Explanatory Memorandum to COM(2016)287 - Amendment of Directive 2010/13/EU on the coordination of certain legal provisions in Member States concerning the provision of audiovisual media services

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1. CONTEXT OF THE PROPOSAL

Reasons for and objectives of the proposal

The audiovisual media landscape is changing at a rapid pace due to ever-increasing convergence between television and services distributed via the internet. Consumers increasingly access on-demand content via smart/connected TVs and portable devices. Young consumers, particularly, watch videos, including user-generated content, on the internet. Traditional broadcasting in the EU remains strong in terms of viewership, advertising revenues, and investment in content (around 30% of revenues). However, new business models are emerging. Broadcasters are extending their activities online and new players offering audiovisual content via the internet (e.g. video-on-demand providers and video-sharing platforms) are getting stronger and competing for the same audiences. However, TV broadcasting, video-on-demand and user-generated content are subject to different rules and varying levels of consumer protection.

The Digital Single Market (DSM) strategy for Europe 1 calls for a modernisation of the Audiovisual Media Services Directive (AVMSD) 2 to reflect these market, consumption and technological changes. It requires the Commission to focus on the scope of application of the AVMSD and on the nature of the rules applicable to all market players 3 (in particular those for the promotion of European works 4 ), the protection of minors and advertising rules.

Pursuant to this commitment and in line with ‘Better Regulation’ requirements 5 , the Commission carried out an ex post evaluation (also called ‘REFIT’). It assessed the effectiveness, efficiency, relevance, coherence and EU added-value of the AVMSD, and pinpointed areas where there is potential for simplification, without undermining the objectives of the AVMSD.

Consistency with existing policy provisions in the policy area

Council Directive 89/552/EEC as amended by Directives 97/36/EC and 2007/65/EC and codified in Directive 2010/13/EU (AVMSD), covers both rules for ‘television broadcasting’ and for on-demand audiovisual media services. This proposal takes into account changes in the audiovisual landscape since the last revision to ensure that the AVMSD will provide a modernised, flexible and forward looking legal framework.

Consistency with other Union policies

This proposal complements existing EU law, in particular the e-Commerce Directive 2000/31/EC, Directive 2003/33/EC on advertising and sponsorship of tobacco products, Directive 2005/29/EC on unfair commercial practices and Directive 2011/93/EU on combating the sexual abuse and sexual exploitation of children and child pornography.

In December 2015, the Commission adopted a proposal for a European Accessibility Act 6 , which sets accessibility requirements for a wide range of products and services including audiovisual media services. Therefore, the revision of the AVMSD does not address the issue of accessibility.

1.

e-Commerce Directive 2000/31/EC (ECD)


The current AVMSD does not apply to user-generated content offered on video-sharing platforms since the providers of video-sharing platforms services often do not have editorial responsibility for the content stored on those platforms. In many cases these services are subject to the e-Commerce Directive (ECD), as they constitute information society services.

The ECD does not require intermediaries to monitor content hosted by them; in fact, it prohibits Member States from imposing a general obligation to monitor or to engage in active fact-finding indicating illegal activity (Article 15). Under the ECD, intermediaries – and more specifically providers of so-called hosting services – are exempt from liability for any illegal information that they host (Article 14). Providers can only qualify as hosting service providers within the meaning of the ECD where they have neither knowledge of nor control over the information in question. This exemption from liability is only available if providers ensure that, if illegal content is identified, they take expeditious action to disable access to or remove it.

This proposal would complement the ECD on some points, as explained in section 5 below, while leaving the abovementioned provisions of the ECD, as well as its Article 3 on the internal market, unaffected.

2.

Directive on advertising and sponsorship of tobacco products 2003/33/EC


Directive 2003/33/EC prohibits advertising for cigarettes and other tobacco products in the press and other printed publications, in radio and in information society services. It also bans sponsorship, by tobacco companies, of radio programmes and of cross-border events. Moreover recital 14 of Directive 2003/33/EC makes it clear that all forms of audiovisual commercial communications for cigarettes and other tobacco products in broadcast services are prohibited by the AVMSD. Such restrictions have, through successive amendments, been extended to cover all audiovisual commercial communications, including sponsorship and product placement in audiovisual media services (Articles 9(1)(d), 10(2) and 11(4)(a) AVMSD). In addition, pursuant to Article 20(5)(e) of Directive 2014/40/EU on the manufacture, presentation and sale of tobacco and related products 7 , the prohibitions applicable to communications concerning tobacco products under the AVMSD also apply to electronic cigarettes and refill containers. The prohibition on commercial communications in respect of tobacco and related products are recalled in a recital of the Directive now proposed.

