper DOC CC TVSF (2000) 6). 6 See the timeline of action in paragraph 26 of Annex D.1. 7 See Case C-125/06 P Commission v Infront WM AG [2008] ECR I-1451, paragraph 39.
Page 6
had been upheld by the EU courts (at the time of the pre-notification phase by the General Court and later on by the Court of Justice) in a number of cases.8
12. As mentioned, the extensive discussions and the thorough assessment of the Norwegian pre-notified list of events are reflected in the internal memorandum attached as Annex D.1 to the present Defence.9 On 19 February 2013 via e-mail the Authority informed the Norwegian authorities that all outstanding issues had been solved and that the Norwegian list could be notified formally while reiterating certain important points already discussed with the Norwegian authorities.10
2.2 The Authority’s assessment and the consultation of the Contact Committee
13. Norway’s formal notification of the draft measures representing the list of major events is dated 22 April 2013, received by the Authority on 23 April 2013, commencing the three month period within which the Authority had to verify whether they were in line with EEA law.
14. Within this three-month deadline, the Authority verified whether the Norwegian measures were in line with the discussions and the Authority’s requests during the pre-notification phase. At the same time, the Authority convened and consulted the EFTA Contact Committee, consisting of representatives of the EEA EFTA States. The EFTA Contact Committee met on 4 July 2013, with the presence of a representative of the Commission. The delegations of the EEA EFTA States raised no objections to the Norwegian draft measures.11
15. It has to be noted that the notified measures were draft measures, i.e. they had not been adopted in Norway yet. Norway would adopt the definitive measures once
8 See Case T-68/08 FIFA v Commission [2011] ECR II-00349; Case T-55/08 UEFA v Commission [2011] ECR II-00271; Case T-385/07 FIFA v Commission [2011] ECR II-00205; all upheld on appeal respectively in Case C-205/11 FIFA v Commission [2013] not yet reported; Case C-201/11 UEFA v Commission [2013] not yet reported; Case C-204/11 FIFA v Commission [2013] not yet reported. 9 The Authority will refer to specific parts of this memo below in order to reply FIFA’s specific allegations. 10 See e-mail dated 19 February 2013 attached as Annex D.3 to the present Defence. 11 See Minutes of the 1st EFTA Contact Committee meeting of 4 July 2013 attached as Annex D.4 to the present Defence.
Page 7
the Authority had approved the list of major events first. The rationale behind this choice was to avoid the risk of a negative decision if any modifications to the list (compared to what had been discussed during the pre-notification phase) were made in the course of the national adoption process.
16. On 16 July 2013 the Authority declared the Norwegian draft measures as compatible with EEA law by Decision no. 309/13/COL.
17. The draft measures, as approved by the Authority, were finally adopted by Norway on 9 August 2013. Subsequently, they were communicated to the Authority and published in the Official Journal of the European Union.12
3 FIFA’s Application
18. The Application is divided into two main pleas:
- first, that the Authority has breached its obligation to state reasons for including “non-prime” FIFA World Cup matches in the list of events;
- second, that the Authority was wrong in law to include “non-prime” FIFA World Cup matches in the list of events.
19. The second plea is in turn divided into four branches:
- The Authority has breached Articles 14(2) of the AVMSD and 5(2)(d) SCA;
- The Authority was wrong to rely on Recital 49 of the AVMSD;
- The Authority was wrong to conclude that the entire FIFA World Cup has been traditionally broadcast on free to air television in Norway;
- The Authority was wrong to conclude that any restrictions on the freedom to provide services, on competition and on the Applicant’s property rights flowing from the impugned decision are proportionate and compatible with EEA law.
12 OJ 2013 L 296, p. 51. .
Page 8
20. The Authority will examine each plea below in turn after making certain preliminary observations.
4 Preliminary observations 21. First, in adopting Decision no. 309/13/COL the Authority did not exercise its own power of decision as such but its power of review, which was restricted and limited to determining whether the EEA State concerned, i.e. Norway, had committed any manifest error of assessment in designating events as being of major importance. The Decision must thus be read in the light of the notified measures.13 The Court of Justice emphasised in its judgment in Case C-205/11 P FIFA v Commission that it is for the Member States alone to determine the events which are of major importance and that they enjoy a broad margin of discretion in that respect.14 While the Court stated that the Commission - or in this case, the Authority – is required to verify whether the conditions laid down for such a determination by the States are fulfilled, it took pains to state that the Commission’s (or Authority’s) power of review is limited.15 In particular, the Court stated that the Commission’s power of review must be limited to determining whether the Member States have committed manifest errors of assessment in designating events of major importance.16
22. Second, the distinction between “prime” and “non-prime” matches is an artificial one, invented by FIFA mainly for the purpose of safe-guarding its financial interests in a series of cases before the European courts. This distinction does not necessarily reflect the interest generated by the individual matches in the FIFA World Cup. For instance, it seems that eg. the Brazilian national team would attract a large audience irrespective of whether it played in the group phase or in the final of the FIFA World Cup. At the same time it also seems that viewers in Norway or in other countries would be interested in watching their own national team playing or the national team which is considered to be an international
13 See Case C-201/11 P, UEFA v Commission, cited above, paragraph 109. 14 Case C-205/11 FIFA v Commission, at paragraph 14. 15 Case C-205/11 FIFA v Commission, at paragraph 20. 16 Case C-205/11 FIFA v Commission, at paragraph 21.
Page 9
football super power as well as the national teams of neighbouring countries or countries to which they have cultural or historical links, eg. the Swedish national team in the case of Norway. Finally, if the distinction and FIFA’s proposal are adopted, only three out of the 64 matches of the final round of the FIFA World Cup will be broadcast on free-to-air TV in case the Norwegian national team does not qualify.
23. Third, the Authority’s assessment in this case consists inter alia in checking whether the inclusion of the events in the list of event of major importance is substantiated by viewing figures provided by Norway. This exercise involves looking at the past figures in order to extrapolate tendencies for the future. However, for this reason, its inherent limitations should also be noted: for example, there is no standard formula on how far in time one needs to go in order to explore the future tendencies in the viewing figures (based on the Commission’s practice and experience, the Authority examined the data available of three last seasons of the tournament, and specifically all viewing data submitted by the Norwegian authorities for the 2006 and the 2010 FIFA World Cups in the present case as well as a limited number of matches of the 2002 FIFA World Cup); or nobody can predict which the football super powers of tomorrow generating great interest will be.
24. Fourth, the Norwegian list of events of major importance has no retroactive or immediate effect. It will enter into force on 1 July 2014 and will not affect the rights that will have been acquired until that point in time. Contracts that are already concluded at that point will not be affected by the Norwegian measures and any exclusivity clause will continue with full force until the expiration of the contract. Thus, the broadcasting rights for the 2014, 2018 and 2022 FIFA World Cup events are unaffected by the contested decision as, according to the Authority’s knowledge, these rights have already been sold. This means that the parties engaging in negotiations about the acquisitions of broadcasting rights in the future will be able to take into account the fact that a certain event constitutes an event of major importance in Norway and the relevant broadcasting rights enjoy a special status.
Page 10
25. Fifth, the Authority will in the present Defence follow FIFA’s choice of terms: the terms “prime” and “non-prime” matches will bear the same meaning as in the Application and the term “FIFA World Cup” will be referring to the final stage or the 64 matches of the FIFA World Cup (consisting of the games of the group stage, the round of 16, the quarter finals, the semi-finals, the “third place” and the final match).
5 FIRST PLEA : Failure to state reasons
26. In paragraphs 45 to 65 of the Application the Applicant claims that the reasoning adduced by the Authority in the contested decision is deficient in a number of respects such that the Authority has breached Article 16 SCA. The Applicant claims in particular that the reasoning set out in recitals 2, 3, 5, 6, 9 and 18 is too vague for it to know and for the Court to review how the Authority reached its conclusions in the contested decision.
27. Article 16 SCA corresponds to Article 296(2) TFEU and provides that decisions of the Authority shall state the reasons on which they are based.
