CJEC, March 18, 1980, No 52-79

1 By a judgment of 23 February 1979, which was received at the Court on 3 April 1979, the tribunal correctionnel, liege, referred two questions under article 177 of the EEC treaty for a preliminary ruling on the interpretation of articles 59 and 60 of the treaty with regard to certain problems concerning the transmission of commercial advertisements by cable television distributors.

2 Those questions have arisen out of criminal proceedings brought before the tribunal de police, liege, against three persons for infringement of a prohibition on the transmission of television broadcasts in the nature of commercial advertising and implicating two Belgian companies, vicariously liable in civil law for the three accused, who are officers of those companies. Those proceedings were begun on the particular initiative of three associations representing consumers or cultural interests and by a certain number of natural persons who intervened as civil parties before the tribunal de police. When that Court acquitted the accused and the companies liable in civil law, the three associations and certain other civil parties as well as the ministere public appealed to the tribunal correctionnel.

3 It is apparent from the file that the two companies in question provide, with the authority of the Belgian administration, a cable television diffusion service covering part of Belgium. Television sets belonging to subscribers to the service are linked by cable to a central aerial having special technical features which enable Belgian broadcasts to be picked up as well as certain foreign broadcasts which the subscribers cannot always receive with a private aerial, and which furthermore improve the quality of the pictures and sound received by the subscribers.

4 The prosecutions relate to the diffusion in Belgium by means of the system of cable television installed there of broadcasts effected by broadcasting stations established outside Belgium to the extent to which they contain commercial advertising material. Belgian legislation prohibits national radio and television broadcasting organizations, which have a legal monopoly on broadcasting, from making broadcasts in the nature of commercial advertising. In regard to cable television, article 21 of the royal decree of 24 December 1966 (moniteur belge of 24 January 1967) also prohibits the transmission of broadcasts in the nature of commercial advertising.

5 The judgment making the reference states that in practice cable television distributors have disregarded that prohibition and have transmitted foreign programmes without excising advertisements ; this practice has been tolerated by the Belgian government, which has not imposed any penalty or withdrawn any authorizations ; it also states that a large number of Belgian television viewers can pick up foreign programmes without the help of the relay systems set up by the cable television diffusion companies.

6 It is in the light of those factual circumstances that the tribunal correctionnel has formulated its questions relating to articles 59 and 60 of the treaty. It believes that the application of the prohibition in question might have an affect upon the freedom to provide services at the community level. In fact, according to the tribunal, foreign broadcasting organizations derive an appreciable part of their revenue from advertising placed with them by advertisers so that the excision of advertisements in Belgium might cause those advertisers to restrict or discontinue their commercial advertising ; furthermore, advertisers, whether traders or manufacturers, established in neighbouring countries would obtain a more restricted coverage of the Belgian market to which they hitherto directed their advertising and on which they offered their services.

7 The questions asked by the tribunal correctionnel are worded as follows:

''1. Having regard to the judgment of the Court of justice of 30 April 1974 in case 155-73, sacchi, must article 59 of the treaty of Rome be interpreted as prohibiting all national rules which prohibit the transmission of advertisements by cable television distribution companies even though it is still possible and lawful to receive such advertisements naturally within the receiving zones of foreign broadcasting stations, having regard in particular to the fact that:

(a) such rules would introduce discrimination based on the geographical locality of the foreign broadcasting station which would be able to transmit advertisements only within its natural receiving zone, as those zones may, because of the differences in density of population, be of very different interest from an advertising point of view,

(b)such rules would introduce a restriction disproportionate to the objective in view because that objective - in other words, a prohibition on television advertising - could never be wholly achieved because of the existence of the natural receiving zones ;

2.having regard to the judgment of the Court of justice of 3 December 1974 in case 33-74, van binsbergen, must articles 59 and 60 of the treaty of Rome be interpreted as having direct effect against all national rules in so far as such rules do not create any formal discrimination against the person providing services on the ground of his nationality or of his place of residence (in the present instance, the prohibition on retransmitting advertisements)?

''

8 Before examining those questions the Court recalls that it has already ruled in its judgment of 30 April 1974 (case 155-73, sacchi, (1974) ecr 490) that the broadcasting of television signals, including those in the nature of advertisements, comes, as such, within the rules of the treaty relating to services. There is no reason to treat the transmission of such signals by cable television any differently.

9 However, it should be observed that the provisions of the treaty on freedom to provide services cannot apply to activities whose relevant elements are confined within a single member state. Whether that is the case depends on findings of fact which are for the national Court to establish. Since the tribunal correctionnel has concluded that in the given circumstances of this case the services out of which the prosecutions brought before it arose are such as to come under provisions of the treaty relating to services, the questions referred to the Court should be examined from the same point of view.

10 The central question raised by the national Court is whether articles 59 and 60 of the treaty must be interpreted as prohibiting all national rules against the transmission of advertisements by cable television to the extent to which such rules do not make any distinction based on the origin of the advertisements, the nationality of the person providing the services or his place of establishment.

11 According to the first paragraph of article 59 of the treaty restrictions on freedom to provide services within the community shall be progressively abolished during the transitional period in respect of nationals of member states of the community. The strict requirements of that provision involve the abolition of all discrimination against a provider of services on the grounds of his nationality or of the fact that he is established in a member state other than that where the service is to be provided.