3.

Unfair Commercial Practices Directive 2005/29/EC (UCPD)


The UCPD is the main body of legislation on business-to-consumer commercial practices, such as misleading advertising, in the EU. It applies to all business to consumer commercial practices, before, during and after a transaction has taken place, and online as well as offline.

The UCPD provides three levels of consumer protection:

The black-list of 31 specific commercial practices which are prohibited in all circumstances;

Misleading and aggressive practices – to be assessed on a case-by-case basis;

General prohibition of unfair practices contrary to professional diligence – to be assessed on a case-by-case basis.

4.

Directive on combating the sexual abuse and sexual exploitation of children and child pornography 2011/93/EU


The Directive on combating the sexual abuse and sexual exploitation of children and child pornography harmonises throughout the Union criminal offences relating to sexual abuse committed against children, the sexual exploitation of children and child pornography. It also lays down minimum sanctions.

Consistency with international law obligations

21 EU Member States are contracting parties to the 1989 European Convention on Transfrontier Television (CETS No. 132) which was amended by a 1998 Protocol. The Union is not a party to the Convention.

The Convention allows contracting parties to apply stricter or more detailed rules to programme services transmitted by broadcasters under their jurisdiction.

To the extent that some of the existing AVMSD rules are less strict than the Convention rules, implementation of the AVMSD rules by EU Member States which are contracting parties to the Convention could already result in some differences between EU Member States depending on whether they are contracting parties to the Convention in respect of their international obligations. This will also be the case for some amendments contained in this proposal, which would introduce in the AVMSD further rules that are less strict than the Convention rules.

For the matters covered by the AVMSD the Union has acquired exclusive competence to enter into international agreements. Any changes of the obligations stemming from the Convention would thus require action on the part of the Union.

2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

Legal basis

The AVMSD is based on the EU's powers to coordinate Member States laws to bring about the freedom to provide services in the internal market (Article 53(1) TFEU in conjunction with Article 62 TFEU).

Subsidiarity (for non-exclusive competence)

The EU-wide dimension of the audiovisual market is constantly increasing, in particular due to online growth and the fact that TV channels are becoming more international. At the end of 2013, 5 141 TV channels (not counting local channels and windows) were established in the EU. Of these, Almost 1989 of them targeted foreign markets (either EU or extra-EU). This share had increased from 28 % in 2009 —year of implementation— to 38 % in 2013. As far as video-on-demand services are concerned, 31 % of the video-on-demand services available in Member State on average are established in another EU country (2015). This underpins the continued added value of the EU intervention.

The proposal complies with both the subsidiarity and proportionality principles by preserving, in general, a minimum harmonisation approach and improving the derogation and circumvention mechanisms. This will allow Member States to take their national circumstances into account. Member States have, in practice, adopted stricter rules, in particular as regards the definition of on-demand audiovisual media service, the setting-up of national regulatory authorities, the promotion of European works, the protection of minors and commercial communications.

Given that the AVMSD provides minimal harmonisation, the existing rules can only be simplified at EU level.

As regards extending the scope of the AVMSD to video-sharing platforms, EU action ensures consistency with the services already covered by that Directive. Maximum harmonisation in this field prevents any potential future fragmentation resulting from national intervention.

Proportionality

As stated above, by preserving the minimum harmonisation approach and cooperation mechanisms, the proposal will comply with the proportionality principle.

Choice of the instrument

The proposed Directive recommends the use of co-regulation and self-regulation in particular with regard to the protection of minors, the fight against hate speech and commercial communications. Such regimes are deemed to be broadly accepted by the main stakeholders and provide for effective enforcement.

