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Regulation of the Dutch commercial television market

May 2006 IIIII The Dutch Media Authority

Contents 1. Introduction 1

2. Conclusions 1

3. The national commercial broadcasting organisations 3

4. Advertising and other commercial activities 10

5. Luxembourg media regulation and monitoring 12

6. Jurisdiction issues in other European countries 15

7. Options for an equal competitive environment 16

Annex 1 Figures and Charts 18

Annex 2 History jurisdiction matter RTL4 and RTL5 21

Regulation of the Dutch commercial television market 1

1. Introduction The national commercial television market in the Netherlands is highly competitive. In addition to public broadcasting, another three commercial broadcasters with a general programming compete for the favour of the viewer. RTL, the first broadcaster to break the public broadcasting monopoly in 1990, currently operates three stations. SBS, which first gained access to the market in 1995, also has three stations to serve its audience. Talpa started with one station in August of 2005. In European terms as well, the situation in the Netherlands can be described as highly competitive. To ensure a level playing field on the market, the rules for and the actual monitoring of the programmes need to be comparable. In view of its extraordinary position, public broadcasting has its own set of rules, laid down in the Dutch Media Act. This Media Act also regulates the commercial broadcasters. However, as one of the companies, i.e. RTL Nederland, is operating under a Luxembourg broadcasting licence (granted to the media company CLT-UFA S.A.), and as such falls under the regulation of the Grand Duchy of Luxembourg, RTL is subject to different rules than SBS and Talpa. This situation regularly leads to a lack of understanding in the sector. Luxembourg has opted to integrally adopt the European Television without Frontiers Directive also called the Television Directive (the “Directive") in its national legislation. In the Netherlands, the Directive has also been implemented in the Media Act, but with respect to a number of components, the Dutch regulation goes further and is more detailed. The result of this is that, particularly in the area of advertising and sponsoring, RTL is allowed more under the Luxembourg regulation than the stations of SBS and Talpa . Since 1997, the Dutch Media Authority has repeatedly instituted legal proceedings to have RTL fall under Dutch supervision. The Commissariaat is of the opinion that the RTL programmes are provided by a Dutch broadcasting organisation. The application of the Directive implies that it is not Luxembourg, but the Netherlands that should carry out the monitoring. The programmes of the three RTL stations solely target the Dutch public and, in its position of broadcaster, RTL Nederland has strong roots in Dutch society. As regulation and supervision are organised differently in Luxembourg than is the case in the Netherlands, the question arises what the effects thereof are for commercial broadcasters established in the Netherlands. In this report, the Commissariaat discusses the competitive environment within Dutch commercial broadcasting and makes recommendations to arrive at more equal starting positions for the players on the Dutch market. This report has been submitted to the Dutch State Secretary Medy C. van der Laan.

2. Conclusions The three national commercial broadcasters RTL, SBS and Talpa solely target the Dutch audience and the Dutch advertisers’ market. In 2005, the share on the viewer market and the advertising market of these commercial broadcasters amounts to 42.9% and 72.3% respectively. Of the three broadcasting companies, SBS programming focuses most heavily on foreign series and films, in all some 60% (18-24 hours). With RTL, 36% of the programming during this period consists of foreign series and films. In addition, RTL pays a lot of attention to human interest and news & information. RTL offers more Dutch series than the Public Broadcasting, but less than Talpa. The rest of the Talpa programming mainly consists of Dutch-language products in the categories human interest, entertainment and sports.


