OPINION OF ADVOCATE GENERAL

delivered on 18 November 1992 (*1)

Mr President,

Members of the Court,

1.The questions submitted by the Raad van State concern the interpretation of Articles 59 and 67 of the Treaty and the First Directive of the Council of 11 May 1960 for the implementation of Article 67 of the Treaty (1) (hereinafter ‘the First Directive’) and Council Directive 88/361/EEC of 24 June 1988 for the implementation of Article 67 of the EEC Treaty (2) (hereinafter ‘the Second Directive’).

2.Referring to the Report for the Hearing for matters of detail, I will merely point out that the main provisions on which the system introduced by the Mediawet (a system with which this Court is not unfamiliar (4)) was based were adopted in order to preserve a pluralistic and non-commercial broadcasting system. And it is precisely for that purpose that national broadcasting time is for the most part shared amongst the ‘omroepverenigingen’ (broadcasting organizations), listeners' or viewers' associations having legal personality and comprising at least 150000 members, so that the programming reflects the various political, social and religious components of Dutch society. Furthermore, those organizations, whose financing is provided entirely by the State, are required to observe numerous conditions concerning both their structure and programme content. The Veronica Omroep Organisatie (hereinafter ‘Veronica’), the plaintiff in the main proceedings, is a broadcasting organization within the meaning of the Mediawet.

3.The facts of the case are these. On 4 July 990, the Commissariaat voor de Media took action against Veronica for infringement of Article 57 of the Mediawet, withdrawing its broadcasting time for thirteen weeks and fining it HFL 50000. The activities in which Veronica had allegedly engaged, in breach of that provision, were essentially the contribution of public funds for the setting up in Luxembourg of a commercial station whose broadcasts were intended to be received, in particular, in the Netherlands.

4.The conclusion reached by the Commissariaat voor de Media is based on three facts: the chairman of the governing board of Veronica and its secretary, respectively, drew up a business plan and provided legal advice with a view to the incorporation of a Luxembourg company named RTL-Véronique for the purpose of managing a television station in Luxembourg; Veronica had also provided, at its own risk, a bank guarantee to secure a loan to RTL-Véronique; and, finally, it had, though a third company, acquired a minority holding in the capital of RTL-Véronique.

5.Veronica appealed against the measure imposed by the Commissariaat voor de Media to the Raad van State, which, in order to determine whether the prohibition of engaging in activities of the kind at issue was compatible with the relevant provisions of Community law, in particular Articles 59 and 67 of the Treaty, has sought a preliminary ruling from this Court.

6.Before I examine the questions, it is appropriate to point out that, as made clear in the order for reference, it is apparent from the legislative history of the Mediawet that the provision at issue must be interpreted as meaning that broadcasting organizations are free to undertake, in addition to activities involved in programme production, only related activities which are directly authorized by the Mediawet (the publication of magazines giving programme listings, the production and distribution of material supplementing educational programmes, the exploitation of copyright) or expressly authorized by the Commissariaat voor de Media, which enjoys some discretion in that regard, provided that it observes the fundamental objective of the Law, namely the preservation of a pluralistic and noncommercial broadcasting system. In fact, all other activities which cannot be regarded as normal economic activities relevant to pursuit of the main activity (programme production) are considered illegal.

7.In its first three questions, the national court asks whether the prohibition of engaging in activities such as investment by a broadcasting organization in a broadcasting station set up or to be set up in another Member State, and the provision of a bank guarantee by that broadcasting organization for a television station established in another Member State, involves a restriction of the free movement of capital (Question 1) or of the freedom to provide services (Question 2). And whether the prohibition imposed on the same broadcasting organization of drawing up a business plan and providing legal advice for a television station to be set up in another Member State involves a restriction of the freedom to provide services (Question 3).