3. RESULTS OF EX POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS

Ex post evaluations/fitness checks of existing legislation

The overall conclusion is that the AVMSD objectives are still relevant. The evaluation found that the country of origin principle has enabled the development and free circulation of audiovisual media services across the EU, with legal certainty and resulted in lower compliance costs for providers and more choice for consumers.

The REFIT evaluation concluded that there is scope for simplification, specifically of the procedures that support the application of the ‘country of origin’ (COO) principle (i.e. the criteria determining jurisdiction over providers and the derogation and cooperation procedures limiting freedom of reception and retransmission in specific cases) and of some commercial communications rules. Some other rules are no longer suited to achieving the policy objectives, primarily due to market developments and changes in viewing patterns. The Directive is also being simplified by aligning the rules on protection of minors for TV broadcasting and on-demand services.


Stakeholder consultations

In 2013, the Commission published the Green Paper 8 "Preparing for a Fully Converged Audiovisual World: Growth, creation and values" and invited stakeholders to share their views on the changing media landscape and borderless internet in particular on market conditions, interoperability and infrastructure, and implications for EU rules. The outcomes of the Green Paper are reflected in the feedback document and executive summary of the replies published by the Commission in September 2014 9 .

With a view to the current revision of the AVMSD, the Commission carried out a public consultation 10 called ‘The AVMSD — a media framework for the 21st century’ which took place from 6 July 2015 to 30 September 2015.

The main results when it comes to policy options for the future were:

– convergence of views across stakeholders regarding the need for possible changes of the rules on the scope of application of the Directive, although there was no common pattern or clarity among stakeholders as regards the way forward;

– convergence of views on the need to ensure the independence of national regulators;

– support across stakeholders for maintaining the status quo as regards the country of origin principle; must-carry/findability; accessibility for persons with disabilities; rules on major events for society, short news reports and right of reply;

– no clear consensus among stakeholders on commercial communications, protection of minors or the promotion of European works.

The following trends emerged among different groups of contributors:

– There was a call from a fair share of representatives of the broadcasting sector to ensure a level playing field either by regulating new services and/or ensuring more flexibility of existing rules.

– Consumers' organisations called for strengthening of the AVMSD rules aimed at protecting viewers, particularly vulnerable viewers.

– The internet, telecom and information and communication technology (ICT) industries called for refraining from new regulation, in order to preserve innovation.

– The content industry called for strengthening of the rules aimed at promoting European works, across all audiovisual media services.

Collection and use of expertise

The Commission relied on the following external expert advice:

– Policy recommendations from other EU institutions, in particular the European Parliament 11 , the Council 12 , the European Economic and Social Committee 13 and the Committee of the Regions 14 .

– Data gathering on the AVMSD cost and benefits 15 . The questionnaire was drafted by a task force of Member States audiovisual regulators convened by the European Commission. It was submitted to Member States regulators in the European Regulators Group for Audiovisual Media Services (ERGA 16 ), to the relevant sectors of the industry and to consumer organisations. The questionnaire was sent in May/June 2015. It asked about the benefits and downsides of certain AVMSD rules and sought quantitative evidence in terms of annual revenue or direct and indirect costs of compliance. It covered rules on:

5.

1. Commercial communications


6.

2. European works


7.

3. The protection of minors


8.

4. The country of origin principle


The reference period for the quantitative questions was 2010 to 2014, inclusive.

The survey attracted 107 replies: 40 from commercial broadcasters (38 %), 20 from public broadcasters (19 %), 18 from video-on-demand providers (17 %), 12 from national associations focusing on the protection of minors (12 %), 10 from national associations representing independent producers (10 %), and 4 from consumer association (4 %). One association representing broadcasters and one representing sales houses also participated. The respondents are established in 19 Member States.

– Studies by and opinions of the European Regulators Group for Audiovisual Media Services (ERGA). In its 2015 work programme, ERGA committed itself to delivering analyses and reports on four main topics: the independence of audiovisual regulatory authorities; material jurisdiction in a convergent audiovisual world; protecting minors in a converged environment; and tackling the issue of territorial jurisdiction in the EU context. Each topic was dealt with by sub-groups comprising ERGA members. The first three reports were adopted via written procedure (in line with Article 11 of the ERGA Rules of Procedure) in December 2015. The report on territorial jurisdiction will be adopted in the course of 2016.