12 In view of the particular nature of certain services such as the broadcasting and transmission of television signals, specific requirements imposed upon providers of services which are founded upon the application of rules regulating certain types of activity and which are justified by the general interest and apply to all persons and undertakings established within the territory of the said member state cannot be said to be incompatible with the treaty to the extent to which a provider of services established in another member state is not subject to similar regulations there.

13 From information given to the Court during these proceedings it appears that the television broadcasting of advertisements is subject to widely divergent systems of law in the various member states, passing from almost total prohibition, as in Belgium, by way of rules comprising more or less strict restrictions, to systems affording broad commercial freedom. In the absence of any approximation of national laws and taking into account the considerations of general interest underlying the restrictive rules this area, the application of the laws in question cannot be regarded as a restriction upon freedom to provide services so long as those laws treat all such services identically whatever their origin or the nationality or place of establishment of the persons providing them.

14 A prohibition of the type contained in the Belgian legislation referred to by the national Court should be judged in the light of those considerations. It must be stressed that the prohibition on the transmission of advertisements by cable television contained in the royal decree referred to above cannot be examined in isolation. A review of all the Belgian legislation on broadcasting shows that that prohibition is the corollary of the ban on the broadcasting of commercial advertisements imposed on the Belgian broadcasting organizations. This is also the way in which the judgment making the reference sets out the relevant legislation, indicating that the royal decree prohibits the transmission of advertisements in order to maintain conformity with the scheme imposed on the national broadcasting organizations.

15 In the absence of any harmonization of the relevant rules, a prohibition of this type falls within the residual power of each member state to regulate, restrict or even totally prohibit television advertising on its territory on grounds of general interest. The position is not altered by the fact that such restrictions or prohibitions extend to television advertising originating in other member states in so far as they are actually applied on the same terms to national television organizations.

16 The answer must therefore be that articles 59 and 60 of the treaty do not preclude national rules prohibiting the transmission of advertisements by cable television - as they prohibit the broadcasting of advertisements by television - if those rules are applied without distinction as regards the origin, whether national or foreign, of those advertisements, the nationality of the person providing the service, or the place where he is established.

17 In view of that answer the question concerning the consequences which may arise from the direct applicability of articles 59 and 60 of the treaty where there is conflict between those provisions and national legislation has become devoid of object.

18 The national Court further asks if rules prohibiting the transmission of advertisements by cable television are not a measure which is dispro portionate in relation to its intended purpose owing to the fact that the prohibition on the broadcasting of commercial advertising by television remains relatively ineffective in view of the existence, in the member states concerned, of the natural reception zones of certain foreign stations.

19 Since the transmission of television signals by cable television enables them to be diffused over a wider area and improves their penetration, restrictions or prohibitions imposed on television advertising within its territory by a member state do not lose their justification because of the fact that reception of foreign broadcasting stations is also possible throughout the national territory, or in certain areas thereof, without the intervention of any cable television system. The answer to the question asked must therefore be in the negative.

20 Finally, the national Court wishes to know whether national rules prohibiting the transmission of advertisements by cable television create discrimination against foreign broadcasting stations owing to the fact that their geographical location allows them to broadcast their signals only within the natural reception zone.

21 The national Court is referring in this question to the spatial limits on the diffusion of television programmes depending, on the one hand, on the natural relief of the ground and of built-up areas and, on the other, on the technical features of the broadcasting systems used. These natural and technical factors undoubtedly lead to differences as regards reception of television signals in view of the correlation between the location of broadcasting stations and television receivers. However, such differences, which are due to natural phenomena, cannot be described as ''discrimination ''within the meaning of the treaty ; the latter regards only differences in treatment arising from human activity, and especially from measures taken by public authorities, as discrimination. Moreover, it should be pointed out that even if the community has in some respects intervened to compensate for natural inequalities, it has no duty to take steps to eradicate differences in situations such as those contemplated by the national Court.

22 The answer must therefore be that national rules prohibiting the transmission by cable television of advertisements cannot be regarded as constituting either a disproportionate measure in relation to the objective to be achieved, in that the prohibition in question is relatively ineffective in view of the existence of natural reception zones, or discrimination which is prohibited by the treaty in regard to foreign broadcasters, in that their geographical location allows them to broadcast their signals only in the natural reception zone.

23 The costs incurred by the government of the federal republic of Germany, the government of the Grand duchy of Luxembourg, the government of the united kingdom, the government of the French republic and the commission of the European Communities, which have submitted observations to the Court, are not recoverable. As these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the proceedings pending before the national Court, the decision on costs is a matter for that Court.

On those grounds,

The Court,

In answer to the questions referred to it by the tribunal correctionnel, liege, by judgment of 23 February 1979, hereby rules:

1. Articles 59 and 60 of the EEC treaty do not preclude national rules prohibiting the transmission of advertisements by cable television - as they prohibit the broadcasting of advertisements by television - if those rules are applied without distinction as regards the origin, whether national or foreign, of those advertisements, the nationality of the person providing the service, or the place where he is established.

2. National rules prohibiting the transmission by cable television of advertisements cannot be regarded as constituting either a dispro portionate measure in relation to the objective to be achieved, in that the prohibition in question is relatively ineffective in view of the existence of natural reception zones, or discrimination which is prohibited by the treaty in regard to foreign broadcasters, in that their geographical location allows them to broadcast their signals only in the natural reception zone.