8.There is no doubt that operations such as investing in the capital of an undertaking and providing a bank guarantee for a loan come under the heading of liberalized capital movements. They are transactions included in List A of Annex I to the First Directive, as amended by Directive 86/566/EEC, (5) which enumerates the capital movements for which the Member States should have removed all restrictions. Those transactions were then mentioned and described in greater detail in Annex I to the Second Directive, which expressly includes among the fully liberalized transactions ‘participation in new or existing undertakings with a view to establishing or maintaining lasting economic links’ under Title I (Direct investments) and, Under Title IX, Sureties, other guarantees and rights of pledge ‘granted by residents to non-residents’.

9.Similarly, it is beyond doubt that the provision of legal advice and activities relating to the preparation of a business plan, to which Question 3 relates, fall to be classified as services within the meaning of Article 59. The fact that the present case is concerned with the ‘export’ of services, that is to say services supplied in one Member State (the Netherlands) to persons established in another Member State (Luxembourg), is irrelevant: it is sufficient, for the provision of a service to be covered by Article 59, that the service in question is of a cross-frontier nature.

10.That said, it is necessary to establish whether the prohibition contained in Article 57 of the Mediawet, which is not discriminatory and is imposed only on national broadcasting organizations, involves a restriction on the movement of capital and the provision of services, in breach of Articles 67 and 59.

11.It should first be noted that Article 57(1) of the Mediawet is certainly not intended — as such — to prevent the provision of services, still less to impede the movement of capital, but merely to prevent the pursuit of activities of a commercial nature which are alien to the terms of reference imposed by law on those organizations. In other words, capital movements and the provision of services are restricted only in so far as they derive from the pursuit of activities which are illegal under the Mediawet, whereas they are not subject to any restriction in relation to those economic activities which the broadcasting organizations may lawfully pursue.

12.It follows, in my opinion, that the terms of the problem before us must be redefined. Let me explain: what must first be decided is whether Community law precludes a Member State from imposing on national broadcasting organizations — bodies which are not exposed to any commercial risk since they are financed entirely by the State — a restriction regarding the use of funds and, at the same time, the requirement that they should be non-profit-making. And of course, regard must be had to the objective which the State has set itself: to preserve a pluralistic and non-commercial broadcasting system, an aim liable to be compromised if, for example, the funds in question were diverted to other (commercial) activities.

13.In fact, the relevant Community legislation imposes no limitation in that respect. Suffice it to note that in the thirteenth recital in the preamble to Council Directive 89/552/EEC of 3 October 1989 on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities, (6) the directive is expressly described as ‘not affect [ing] the responsibility of the Member States and their authorities with regard to the organization — including the systems of licensing, administrative authorization or taxation — financing and the content of the programmes; ... the independence of cultural developments in the Member States and the preservation of cultural diversity in the Community therefore remain unaffected’.

14.Furthermore, in its judgments of 25 July 1991, (7) which were concerned specifically with certain conditions imposed by the Mediawet on broadcasting organizations, the Court held that ‘in order to ensure the pluralism which it wishes to maintain, the Netherlands Government may very well confine itself to formulating the statutes of its own bodies in an appropriate manner’. And that is precisely what the Netherlands Government has done.

15.If it is thus recognized that the Member States alone have powers to organize and finance their own television stations and a State opts, in the public interest (in this case, in order to preserve pluralism) for a noncommercial system, I do not see how a prohibition such as that at issue here can be challenged. It is clear that the only way of guaranteeing that the system is noncommercial is precisely to prohibit the broadcasting organizations from engaging in commercial activities alien to their terms of reference; what is important, for the present purposes, is that the activities which those organizations are required (or at least are authorized) to perform are pursued in observance of the freedoms guaranteed by the Treaty.

16.And it is not superfluous to point out that restrictions such as those complained of by Veronica are the same as those imposed, for example, on most public organizations, in so far as they are required to have regard to the tasks and the objects assigned to them by their statutes.