There is no doubt that RTL makes an important contribution to the plurality of the Dutch television offer. A clear example of this is the programme RTL Nieuws. RTL has joined the various systems of self-regulation and co-regulation within the media, such as the Dutch Advertising Standards Committee, the Press Council in the Netherlands and the Netherlands Institute for the Classification of Audio-visual Media (NICAM) (Kijkwijzer). That the Dutch government also recognises RTL as an important broadcaster, is clear from the fact that in the past two years various Dutch Ministries have contributed some 4 million EUR to programmes in the form of co-productions. This amount is higher than the contributions to the joint other broadcasting organisations (i.e. SBS and Public Broadcasting). The distinction between RTL on the one hand and SBS and Talpa on the other hand manifests itself in the area of commercial messages in the programming. RTL goes further in including advertising in the programmes themselves, offers advertisers slogans on billboards and offers room for split screen’ advertising and individual commercials within the programmes. These forms of advertising are not allowed in Dutch legislation. A random check by the Commissariaat also shows that RTL has more interruptions during films. This enhanced advertising and other commercial activities in the RTL programming follows directly from the difference in regulation and monitoring in Luxembourg. In the event that Dutch commercial broadcasters violate a regulation, this in principle results in a fine by the Dutch Media Authority. However, monitoring in Luxembourg is organised along different lines. There is an independent supervisory body for broadcasting (CNP), but this body has no authority with respect to advertising and sponsoring rules. The SMC, a service that operates directly under the Ministry, monitors compliance with advertising and sponsoring rules, but the only sanction it has at its disposal is revoking the broadcasting licence. For this reason, no sanction procedures were initiated by the Luxembourg authorities as they do not have the power to impose fines. As a result of the difference between the two countries and the differences in the room for advertisers, it is likely that RTL has a better negotiation position with the advertisers than SBS & Talpa and, as such, has an economic advantage. It is understandable that the latter organisations see this as a major drawback. The Commissariaat recommends the State Secretary to include a number of liberalisations in the Media Act for the commercial broadcasters. The first option – which can be realised within a reasonably short term – is that the Netherlands adjusts its media legislation on certain points to the minimum level of the Directive and, through this, to the Luxembourg system. For example by enabling ‘slogans’ in on-air sponsorship of programmes, liberalising the options for extending commercial broadcast time during films and allowing ‘split screen’ advertising and isolated commercials. The Commissariaat does not advocate a liberalisation of the options to mix advertising with editorial content. It remains to be seen, for that matter, whether adjusting Dutch media legislation will actually lead to a situation with no differences at all between the Netherlands and Luxembourg. For it is likely that through the different way broadcaster monitoring in Luxembourg is organised and as a result of any interpretation differences, there will remain a distinction between the Dutch commercial broadcasters on the one hand and the RTL stations on the other hand. For this reason it is also of importance to revise the jurisdiction criteria in the coming revision of the Directive. The establishment criteria might, for example, be tightened in such a way that the jurisdiction rests with the member state where the broadcaster has the actual centre of activities.


The European legislator could possibly see the necessity of adjusting the jurisdiction criteria now that it becomes increasingly clear that the matter at hand is not an isolated issue in Europe. The situation in which a station exclusively targets the market of a member state without falling under the media regulation of that member state, can be found in no less than thirteen countries.

3. The national commercial broadcasting organisations

RTL Nederland RTL Nederland is a full subsidiary of RTL Group, the international media concern that came into being in 2001 through a merger of CLT-UFA with British media group Pearson. After a share-swap with Pearson and Belgium-Canadian Groupe Bank Bruxelles (GBL), the German media concern Bertelsmann AG becomes major shareholder of RTL Group in July 2001; Bertelsmann AG owns 90.4% of the share capital. The remaining shares are traded on the Exchange. CLT-UFA is responsible for the broadcasting activities of RTL4, RTL5 and RTL 7. Although the licences for these programmes were granted to CLT-UFA, this report will usually refer to RTL Group. RTL Group is the biggest broadcasting company of Europe with activities and interests in television and radio stations in France, Germany, Spain, Luxembourg, the Netherlands, Belgium, Hungary, Croatia, the United Kingdom, Portugal, Russia and the Netherlands. RTL Group owns shares of 33 television stations. In most countries, programmes are being broadcast under licences granted by the national authorities. More than before, a trend can be discerned to concentrate licences in Luxembourg. Examples are RTL 7, which – contrary to the by now dissolved television station Yorin – has been operating under a Luxembourg licence since August 2005 and the French-speaking community of Belgium, where three RTL stations operate under a Luxembourg licence after an initial period of some years in which they (also) broadcasted under Belgium licences. See Appendix 1. In 2004, the turnover of RTL Group amounted to nearly 4.9 billion EUR, an increase of ten percent as compared to 2003. Television contributes the major share. Additional sources of income are producing programme content and radio activities. The focus of the corporate activities lies in Germany and France. The activities of RTL Nederland make up some seven percent of total turnover and some five percent of the result of RTL Group.

