EHRM, 07-06-2012, nr. 38433/09

The applicant company submitted that it had been unable to broadcast television programmes despite having been granted a licence to do so following a public tendering procedure. This infringement of its rights resulted from various legislative, administrative and judicial measures by the Italian State, acting through different bodies and instruments. The interferences with its right to freedom of expression had been neither justified nor necessary in a democratic society.

In the applicant company's submission, the enactment of a series of transitional laws had endorsed a provisional practice that favoured existing operators, preventing it from effectively asserting its rights. It referred to the Court's finding in Meltex Ltd and Movsesyan (cited above) and noted that, unlike in that case, the violation in its own case did not stem simply from the denial of a right in a one-off decision but from the refusal, for more than ten years, to give effect to a licence awarded as a result of a public tendering procedure.

The applicant company submitted that the refusal to allocate it any broadcasting frequencies amounted to interference with the exercise of its rights under Article 10 § 1 of the Convention (Meltex Ltd and Movsesyan, cited above, and Glas Nadezhda EOOD and Anatoliy Elenkov, cited above). The interference had not been prescribed by law, as required by the Convention, on account of the unforeseeability of the transitional legislation passed by the national parliament. The applicant company further pointed out that the Italian courts had applied the legislation in question and had found that compensation should be calculated with effect from 1 December 2004, contrary to what the CJEU had held in its judgment.

The Government observed that in 1999 the applicant company had been awarded a licence which had not ipso facto conferred the right to be allocated frequencies. In accordance with Legislative Decree no. 5 of 23 January 2001, as amended by Law no. 66 of 20 March 2001 (see paragraphs 63–64 above), the applicant company could have purchased the necessary frequencies to transmit programmes. However, it had not availed itself of that option and had not taken part in the fresh call for tenders issued in 2007.

In the Government's submission, the applicant company had not been allocated frequencies because of the general reorganisation of national and local analogue frequencies in a context of limited availability, and because several companies that had submitted unsuccessful bids in 1999 had appealed to the national courts and been allowed to continue broadcasting without a licence on the basis of the former rules.

The Government stated that the purpose of the 1999 call for tenders had been to select the operators to be included in the AGCOM plan. Accordingly, the aim had not been to allocate frequencies directly since the installation adjustment programme had yet to be drawn up. In that connection, they pointed out that the Ministry had not awarded any other licences under the same conditions in 1999.

The Government explained that, following the failure of cable television in Italy, Law no. 66/2001 had envisaged that the transition to digital terrestrial television would take place by 2006 at the latest. Subsequently, Legislative Decree no. 352/2003 and Law no. 112/2004 (see paragraphs 65–67 above) had specified that the transitional provisions would cease to apply once digital coverage had exceeded 50% of all users, a level attained on 27 May 2004.

The Government further noted that the CJEU had held that it was not necessary to examine whether there had been a violation of Article 10 of the Convention. Furthermore, in judgments nos. 242 and 243/2009 the Consiglio di Stato had held that national television was not a transfrontier service and that the applicant company, as a licence holder, was entitled to take part in competitive, non-discriminatory procedures for the allocation of frequencies from 1 January 2008. This result had been achieved with the ministerial decree of 11 December 2008 (see paragraph 16 above), in which the applicant company had been allocated channel 8 on the VHF III frequency band, which had become available as a result of the transition to digital broadcasting.

The Government pointed out that Italy had gradually had to bring national and local channels into line and that it had been essential to reconcile the vested rights of existing operators with the interests of new operators and, above all, to avoid any risk of sliding towards a monopoly or, conversely, into chaos. The transition had, in particular, allowed the existing operators to continue broadcasting and the new licence holders to develop a network by purchasing frequencies.

The Government pointed out that, according to the Court's case-law, regulation of the activities of television companies was compatible with Article 10 of the Convention, which did not prevent States from examining the technical aspects, the rights and needs of a specific audience, the nature and objectives of channels, their potential audience at national and local level, and the obligations deriving from international undertakings (Informationsverein Lentia and Others v. Austria, 24 November 1993, Series A no. 276).