28. Article 16 SCA has been interpreted by the Court as requiring that the statement of reasons must be adapted to the circumstances of each case. In particular, the content of the measure in question, the nature of the reasons given and the interest which the addressees of the measure may have in obtaining explanations, must be emphasised. It is not a requirement for the reasoning to go into all the relevant facts and points of law. Whether the statement of reasons meets the requirements of Article 16 SCA must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question. The Authority refers to Case E-9/12 Iceland v EFTA Surveillance Authority (“Verne”), judgment of 22 July 2013, not yet reported, paragraphs 129– 136 and the case-law cited.
29. Therefore, the Authority submits that the contested decision, read in its relevant context and taking into consideration the relevant legal rules, is appropriately reasoned in that it fulfils the test under Article 16 SCA.
Page 11
30. The Authority points out that the contested decision is closely modelled on Commission Decision 2007/479/EC of 25 June 2007 17, which was challenged in Case T-385/07 and Case C-204/11 P and on Commission Decision 2007/730/EC of 16 October 2007 18 which was challenged in Case T-68/08 and C-205/11 P.
31. In particular, recital 2 of the contested decision is materially similar to recital 2 of Commission Decision 2007/479/EC and of Commission Decision 2007/730/EC. The same is true for recital 3 of the contested decision and recital 3 of Commission Decision 2007/479/EC and of Commission Decision 2007/730/EC (with the exception of the use of the word “market” instead of the more colloquial “landscape”). Likewise recital 5 of the contested decision and recital 5 of Commission Decision 2007/479/EC and of Commission Decision 2007/730/EC are materially the same, as is recital 6 of the contested decision and recital 6 of Commission Decision 2007/479/EC and of Commission Decision 2007/730/EC. Recital 9 of the contested decision is significantly the same as recital 9 of Commission Decision 2007/479/EC read in conjunction with its recital 16 and is also significantly the same as recital 7 of Commission Decision 2007/730/EC read in conjunction with its recital 18.
32. The Applicant challenged the adequacy of the reasoning of Commission Decision 2007/479/EC in Case T-385/07. The General Court dismissed the plea of lack of reasoning in paragraphs 68 to 74 of its judgment. It is apparent from the summary of the plea in paragraphs 64 to 66 of the judgment that the plea was couched in similar terms to the plea for lack of reasoning in paragraphs 45 to 65 of the Application in the present case. The applicant in Case T-385/07 did not directly and clearly take issue with paragraphs 68 to 74 of the General Court’s judgment in its appeal in Case C-204/11 P.
33. Similarly, in Case T-68/08, the Applicant challenged the adequacy of the reasoning of Commission Decision 2007/730/EC. The summary to be found in paragraphs 59 to 65 of the judgment in that case shows that, as in Case T-385/07, the plea of lack of reasons was materially similar to the plea set out in paragraphs
17 OJ 2007 L 180, p. 24. 18 OJ 2007 L 295, p. 12.
Page 12
45 to 65 of the Application in the present case. The General Court roundly rejected the plea of lack of reasoning in paragraphs 67 to 76 of its judgment. Again, the applicant did not directly and clearly take issue with paragraphs 67 to 76 of the General Court’s judgment in its appeal in Case C-205/11 P.
34. Given the similarity between the decisions and the deliberate policy of the Authority to adopt, for the sake of homogeneity, the same methodology and a materially similar procedure in dealing with the Norwegian notification as the Commission had adopted in respect of the Belgian and British notifications, and given the similarity of the pleas raised in the proceedings in the General Court, the Authority submits that the plea of inadequacy of reasons should be similarly dismissed in this case.
35. As the Court of Justice recently held, the reasons given for a measure adversely affecting a person or operator are sufficient if that measure was adopted in circumstances known to that person which enable him to understand the scope of the measure concerning him.19
36. Because the draft Norwegian measures were made public and were the object of a public consultation, the Applicant was fully aware of them and of the data on which they were based. That the Applicant was able to and actually did make representations to the Norwegian authorities is made clear on page 12 of the notification of the Norwegian measures in Annex A.2 to the Application. Because of its participation in Case T-385/07, for example, the Applicant knew that the average viewing figures in Belgium for non-prime matches were generally lower than those supplied by the Norwegian authorities in support of the notification of their draft measures.
37. It is also clear from the circumstances of this case, the information supplied by the Norwegian authorities and from its participation in the consultation process that the Applicant knew that the final stage of the FIFA World Cup was not included
19 Case C-417/11 P Council v Bamba, unpublished, paragraph 54.
Page 13
in its entirety in a list of major importance irrespective of the interest generated by the individual matches in Norway.20
38. What is also clear from the tenor of the Application lodged in this case, as well as from the submissions the Applicant made before the EU Courts in similar circumstances, is that the Applicant is in a position to and actually does challenge the lawfulness of the merits of the contested decision.
39. Accordingly, the Authority submits that the first plea concerning the inadequacy of reasons should be dismissed.
6 SECOND PLEA: Errors of law
6.1 Breach of Articles 14(2) of the Directive and 5(2)(d) SCA
40. In paragraphs 69 to 80 of the Application, FIFA claims that the Authority failed to adequately discharge its obligation, pursuant to Articles 14(2) of the Directive and 5(2)(b) SCA, to examine carefully and impartially all the relevant facts of the case. The contested Decision should, thus, be annulled in so far as it concerns the “non- prime” matches of the FIFA World Cup.
41. In particular, FIFA contends that the Authority relied on the unsubstantiated assertions of the Norwegian authorities and did not inquire beyond what was included in the notification regarding the viewing figures, the restrictions imposed on unqualified broadcasters as well as whether the FIFA World Cup has traditionally been broadcast on free television in Norway.
42. The Authority submits that all assertions put forward by FIFA in this plea are unsubstantiated and should be rejected.
43. It needs to be recalled that it is for the EEA States alone to determine the events which are of major importance for their society and should be put in their national lists, and they have broad discretion in that respect. The Authority’s power to review must be limited to determining whether the EEA EFTA State has
20 Case C-205/11 P FIFA v Commission, cited above, paragraph 41.
Page 14
committed any manifest errors of assessment in designating events of major importance. In order to assess whether a manifest error of assessment was committed by the national authorities, the Authority needs to examine carefully and impartially all the relevant facts of the case which support the conclusions reached.21
44. The Authority complied fully with this obligation by assessing all relevant facts of the case both in the pre-notification phase as well as within the three month period upon the formal notification. Since April 2011, when the pre-notification discussions commenced, till April 2013, when the formal notification was received, the Authority sought additional information from the Norwegian authorities in seven instances (dated 4 April 2011, 18 May 2011, 23 June 2011, 28 June 2012, 31 October 2012, 7 November 2012 and 15 January 2013 – see timeline in paragraph 26 of Annex D.1 to the present Defence).
45. The exercise of the Authority’s scrutiny regarding the viewing figures available reflects the entire process of verification of the Norwegian measures’ compatibility with EEA law.
46. The outcome of the process of seeking additional information is reflected in the amount of viewing figures provided by the Norwegian authorities in the course of the administrative procedure, regarding all events listed, in particular viewing figures relating to the FIFA World Cup. The Authority attaches the relevant figures reflecting the progression in the amount of data received upon requesting additional information from the Norwegian authorities as Annex D.5 to the present Defence. More precisely, together with the pre-notified documents on 27 March 2011 the Authority received viewing figures referring solely to certain matches of the 2010 FIFA World Cup as well as the qualifying matches with the participation of the Norwegian national team (see Annex D.5.a). Upon request for additional data, the Norwegian authorities submitted more viewing figures on 31 May 2012 (see Annex D.5.b) and 17 December 2012 (see Annex D.5.c)before submitting the formal notification on 22 April 2013 (See Annex A.2 to the Application).
21 See Case C-205/11 P FIFA v Commission, cited above, paragraphs 14 and 21.
Page 15
47. In paragraph 72 of the Application, FIFA is trying to trivialise the number of games the viewing figures of which were taken into account for the Authority’s assessment. In this respect, the Authority submits, first, that, as confirmed by the Norwegian authorities, the viewing figures provided represent the entirety of viewing figures available to the Norwegian Ministry. Second, for the 2002 FIFA World Cup, all available data were taken into consideration. Third, all matches of the 2006 and 2010 FIFA World Cups were taken into account as average ratings referring to the entire population as well as to different special groups of viewers were provided for these two FIFA World Cups in addition to average ratings for the ten most watches matches in these two FIFA World Cups.
