Essentially, the CJEU held that a total ban might go beyond what is necessary to preserve media pluralism across TV broadcasting by reserving revenue from regional TV advertising for regional and local channels and, further, it might create unacceptable inequality between national TV broadcasters and providers of advertising services on the internet.

The Austrian company, Fussl Modestraße Mayr GmbH, operates a network of fashion shops in Austria and Bavaria (Germany). In 2018, it entered into a contract with SevenOne Media GmbH, the marketing arm of the German TV station ProSiebenSat 1, in relation to broadcasting ads in Bavaria only in between and within programmes broadcast nationally by ProSieben.

In 2016, a Regional Treaty was concluded prohibiting TV broadcasters from inserting into their national broadcasts TV ads limited to a regional level. The aim of the ban was to allow regional and local TV broadcasters to keep the revenue from regional TV advertising, thus ensuring them a source of finance and making them sustainable to ensure media pluralism in Germany. The ban included an “opening clause”, allowing the Region to authorise regional advertising in the context of national broadcasts.

SevenOne Media did not honour the contract and Fussl issued proceedings in the German court. The court referred various questions to the CJEU querying whether the ban in the Regional Treaty complied with EU law.

The CJEU held that Article 4(1) of the Audiovisual Media Services Directive (2010/13/EU), which allows Member States, under certain conditions, to provide for more detailed or stricter rules to protect viewers’ interests, did not apply in this case. Although the ban in the Regional Treaty fell within an area covered by the Directive, i.e. TV advertising, it relates to a specific issue that is not governed by the Directive and is not connected to the objective of protecting viewers. Therefore, it cannot be defined as a “more detailed” or “stricter” rule under Article 4(1) such that it is not precluded.

As for compliance with the freedom to provide services guaranteed by Article 56 of the Treaty on the Functioning of the European Union (TFEU), the CJEU noted that the ban involves a restriction on that fundamental freedom to the detriment of both the providers of advertising services, i.e. the broadcasters, and the recipients of those services, i.e. the advertisers, in particular those established in other Member States. As for justification for the restriction, the CJEU said that preserving pluralism in TV programmes might be an overriding reason in the public interest. On proportionality, the CJEU said that the objective of maintaining media pluralism, insofar as it is linked to the fundamental right to freedom of expression, gives national authorities a wide discretion. However, the ban in question had to be such as to guarantee the attainment of the objective of ensuring media pluralism in a consistent and systematic way and should not go beyond what is necessary to attain it.

Whether the ban, which appeared to state that it does not apply to advertising provided solely at regional level over the internet, meets the requirement of consistency was for the national court to decide. In that regard, it was for the German court to ascertain whether advertising services provided on internet platforms constitute genuine competition for regional and local TV broadcasters on the regional advertising market and are a threat to the revenue which they derive from that advertising.

It might be, the CJEU said, that the issue in fact involved two competing types of services on the German advertising market that are likely to present the same risk to the financial health and sustainability of regional and local TV broadcasters and, therefore, to the objective of protecting media pluralism. This was for the national court to decide, which would have to ascertain whether German law permits national TV broadcasters to broadcast regional advertising as part of their streaming programmes on the internet. If so, the German court would necessarily have to conclude that the ban set out in the Regional Treaty is inconsistent.

The CJEU considered that perhaps a less restrictive measure could result from the effective implementation of the authorisation system at Regional level provided for by the “opening clause”. However, it was for the national court to verify whether such a measure could actually be adopted and implemented in such a way as to ensure that, in practice, the objective of ensuring media pluralism could be achieved.

As for freedom of expression and information guaranteed by Article 11 of the Charter, the CJEU said that the latter does not preclude a ban on regional advertising on national TV channels. Such a ban is essentially a balancing act between, on the one hand, the freedom of commercial expression of national TV broadcasters and advertisers and, on the other hand, the protection of media pluralism at regional and local level. Therefore, the German legislature is entitled to consider, without exceeding the wide margin of appreciation to which it is entitled, that safeguarding the public interest should prevail over the private interest of national TV broadcasters and advertisers.

Further, the CJEU said that the principle of equal treatment, enshrined in Article 20 of the Charter, also does not preclude the ban in question, provided that it does not give rise to unequal treatment between national TV broadcasters and providers of advertising, in particular linear advertising, on the internet as far as the broadcasting of advertising at regional level was concerned. It was for the national court to decide whether the situation of national TV broadcasters and that of providers of internet advertising services, with respect to the provision of regional advertising services, is significantly different in terms of various considerations, including the usual ways in which advertising services are used, the manner in which they are provided or the legal framework within which they are provided. (Case C-555/19 Fussl Modestraße Mayr GmbH v SevenOne Media GmbH EU:C:2021:89 (3 February 2021) — to read the judgment in full, click here).