17.That conclusion having been reached, it is unnecessary, for the purposes of the present case, to answer the last two questions. However, for the sake of completeness and in case the Court should take the opposite view, namely that the restrictions mentioned by Veronica are in principle contrary to Articles 59 and 67, it is necessary to consider whether

the prohibition at issue may be justified by reasons of public interest (Question 4) and whether the preservation of a pluralistic and non-commercial system may constitute such justification (Question 5).

18.The answer is very simple as regards the provision of services. The Court has expressly recognized, in particular in its judgments of 25 July 1991 referred to earlier, that any restrictions deriving from measures that apply indiscriminately ‘come within the scope of Article 59 if the application of the legislation to foreign persons providing services is not justified by overriding reasons relating to the public interest’. (8) Indeed, there is no reason to consider that that finding does not also apply to a case where services are provided by national organizations and it is the service that is to go abroad.

In fact, the absence of uniformity is only apparent. It will be recalled that Article 67 itself provides that the restrictions on capital movements are to be eliminated ‘to the extent necessary to ensure the proper functioning of the common market’, which implies that the liberalization of capital is tied up with the exercise of the other freedoms (persons, goods and services): it may therefore be subject to restrictions when they are a direct consequence of lawful restrictions associated with the other freedoms guaranteed by the Treaty. Moreover, that view was recently expressed by the Court in its judgment in <span class="italic">Bachmann,</span> (9) in which it held that ‘Article 67 does not prohibit restrictions which do not relate to the movement of capital but which result indirectly from restrictions on other fundamental freedoms’.

Now, if capital movements may be subjected to restrictions by reason of (lawful) limitations inherent in the freedom to which they are attached, <span class="italic">a fortiori,</span> in my opinion, it must be permissible to impose restrictions on them where to do so is justified by

reasons relating to the public interest or, if another term is to be preferred, overriding requirements.

9.That said, it only remains to establish whether the prohibition laid down by Article 57(1) of the Mediawet may be justified by the need to preserve a pluralistic and noncommercial broadcasting system and whether it is proportionate in relation to the objective pursued.

In these proceedings, both the Commission and the Netherlands Government have started from the premise that the noncommercial requirement is an overriding requirement, as the Court acknowledged in its judgments of 25 July 1991 cited earlier, and they have therefore confined themselves to considering the proportionality of the measure at issue. I think some clarification is called for: in those judgments the Court referred only to pluralism, stating in particular that ‘the maintenance of the pluralism which that Dutch policy seeks to safeguard is connected with freedom of expression, as protected by Article 10 of the European Convention on Human Rights and Fundamental Freedoms, which is one of the fundamental rights guaranteed by the Community legal order’. (10)

And, in my view, that was no accident. The non-commercial character of a broadcasting system cannot be regarded — in itself — as an objective worthy of protection at Community level, so that restrictions on the provision of services or the movement of capital, or both, might be justified: on the contrary, it is a means of upholding, as in the present case, a cultural policy objective. It follows that the non-commercial character of the Dutch system may justify restrictions only to the extent found necessary in order to guarantee pluralism.

However, it certainly cannot be asserted, as a general statement, that all services provided or all capital movements effected by a broadcasting organization are intrinsically capable of undermining the pluralism which the Dutch system seeks to guarantee; on the contrary, it is clear that the activities in question may be such that they have no impact on the attainment of the aim in question (for example, how could that aim be affected by investment in a building company?). It follows that the prohibition of engaging in commercial activities will only have a <span class="italic">raison d'être,</span> as is apparent from the actual order for reference, in relation to those activities which are liable to undermine the aim pursued. For the present purposes, therefore, the problem is limited to the type of activities, viewed as a whole, carried on by Veronica.