48. Out of the ten most watches matches in the 2006 and 2010 FIFA World Cups only three correspond to “prime” matches whereas the remaining seven most watched games for each FIFA World Cup are spread in all stages of the FIFA World Cup, i.e. the group phase, the round of 16 and the quarter finals. They were thus “non- prime” matches according to the Applicant’s classification.
49. As regards viewing rates referring to the 1998 FIFA World Cup, first of all, they were not assessed as they were not available to the Ministry. Moreover, the Authority, in view of the Commission’s practice, did not consider that going that much back in time would enable it to make a better projection for the future. However, given the fact that viewers are even more interested in the FIFA World Cup when their national team participates, it would seem plausible that the 1998 FIFA World Cup attracted an even larger audience in Norway as the Norwegian national football team participated in that tournament.
50. FIFA reproaches the Authority for not taking into consideration the figures provided by FIFA or not requesting copies of surveys and analysis of the viewing figures by the latter. This claim though does not correspond to reality. The observations submitted by FIFA in the course of the administrative procedure, including the viewing data provided by the latter, were carefully assessed by the Authority as evidenced by an internal memorandum dated 3 July 201322. The Authority’s conclusion regarding the viewing figures provided was that for 2006
Page 16
and 2010 FIFA World Cups, the average of ca. 10% of the viewing population for the “non-prime” matches was fairly high and did not support FIFA’s assertion that these matches did not attract “large audiences”.23 Thus, if anything, the viewing figures provided by FIFA confirmed Norway’s grounds for including the entire FIFA World Cup in the list of major events.
51. FIFA’s data also confirm the information provided by the Norwegian authorities that the FIFA World Cup has traditionally been broadcast on free-TV in Norway. In Annex A.6 to the Application, it is obvious that the entire 2006 World Cup was broadcast on free-TV as well as the vast majority of the matches of the 2010 FIFA World Cup. The Authority submits that the Norwegian authorities have confirmed that the FIFA World Cup has traditionally been broadcast free-to-air as they have also mentioned in the notification of the Norwegian list of events of major importance.24
52. In paragraph 79 of the Application FIFA expresses concerns about the restrictions imposed by the Norwegian measures on non-qualified broadcasters regarding the price at which they would be obliged to sell their already acquired rights. First, it needs to be stressed that the rights already acquired before the entry into force of the Norwegian list are not affected by the latter as this will apply only to rights in the future (i.e. those that will not have been acquired at the time of entry into force of the Norwegian list). Second, the Authority reviewed thoroughly this aspect of the Norwegian measures in the pre-notification phase (see paragraphs 69 to 82 of the internal memorandum dated 5 February 2013 attached as Annex D.1 to the present Defence) before approving the Norwegian measures including obviously Section 5-3 “Procedural provisions and setting of market price” of the Norwegian notification.
53. In case in the future a non-qualified broadcaster acquires exclusive rights of the FIFA World Cup, it will be obliged to provide a written offer for resale to a qualified broadcaster upon the latter’s request. Should the two parties be unable to fix the remuneration price an independent authority, the Norwegian Media
22 Attached as Annex D.6 to the present Defence. 23 See page 4 of Annex D.6 to the present Defence.
Page 17
Authority, will determine the resale price in accordance with market principles laid down in advance.25 The Authority, thus, concluded that Norway took all necessary precautions in order to prevent such unnecessary and unfair restrictions from being imposed on non-qualified broadcasters.
54. In view of the above, the Authority submits that it fully and adequately discharged its obligations under Article 14(2) of the Directive and Article 5(2)(d) SCA and thus this branch of FIFA’s second plea should be rejected.
6.2 Wrongful reliance on recital 49 of the Directive
55. In paragraphs 81 to 84 of the Application FIFA claims that one of the reasons on which the Authority founded its approving Decision was that the FIFA World Cup is mentioned in Recital 49 of the Directive as an example of an event of major importance for society.
56. The Authority agrees with FIFA that, according to the Court of Justice in Case C- 205/11 P, “[...] the World Cup must be regarded as an event which is, in principle, divisible into different matches or stages, not all of which are necessarily capable of being characterised as an event of major importance”.26 The Court of Justice clarified though that the “final stage of the World Cup cannot validly be included in its entirety in a list of events of major importance irrespective of the interest generated by the individual matches concerned [and] that State is not freed from its obligation to communicate to the Commission the reasons justifying the designation, in the specific society of the Member State concerned, of the final stage of the World Cup as a unique event which must be regarded in its entirety as being of major importance for that society”.27
57. In view of these statements by the Court of Justice, the process of including the entire final stage of the FIFA World Cup in a national list of major events cannot be “automatic”, unfounded or lacking any justification. On the contrary, the EEA
24 See page 12 of the Notification by Norway attached as Annex A.2 to the Application. 25 A similar solution has been adopted in a number of EEA States which have set up lists of major events. 26 Case C-205/11 P, FIFA v Commission, cited above, paragraph 35. 27 Ibid., paragraph 41 (emphasis added).
Page 18
State has to provide reasons justifying whether the individual matches comprising the FIFA World Cup attract sufficient attention, i.e. large audience, in order to render it an event of major importance. However, if indeed the individual matches attract sufficient attention in that EEA State, the latter is not prevented from including the entire event in its national list of important events.
58. In the case at hand, as at the time the Court of Justice had not yet issued its judgment in Case C-205/11 P and the General Court had considered the FIFA World Cup as a single event in its judgment in Case T-68/0828, Norway referred to the FIFA World Cup as a “single event” in its notification.29 The Authority stresses however that it insisted that Norway communicated the reasons why the entire event is of major importance for Norwegian society and thus substantiating its inclusion in the list.30
59. Norway communicated the reasons for which the final stage of the FIFA World Cup was included in its entirety in the list by stating that it is among the most popular sports events in Norway, it has traditionally been broadcast on free television and the different matches are interdependent. In order to examine carefully all relevant aspects of the case, the Authority asked the Ministry to submit data, in particular the audience ratings, ratings percentages and market shares for several matches of the FIFA World Cup in the years 2002, 2006 and 2010.
60. These data were very analytical: they included average audience ratings, rating percentages and market shares for the entire population and for several population groups in relation to all matches of the 2006 and 2010 FIFA World Cups as well as the equivalent figures relating to the ten most watched matches of these two most recent FIFA World Cups. As regards the 2002 FIFA World Cup, the Ministry provided all data in its disposal, i.e. average audience ratings, rating
28 See Case T-68/08 FIFA v Commission, cited above, paragraph 116. 29 See Norwegian notification, p. 12, attached as Annex A.2 to the Application. 30 See paragraphs 51 to 53 of the Authority’s internal memo dated 5 February 2013 attached as Annex D.1 to the present Defence.
Page 19
percentages and market shares for the entire population as well as for several population groups for a limited number of matches.31
61. In view of the above, it becomes clear that the Authority did not base itself on Recital 49 alone, irrespective of the interest generated by the individual matches, for reaching its conclusion that the Norwegian authorities had not committed a manifest error of assessment when they decided to include the FIFA World Cup in its entirety in the Norwegian list of major events. On the contrary, the interest generated by individual (“prime” and “non-prime”) matches was assessed. Thus, this branch of FIFA’s second plea should be rejected.
6.3 Characterisation of “non-prime” matches as events of major importance
62. In this third branch of its second plea FIFA reproaches the Authority for committing a manifest error of assessment by approving the inclusion of the “non-prime” matches of the FIFA World Cup in the Norwegian list of major events.
