Regulator rejects cap on Italy TV ad revenue

Berlusconi appointee makes call

ROME -- The head of Italy's competition watchdog came to the aid of Silvio Berlusconi's Mediaset on Monday, stating that a plan designed to cap ad revenue for television companies would hurt competition in the sector.

Last year, Italy's Ministry of Communications unveiled an initiative to limit the power of Italian media companies by limiting any one company to 45% of the total television advertising pool. Because Mediaset -- Italy's largest private broadcaster -- already owns more than half of all television advertising, the rule would hurt the company more than its rivals.

The situation became even more potentially damaging to Mediaset when the government announced that state broadcaster RAI would remove advertising from two of its three national networks, making Mediaset's share of the entire ad market larger in percentage terms.

But on Monday, Antonio Catricala, head of Italy's antitrust regulator, ruled that the cap represented an illegal obstacle to competition. Former Prime Minister Berlusconi appointed Catricala in 2005.

"It is not correct to put a cap on a company's revenues because that is like trying to stop a company from growing," Catricala said in a statement.

The antitrust regulator has yet to release a formal ruling on the subject, and when that happens, the government could choose to appeal. But Catricala's statement nonetheless represents a boost to Mediaset as it prepares to battle against the new media reform, which includes several planks that could hurt Mediaset.

According to a report released last year, the proposed reforms could cost Mediaset as much as €100 million ($131 million) per year.
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