The Government explained that the licence granted to the applicant company meant that it was in a legally protected position and could purchase frequencies, use other operators' digital transmission capacity and benefit from ‘the co-location of the two operators RAI and [Mediaset]’.

The Government observed that the applicant company currently offered its customers a series of channels broadcasting varied content, including horror films and adult films. In practical terms, it operated a limited system, since its programmes could be viewed only by using a decoder which it supplied to its customers. This served to illustrate the manner and scope of the benefit drawn by the applicant company from its freedom to impart information and ideas in a democratic society.

Lastly, the Government submitted that the circumstances of the case were in no way comparable to those of Meltex Ltd and Movsesyan (cited above).

Open Society Justice Initiative began by giving an overview of the ‘Guiding Principles on Broadcast Media Pluralism’. It then referred to the laws and practices of three European countries of a similar size to Italy (France, Germany and the United Kingdom), before discussing European standards, which recognised that the duty to ensure pluralism necessitated limits on media ownership, especially in broadcasting.

It also examined political control of broadcasters and noted that many European countries had adopted legal systems that specifically banned and/or restricted the ability of leading politicians and political parties to control broadcasting entities and their programming.

In the third party's submission, the circumstances of the present case were to be seen in the context of a greater and older malaise in the Italian broadcasting and information sector. Open Society Justice Initiative submitted that, should the Court find an Article 10 violation in this case, it should consider ordering the Italian State to implement measures of a general and systemic nature with a view to guaranteeing the pluralism of its broadcasting system.

The Court considers it appropriate at the outset to recapitulate the general principles established in its case-law concerning pluralism in the audiovisual media. As it has often noted, there can be no democracy without pluralism. Democracy thrives on freedom of expression. It is of the essence of democracy to allow diverse political programmes to be proposed and debated, even those that call into question the way a State is currently organised, provided that they do not harm democracy itself (see Manole and Others v. Moldova, no. 13936/02, § 95, ECHR 2009 (extracts), and Socialist Party and Others v. Turkey, 25 May 1998, §§ 41, 45 and 47, Reports 1998-III).

In this connection, the Court observes that to ensure true pluralism in the audiovisual sector in a democratic society, it is not sufficient to provide for the existence of several channels or the theoretical possibility for potential operators to access the audiovisual market. It is necessary in addition to allow effective access to the market so as to guarantee diversity of overall programme content, reflecting as far as possible the variety of opinions encountered in the society at which the programmes are aimed.

Freedom of expression, as secured in Article 10 § 1, constitutes one of the essential foundations of a democratic society and one of the basic conditions for its progress (see Lingens v. Austria, 8 July 1986, § 41, Series A no. 103). Freedom of the press and other news media affords the public one of the best means of discovering and forming an opinion of the ideas and attitudes of political leaders. It is incumbent on the press to impart information and ideas on political issues and on other subjects of public interest. Not only does the press have the task of imparting such information and ideas: the public also has a right to receive them (see, for example, Handyside v. the United Kingdom, 7 December 1976, § 49, Series A no. 24, and Lingens, cited above, §§ 41–42).

The audiovisual media, such as radio and television, have a particularly important role in this respect. Because of their power to convey messages through sound and images, such media have a more immediate and powerful effect than print (see Jersild v. Denmark, 23 September 1994, § 31, Series A no. 298, and Pedersen and Baadsgaard v. Denmark [GC], no. 49017/99, § 79, ECHR 2004-XI). The function of television and radio as familiar sources of entertainment in the intimacy of the listener's or viewer's home further reinforces their impact (see Murphy v. Ireland, no. 44179/98, § 74, ECHR 2003-IX).

A situation whereby a powerful economic or political group in society is permitted to obtain a position of dominance over the audiovisual media and thereby exercise pressure on broadcasters and eventually curtail their editorial freedom undermines the fundamental role of freedom of expression in a democratic society as enshrined in Article 10 of the Convention, in particular where it serves to impart information and ideas of general interest, which the public is moreover entitled to receive (see VgT Verein gegen Tierfabriken v. Switzerland, no. 24699/94, §§ 73 and 75, ECHR 2001-VI; see also De Geillustreerde v. the Netherlands, no. 5178/71, Commission decision of 6 July 1976, § 86, Decisions and Reports 8, p. 13). This is true also where the position of dominance is held by a State or public broadcaster. Thus, the Court has held that, because of its restrictive nature, a licensing regime which allows the public broadcaster a monopoly over the available frequencies cannot be justified unless it can be demonstrated that there is a pressing need for it (see Informationsverein Lentia and Others, cited above, § 39).