63. According to a set of guidelines applied by the Commission32, in a test to assess whether an event may be considered to be of major importance for the society at least two of the following conditions have to be met:
- The event and its outcome have a special general resonance in the relevant State, not simply significance to those who ordinarily follow the sport or activity concerned;
- The event has a generally recognised, distinct cultural importance for the population in the State concerned, in particular as a catalyst of its cultural identity;
- It involves the national team or a national representative in the sport concerned in a major international tournament;
31 See Annex III of the Notification by Norway attached as Annex A.2 to the Application. 32 Commission’s Working Document CC TVSF (97) 9/3: Implementation of Article 3A of Directive 89/552/EEC (as modified by Directive 97/36/EC). Evaluation of National Measures attached as Annex D. 2 to the present Defence.
Page 20
- The event has traditionally been broadcast on free television and has commanded large television audiences in the State concerned.
64. According to the notification of the Norwegian measures, the entire FIFA World Cup satisfied three out of the above four conditions, i.e. first, it has traditionally been broadcast on free television attracting large audiences; second, it has a special general resonance in Norway and third, it involves the Norwegian national team.
65. FIFA challenges the approval of the Norwegian measures by the Authority on three grounds: first, the Authority was wrong to find that “non-prime” matches have been traditionally broadcast on free-to-air TV; second, the Authority was wrong to find that “non-prime” matches attracted large TV audiences in Norway; third, the Authority was wrong to find that “non-prime” matches have a special resonance in Norway. The Authority will deal with each of these grounds in turn.
6.3.1 Traditional broadcast on free-to-air TV
66. In paragraphs 87 to 95 of the Application, FIFA submits that the Authority erred in holding that the FIFA World Cup has traditionally been broadcast in Norway by free-to-air broadcasters.
67. It is noted that both during the pre-notification phase as well as in the formal notification, the Authority received in several instances confirmation by the Norwegian authorities that the final stage of the FIFA World Cup has traditionally been broadcast on free television in Norway.
68. In particular, this is reflected in paragraph 51 of the internal memorandum dated 5 February 201333 stating that “[t]he inclusion of [...] the FIFA [...] Championship[s] in full in the Norwegian proposed measures has been substantiated by the fact that [...] the event has been traditionally broadcast on free television [...]”. Furthermore, the Norwegian formal notification mentions that “[t]hese events have traditionally been broadcast on free television and have commanded large television audiences in Norway”.34
33 Attached as Annex D.1 to the present Defence. 34 See page 12 of the Notification by Norway attached as Annex A.2 to the Application.
Page 21
Moreover, all viewing figures and ratings provided to the Authority concern broadcasts on free television in the possession of the Norwegian authorities.
69. It is apparent from recital 9 of Decision no. 309/13/COL that the Authority took account of the fact that the tournament, in its entirety or the vast majority of the matches comprising it, had traditionally been broadcast on free television channels and commanded large television audiences.35
70. It needs to be stressed that once the Authority bases its decisions on the information received by the EEA EFTA State, it cannot be annulled for manifest error of assessment. If follows from the duty of loyal cooperation that it is for the national authorities to provide all information of relevance to the case. The Authority submits that the Norwegian authorities have complied with their duty in the present case. The Authority was in a position to make a definitive assessment of the Norwegian measures on the basis of the information available to it.36
71. In paragraphs 89 and 90 of the Application, FIFA insists on the limited number of matches of the 2002 FIFA World Cup that were broadcast free-to-air. In this regard, the Authority submits that the 2002 FIFA World Cup is an example of the situation that Norway intends to avoid by including the FIFA World Cup in its list. 2002 was apparently the only year that pay-TV broadcasters acquired the rights due to the unfruitful negotiations for the rights between the owner of the rights and the free-to-air broadcasters in Norway and the lack of deal between those two parties. This difficulty in reaching an agreement that year is reflected in the press release published by Telenor37, the owner of a pay-TV operator, on 9 November 2001 (i.e. less than one year before the beginning of the 2002 FIFA World Cup whereas under normal circumstances broadcasting rights are acquired several years in advance38) which stated: “Telenor has saved the 2002 Football World Cup for all football fans in Norway and Scandinavia. That is clear after an agreement has
35 Compare with Case C-205/11 P, FIFA v Commission, cited above, paragraph 50. 36 See Case E-9/12 Iceland v EFTA Surveillance Authority (Verne), not yet reported, paragraph 122. 37 Telenor is the owner of the pay-TV broadcaster Canal Digital. 38 By way of comparison, already today the broadcasting rights in Norway of the 2022 FIFA World Cup have been acquired.
Page 22
now been reached with the owner of the rights, Prisma”.39 In other words, if it were not for Telenor acquiring the rights to the 2002 FIFA World Cup and broadcasting it on pay-TV, that year’s tournament would not have been broadcast at all in Norway. Thus, in the end, only eleven out of the 64 matches of the 2002 FIFA World Cup were broadcast on free-TV.
72. The fact that a limited number of matches of the 2002 FIFA World Cup were broadcast on free-TV explains the reason why no viewing figures are available regarding that FIFA World Cup as the viewing ratings of pay-TV operators cannot be tracked. Thus the 2002 FIFA World Cup reflects the consequences that will be avoided with the inclusion of the FIFA World Cup in the Norwegian list. The year 2002 was an exception to the rule that the FIFA World Cup has traditionally been broadcast on free-TV in Norway.
73. The Authority notes, furthermore, that Annex A.6 to the Application confirms that the final stage of the FIFA World Cup has traditionally been broadcast on free television in Norway. More precisely, the viewing figures submitted by FIFA for 2006 confirm that the entire FIFA World Cup (i.e. the 64 matches) was broadcast free-to-air and the viewing figures of 2010 FIFA World Cup confirm that the vast majority (48 out of the 64 games) were broadcast on free television.
74. It is worth mentioning that the broadcasting rights for the 2014, 2018 and 2022 FIFA World Cups have already been acquired for the Norwegian market. According to the press release of TV2 (free-to-air broadcaster), the latter will broadcast the 2018 and 2022 FIFA World Cup. Furthermore, regarding the 2014 FIFA World Cup, 46 out of the 64 matches will be broadcast on free television.40 This pattern further confirms the information provided by the Norwegian
39 Translation into English by the Authority. Emphasis added. See the entire text of the press release in Norwegian (available at http://www.telenor.com/no/media/pressemeldinger/2001/telenor-gir-norge-og-skandinavia- fotballvm/) (with partial translation into English) together with the group chart of Telenor attached as Annex D.7 to the present Defence. 40 See the entire text of the press release by TV2 dated 16 April 2012 (available at http://www.tv2.no/omtv2/pressemeldinger/tv-2-skal-sende-fotballvm-i-2018-og-2022- 3756568.html) in Norwegian with partial translation by the Authority in English attached as Annex D.8 to the present Defence.
Page 23
authorities that the FIFA World Cup has traditionally been broadcast on free television.
75. Regarding deferred television coverage, the Authority recalls the General Court’s statement in its judgment in Case T-385/07 FIFA v Commission that “[...] failure to broadcast or deferred broadcasting of a limited number of „non-prime‟ matches does not require the conclusion to be drawn that, despite their features [...] they are not, as a whole, of major importance for Belgian society, particularly when those solutions are adopted for objective reasons, such as two matches are played simultaneously”.41 Moreover, the Authority’s Decision no. 309/13/COL refers to broadcasts on free-TV and not those that were necessarily broadcast live.
76. Finally, in paragraphs 93 and 94 of the Application, FIFA argues that it is not indicated in the Decision whether the Authority sought clarifications by Norway assuming that it had doubts as to the validity of the designation of the FIFA World Cup in the Norwegian list of events of major importance. The Authority submits that this argument should be rejected for two reasons. First, the Authority did not entertain any doubts as the data submitted by the Norwegian authorities substantiate the valid inclusion of the FIFA World Cup in its entirety in the Norwegian list. Second, the Authority’s statement of reasons in the decision may be succinct, so long as it is appropriate.42
77. In view of the above, the Authority submits that it did not err in accepting that the FIFA World Cup has traditionally been broadcast on free-to-air television in Norway, and thus FIFA allegation in this respect should be rejected.
