EC opposes gov't aid for Flemish pubcaster

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BRUSSELS -- The European Commission is set to rule Wednesday that government aid for Flemish public broadcaster VRT was illegal, sources inside the EU executive said.

However, the commission is expected to merely ask the Flemish authorities to halt the payments. It will not ask the Belgian Dutch-language broadcaster to pay back the illegal aid, which is thought to amount to tens of millions of euros. EU Competition Commissioner Neelie Kroes will instead ask the Flemish regional government to set up a new aid system by the end of the year.

The commission -- the EU's antitrust executive -- originally opened the investigation in 2004, after receiving a complaint from VRT's commercial rival, VTM.

It found that elements of financing, such as exemption from charges for the use of radio spectrum, amounted to state aid that effectively gave VRT an unfair advantage over its commercial competitors. Other aid included subsidies to help the switchover from analog to digital broadcasting and support for VRT's Internet services.

Anticipating the EC decision, Flemish Media Minister Geert Bourgeois promised in December to amend the law before the end of May to ensure that public financing for the VRT is limited to "its responsibilities as a public broadcaster." The laws will aim to ensure VRT gives clear justification when it seeks funding for new activities.

EU treaty rules allow state financing of public broadcasters through subsidies or license fees, but only if the aid is strictly limited to public service activities and there is no "overcompensation."

VRT broadcasts in Dutch, and is subsidized by the Flemish northern half of the federal Belgian state. The Flemish government gave a €287 million ($427 million) grant to VRT in 2007, but the broadcaster also generated €144 million ($214 million) in revenue from advertising last year.
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