1

1 Source data: Concentration and Plurality of the Dutch Media 2004, The Dutch Media Authority (Commissariaat voor de

Media) October 2005.


Figure 1. Ownership relations of RTL Group – Survey date: 1 July 2005

Note: 1. The television station Yorin was dissolved in August 2005. That same month, RTL7 started broadcasting under the licence of CLT-UFA S.A. 2. Radio station Yorin FM was sold to SBS in January 2006. 3. Translation left column: operating companies television (werkmaatschappijen televisie), operating companies radio (werkmaatschappijen radio), operating companies internet (werkmaatschappijen internet), operating companies facilitating companies (werkmaatschappijen facilitaire bedrijven). 4. Translation right column: shareholders (aandeelhouders), natural persons (natuurlijke personen), voting right holders (stemrechthebbenden).

5. Translation copyright statement: MediagraphiX, source data: annual reports 2004.

In 2004, RTL Nederland completes a reorganisation of company components to bring the corporate structure more in line with those of the sister companies in Germany and Belgium. A number of operating companies are dissolved. The activities will be located in a smaller number of company components, established on one single location. The change of the name of RTL/de Holland Media Groep (HMG) into RTL Nederland is a clear reference to the German parent company RTL Group. The television production company Holland Media House is dissolved and replaced by Blue Circle. This new production company is among others responsible for the programme RTL Boulevard. RTL Nederland houses the television stations RTL4, RTL5 and RTL7 as well as the radio station RTL FM. The latter programme is broadcast under a Dutch licence; a requirement for acquiring an air wave frequency in the Netherlands. The radio station Yorin FM has already been sold to SBS.


RTL is the commercial station with the highest number of viewers in 2004. The station focuses on the age group from 20-49 and has the most appeal through programmes like RTL Nieuws, Idols, Dancing with the stars, Baantjer, Grijpstra & De Gier, RTL Boulevard and Editie NL. The station RTL5 has a younger age group (20-34 years), with Dutch Eredivisie League soccer and the late night talk show Jensen!, RTL travel and Lieve Patty. RTL7 is launched in August 2005. RTL7 targets the age group of 20-49 with a focus on men.The station’s programme offer includes business news such as Business Class and Nederland in bedrijf, sports events including Wimbledon and Master of Darts, films and action series. In addition, there are repeated broadcasts of popular programmes of RTL4. In the evening hours (18-24 hours), RTL Nederland broadcasts around 36% of foreign series and films. RTL Nederland makes an important contribution to the Dutch television offer in the categories news and current items, serious information/education and Dutch series. RTL Nieuws is for instance considered the only decent alternative for the NOS Journaal of the Public Broadcasting. See Appendix 1 for a detailed explanation of the evening programme offer of RTL in 2005. Self-regulation Despite its format Luxembourg status, RTL Nederland, just as SBS and Talpa, has joined the agreements within Dutch media within the framework of self- and co-regulation. The commercial breaks on RTL4, RTL5 and RTL5 need to comply with the Dutch Advertising Standards and decisions of the Dutch Advertising Standards Committee are respected. RTL participates in the administration of the Press Council in the Netherlands. RTL is also a member of the Netherlands Institute for the Classification of Audio-visual Media (NICAM) and their programmes are classified on the basis of Kijkwijzer.

SBS SBS Broadcasting S.a.r.l. is for 80% owned by the British investment companies Permira and KKR. The remaining 20% is controlled by Telegraaf Media Groep. In 2001, the international media concern SBS Broadcasting S.A. (later SBS Broadcasting S.a.r.l.) became the legal successor of TV1, set up two years earlier by the American film producer Harry Evans Sloan. The shares of SBS Broadcasting S.a.r.l. are largely in the hands of various investment companies. The media company Liberty Global Europe is the largest shareholder with 18.2% of the shares. SBS Broadcasting S.a.r.l. operates television station in the Netherlands, Belgium, Denmark, Sweden, Norway, Finland, Hungary and Rumania and also owns interests in 53 radio stations. In 2004, SBS Broadcasting S.a.r.l. generated a turnover of 678 million EUR, an increase of more than sixteen percent as compared to the preceding year. With 82 percent, the television activities constitute the major source of income. The Dutch SBS division contributed nearly 40 percent to the turnover of the parent company in 2004 and realised 27.2% of the company’s operating result. The radio and tv guides Veronica Magazine en Satellite, which are very successful in the Netherlands, are a major source of income.