6.3.2 Attraction of large TV audiences in Norway
78. In paragraphs 96 to 108 of the Application, FIFA submits that the Authority erred in holding that the broadcasting of the FIFA World Cup on free-to-air channels in Norway has attracted a large television audience. FIFA contends that the figures available to it on the basis of the TNS Gallup (Oslo) surveys and analysis of the viewing figures, “especially the “non-prime” matches have never attracted large
41 See Case T-385/07 FIFA v Commission, cited above, paragraph 103. 42 See Case C-204/11 P FIFA v Commission, cited above, paragraph 44.
Page 24
Norwegian television audiences”, i.e. the “non-prime” matches of the 2006 FIFA World Cup were viewed by an average of 9.8% of the potential viewing public and the equivalent percentage for the 2010 FIFA World Cup was 8.6%.
79. The Authority submits, first, that for its assessment of the Norwegian measures it took into consideration the fact that the FIFA World Cup, both the “prime” and “non-prime” matches, attracted large audiences in Norway, as stated by recital 9 of the Authority’s Decision no. 309/13/COL.
80. Second, it needs to be stressed that this branch of FIFA’s second plea is built and developed on an artificial comparison: the comparison between the “prime” with the “non-prime” matches. FIFA seems to be claiming that since the “non-prime” matches do not attract (approximately) equally large audiences as the “prime” matches, this should be interpreted to the effect that the “non-prime” matches do not attract large audiences for the purpose of approving the inclusion of the latter in the list.43
81. The Authority has already explained that the distinction between “prime” and “non-prime” matches is artificial. Even more so is the comparison between these two categories of matches. Common experience brings support to the assumption that it would seem obvious that the “prime” matches would attract a much larger audience than the “non-prime” matches for several reasons, eg. presumably the best teams of the tournament will be participating.
82. For the purposes of the inclusion of the “non-prime” matches in the list of events of major importance for society, this comparison is irrelevant. What is of importance is whether the requirement of attraction of large audiences is fulfilled in general terms in the sense that they generate interest. In the wording of the General Court in Case T-385/07 FIFA v Commission, “[a]lthough, admittedly, those figures are lower than those for “prime” matches, the fact remains that the inclusion of “non-prime” matches in the national list of events of major importance for society does not require that they draw the same number of viewers as “prime” matches”.44
43 See paragraphs 101 and 102 of the Application. 44 See Case T-385/07 FIFA v Commission, cited above, paragraph 105; Compare also with Case T- 68/08, FIFA v Commission, cited above, paragraph 123.
Page 25
83. The question then is how one defines the term “large audience”. In this sense, the Authority submits that its assessment was based on previous Commission practice in this field and viewing figures it received from the latter in the course of the pre-notification phase by way of example in relation to the lists of other EEA States. The Authority submits that the Commission approved the inclusion of the FIFA World Cup in its entirety in the national list of events of major importance of another EEA State when the average viewing shares ranged from 4.7% to 30.1% for the individual (both “prime” and “non-prime”) matches when the national team of that EEA State was playing and from 1.8% to 9.9% for individual (both “prime” and “non-prime”) not involving the national team.
84. Thus, the viewing rates provided by FIFA in Annex A.6 to the Application indicating that the “non-prime” matches of the 2006 FIFA World Cup attracted an average of 9.9% (whereas the average for “prime” matches was 24.6%) of the potential viewing public, these matches during the 2010 FIFA World Cup an average of 9% (whereas the average for “prime” matches was 23%) were considered satisfactory for substantiating the inclusion of the FIFA World Cup in the Norwegian list. The same consideration applies for the “non-prime” games during the 1998 FIFA World Cup attracted 11.3% and these matches in the 2002 FIFA World Cup attracted allegedly 6.6% of the viewing public, as provided by FIFA in paragraphs 103 to 105 of the Application.
85. In paragraph 98 of the Application, FIFA notes that market shares and audience ratings per channel do not allow to know the total size of the viewing public who watched “non-prime” matches in order to measure the relative importance of these matches for the Norwegian society. The Authority recalls that, according to the General Court, “[...] in order for an event to be included in the list it must be of major importance for society, the fact remains that the prior establishment of specific criteria used to assess that importance is an essential factor in order for national decisions to be adopted in a transparent manner and within the parameters of the discretion which national authorities have in that regard”.45 Thus, the Authority assessed the method chosen by the Norwegian authorities in order to measure the interest an event
Page 26
generates and thus its importance for society, i.e. the average audience ratings (for the entire population and also by gender and age) and the market shares provided. Assessing such viewing figures to substantiate whether an event attracts large audience is a perfectly acceptable as well as particularly detailed method, also used by all the EEA States having created a list of events of major importance (even not always in such a detailed way as Norway did) and assessed by the Commission.
86. It needs to be stressed that the Authority did not approve the inclusion in the list of major events of the entire FIFA World Cup without taking into account the interest generated and viewing rates of the “non-prime” matches. On the contrary, the Authority explicitly requested from the Norwegian authorities to provide viewing figures for “prime” and “non-prime” matches in order to assess the “interest generated by the individual matches in the [EEA] State concerned”46. Indeed, responding to this request, Norway provided for the 2006 and 2010 FIFA World Cups average viewing figures and market shares for the entire population as well as for several categories of viewers on the basis of gender and age group, and on top of this the figures corresponding to the ten most watched games of the 2006 and 2010 FIFA World Cups as well as the equivalent data for certain matches of the 2002 FIFA World Cup.
87. It comes as no surprise that three out of these ten most-watched matches correspond to what FIFA calls “prime” matches. Nevertheless, one should not disregard the fact that the remaining seven most watched games in the 2006 and 2010 FIFA World Cups are spread in all phases of the tournament, i.e. at the group stage, the round of 16 and the quarter final. For instance47, for the 2006 FIFA World Cup, the final (i.e. “prime”) match (Italy – France) generated the greatest interest among Norwegian viewers (18.6% average viewing rating) followed by two “non-prime” matches (Sweden – England generating 16.5% and Brazil – Croatia generating 13.5% viewing rating). The two semi-final (“non- prime”) games (Germany – Italy and Portugal – France) are placed lower in the
45 See Case T-68/08 FIFA v Commission, cited above, paragraph 87. 46 See Case C-205/11 P, FIFA v Commission, cited above, paragraph 41.
Page 27
list generating approximately 13% and 12.1% viewing ratings, i.e. as much interest as several “non-prime” matches such as Japan – Brazil (11.7%), the Netherlands – Argentina (11.3%), Brazil – Australia (11.3%) and Sweden – Paraguay (11.2.%). The list of the most-watched games in 2006 is confirmed by the figures provided by FIFA. As regards the 2010 FIFA World Cup, again the final (“prime”) match (the Netherlands – Spain generating 32.5% viewing rating) was the most-watched followed by the two semi-final (“prime”) matches (Uruguay - the Netherlands generating 22.3% and Germany – Spain 19.7% viewing rating). However, “non- prime” matches such as Spain – Portugal and Brazil – Ivory Coast generated almost as high viewing ratings as the semi-finals (19.3% and 18.7% respectively). Again, this list of the ten most watched games is confirmed by FIFA’s figures.
88. The Authority’s verification of the viewing figures provided by Norway was further confirmed by the observations submitted by FIFA (see Annex A.3 to the Application) during the three-month period following the receipt of the notification. The assessment of FIFA’s figures is reflected in the internal memo prepared by the Authority’s responsible case handler mentioning that the viewing population for the “non-prime” matches is fairly high.48 The data referred to by FIFA in its observations are attached as Annex A.6 to the Application illustrating systematically the fact that the average viewing figures for “non-prime” matches reached 9.9% in the 2006 FIFA World Cup and 9% in the 2010 FIFA World Cup confirming that even “non-prime” matches generate significant interest in Norway.
89. At the same time, it should not be disregarded that other factors, such as the teams playing and the time of the day49 that a game is broadcast, influence the number of viewers watching it. FIFA has highlighted certain games of the 2010 FIFA World Cup which have generated very low interest50 (Mexico – Uruguay 0.9%, Australia – Serbia 0.5%, Cameroon – the Netherlands 1% and Switzerland –
47 The detailed list of the viewing figures attached to the notification by Norway are to be found in Annex III of the notification attached as Annex A.2 to the Application. 48 See Annex D.6 to the present Defence, page 4. 49 The General Court also took into account the time zones in its judgments: See Case T-68/08 FIFA v Commission, cited above, paragraph 129 and Case T-385/07 FIFA v Commission, cited above, paragraph 108. 50 The figures are taken from Annex A.6 to the Application.
