The new Cinema Communication (2)

As previously posted here, the European Audiovisual Observatory is focusing its workshop in Cannes this year on the rules for public film funding in Europe. One of the key presentations at this workshop will centre on the Observatory’s latest 'IRIS plus' report, as follows -


The lead article by Observatory Legal Analyst, Francisco Cabrera, looks towards the passing of a new Cinema Communication, the European Commission’s key set of rules for film funding in Europe currently under review and the subject of wide-ranging public consultation. The current Cinema Communication determines the criteria that the Commission uses to assess the compatibility of state aid schemes for film and audiovisual production in Europe with current EU law. Clearly a central document for the attribution of public aid to film products, therefore.


Cabrera opens with a useful overview of EU competence on cultural matters. It is the Treaty of the Functioning of the European Union (TFEU) which stipulates that state aid in general may not distort competition. However, aid to promote culture and heritage conservation may be compatible with the common market where such aid does not affect trading conditions and competition in the Union to an extent that is contrary to the common interest.


The article then looks at the text of the current Cinema Communication dating from 2001. This document and the validity of the rules it contains were extended three times in 2004, 2007and 2009. Globally, it provided to be satisfactory and functional for industry and decision-makers alike. However, certain trends in the audiovisual industries such as “support for aspects other than film and TV production ([…] film distribution and digital projection), more regional film support schemes, as well as competition among some member states to use state aid to attract inward investment from large-scale, mainly US, film production companies” incited the Commission to apply the current criteria until the end of 2012 at the latest and at the same time to launch a public consultation on the revision of the Communication.


This public consultation was based on an Issues Paper which contained what the Commission felt to be the main areas of consultation and served as a basis of all answers to be submitted by 30 September 2011. The issues paper addressed questions such as the “subsidy race” (the attracting of large-scale inward investment in a particular country through funding or indeed tax shelter incentives), aid for activities other than production as well as for the digitisation of cinemas, the scope of works to be supported (opening up the whole ‘cross-media’ debate), territorial conditions for spending aid awarded and of course the consequences for state aid of the digital revolution.


Cabrera then goes on to provide an exclusive overview of some of the responses to the Issues Paper from the representatives of the various branches of the film industry. Not surprisingly, most interested parties agreed that the rules on aid intensity (proportion of aid to the total budget) should not be lowered. Indeed some professional organisations were in favour of increasing the proportion of aid allowed. When questioned on the “subsidy race” issue, most professional organisations adopted a pan-European stance, pointing out the overall benefits for the European industry as a whole of welcoming large productions from outside of Europe. Regarding the Commission’s proposals to reduce territorial spending obligations (the current Communication allows a member state to attribute public support on the requirement that up to 80% of the film production budget be spent in its territory) most professional organisations gave this proposal a lukewarm reception, arguing that, for example, “territorial conditions do indeed ensure the continued presence of human skills and technical expertise required for cultural creation”.


Cabrera concludes his leading article with a round-up of the propositions included in the current draft Communication published in March of this year. We are currently in the heat of the three-month consultation period to end in June 2012. The author concludes that “it is to be expected that the European Commission will meet with resistance from some member states and professional organisations on at least the most controversial issues such as territorialisation and the “subsidy race”.