– External studies 17 on alcohol advertising exposure, impact of online marketing on children, independence of audiovisual regulators, self- and co-regulation and standardisation:

– A study on Alcohol advertising exposure, to assess whether rules on audiovisual commercial communication for alcoholic beverages have given minors the level of protection required 18 .

– A study on the impact of marketing through social media, online games and mobile applications on children's behaviour. The final report will be published in May 2016 19 .

– A study on the independence of audiovisual regulators, updating a previous study on independence of regulatory authorities. It reports on recent changes and developments in Member States and candidate countries as regards the independence and efficient functioning of the audiovisual media services regulatory bodies. The final report was published 20 on 8 December 2015.

– A study on Self-regulation that reviews existing self-regulation approaches in a range of Member States and aims at providing information about relevant evidence of existing schemes and their effectiveness. The final report is due in the second quarter of 2016.

– Four Studies on survey and data gathering to support the impact assessment of a possible new legislative proposal on the AVMSD commissioned under the Framework Contract EAC-22-201 21 . These cover: commercial communication, protection of minors, cultural diversity and media freedom/public interest and access for persons with disabilities. The draft final reports of the study will be sent to the Commission in the second quarter of 2016.

– Two reports of the European Audiovisual Observatory (EAO) (‘Study on data and information on the costs and benefits of the Audiovisual Media Service Directive (AVMSD)’ 22 and ‘On-demand markets in the European Union —2014 and 2015 developments’ 23 ) carried out in the context of Framework Contract PN/2011-27/A6. These two reports focus on:

the measurement of audiences;

online advertising in the EU;

the EU subscription video-on-demand market in 2014;

the visibility of films in on-demand services;

the proportion of European fiction works on a sample of TV channels;

on-demand audiovisual services, including revenues and investment in original programming;

linear audiovisual services, including revenues and investment in original programming

Impact assessment

9.

The executive summary of the Impact assessment and the positive opinion of the Regulatory Scrutiny Board can be found on the website of the Commission: XXX


The following options have been examined (for each section, the preferred option is highlighted):

Options addressing the problem of insufficient protection of minors and consumers in video-sharing platforms

10.

Option A encourages self-regulation for protection of minors and consumers on video-sharing platforms


Option B imposes an obligation of means on video-sharing platforms for protection of minors and hate speech, implemented through co-regulation.


Options addressing the problem of the lack of a level playing field and internal market weaknesses

(a) Promotion of European works

Option A gives more flexibility to both TV broadcasting and on-demand services in the way they implement the obligations to promote European works.

Option B maintains the status quo for TV broadcasting and reinforces the rules for on-demand service providers.

(b) Protection of minors in on-demand services

Option A increases the level of protection of minors for on-demand audiovisual media services, simplifies the notion of harmful content and encourages EU co-regulation on content descriptors.

(c) Country of origin principle

Option A simplifies and improves jurisdiction rules and cooperation procedures

(d) Independence of regulators

Option A requires Member States to have an independent regulatory authority and sets a number of requirements to support their independence and effectiveness. ERGA coordination and advisory role is reinforced and embedded in the AVMSD.

Option addressing the problem of the rules on commercial communications no longer fit for purpose

Option A makes some of the rules for audiovisual commercial communications more flexible.

The combination of preferred options is deemed to strike the best balance between the need to introduce flexibility with respect to the current level of regulation and ensuring adequate consumer protection.

On the one hand, the industry will benefit from more flexible quantitative rules on commercial communications. The increased efficiency of the country of origin principle and the requirements for the independence of regulators would improve the business environment in which audiovisual players operate.

On the other hand, consumers will be guaranteed a high level of protection through the limited extension of the AVMSD to video-sharing platforms and the reinforcement of the requirements applicable to on-demand services in terms of the protection of minors. Consumers will also benefit from a greater access to European works in on-demand services.

All options take into account, where appropriate, the need for flexibility for the industry by considering possible implementation via self and/or co-regulation (scope of application, information on harmful content).

Most of the options complement each other. For example, the independence of regulators will be of the utmost importance if Members States decide to entrust them with the application of the new rules regarding video-sharing platforms. Also the potential increase in audiovisual media service providers' revenues deriving from the greater flexibility of quantitative rules on advertising will release a potential for an increased contribution to the production of European works.