Figure 2. Ownership relations SBS Broadcasting B.V. – Survey date: 1 July 2005

Note: 1. The parent company SBS Broadcasting S.A was taken over by the British investment companies Permira and KKR

in August 2005. As per October, the shares have been placed in PKS Media S.a.r.l. (later “SBS Broadcasting S.a.r.l.”). The empty holding company SBS Broadcasting S.A. was liquidated after distribution to the shareholders.

2. In October 2005, Telegraaf Media Groep sold its interest of 27% in the Dutch subsidiary as well as 2,4% in the parent company to Permira and KKR. The proceeds were used to finance the acquisition of an interest of 20% in the new company SBS Broadcasting S.a.r.l. (Permira and KKR keep their 80%).

3. In October 2005, Veronica Holding sold its interest of 10% in the Dutch subsidiary to Permira and KKR. 4. In January, the radio station Yorin FM was taken over from RTL. In the middle of April the name was changed into

“Caz”! 5. Translation right column: shareholders > 5% (aandeelhouders > 5%), others (overigen), SBS-administrators/advisory

board (SBS-bestuurders/commissarissen), listed on the Exchange of Amsterdam and New York, (tevens beursgenoteerd te Amsterdam en New York), other activities (overige activiteiten), telephony (telefoniediensten), advertising sales (reclameverkoop).

6. Translation copyright statement: MediagraphiX, Source data: annual reports 2004.

SBS exploits the television stations SBS6, NET5 and Veronica. The radio station CAZ! launched in April 2006 succeeds Yorin FM, which was taken over from RTL Nederland. The first station with which SBS S.A. acquired a foothold in the Netherlands in August 1995, is SBS6. Characteristic is the strong accent on reality tv programmes of Dutch and foreign (mainly American) origin. Hart van Nederland was the first news programme of the Netherlands with purely domestic news and the formula was followed by various other broadcasters.


Just as RTL NL, SBS disposes of its own television production company, responsible for the news programmes Hart van Nederland, Shownieuws and Aktienieuws. In recent years, the share of sports (darts, soccer and racing) in the programming has increased significantly. As SBS6 mainly has a ‘male profile’, NET5 was launched in March 1999 as complementary station targeting young (highly educated) women. NET5 is considered as one of the general broadcasters with the sharpest profile and has a market share of 10% among women in the age group of 20 to 34 years of age thanks to series like Ally McBeal, Desperate Housewives and Sex and the City. As per September 2003, one-time public and then residing under RTL, Veronica is part of SBS Broadcasting B.V. It replaced the hardly successful VB with SBS and the station presently has the youngest viewer profile of all three SBS stations. Long-term foreign series (Star Trek), comedies (The Fresh Prince of Bel-Air) and Dutch programmes such as Temptation Island are the main body of the programming. Veronica broadcasts daily from 18:00 hours and shares the channel with children’s station Jetix Europe. Of all Dutch commercial broadcasting organisations with broadcasts during the evening hours (18-24 hours), SBS has the highest contribution in the categories art and culture, and children’s programmes. With 60%, the share of foreign series and films in the programming is significantly higher than is the case with RTL. See Appendix 1 for a detailed explanation of the evening programme offer of the SBS stations in 2005.

