EC approves aid for Italy digi switchover

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BRUSSELS -- The European Commission on Thursday cleared €40 million ($53.8 million) in tax breaks designed to help Italians make the switchover to digital television. The commission -- the European Union's antitrust authority -- said the tax breaks are effectively government subsidies to help cut the costs for consumers of equipment for the reception of digital television.

A commission investigation found the tax deductions were "technology neutral," meaning that they were available regardless of whether the decoder is used for terrestrial, cable or satellite channels.

The commission also ruled that they were proportionate to the objective of promoting the transition from analog to digital TV. The tax cut is worth 20% of the price paid for the equipment, up to a maximum deduction of €200 ($270) per decoder.

Strict EU rules on government aid mean that subsidies are carefully vetted so they do not unfairly distort the European market. However, the EU does allow financial support to consumers, information campaigns and subsidies to overcome a specific market failure or to ensure social or regional cohesion.

In this case, the EC had an added reason to back the measures, as it believes the switchover to digital television may be delayed if left entirely to market forces.

"This decision illustrates the commission's commitment to support the transition to digital TV and interoperability," EU Competition Commissioner Neelie Kroes said. "It also shows that state support for these goals can be provided in line with the state aid rules."

The decision comes five months after the EC ordered broadcasters including Mediaset and RAI to repay more than €200 million ($270 million) in aid back to the Italian government. In that case, the commission ruled that the government subsidies for digital TV decoders, dating back to 2004 and 2005, broke EU rules as they excluded satellite technology and were not "technology neutral."
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