The 2018 AVMSD revision brought significant innovations in an effort to (further) achieve regulatory convergence for audiovisual content dissemination.
Clarifications and changes were made for derogation and circumvention from the country‑of-origin principle but first cases illustrate a continued need to strike the right balance between reliance on the country-of-origin and safeguarding fundamental principles in targeted Member States.
New rules for VSPs are a significant step towards a more converged regulation but practical effectiveness is yet to be assessed after transposition is complete and the actual implementation in practice takes place while the cooperation mechanisms can be further tested.
Based on new promotion of European works rules, which mostly were transposed uniformly concerning share and prominence in on-demand catalogues, it is to be expected that the imposition of stricter rules on on-demand services will lead to a further increase of the supporting effect for the European audiovisual market.
Concerns about the appropriate positioning of the AVMSD arise, particularly in view of recently adopted or proposed legislative initiatives on EU level.
Cooperation mechanisms in a cross-border and cross-sectoral dimension will be key with regard to all of these implementation issues.
The reform of the AVMSD in 2018 has brought significant innovations. Among other things, changes affected some of the basic principles of the AVMSD such as the scope or the country-of-origin principle. These changes have become even more relevant in the context of recent developments as well as regulatory enforcement action.
This Background Analysis reflects the implementation of the revised AVMSD and possible issues that have occurred with it. The transposition deadline of September 2020 was missed by most Member States and therefore the picture of application in practice is not yet complete. It should be noted that the implementation partly also depended on the publication of Guidelines by the European Commission which only took place in July 2020.
Country of Origin, jurisdiction, derogation and circumvention
The country-of-origin principle as cornerstone of the AVMSD was retained, but some clarifications on exceptions were made. The nearly unchanged criteria for establishing jurisdiction have proven to be efficient in assigning responsibility to Member States.
The technical criteria for a subsidiary determination of establishment for third country providers using satellite dissemination within the EU have led to problematic results by opening the benefit of the Single Market and freedom to provide services for providers that have no attachment to the EU in relation to the editorial decision-making.
The first applications of temporary derogation measures directed against non-domestic providers show difficulties that continue to result partly from the procedural complexity. Especially the application of temporary suspension orders in the Baltic States against Russian state-controlled media outlets illustrate the need for a balancing between country-of-origin and the safeguarding of fundamental principles by targeted Member States.
The sanctions issued by the Council of the EU against certain providers after the Russian attack of the Ukraine and their confirmation by the General Court should be seen in light of a future adaptation of the abilities to respond to such situations under the AVMSD or beyond it.
Rules on VSPs
The extension of the scope to VSPs was a significant step towards the creation of convergent regulation of the audiovisual media market concerning advertising and protecting minors as well as the general public. However, significant elements are left to the implementation in the Member States most of which have closely followed the measures suggested by the Directive, partly integrating them into a self- and co-regulation framework in which the national regulatory authorities have a decisive role with control and statutory powers.
Conclusions on practical effects can only be drawn in a limited way, as the transposition process has not yet been completed in an especially relevant Member State. This concerns both the scope of applicability, especially in light of the criterion of essential functionality of a service on which the Commission has published Guidelines but which ultimately is assessed by the Member State having jurisdiction, as well as the evaluation of the appropriateness of measures by VSPs.
Certainly, cooperation mechanisms of the regulatory authorities will be key and in this context ERGA has developed an adequate approach with the Memorandum of Understanding on enhanced cooperation which could be the basis for future formalisation of decision-making.
Rules on European works
The AVMSD revision 2018 has comprehensively reformed the system of promotion of European works in the on-demand sector. Irrespective of the late transposition in most Member States, almost all have adopted the 30% catalogue share from the AVMSD with specificities in some Member States such as higher quotas generally or higher quotas for specific offers (e.g. public service media), separate quotas for independent productions or for domestic works. The majority of transpositions rely on the calculation method proposed in the Guidelines of the European Commission. Regarding the prominence obligation, most Member States follow the wording of the AVMSD and refer to specific ways of achieving prominence by taking up possible approaches as set out in Recital 35. With regard to the low turnover and low audience exemptions, most Member States rely on the indications made in the Commission Guidelines. The obligation to waive promotion duties due to the nature or theme of a service was enshrined explicitly in national law in about a half of the Member States. It should be noted that aspects of jurisdiction and monitoring compliance are and will be of high importance in the context of Art. 13(1) with regard to new regulatory approaches needed and in connection with jurisdiction questions based on the country-of-origin principle.
Art. 13(2) acknowledges that Member States can impose obligations to contribute financially to the production of European works but provides for limitations if such obligations are imposed on non-domestic providers. It can be noted that this possibility has so far been taken up to a limited, but noteworthy extent vis-à-vis non-domestic providers, and it can be expected that this will be continued in the future.
Consistency and coherence
The potential for conflict of the AVMSD with other legal acts and thus the need for coherence has increased significantly in recent times due to enacted or proposed legislation at EU level.
This applies first and foremost to the DSA, which not only addresses players in the distribution and value chain of audiovisual content but also has direct overlaps in its catalogue of duties with the AVMSD. The ”without prejudice“ clause that the DSA establishes in relation to the AVMSD, may not be sufficient to clarify practical conflict cases and provide for a clear delineation in the different supervisory regimes. The DMA, the TCO Regulation and the proposed CSAM Regulation, also have potential for conflict, especially in the area of regulating VSPs.
There are even more evident overlaps in the proposals for the EMFA and a Regulation on political advertising. Here, clarification of the priority of the AVMSD is not only to be seen in light of the endeavour to create legal certainty and ensure effective (cross-border) law enforcement but also in light of the maintenance of value decisions of the AVMSD such as the independence of supervision and the protection of editorial content.
Other issues and outlook
With the AVMSD revision a number of further changes were made which are of relevance. New rules on transparency of media ownership and the rules ensuring the protection of minors concern subject areas that are strongly characterised by culturally determined peculiarities and are therefore still designed very differently at Member State level. With a few exemptions, the option to implement rules on prominence of general interest content in Art. 7a has hardly been used while Art. 7b (on signal integrity), led to quite uniform rules at national level leaning on the wording of the AVMSD.
All these rules have to be seen in relation to the institutional system of the AVMSD and of ongoing legislative proposals. Regarding evolving conditions of the audiovisual media landscape and the new legislative environment, cooperation between regulatory authorities and consistency of application of the legal framework is and will be key.