Page 28
Honduras 1%). These matches were indeed “non-prime” games but the viewing figures are low not for that reason solely but also due to the fact that they were not what a football fan would call a “derby”, they were broadcast around midnight, on a working day (Tuesday, Wednesday, Thursday and Friday) as the third consecutive match of that day. If all these factors are taken into account, it comes as almost a necessary consequence that these matches did not generate high interest in Norway, irrespective of whether they were “prime” or “non- prime” matches.
90. On the basis of these data, the Authority concluded that the Norwegian measures were justified in considering the final stage of the FIFA World Cup as a unique event which must be regarded in its entirety as being of major importance for the Norwegian society rather than a compilation of individual events divided into matches of different levels of interest.51
91. Finally and as regards FIFA’s allegation that the Authority did not assess data for the 1998 FIFA World Cup, the Authority submits that, first, it was not deemed necessary to go back that far in time in order to make a projection for the future; second, on the basis of the Authority’s communication with the Commission about its practice, the Authority asked Norway to provide data for the last 2-3 seasons of each event.
92. The Authority thus submits that this branch of the Application should be rejected.
6.3.3 Special general resonance in Norway
93. In paragraphs 109 to 123 of the Application FIFA alleges that the Authority erred in holding that the “non-prime” matches of the FIFA World Cup enjoy a special resonance in Norway, and are not simply of significance to those who ordinarily follow football.
94. FIFA argues that only the comparison between the average viewing figures by football fans and by non-football fans would allow a conclusion as to whether the
51 See Case C-205/11 P, FIFA v Commission, cited above, paragraph 41.
Page 29
FIFA World Cup has a special general resonance in Norway but no such figures were mentioned in the contested decision.
95. As a preliminary important point, the Authority wishes to reiterate that its obligation was to assess whether the Norwegian authorities had made a manifest error of assessment in suggesting that at least two out of the four conditions mentioned in paragraph 63 of the present Defence were satisfied in order to verify whether the inclusion of the FIFA World Cup in its entirety in the Norwegian list of events of major importance was complying with EEA law. In order to conduct that assessment the Authority took into account the reasons presented, it examined the methodology employed and investigated the figures provided by the Norwegian authorities in their formal notification as well as in the pre- notification phase. The Authority accepted that, as regards the FIFA World Cup, three conditions out of four are satisfied, namely, first, the FIFA World Cup attracts large audience on free-TV; second, the national team is involved and third, it has a special general resonance in Norway.
96. In order to substantiate that the FIFA World Cup has a special general resonance in Norway, the Norwegian authorities employed a methodology consisting in providing average audience ratings (rtg%) and market shares (shr%) based on television audience measurements compiled by TNS-Gallup. These figures were provided for the entire Norwegian population above 12 years old as well as for several groups of the Norwegian population representing persons of both genders and different age groups.52 Namely, these groups, representing both football fans and non-fans, were the male viewers above 12 years, the female viewers above 12 years, all viewers between 12 and 19 years, all viewers between 20 and 29 years, all viewers between 30 and 39 years, all viewers between 40 and 49 years, all viewers between 50 and 59 years as well as all viewers above 60 years of age.
97. The Authority assessed the viewing figures provided and concluded that the methodology employed by Norway in order to show the special general resonance of the FIFA World Cup in that State was not manifestly erroneous but on the contrary it was reasonable and acceptable. The Norwegian method
Page 30
demonstrated that the matches of the FIFA World Cup were generating interest among viewers of different profiles (i.e. different gender and age) as well as for the entire population.
98. In particular, the viewing figures provided show that actually all broadcasts on NRK1 of the 2006 FIFA World Cup had a special general resonance to all groups of the Norwegian population, irrespective of gender and age, as the average audience ratings (rtg%) were considerably above 5% for all groups, with the only exception being the age group 12 to 19 years old (the rtg% for them was 3.5%). In particular, the average viewing rating for men above 12 years was 9.3% whereas for women above 12 years was lower but still high, reaching 5.8%. Furthermore, the average viewing ratings for all age groups above 30 years were ranging from 7.3% till 11.2% which is quite substantial. Especially in respect of the ten most watched games (comprising both “prime” and “non-prime” matches) these percentages range on average from 11.2% to 18.6% for the entire Norwegian population, reflecting the special general resonance of these matches.
99. Similar considerations apply as regards the 2010 FIFA World Cup, for which the actual figures were even higher in general: all broadcasts on TV2 (48 matches out of the 64 of the FIFA World Cup) attracted an average viewing rating ranging between 6.8% to 14.1% which represents the general special resonance of both the “prime” and “non-prime” matches of the FIFA World Cup. In particular, the average viewing rating for men above 12 years was 14.1% whereas for women above 12 years was lower but still high, reaching 7.9%. Furthermore, the average viewing ratings for all age groups above 20 years were ranging from 11.2% till 12.5% which is quite substantial. The special general resonance is manifested by the figures provided for the Norwegian population in respect of the ten most watched games attracting an average viewing rating ranging from 14.9% to 32.5%.
100. Thus, the Authority identified no reason for finding a manifest error in the methodology employed by the Norwegian authorities in order to conclude that the FIFA World Cup in its entirety has a special resonance in Norway.
52 See Annex III of the Notification by Norway attached as Annex A.2 to the Application.
Page 31
101. In the Application FIFA sets out an alternative methodology for measuring the special general resonance and for identifying the football fans and the non- football fans. It argues that the method employed demonstrates that the “non- prime” matches of the FIFA World Cup have commanded a small number of non- fans viewers.
102. The Authority disagrees. First, the alternative and admittedly not self- explanatory methodology set out by FIFA was submitted to the Authority in the course of its assessment of the Norwegian notification. According to the methodology employed by FIFA, it is basically demonstrated that football fans (as defined therein not in a transparent way taking into account football events totally unrelated to the FIFA World Cup such as for example the Norwegian premier league tournament) watch more matches of the FIFA World Cup that non-fans. However, this conclusion just states the obvious and was not helpful for the purposes of the Authority’s assessment. At the same time, the General Court had rejected this methodology as “overly restrictive” and “unsuited to both the structure of the FIFA World Cup and the features that the tournament must have”.53 The Authority thus was not convinced that this method was appropriate and clear to be applied for measuring the special general resonance of the FIFA World Cup in Norway.
103. Second, FIFA’s methodology and the data it generated do not provide any grounds to support that the methodology employed by the Norwegian authorities was manifestly erroneous. Third, even with the FIFA methodology it is demonstrated that several thousands of non-fans viewers were attracted by both the “prime” and “non-prime” matches of the 2006 and 2010 FIFA World Cups. Fourth, the viewing figures referring to the female population are actually evocative of the fact that the FIFA World Cup in its entirety attracts a substantial female audience (admittedly lower than the male audience but this is of no importance).
104. On the basis of the considerations above, the Authority submits that it did not err in not identifying a manifest error in the methodology employed by the
Page 32
Norwegian authorities and their conclusion that the FIFA World Cup has a special general resonance in Norway. Thus, this branch of the second plea put forward by the Applicant should be rejected.
6.4 Proportionality of restrictions on the freedom to provide services, on competition and on the Applicant’s property rights
6.4.1 Preliminary comments 105. In paragraphs 124 to 152 of the Application, FIFA contends that the Authority has committed a manifest error of assessment in holding that the FIFA World Cup in its entirety is of major importance for the Norwegian society as the effects of the Norwegian measures are disproportionate and exceed those which are intrinsically linked to their inclusion on the Norwegian major events’ list. Moreover, FIFA puts forward that its property rights are unduly and severely interfered with and freedom of competition is restricted.