The combination of options achieves a more level playing field between the different players in the audiovisual media market. This is for instance realised by levelling up certain requirements for on-demand services and video-sharing platforms in relation to the protection of consumer or promotion of European works while providing more flexibility to TV broadcasting services on certain rules on commercial communications.

Regulatory fitness and simplification

The ex post evaluation identified commercial communications as one area where more flexibility could be provided in particular as regards TV broadcasters.

The market for TV broadcasting has evolved and there is a need for more flexibility with regard to audiovisual commercial communications, in particular for quantitative rules for linear audiovisual media services, product placement and sponsorship. The emergence of new services, including without advertising, has led to a greater choice for viewers, who can easily switch to alternative offers. Product placement has the potential to generate substantial additional resources for media service providers. The regulatory framework has to be aligned to this new context, namely via more flexibility with respect to the rules for broadcasting services. Against this backdrop, the proposal allows (in certain circumstances) product placement and introduces more flexibility as regards the quantitative rules. At the same time, the proposal takes into account evidence 24 collected on the effect that product placement can have on children by continuing to limit their exposure to such content.

As regards possible savings for service providers, it would be limited. Advertising scheduling is a core component of broadcast programming and the quantitative rules imposed by the AVMSD are only a small part of a large number of parameters taken into account in TV scheduling strategies aiming at optimising audience and revenue. The costs associated with broadcast programming, including IT costs, are ‘business as usual’, i.e. costs endured even in the absence of the AVMSD.

As regards national regulatory authorities, there would not be any incremental administrative cost for them. Currently, regulators' monitoring and enforcement activities with respect to the 20% limitation of advertising per hour on television amount to up to EUR 1 million 25 . As regards product placement and sponsorship rules, these costs amount respectively up to EUR 2.2 million and EUR 2.1 million per year at EU level 26 . As an important share of these costs derive from the application of subjective criteria, such as the undue prominence of product placement, regulators will certainly lower their current costs. It is however not possible to quantify precisely these cost savings.

As regards small and medium-sized enterprises (SMEs) and micro enterprises, the proposal provides for possible exemptions for the provisions related to the promotion of European works. Indeed, Member States would be allowed to introduce exceptions for thematic or low audience audiovisual media services.

For the provisions addressing protection of consumer including minors, the proposal does not foresee any exemptions for SMEs and micro enterprises as it touches extremely important values.

Fundamental rights

The proposal takes also full account of the fundamental rights and principles recognised by the Charter of Fundamental Rights of the European Union, in particular the right to respect for private and family life and the protection of personal data (Articles 7 and 8), the freedom of expression and information (Article 11), the freedom to conduct a business (Article 16) and the prohibition of discrimination (Article 21), the rights of the child (Article 24) and the right to an effective remedy and a fair trial (Article 47).

4. BUDGETARY IMPLICATIONS

11.

The proposal has no implications for the EU budget.


5. OTHER ELEMENTS

Implementation plans and monitoring, evaluation and reporting arrangements

Monitoring of the implementation will continue to be assured by the Commission on the basis of:

– Application reports by the Commission, on the Directive as a whole, two years after the adoption of the Directive and every three years thereafter;

– Reports on the application of the provisions related to the promotion of European works every two years (for TV broadcasting and on-demand services);

– Monitoring of the implementation of the provisions on video-sharing platforms on the basis of an independent study carried out after the transposition;

– Monitoring of the implementation of the provision on content descriptors for protection of minors.

Explanatory documents (for directives)

12.

N/A


Detailed explanation of the specific provisions of the proposal

The country of origin principle for media service providers is maintained and reinforced by simplifying the rules determining which country has jurisdiction and improving the derogation mechanisms in cases of exceptions.

The amended Directive will continue to be based on minimum harmonisation. However, a higher degree of harmonisation is sought by reinforcing the independence of audiovisual regulators. This is an important novelty, given the key role of audiovisual regulators in shaping and preserving the internal market. Moreover, it is highly relevant for guaranteeing the pluralism of the media. The proposal reinforces the role of the European Regulators Group for Audiovisual Media Services (ERGA) by giving it more tasks when advising and assisting the Commission in consistent implementation of the directive in all Member States. As a consequence, the Commission Decision of 3 February 2014 on establishing the European Regulators Group for Audiovisual Media Services will be repealed when the Directive enters into force.