10.In that connection, I would observe first of all that the fact that a national broadcasting organization contributes to the creation of, and maintains (significant) interests in, a television company established abroad, but broadcasting mainly towards the Netherlands, cannot be regarded as having no impact on the balance created by the Mediawet as between the various broadcasting organizations. Indeed, in such a situation the broadcasting organization in question will <span class="italic">de facto</span> have more broadcasting time than has been assigned to it — the time allocated is based on the number of members of each organization and is intended to ensure that all the social components are represented. Moreover, the other organizations will be placed at a disadvantage from the point of view of financing, as regards the part deriving from advertising revenue: and that seems to me not to be permissible, having regard to the particular financing arrangements of a system like the Dutch one. The activities undertaken by Veronica, viewed as a whole, are thus liable to undermine the pluralism which the law at issue was designed to safeguard.

Against that background it is appropriate to refer to the line of decisions of the Court, starting with the judgment in <span class="italic">Van Binsbergen,</span> (11) according to which ‘a Member State cannot be denied the right to take measures to prevent the exercise by a person providing services whose activity is entirely or principally directed towards its territory of the freedom guaranteed by Article 59 for the purpose of avoiding the professional rules of conduct which would be applicable to him if he were established within that State’. Similarly, in my opinion a Member State which has imposed the requirement on broadcasting organizations to observe certain conditions intended to safeguard pluralism must have the right to adopt provisions designed to ensure that such organizations cannot compromise the pursuit of that aim by setting up in another Member State or by making a significant investment in a station which is established in another Member State but is intended to broadcast, in particular, to the State in question.

The prohibition of undertaking activities of the kind at issue in this case is not only necessary in order to safeguard the pluralism of the broadcasting system but is also proportionate in relation to the aim pursued, it not having been shown that such a result could be attained by less restrictive rules.

Conclusion

‘The provisions of the Treaty concerning the free movement of capital and the freedom to provide services, in particular Articles 59 and 67, must be interpreted as not precluding legislation of a Member State which, in a non-discriminatory manner, prohibits national broadcasting organizations financed out of public funds and not pursuing profit from engaging in economic activities which are unconnected, or indeed conflict, with the tasks entrusted to them by their statutes’.

In the alternative, I suggest the following answer:

‘The provisions of the Treaty concerning the freedom to provide services and the free movement of capital, in particular Article 59 and 67, must be interpreted as not precluding legislation of a Member State which prohibits a broadcasting organization established in that State from investing in a commercial television station established or to be set up in another Member State, from providing a guarantee for that station or supplying services such as commercial and legal advice, again with a view to the setting up of such a commercial station, where such activities are directed towards setting up a commercial station intended to broadcast, in particular, to the territory of the first State concerned, provided that the prohibition in question is necessary in order to guarantee the pluralistic and non-commercial character of the system and is proportionate in relation to that objective’.

*1 Original language: Italian.

1 OJ, English Special Edition 1959-1962, p. 49.

2 OJ 1988 L 178, p. 5.

3 Staatsblaad 1987, p. 249.

4 The Court has given several judgments on the Dutch rules on the production and broadcasting of radio and television programmes: sec Case C-353/89 Conirnisiion v Netherlands [1991] ECR I-4069, Case C-288/89 Collectieve Anlennevoornemng Gouda [1991] ECR I-4007, and Case C-352/85 Bond Van Adverteerden [1988] ECR 2085.

5 Council Directive of 17 November 1986 amending die First Directive for the implementation of Article 67 of tile Treaty (OJ 1986 L 332, p. 22).

6 OJ 1989 L 298, p. 23.

7 Case C-288/89 Collectieve Antennevoorziening Gouda, paragraph 24, and Case C-353/89 Commission v Germany, paragraph 42, both cited above.

8 Commisiioti v Ncīhertandi, paragraph 17, and (Joitdti, paragraph 13.

9 Case C-204/90 [1992] ECR I-249, paragraph 34.

10 Gouda, cited above, paragraph 23.

11 Case 33/74 [1974] ECR 1299, paragraph 13. To the same effect, sec the judgments in Case 115/78 Knoors [1979] ECR 399, Case 201/84 Commission v Germany [1986] ECR 3755, paragraph 22, and Case 130/88 Van de Bnl [1989] ECR 3039, paragraph 26.