106. This branch of FIFA’s second plea seems to constitute an appeal of the judgments delivered by the Court of Justice in Cases C-205/11 P and C-204/11 P FIFA v Commission. The response to FIFA’s arguments in the present plea has already been provided by the Court of Justice in those cases. The Authority will respond to FIFA’s arguments anew in the present case.
107. As preliminary points the Authority submits, firstly, that, pursuant to consistent case-law, where several rights and fundamental freedoms protected by the EEA legal order are at issue, the assessment of the possible disproportionate nature of a provision of EEA law must be carried out with a view to reconciling the requirements of the protection of those different rights and freedoms and a fair balance between them.54 The European legislature has also conducted this balance of interests in the present case regarding the rights acquired by a broadcaster on an exclusive basis. Recital 48 of the Directive mentions that “[...] it is essential to promote pluralism through the diversity of new production and
53 See Case T-385/07, FIFA v Commission, cited above, paragraph 102. 54 See Case C-283/11 Sky Österreich GmbH v Österreichischer Rundfunk [2013] not yet reported, paragraph 60 and case-law cited therein.
Page 33
programming across the [EEA] and to respect the principles recognised by Article 11 of the Charter of Fundamental rights of the European Union”. Recital 49 highlights the importance of measures taken by the EEA States in order to protect the right to information and to ensure wide access by the public to television coverage of national or non-national events of major importance to society.
108. It seems that FIFA takes issue with exactly this requirement of wide access by the public to broadcasts of major importance of a certain society when it complains about pay-TV companies being denied the right to provide services in respect of these matches.
109. Secondly, as FIFA acknowledges in paragraph 126 of the Application, in its judgment in Case C-205/11 P FIFA v Commission, the Court of Justice stated that “[...] the European Union legislature authorised the Member States to designate certain events which they consider to be of major importance for society in the Member State concerned („event of major importance‟) and expressly authorised, in accordance with the discretion it is granted by the Treaty, obstacles to the freedom to provide services, the freedom of establishment, the freedom of competition and the right to property, which are an unavoidable consequence of such a designation”.55
110. Third, it escapes the Authority’s understanding why a qualified broadcaster which has acquired the rights to the FIFA World Cup (in other words has paid to purchase them) would in the end opt for not actually broadcasting the event, as FIFA means to suggest in paragraph 128 of the Application. In any case, in the same paragraph, it seems that FIFA concedes that the FIFA World Cup is of major importance for the Norwegian society.
111. Fourthly, the Authority also fails to understand what FIFA purports to argue in paragraphs 129 to 132 of the Application. One could suppose that it contests the non-inclusion of the qualifying matches of the FIFA World Cup affecting the matches that the Norwegian national team plays as well. As for the allegation that the Norwegian measures fail to genuinely reflect a concern to attain in a consistent and systematic manner the objective of ensuring wide access
55 See Case C-205/11 P FIFA v Commission, cited above, paragraph 12 (also compare paragraph 22).
Page 34
by the public to television coverage of major events, the Authority stresses that it had a mere power of review of the draft measures proposed by the Norwegian authorities. Its role was to assess whether the inclusion in the list of the events proposed was in compliance with EEA law and not to assess whether even more events than the ones proposed by Norway could also be included.
112. In view of the above, the Authority will examine FIFA’s allegations about the infringement of its rights in turn:
6.4.2 Property rights
113. In respect of the effect of the inclusion of the FIFA World Cup in the Norwegian list of major events, FIFA argues that the elimination of any real competition between qualified and non-qualified broadcasters for the acquisition of the broadcasting rights to the FIFA World Cup impacts detrimentally on the price which FIFA may be able to obtain for granting broadcasting licenses.
114. As shown in paragraphs 62 to 104 above, the FIFA World Cup in its entirety was validly designated as an event of major importance for society and included in the Norwegian list of events of major importance. The Authority submits that the potential reduction in revenues suffered by sport organizations, as submitted by the Norwegian Competition Authority and the Norwegian Football Association,56 falls within the obstacles to the right to property being the inevitable consequence of the valid designation of the FIFA World Cup as an event of major importance for the Norwegian society.
115. Moreover, according to the established case-law of the Court of Justice, the protection of the fundamental right to property is not absolute but it must be viewed in relation to its social function: “[c]onsequently, the exercise of the right to property may be restricted, provided that those restrictions in fact correspond to objectives in the public interest and do not constitute in relation to the aim pursued a disproportionate and intolerable interference, impairing the very substance of the right guaranteed”.57 In this case, the Directive aims at drawing a balance between the
56 Referred to in the Notification by Norway attached as Annex A.2 to the Application on pages 9 and 10. 57 See Case C-205/11 P FIFA v Commission, cited above, paragraph 143 and case-law cited therein.
Page 35
right to property and the right to information in the form of wide public access to television broadcasts of events, national or non-national, of major importance to society.
116. Furthermore, the Norwegian authorities will start applying these measures only to agreements which are entered into after the list comes into force, i.e. the list has no retroactive effect. The lack of retroactive effect is of importance with regard to arguments raised by FIFA relating to violation of its property rights.
117. First, FIFA will take the inclusion of the FIFA World Cup into account when negotiating the acquisition of the rights to the FIFA World Cup and their price in the future.58
118. Second, by way of analogy, the Authority refers to the statement by the Court of Justice in Case C-283/11 Sky Österreich that an economic operator having acquired exclusive rights cannot, in the light of European law, rely on an acquired legal position, protected by its fundamental right to property, on the basis of Article 17(1) of the Charter of Fundamental Rights of the EU, when the Member States were required to transpose Directive 2007/65 (before a certain point in time) requiring Member States to guarantee the right of broadcasters to make short news reports on events of high interest to the public which are subject to exclusive broadcasting rights.59
119. Having regard to the differences between that case and the present one, the Norwegian measures do not apply to already acquired broadcasting rights having asset value, while Case C-283/11 Sky Österreich did so. In this case, therefore, commercial interests or opportunities are at stake, not acquired property rights. The Authority submits that the present case should be viewed in the light of the fact that underlying principle as regards the protection of the fundamental right to property guaranteed by EEA law does not apply to commercial interests or opportunities, the uncertainties of which are part of the very essence of economic activity.60 In other words, even if it might be said that
58 Compare with Case C-283/11 Sky Österreich GmbH, cited above, paragraph 64. 59 See Case C-283/11 Sky Österreich, cited above, paragraph 39. 60 Ibid. paragraph 34.
Page 36
the granting of commercial rights has been an established commercial practice in the past, the granting of these rights for the future is subject to the risks linked to any commercial activity. Thus, FIFA cannot rely on the protection of a fundamental right to property in relation to the price of future broadcasting rights.
120. In view of the reasons explained above (paragraphs 62 to 104), the Authority did not commit a manifest error in approving the inclusion of the FIFA World Cup in its entirety in the Norwegian list of major events. FIFA’s allegations about a disproportionate and intolerable interference with its property rights are based on an incorrect assessment.61
121. Moreover, FIFA did not adduce any evidence in order to substantiate that the obstacles to its alleged property rights exceed those which are intrinsically linked to their inclusion on the Norwegian events’ list.
122. Finally, it is noted that the Norwegian measures will not destroy the commercial value of these rights as FIFA is not obliged to sell them on whatever conditions and second it is protected by the EEA competition rules against collusive practices.62 Furthermore, as already mentioned, a special dispute settlement mechanism has been put in place regarding the price of the resale of the rights under the auspices of the Norwegian Media Authority.
123. In view of the above, the Authority invites the Court to reject the arguments brought by FIFA referring to the infringement of its property rights.
6.4.3 Freedom to provide services
124. As regards the freedom to provide services, FIFA complains about the choice of words in Authority’s Decision 309/13/COL (“appear proportionate” as opposed to “are proportionate”) and argues that the restrictions on the freedom to provide services largely exceed the intrinsic effects which may be deemed to be
61 Case C-205/11 P FIFA v Commission, cited above, paragraph 145. 62 Compare with the statement of the Court of Justice in Case C-205/11 P FIFA v Commission, cited above, paragraph 146.
Page 37
inevitably entailed by the inclusion of the entire FIFA World Cup on the Norwegian list.