Financial indicators and market shares In 2004, RTL Nederland realised an operating result of 39 million EUR (2003: 25 million EUR). The television result increased by 80% from 30 million EUR to 54 million EUR. In 2004, RTL4, RTL5 and Yorin generate a net turnover of 331 million EUR. Recently published figures over 2005 indicate that RTL Nederland has once more improved its operating result. The operating result increases by 17.9% to 46 million EUR. Turnover of the joint RTL stations arrives at 358 million EUR, an increase of 5.9% with respect to 2004. In 2004, SBS realised an operating result of 33 million EUR (2003: 20 million EUR). The television result increased by 24% from 17 million EUR to 21 million EUR. In 2004, SBS6, NET5 and Veronica generated a net turnover of 206 million EUR.

Chart 1. Financial indicators RTL Nederland and SBS Broadcasting

Broadcaster Net turnover Operating result* Employees (x 1.000.000€) (x 1.000.000€)

2003 2004 2003 2004 2004 RTL Nederland 327 338 25 39 750 Television 320 331 30 54 Radio 7 7 -5 -15 SBS Broadcasting 222 269 20 33 452 Television 201 206 17 21 Print 21 63 3 12 Source data: Annual reports 2004 and Chamber of Commerce * Concerns the operating result corrected for the amortisation of goodwill (‘ébita’)


The Dutch television market is dominated by the Public Broadcasting, RTL Nederland and SBS. In 2004, the Public Broadcasting is the most popular broadcaster with a market share of 36.1% of the viewers market. RTL Nederland comes second with 24.1% and SBS has a market share of 16.8%. In 2005, RTL Nederland succeeds in consolidating its market share with a share of 23.5%. This concerns average viewing figures in the age category from six years up, measured over a period of twenty-four hours.

Chart 2. Market shares Public Broadcasting, RTL Nederland and SBS Broadcasting in 2004

Suppliers/station Market shares* 18-24

2002 2003 2004 2004 Public Broadcasting 35.9 34.4 36.1 38.5 Nederland 1 11.1 11.2 11.1 12.1 Nederland 2 17.2 15.7 18.4 19.4 Nederland 3 7.6 7.5 6.6 7.0 RTL Nederland 25.3 26.2 24.1 26.5 RTL 4 15.8 16.4 15.4 16.6 RTL 5 4.6 4.8 4.3 4.3 Yorin 4.9 5.0 4.4 5.6 SBS Broadcasting 16.3 16.7 16.8 20.3 SBS 6 9.3 9.6 9.6 11.4 Net 5 4.2 4.3 4.3 5.2 Veronica - 2.8 2.8 3.7 Other 22.8 22.8 22.9 14.3 Total 100.3 100.1 99.9 99.6 Source data: SKO (Dutch Audience Research Foundation) * This concerns average viewing figures (Monday up to and incl. Sunday) in the age category from six years up, measured over a period of twenty-four hours. The market shares in the right-hand column have been calculated according to the usual method (18:00 to 24:00 hours)

Talpa The youngest commercial television station Talpa TV started on 13 August 2005. Talpa TV BV is fully owned by Talpa Media Holding NV. In addition to Talpa, the holding company also exploits the companies Talpa Music, Talpa Content and Talpa Radio with the stations Radio 538, Radio 10 Gold and the internet radio station Juize FM. In 2004, Talpa Media Holding realised a negative turnover of 3.1 million EUR. The operating result over that year amounted to 21.6 million negative, one year earlier the losses were 10.3 million EUR.


Figure 3. Ownership relations Talpa Media Holding per 31 October 2005

Soccer is an important pillar of the programming of Talpa. By obtaining the rights to broadcast summaries of the matches in the Dutch Eredivisie League, Talpa managed to secure an important crowd-puller. And with the (away) matches of the Dutch national soccer team the new broadcasters has been able to attract a lot of viewers. The news show NSE Nieuws was cancelled early April due to disappointing ratings. Characteristic for Talpa’s strategy was pulling in well-known Dutch television personalities and programmes from other broadcasters such as talk show Barend & Van Dorp and Jack Spijkerman

’s comedy/talk show Kopspijkers. Talpa

broadcasts a great deal of Dutch drama as e.g. the first series of Gooische Vrouwen, Rozengeur & Wodka Lime, the police series Van Speijk and the daily soap Lotte. The share of reality tv is also high with programmes such as Joling & Gordon over de Vloer, Expeditie Robinson and (Hotel) Big Brother. Talpa has the most Dutch programming of all commercial broadcasters. In the categories Dutch series (8.4%) and human interest (24.2%) the Talpa contribution is the highest of all broadcasters, both the commercial as the public broadcasting organisations. Their share in the programming of quizzes and game-shows is much higher than that of the other commercial broadcasters and almost on the same level as with Public Broadcasting. See Appendix 1 for a detailed explanation of the evening programme offer of Talpa in 2005.

