Subsidies for U.S. Productions at Stake

LONDON –  The multi-billion dollar annual support for the making and distributing of movies provided by European Union member states has come under public scrutiny.

The European Commission has launched a public consultation as the first step of a review of the criteria used to apply European state aid rules to the cash support from member states.

Areas in the spotlight from the old laws include competing to attract major film productions using state aid and supporting activities other than production.

Interested parties have until the end of September to submit their comments.

Commission vp in charge of competition policy Joaquín Almunia said: "Before designing the future state aid rules for this important sector, my colleagues and I want to gather views about what the common European objective of such support should be. For example, does a subsidy race to attract major US productions undermine the effectiveness of aid to support smaller European films?”

Alumnia will also be asking if the rules should “go beyond encouraging the production of more films” and if support is needed to encourage filmmakers to explore the possibilities of the digital revolution?”

One of the big issues on the consultation will be the competition among some European states to use state aid to attract inward investment from large-scale mainly U.S. film production companies.

European Union member states provide an estimated €2.3 billion ($3.3 billion) per year in film support.

Of that €1.3 billion ($1.85 billion) in grants and soft loans and €1 billion ($1.4 billion) in tax incentives. Around 80% of this is for film production.

The U.K. is among the top five European countries offering this support along with France, Germany, Italy and Spain.