125. The Authority submits that similar considerations also apply with respect to obstacles to freedom to provide services. Such restrictions on freedom to provide services are justified since they are intended to protect the right to information and to ensure wide public access to television broadcasts of events, national or non-national, of major importance to society, subject to the additional conditions that they are appropriate for attaining the objective which they pursue and do not go beyond what is necessary in order to attain it.63
126. The Authority submits that these conditions are met in the case of the Norwegian measures. The FIFA World Cup was validly designated as an event of major important to society and any restrictions on the freedom to provide services are appropriate, necessary and proportionate and are inherently linked to the valid designation of the FIFA World Cup as an event of major importance for the Norwegian society. Also FIFA did not provide any evidence to substantiate that these restrictions largely exceed the intrinsic effects which may be deemed to be inevitably entailed by the inclusion of the entire FIFA World Cup on the Norwegian events’ list.
127. In view of the above, FIFA’s arguments with regard to restrictions on freedom to provide services should be also be rejected.
6.4.4 Freedom of competition
128. In this section of its argumentation FIFA repeats its complaints about the total exclusion of non-qualified broadcasters from competing about the rights.
129. The Authority fails to understand what exactly FIFA is challenging by attacking “the actual total exclusion of competition of non-qualified broadcasters [...] since none of the listed events can be broadcast by any of them on an exclusive basis”.64 This argument touches upon the mere rationale behind the Directive itself: the latter aims at promoting pluralism and wide access of the general public to
63 Ibid. paragraph 158. 64 See paragraphs 142 and 143 of the Application.
Page 38
information. The purpose of its adoption is to ensure that EEA citizens will have access to broadcasting of events of major importance without having to pay additional pay-TV fees.
130. Pay-TV channels have opted for a business model which by definition excludes them from having an interest in competing for these rights. At the same time, examples from the Norwegian broadcasting market show that a pay-TV broadcaster could possibly enter the market with another business model, i.e. as a free-to-air, advertising-based channel, in order to broadcast certain programmes. For instance, for the 2012 European Cup (EURO 2012) a pay-TV operator, Canal+ (later renamed to CMore), having acquired the broadcasting rights initially, subsequently distributed one third to TV2 (free-TV channel), one third to NRK (free-TV channel) and one third was broadcast by Canal9 which was the free-to- air channel of Canal+, established for the purpose of broadcasting the EURO 2012. This example shows that alternative business models for pay-TV operators, on a permanent or temporary basis, can in fact be viable and operational.
131. In paragraph 142 of the Application, FIFA claims that non-qualified broadcasters are excluded from the possibility to acquire the right to the listed events “even where qualified broadcasters do not wish to acquire the broadcasting rights of the FIFA World Cup”. This statement does not reflect reality as a non-qualified television channel may exercise an exclusive right to a listed event if no requests for resale have been received from any qualified broadcaster within ten months before the event takes place or no qualified television channels are willing to acquire the broadcasting rights at market price.65
132. In view of the above, the Authority invites the Court to reject this branch of the second plea too.
6.4.5 Proportionality in general
133. The Authority submits that in recital 18 of the contested decision several factors supporting and reinforcing the proportionality of the Norwegian measures are enumerated. An equivalent paragraph also exists in the decisions adopted by
65 See Notification by Norway, Section 5-3(e), page 3, attached as Annex A.2 to the Application.
Page 39
the Commission regarding the list of events of major importance of other EEA States. Even though these factors are analytically explained in the memo (in Annex D.1), the Authority will briefly explain how they contribute to the proportionality of the Norwegian measures.
134. As regards the requirement as to the territorial coverage, the definition of a potential coverage improves competition for the rights because a larger proportion of broadcasters are eligible to bid on the rights included in the list. At the same time, the cultural policy rationale for setting up the list is maintained in a satisfactory manner since the events are made available on channels that 90% of viewers in Norway potentially access. This criterion in practice covers all channels that are available in the basic tier subscription packages from the satellite operators.
135. It is noted that the Norwegian Ministry made reference to the fact that, after the closure of the analogue terrestrial network, the majority of television viewers are customers with television distributors, where it is not possible to receive television services without a basic tier subscription or paying a basic fee. The Authority’s thus accepted the Norwegian authorities’ proposal that free television should be defined as television channels that are available without any form of payment other than a licence fee and/or basic tier subscription or basic fee. The basic tier subscription fee shall be understood as the least expensive channel package that the television distributors offer or require a subscription to in order to receive television signals. This includes all channels that are available in a basic tier subscription package or can be freely selected in a basic tier package at no additional cost.66
136. In paragraph 147 of the Application, FIFA contests the proportionality of the arrangements provided for the relicensing of exclusive rights by non-qualified broadcasters to the qualified ones as well as the proportionality of the mechanism for dispute resolution between qualified and non-qualified broadcasters in respect of the price of the rights. The Authority submits first that these statements by
66 Potentially four free-to-air broadcasters would qualify today (NRK, TV2, Viasat TV3/TV4 and SBS Media).
Page 40
FIFA are totally unsubstantiated. Second, the Norwegian measures make provisions for situations in which there might be no qualifying buyers for the events listed, in order to ensure that the non-qualifying broadcaster is able to exercise its rights so as to avoid a situation in which the event listed would not be broadcast at all. Further, a possibility for the non-qualified broadcaster has been introduced to sell the rights to parts of an event if it does not receive any offers from the qualified broadcasters. As regards the dispute resolution mechanism, the Authority considers that it fulfils all proportionality requirements since in case of dispute the remuneration for the resale of the rights will be based on market principles in accordance with the relevant guidelines issued by the Norwegian Media Authority.67
137. The fact that other EEA States have not included the FIFA World Cup in its entirety in their national lists of major events is irrelevant. As clearly stated by the Court of Justice, it is for the Member States alone to determine the events which are of major importance; they have a broad discretion in this respect due to the considerable social and cultural differences that exist across the EEA.68
138. Finally, the Authority stresses that the list will enter into force on 1 July 2014 in order to ensure that any contract negotiations are not adversely affected and it has no retroactive effect. During the pre-notification phase, the Authority underlined that, as most of the broadcasting rights for the FIFA World Cup had already been sold until 2022, the list would have no actual effect until that point in time. The Norwegian authorities responded that it had considered giving retroactive effect to the list but at the end, on the grounds of fairness, it decided otherwise.
139. In view of the above, the Authority submits that the above mentioned factors enhance the proportionality of the Norwegian measures, and thus all allegations to the contrary by FIFA are unfounded and should be rejected.
67 See Notification by Norway, Section 5-3(d) attached as Annex A.2 to the Application. 68 See Case C-205/11 P, FIFA v Commission, cited above, paragraphs 14 and 15.
Page 41
7 CONCLUSION
140. Accordingly, the Authority requests the Court to:
1. Dismiss the Application.
2. Order the Applicant to pay the costs.
Xavier Lewis Maria Moustakali
Agents of the EFTA Surveillance Authority
Signed version!
Page 42
SCHEDULE OF ANNEXES
Referred to Number of in this pages No Description defence at paragraph(s)
7, 9, 12, 44, Internal memorandum dated 5 February D.1 52, 58, 68, 31 2013 (Event no. 661783) 133
Commission’s Working Document CC D.2 TVSF (97) 9/3 – Commission’s Discussion 8 16 Paper DOC CC TVSF (2000) 6
Authority’s e-mail dated 19 February 2013 D.3 12 8 (Event no. 663389)
Minutes of the 1st EFTA Contact D.4 14 3 Committee meeting (Event no. 677724)
Data submitted by Norwegian authorities on 27 March 2011, 31 May 2012 and D.5 46 7 17 December 2012 (Event nos. 631963, 691961 and 691962 respectively )
Internal memorandum dated 3 July 2013 D.6 50, 88 4 (Event no. 677453)
Press release by Telenor dated 9 November 2001 in Norwegian D.7 71 4 (accompanied by partial translation into English)
Press release by TV2 dated 16 April 2012 D.8 in Norwegian (accompanied by partial 74 2 translation into English)