Ruling puts Rete 4 in tough spot

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The European Court of Justice on Thursday ruled that Italy's 10-year-old system of divvying up television frequencies is anti-competitive, a decision that could force Mediaset's Rete 4 network to abandon its terrestrial frequencies.

The ruling from the Luxembourg-based court is tied to a 1999 complaint from Centro Europa 7, a would-be Italian broadcaster that never took to the airwaves.

Mediaset's Rete 4 — one of the company's three national networks — was supposed to surrender its terrestrial frequencies and become a satellite broadcaster in order to make room for Centro Europa 7. But Mediaset took advantage of a loophole in Italian law and never made the switch, sparking the complaint from Centro Europa 7.

On Thursday, Europe's highest court ruled that Centro Europa 7 was unfairly blocked from entering the Italian market.

The Italian system "does not comply with the principle of freedom to provide services and does not meet objective, transparent, non-discriminatory and proportionate selection criteria," the court said in a statement.

The decision is a blow to Rete 4, which could now eventually be forced to give up its terrestrial frequencies, though Mediaset issued a statement Thursday saying the company was "convinced" it did not break Italian law by not changing Rete 4's broadcast technology.

"The case exclusively regards a request for damages put forth by Centro Europa 7 against the Italian state," Mediaset said. "No damages are sought against Mediaset."

Any action required by the decision is not imminent. With the European court's decision, the case will be sent back to the Italian State Council, which had been investigating Centro Europa 7's complaint and had asked the European Court of Justice for its opinion.

EU media and information society commissioner Viviane Reding welcomed the ruling, saying it confirmed that EU governments may not allocate radio frequencies to freeze or to protect operators.

"The judgment is a clear signal in favor of effective competition, of fair and nondiscriminatory access to radio frequencies and of more consumer choice between spectrum-based communication services," she said.

Centro Europa 7's investors also applauded the decision, with the group's lawyers releasing a statement that called the ruling an "act of justice."

Eric J. Lyman reported from Rome; Leo Cendrowicz reported from Brussels.
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