01/04/2014 - All's Well that Ends Well? In its new IRIS plus report, the European Audiovisual Observatory looks at the contents of the new 2013 Cinema Communication

The European Commission adopted its much-disputed new-look Cinema Communication in November 2013. This revamped legal instrument lays down the rules by which the EU judges whether or not European film funds comply with EU state aid rules. It finally saw the light of day following an uphill consultation process with the industry and decision-makers, many of whom feared that new rules on territorial spending and the so-called subsidy race would scupper public film-funding schemes. In its brand-new IRIS plus report, the European Audiovisual Observatory, part of the Council of Europe in Strasbourg, looks at the contents of this new 2013 Cinema Communication while re-treading the road which led to its latest re-write.

The Observatory's legal analysts, Francisco Javier Cabrera Blázquez and Amélie Lépinard, open with a useful overview of general EU rules concerning culture and state aid. They explain that market distortion by state aid is not permitted by EU legislation, exceptions to this being, among others, "aid to promote culture and heritage conservation". It is this ‘cultural exception' which allows European film funds to provide money for European film productions, according to their various and often complex rules.

Moving on to the original 2001 Cinema Communication, Cabrera and Lépinard explain that the initial rules stipulated the "cultural" nature of the project, 80% of the production budget being spent in the country providing the aid, the level of aid intensity (ie, percentage of the total budget) at 50% maximum, and the prohibition of aid for specific filmmaking activities such as post-production. Given that the validity of this document was extended three times, its final expiry date fell on 31 December 2012.

Following a public consultation in June 2011, a draft communication was published in March 2012 subject to a further three-month consultation period on this new document. Cabrera and Lépinard analyse this 2012 Draft Communication at length in terms of its scope of activities as well as various selected responses made by public authorities, film institutions and professional organisations. A revised 2012 Draft Communication was published in April 2013, followed by a public consultation ending in May 2013.

The final 2013 Communication was adopted in November 2013 and the report explains its differences with the original 2001 document. For example, the 2013 text allows aid "covering all aspects of film creation, from story concept to delivery to the audience". One of the most controversial of all topics during the whole process was the territorial spending obligations. The new Communication frees up the producer's spending obligations by potentially considerably reducing the amount of funding to be spent in the country providing the aid. The so–called "subsidy race" problem (countries vying with each other to offer the most attractive funding systems for foreign investment) has been solved by considering that "foreign production on a member state's territory may have a positive effect on the national audiovisual sector".

Read the full report here.