Government financing Through financing television programmes (sponsoring) the government wants to bring certain issues to the attention of the Dutch public. RTL Nederland has received four million euros in government contributions for programme purposes during a period of two years. In 2005, the government contributions (calculated up to and incl. August 2005) increased by 61 percent as compared to 2004. This makes the government contribution to programmes of RTL Nederland significantly higher than the joint contributions to public and domestic commercial broadcasting organisations. In the same period, SBS received government contributions for programme purposes to an amount of nearly half a million euros.

Talpa Service II NV (80%)

Rabo Participaties II BV (20%)

Talpa Media Holding NV

Talpa Radio International BV

Talpa TV BV Talpa Music BV Talpa Content BV

Radio 538 Radio 10 Gold

Juize.FM


Chart 3: Co-productions 2004-2005

Stations Number Contributions

(x 1,000)

2004

2005

*

2004

2005

RTL Nederland 7 14 1.130 2.885 Public Broadcasting 4 19 335 1.164 Other commercial 2 5 110 465 Regional broadcasters - 1 - 3

*The data over 2005 concern the period up to / incl. August

*Source: Netherlands Government Information Service

4. Advertising and other commercial activities The programmes of the Public Broadcasting, RTL, SBS and Talpa exclusively target the Dutch public. The programmes of the stations are alternated with commercials that target Dutch consumers. In 2004, RTL Nederland generates 1,055 million EUR in gross media spending. The gross media spending of SBS and the Public Broadcasting in that year are respectively 773 and 583 million EUR. In 2005 RTL manages to consolidate its position on the Dutch advertisers market. Gross media spending increases to 115 million EUR. SBS maintains its position as well. Gross media spending of SBS amounts to 818 million EUR, an increase of 6% with respect to 2004. The stations of the Public Broadcasting generate 470 million in gross media spending, a decrease of 19% with respect to 2004.

2

Gross media spending in principle only includes advertising commercials, without taking the usual discounts into account on the price list rate for advertisers. This means that forms of so-called non spot advertising such as individual (isolated) spots, sponsoring and text message revenues are not included in the gross media spending. When the relation between the number of viewers and the gross media spending is further examined, it becomes clear that SBS relatively speaking manages to secure the same or an even higher share of the market than RTL. Particularly the target group station NET5 has a favourable ratio between market share on the one hand and advertising volume on the other hand. However, when we look at the ratio between the market share of the stations in relation with the net turnover of the company, RTL Nederland scores a much higher net turnover per percentage point market share of the viewers with its television activities than SBS. This seems to indicate that RTL generates higher revenues outside the commercial breaks. Recently, the Commissariaat - on the basis of random samples - checked various forms of commercial activities in the programming of RTL4, RTL5 and RTL7 in the light of the rules of the Dutch Media Act and the Media Decree This analysis shows that the RTL programmes make use of more options for commercial activities than would be allowed under the Dutch jurisdiction. There are for example more commercial breaks than is allowed in the Netherlands. This is among others the case in broadcasts of films and sports events. Also in the area of sponsoring, the Luxembourg status offers more room than would be possible under the Dutch system. This concerns on-air sponsorship and the manner in which the products and services of the sponsor are brought to the attention of the viewers.