Article 7 of the current Directive is deleted given that the proposed European Accessibility Act already sets stricter common accessibility requirements for media service providers.

Regarding the protection of minors, the revised Directive provides for alignment of the standards of protection for TV broadcasting and on-demand services. Article 12 requires that programmes that may impair the physical, mental or moral development of minors are only made available in such a way as to ensure that minors will not normally hear or see them. This is regardless of whether such programmes are broadcast by TV broadcasters or provided by on-demand media service providers. With a view to this alignment, Article 27 of the current Directive (applicable to TV broadcasting only) is removed.

The revised Directive creates a more level playing field in the promotion of European works by obliging on-demand services to reserve at least 20% share for European works in their catalogues and to ensure adequate prominence of such works (Article 13). Article 13 will also allow Member States to impose financial contributions (direct investments or levies allocated to national film funds) to on-demand services in their jurisdictions as well as, under certain conditions, to those established in a different Member State but targeting their national audiences. In order to ensure that obligations on promotion of European works do not undermine market development and to allow for the entry of new players in the market, companies with no significant presence on the market should not be subject to such requirements. This is in particular the case for companies with a low turn-over.

This proposal achieves a balance between competitiveness and consumer protection by, on the one hand, introducing more flexibility for all audiovisual media services on product placement and sponsorship and increased flexibility for TV broadcasting. The hourly limit is replaced by a daily limit of 20% of advertising during the period between 07:00 and 23:00 (Article 23). Films made for television, cinematographic works and news could be interrupted more often (Article 20) and isolated spots would be admissible (Article 19). On the other hand, the future Directive will also strengthen provisions to protect minors from inappropriate audiovisual commercial communications of foods high in fat, salt/sodium and sugars and alcohol beverages by, where necessary, encouraging codes of conduct at EU level (Article 9(2) and (4)).

A further new feature is the extension of its scope to cover, in certain respects, video-sharing platform services which do not have editorial responsibility for the content that they store but which organise that content, through various means.

The amended Directive would introduce an obligation on Member States to ensure that, within their field of responsibility, video-sharing platform providers put in place, preferably through co-regulation, appropriate measures to: i) protect minors from harmful content; and ii) protect all citizens from incitement to violence or hatred. The proposal sets out what those measures can entail, as appropriate in an individual case. The system would be compatible with the liability exemption for hosting service providers set out in Article 14 ECD, in as far as that provision applies in a particular case, because these obligations relate to the responsibilities of the provider in the organisational sphere and do not entail liability for any illegal information stored on the platforms as such.

Member States continue to be bound by the rules of the ECD. They would consequently not be allowed to impose on providers any general obligation to monitor content or to actively engage in fact-finding, without precluding the imposition of monitoring requirements in specific cases (Article 15 ECD).

Member States would not be allowed to require video-sharing platform providers under their jurisdiction to apply stricter measures than the ones provided for in the Directive, as amended. This is without prejudice to any measures which Member States may apply in line with Directive 2000/31/EC with respect to illegal content stored on the platforms.

Furthermore, this is also without prejudice to Article 25 of Directive 2011/93/EU, which requires Member States to take measures against websites containing or disseminating child pornography. In particular, it provides that Member States may take measures to block access to web pages containing or disseminating child pornography towards the Internet users within their territory, subject to safeguards to ensure the transparency, necessity and proportionality of such measures as well as the possibility for legal redress.

With respect to the provision of information society services provided from another Member State, the ECD sets out the principle of country of origin, subject to a number of possible exceptions (Article 3). This system will continue to apply to video-sharing platforms providers. The proposal seeks to ensure that the same rules also apply to such providers which do not have an establishment in a Member State, but which have a parent company, a subsidiary or another entity of the same group with such an establishment.

The Commission would facilitate, with ERGA's support, the coordination of codes of conduct at EU level. Moreover, a complaint and redress mechanism should be foreseen at national level.