The Court observes that in such a sensitive sector as the audiovisual media, in addition to its negative duty of non-interference the State has a positive obligation to put in place an appropriate legislative and administrative framework to guarantee effective pluralism (see paragraph 130 above). This is especially desirable when, as in the present case, the national audiovisual system is characterised by a duopoly.

With this in mind, it should be noted that in Recommendation CM/Rec(2007)2 on media pluralism and diversity of media content (see paragraph 72 above) the Committee of Ministers reaffirmed that ‘in order to protect and actively promote the pluralistic expressions of ideas and opinions as well as cultural diversity, member states should adapt the existing regulatory frameworks, particularly with regard to media ownership, and adopt any regulatory and financial measures called for in order to guarantee media transparency and structural pluralism as well as diversity of the content distributed’.

The question arising in the instant case is whether there has been interference by the public authorities with the applicant company's right to ‘impart information and ideas’ and, if so, whether the interference was ‘prescribed by law’, pursued one or more legitimate aims and was ‘necessary in a democratic society’ for achieving them (see RTBF v. Belgium, no. 50084/06, § 117, ECHR 2011 (extracts)).

The Court has held that the refusal to grant a broadcasting licence constitutes interference with the exercise of the rights guaranteed by Article 10 § 1 of the Convention (see, among other authorities, Informationsverein Lentia and Others, cited above, § 27; Radio ABC v. Austria, 20 October 1997, § 27, Reports 1997-VI; Leveque v. France (dec.), no. 35591/97, 23 November 1999; United Christian Broadcasters Ltd v. the United Kingdom (dec.), no. 44802/98, 7 November 2000; Demuth v. Switzerland, no. 38743/97, § 30, ECHR 2002-IX; and Glas Nadezhda EOOD and Anatoliy Elenkov, cited above, § 42). It is of little consequence whether the licence is refused following an individual application or participation in a call for tenders (see Meltex Ltd and Movsesyan, cited above, § 74).

The Court observes that the present case differs from those cited in the preceding paragraph in that it does not concern a refusal to grant a licence. On the contrary, following a call for tenders, the applicant company was granted a licence on 28 July 1999 for analogue terrestrial television broadcasting (see paragraph 9 above). However, since it was not allocated any broadcasting frequencies, it was unable to transmit programmes until 30 June 2009.

The Court reiterates that the Convention is intended to guarantee not rights that are theoretical or illusory but rights that are practical and effective (see Artico v. Italy, 13 May 1980, § 33, Series A no. 37). The failure to allocate frequencies to the applicant company deprived the licence of all practical purpose since the activity it authorised was de facto impossible to carry out for nearly ten years. This accordingly constituted a substantial obstacle to, and hence an interference with, the applicant company's exercise of its right to impart information and ideas.

In conclusion, the Court considers that the legislative framework, as applied to the applicant company, which was unable to operate in the television broadcasting sector for more than ten years despite having been granted a licence in a public tendering procedure, did not satisfy the foreseeability requirement under the Convention and deprived the company of the measure of protection against arbitrariness required by the rule of law in a democratic society. This shortcoming resulted, among other things, in reduced competition in the audiovisual sector. It therefore amounted to a failure by the State to comply with its positive obligation to put in place an appropriate legislative and administrative framework to guarantee effective media pluralism (see paragraph 134 above).

These findings are sufficient to conclude that there has been a violation of Article 10 of the Convention in the instant case.

The above conclusion dispenses the Court from examining whether the other requirements of paragraph 2 of Article 10 of the Convention were complied with in the instant case, namely whether the laws prolonging the transitional scheme pursued a legitimate aim and were necessary in a democratic society for achieving that aim.