2 Source data: BBC The Media and Advertising Bank (gross media spending).


Within the RTL programming this especially applies to programmes such as Mens en Lijf, Food & Fit, Jetsetters, Eigen Huis en Tuin, Yacht Vision and AutoXperience. Also with the magazines on entrepreneurship such as Business Class and Nederland in Bedrijf, companies are put in the spotlight that have (financially) contributed to the programme and a manner of showing or stating the products and services of the sponsor is used that would in principle not be allowed under Dutch media legislation. Split screen advertising is offered to advertisers by RTL, but is still hardly present in the programmes. With the split screen technique, the advertisement is shown on-screen at the same time as the programme component. At the same time RTL is experimenting, for example in the programme Idols, with showing a commercial/billboard for Rexona during the Programme. This is not permissible under Dutch law. It was noted that RTL programmes do not always have 20 minute intervals between commercial breaks and do not always observe the (European) rule to limit individual commercials to a minimum and to maintain the advertising maximum per hour. It should be noted, however, that this may be due to shifts in the programming. The above clearly indicates that RTL Nederland, with respect to advertising and sponsoring, makes use of the extra room the Directive engrafted Luxembourg legislation offers in comparison with the Dutch Media Act. This seems to confirm the regularly voiced complaint that RTL Nederland has a competitive advantage over SBS and other commercial broadcasters thanks to its stronger negotiation position with respect to advertisers and sponsors, There are estimates on the market that claim that RTL Nederland certainly obtains 15 million EUR higher revenues from the market than when the broadcasting organisation would have to comply with the Dutch Media Act. According to RTL Nederland, it concerns some millions that can be directly attributed to operating under a Luxembourg licence. It should be noted in this context that the Commissariaat has not been able to correctness of these figures on the basis of the available material. In addition to the sample check, it was examined whether any violations of extraordinary circumstances were observed with SBS and Talpa last year with respect to various aspects of the Media Act. Concerning Talpa it should be taken into consideration that this broadcaster does not yet broadcast 24 hours a day for a period less than a year. Some random checks were carried out into commercial broadcast time, but an extensive survey has not taken place as yet. With respect to commercial broadcast time only the situation of SBS can be compared. With respect to a number of components, RTL Nederland distinguishes itself clearly from SBS and Talpa. In the broadcast of sports events by RTL Nederland, the commercial breaks do not always take place at a natural (pause) moment. This practice was not observed with both SBS and Talpa. RTL regularly broadcasts separate commercials that stand out even more as a result of their format and design. Up to now no isolated spots have been observed with Talpa as well as SBS. No commercial breaks that were too short, were found with SBS last year. Contrary to RTL, both with SBS and Talpa no split screen commercials have been found up to today. Although product placement takes place with all commercial broadcasters and is allowed under certain circumstances, RTL clearly goes a lot further in a large number of programmes than SBS and Talpa by means of claims or otherwise commercial expressions as well as other forms of attention. Contrary to SBS and Talpa, closing credits sponsoring has regularly been observed with RTL programmes in which the name of the sponsor was shown. The combination of form and content – for example through the use of slogans – gives sponsor announcements (billboards) sometimes the format of a commercial. Both with SBS and Talpa, one billboard has up to now resulted in a violation.


In the area of clandestine advertising, large differences can be observed between the programming of RTL Nederland and SBS. Although fines were imposed on SBS in the past, the programming is generally speaking in line with the Media Act. With respect to other components of the Media Act no noteworthy deviations were observed between RTL Nederland and SBS. Both with SBS and RTL sometimes interval between commercial breaks were found of less than 20 minutes. Earlier surveys have furthermore shown that SBS too incidentally exceeds the advertising maximums per hour. In addition to this, more commercial breaks during films took place with SBS and RTL than is permitted under the Media Act. In 2005, the Commissariaat imposed fines on SBS for exceeding the maximum length of commercial broadcast time in the programmes of NET5 and SBS6 to an amount of more than 200,000 EUR. Surveys commissioned by the Commissariaat indicate that Luxembourg has a more attractive taxation environment for international companies than the Netherlands. Both countries have long been competitors as domicile for head offices of multinationals, but since the second half of the nineties of the last century the Netherlands has been lagging behind. The Netherlands has a higher effective tax rate than Luxembourg. Next to the difference in tax burden, the attitude of the Luxembourg authorities is another important difference, especially with respect to multinationals that consider establishment in Luxembourg. Entrepreneurs in Luxembourg can more easily make arrangements with the tax authorities – in the form of so-called rulings – than is the case in the Netherlands. According to the investigators, Luxembourg also applies a more flexible approach in making arrangements than the Netherlands. Although these agreements have to be in compliance with the law and case law, they may in practice result in a significant tax reduction.