As their main submission, the Government disputed that there had been a ‘possession’ and pointed out that the licence awarded in 1999 to the applicant company had not ipso facto conferred an entitlement to have frequencies allocated by the Ministry; accordingly, it had not had a legitimate expectation of obtaining any frequencies. In addition, the domestic courts had declared inadmissible the applicant company's request for the allocation of the frequencies.

The Government further noted that the Convention did not protect non-existent rights lacking any legal basis. According to the Court's case-law, neither a ‘genuine dispute’ nor an ‘arguable claim’ satisfied the requirements of a ‘possession’ within the meaning of the Convention. No ‘legitimate expectation’ protected by the Convention arose where there had been a dispute as to the correct interpretation and application of domestic law and where the applicants' submissions had been rejected by the national courts (Kopecký v. Slovakia [GC], no. 44912/98, § 50, ECHR 2004-IX).

In addition, the applicant company could have purchased the frequencies on the market under section 1 of Law no. 66 of 20 March 2001 (see paragraph 63 above). In the Government's submission, the subject of the application was not the allocation of the frequencies but the allegedly insufficient amount of compensation awarded at national level. Lastly, the Government noted that the licence had never been withdrawn or revoked.

The applicant company contested the Government's arguments and submitted that the right of access to and use of broadcasting frequencies, allowing the exercise of freedom of expression and the pursuit of an economic activity, constituted an asset and thus fell within the scope of a ‘possession’ within the meaning of Article 1 of Protocol No. 1.

The Court reiterates that the concept of ‘possessions’ in the first paragraph of Article 1 of Protocol No. 1 has an autonomous meaning which is not limited to the ownership of material goods and is independent from the formal classification in domestic law. In the same way as material goods, certain other rights and interests constituting assets can also be regarded as ‘property rights’, and thus as ‘possessions’ for the purposes of this provision. In each case the issue that needs to be examined is whether the circumstances of the case, considered as a whole, conferred on the applicant title to a substantive interest protected by Article 1 of Protocol No. 1 (see Iatridis v. Greece [GC], no. 31107/96, § 54, ECHR 1999-II; Beyeler v. Italy [GC], no. 33202/96, § 100, ECHR 2000-I; and Broniowski v. Poland [GC], no. 31443/96, § 129, ECHR 2004-V).

Article 1 of Protocol No. 1 applies only to a person's existing possessions. Thus, future income cannot be considered to constitute ‘possessions’ unless it has already been earned or is definitely payable. Further, the hope that a long-extinguished property right may be revived cannot be regarded as a ‘possession’; nor can a conditional claim which has lapsed as a result of a failure to fulfil the condition (see Gratzinger and Gratzingerova v. the Czech Republic (dec.) [GC], no. 39794/98, § 69, ECHR 2002-VII).

However, in certain circumstances, a ‘legitimate expectation’ of obtaining an asset may also enjoy the protection of Article 1 of Protocol No. 1. Thus, where a proprietary interest is in the nature of a claim, the person in whom it is vested may be regarded as having a ‘legitimate expectation’ if there is a sufficient basis for the interest in national law, for example where there is settled case-law of the domestic courts confirming its existence. However, no ‘legitimate expectation’ can be said to arise where there is a dispute as to the correct interpretation and application of domestic law and the applicant's submissions are subsequently rejected by the national courts (see Kopecký, cited above, § 50).

The Court observes at the outset that from 28 July 1999 the applicant company held a licence for nationwide terrestrial television broadcasting. The licence authorised it to install and operate an analogue television network (see paragraph 9 above). The Italian administrative courts found that this did not confer on the applicant company a personal right (diritto soggettivo) to be allocated broadcasting frequencies but only a legitimate interest (interesse legittimo), that is, an individual position indirectly protected as far as was consistent with the public interest. Accordingly, the applicant company's sole entitlement was to have its request for frequencies dealt with by the Government in a manner consistent with the criteria laid down by domestic law and the CJEU (see the Regional Administrative Court's judgment of 16 September 2004, paragraph 25 above, and the Consiglio di Stato's decision no. 2622/08 of 31 May 2008, paragraph 37 above).

As the Court has noted in relation to Article 10 of the Convention, in view of the terms of the licence and the legislative framework in place at the time, the applicant company could reasonably have expected the authorities, within the twenty-four months following 28 July 1999, to take the necessary legal measures to regulate its terrestrial broadcasting activities. Provided that it upgraded its installations as it was required to do, the applicant company should then have been entitled to transmit television programmes (see paragraph 145 above). It therefore had a ‘legitimate expectation’ in that regard. It is true that, as the Government noted, the administrative courts refused the applicant company's requests to be allocated frequencies. However, that decision did not entail a rejection of the applicant company's request on the merits but resulted from the general rule in Italian law to the effect that the administrative courts cannot take certain measures in place of the administrative authorities (see paragraph 37 above).

Furthermore, in its judgment of 31 January 2008 the CJEU held as follows:

The Court agrees with this analysis. It further notes that, as it has previously held, the withdrawal of a licence to carry on business activities amounts to interference with the right to peaceful enjoyment of possessions as enshrined in Article 1 of Protocol No. 1 to the Convention (see Tre Traktörer AB v. Sweden, 7 July 1989, § 53, Series A no. 159; Capital Bank AD v. Bulgaria, no. 49429/99, § 130, ECHR 2005-XII; Rosenzweig and Bonded Warehouses Ltd v. Poland, no. 51728/99, § 49, 28 July 2005; and Bimer S.A. v. Moldova, no. 15084/03, § 49, 10 July 2007). Although the licence was not in fact withdrawn in the instant case, the Court considers that, without the allocation of broadcasting frequencies, it was deprived of its substance.

The Court thus considers that the interests associated with exploiting the licence constituted property interests attracting the protection of Article 1 of Protocol No. 1 (see, mutatis mutandis, Tre Traktörer AB, cited above, § 53).

It therefore finds that the applicant company's legitimate expectation, which was linked to property interests such as the operation of an analogue television network by virtue of the licence, had a sufficient basis to constitute a substantive interest and hence a ‘possession’ within the meaning of the rule laid down in the first sentence of Article 1 of Protocol No. 1, which is therefore applicable in the present case (see, mutatis mutandis, Stretch v. the United Kingdom, no. 44277/98, §§ 32–35, 24 June 2003, and Bozcaada Kimisis Teodoku Rum Ortodoks Kilisesi Vakfı v. Turkey (no. 2), nos. 7646/03, 37665/03, 37992/03, 37993/03, 37996/03, 37998/03, 37999/03 and 38000/03, § 50, 6 October 2009).

The Court observes that this complaint is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.

The applicant company submitted that the Government's conduct amounted to an expropriation of possessions for the purposes of Article 1 of Protocol No. 1, in so far as the Government had not only unjustifiably failed to allocate the frequencies but had also refused to give effect to the licence awarded following a lawful public tendering procedure.

The applicant company contended that the expropriation had no connection with the public interest but had served Mediaset's private interests by using frequencies that should have been relinquished in its favour as the legitimate licence holder. Moreover, the expropriation had not been ‘subject to the conditions provided for by law’. Pursuant to Law no. 249/1997, the relevant frequencies should have been relinquished in favour of the successful bidder in the tendering procedure, namely Centro Europa 7 S.r.l. However, a number of transitional legislative measures had prevented the company from having access to the frequencies.

The applicant company further submitted that the compensation awarded at national level did not reflect the value of the expropriated property. To determine the loss of earnings resulting from lost opportunities, the Court should consider not only the delay in allocating the frequencies, but also the fact that it had been impossible to compete with other companies in 1999, at a time when the market had been more limited than today. The applicant company further noted that the Consiglio di Stato, referring to the Constitutional Court's finding that 31 December 2003 constituted a reasonable date for the expiry of the transition period, had taken into account only the damage sustained after 2004, thereby disregarding five years of the violation. Lastly, the applicant company noted that, according to the Consiglio di Stato's finding, the award of the licence had not conferred the immediate right to engage in the corresponding economic activity, and that the compensation should therefore have been calculated on the basis of the legitimate expectation of being allocated frequencies by the appropriate authorities.

The Government contested the applicant company's arguments and objected to the ‘financial’ nature of the application.

The applicant company submitted that the damages awarded to it were insufficient. It noted that the Consiglio di Stato had found that compensation was payable in respect of a very limited part of the immense damage suffered, had disregarded expert evidence adduced by it and had failed to appoint independent experts. Thus, the Consiglio di Stato had dismissed almost the entire claim for compensation, declaring that neither legal costs nor start-up expenses could be reimbursed.

As regards start-up expenses, the applicant company observed that after being awarded the broadcasting licence, it had quickly set up an efficient and effective structure in order to become a serious player in the commercial broadcasting market. In particular, it had leased more than 20,000 square metres of television studios, equipped with cutting-edge technology, which had been purchased in advance so that it could start broadcasting promptly. It had also borne the costs of setting up an audiovisual library by producing its own programmes, as required by the licensing regulations.

As regards loss of earnings, the inadequacy of the damages awarded by the Consiglio di Stato was clear from a comparison of that amount with the profits achieved by Retequattro, the over-quota channel which should have relinquished the broadcasting frequencies allocated to the applicant company. In assessing loss of earnings, the Court should also take into account the fact that Centro Europa 7 S.r.l. had only recently entered the commercial broadcasting market, at a time when analogue broadcasting was about to be entirely superseded by digital terrestrial television and other broadcasting techniques. Changes in the market since 1999 should therefore be taken into consideration. The applicant company argued that it had been illegally kept out of the commercial broadcasting market for a considerable time, which had also harmed its prospects of promoting its brand and reputation and acquiring expertise, audiovisual content and other advantages associated with analogue broadcasting.

In the light of the foregoing, and on the basis of documentary evidence, the applicant company claimed EUR 2,174,130,492.55 (EUR 129,957,485.60 for losses sustained and EUR 2,045,214,475.00 for loss of earnings) — the sum it had sought in the national proceedings — less the amount awarded by the Consiglio di Stato, or a different amount, to be determined on an equitable basis. Statutory interest should be payable on the compensation.

The Government objected to the applicant company's claims, which they considered excessive. They pointed out that the Consiglio di Stato had awarded it compensation. Moreover, the claims were a matter of speculation and had no causal link with the alleged violations of the Convention (Informationsverein Lentia and Others, cited above, § 46; Radio ABC, cited above, § 41; and Meltex Ltd and Movsesyan, cited above, § 102).

The Government further submitted that the applicant company had not set up any installations for digital television broadcasting in the period from December 2008 to January 2009. The relevant equipment had not been purchased until after 2009.

The applicant company claimed EUR 10,000,000 in respect of non-pecuniary damage.

It submitted that the Court should consider the following factors in particular: (a) the considerable time that had elapsed; (b) the fact that the applicant company could reasonably have expected the Italian Government to give effect to the television broadcasting licence within the relevant time-limits; (c) the frustration and anxiety arising from being a powerless witness to the development of the television broadcasting market without being able to be a stakeholder in it, and the loss of a number of profitable opportunities; (d) the substantial financial implications; (e) the harm to the company's reputation on account of the position of the persons involved; (f) the company's serious concerns at being unable to catch up with its competitors, which had consolidated their position in the analogue broadcasting and related markets; (g) the conditions of uncertainty in which the applicant company had had to take strategic decisions; (h) the obstacles and hurdles that its manager had had to overcome; and (i) the frustration arising from the Government's repeated and blatant disregard of the judgments of the Constitutional Court and the CJEU and of the demands of the European institutions.

The Government objected to the applicant company's claims, which they considered excessive.

Submitting documentary evidence, the applicant company sought the reimbursement of the legal costs incurred at both national and European level in seeking to give effect to the licence and to be able to engage properly in economic activities in the television broadcasting market.

It pointed out that it had had to contend not only with the dominant commercial broadcaster in Italy, but also with the Italian Government itself for over ten years, since during that period, the owner of Mediaset — the broadcasting group to which the over-quota channel Retequattro belonged — had also served several terms as Prime Minister.

Accordingly, the applicant company claimed EUR 1,023,706.35 for the costs incurred at national level and EUR 200,000 for those incurred before the Court.

The Government objected to the applicant company's claims.