5. Luxembourg media regulation and monitoring The Luxembourg Media Act, Le loi sur les médias électroniques, of 27 July 1991, which liberalised the Luxembourg audiovisual media sector and formally terminated the CLT monopoly, constitutes the legal basis for the audiovisual sector in Luxembourg. Most provisions of the Directive have been laid down in the Luxembourg Media Act. In addition, the Directive has been implemented in two Règlements grand-ducal (Rules) of 5 April 2001, one for European and independent productions and one for advertising, teleshopping, self-promotion and sponsoring. The status of these two rules is comparable with the Dutch Media Decree: delegated regulations adopted by the government and based on formal law (the Media Act). More and more detailed regulations can be found in the Cahier des Charges agreed upon between the Minister and the broadcaster. For the Luxembourg RTL television programme, the Cahier contains obligations in the domain of stimulating art and culture, impartial and objective reporting, programmes of sufficient quality and sufficient offer of culture, information and entertainment. Furthermore, provisions concerning the ban on discrimination, youth protection and an archive obligation can be found in the Cahier. The Cahier also contains the obligation to provide programmes for minorities and to report on extraordinary events.


The Luxembourg legislator has opted for an integral implementation; the provisions have virtually fully been translated into national law without any amendments. For example: concerning clandestine advertising, Article 28, paragraph 1 of the Luxembourg Media Act stipulates that 'clandestine advertising and teleshopping are prohibited’. A further elaboration, as can be found in the various articles of the Dutch Media Act and the Media Decree, is missing. With respect to sponsoring and the European quota provisions it also holds good that the conditions in the Luxembourg rules are identical with the European rules for these matters and are not complemented or explained. Where there is room for different interpretations (and this is allowed), the Luxembourg authorities usually apply the most liberal view. This is for instance the case with interrupting films for commercials. According to the Luxembourg system, films may be interrupted more often by commercial breaks because for the determination of the length of the film the broadcast time of the commercial breaks may also be included. By now the Dutch legislator, partly after a positive recommendation by the Commissariaat, is also convinced of the fact that such a liberalisation is necessary. In a draft proposal to amend the Media Act a ‘gross principle’ is applied enabling more commercials breaks during film broadcasts in the future. The Grand Duchy has three authorities in the field of regulation of audiovisual media.

- Ministère d’Etat, Service des Médias et des Communications (SMC)

- Commission Indépendante de la Radiodiffusion (CIR), Independent Broadcasting Commission

- Conseil National des Programmes (CNP) -

SMC is the media department associated with the Luxembourg Prime Minister, who is responsible for granting licences to all television stations, national radio stations and radio stations with a reasonably large coverage. A government official (Commissiare du Gouvernement) has been appointed for each Luxembourg broadcaster who monitors the compliance with the licence conditions, laid down in the Cahier des Charges. This also applies to the stations that target a foreign public, like RTL4, RTL5 and RTL7. The government official for RTL Group attends the board meetings of CLT-UFA. The only sanction the Ministry has at its disposal is revoking the licence. As this is a heavy sanction, it is used only seldom. Officially this is only possible on repeated violations of the same rule. A survey is conducted after a complaint or may be started independently; to this end the Ministry disposes of a monitor section. The supervision concerns all matters that do not specifically relate to the content of the programme. This means that the Ministry and/or the Government Official is in charge of enforcing the rules concerning:

- Volume, form and duration of commercial messages; - the manner of interrupting by the commercial breaks; - clandestine advertising; - teleshopping; - sponsoring; - European, independent and recent productions.

As far as known, SMC once conducted an examination in response to a complaint by a Dutch viewer. According to the person who complained, the soap Goede Tijden, Slechte Tijden on RTL4 showed a lot of consumption of alcohol. The management of the then RTL/Veronica Holland Media Groep (HMG), put up their defence based on the argument that this concerned normal and neutral drinking moments in the series. A bar functioned as one of the permanent location of the series. The SMC shared that view.


The SMC also monitors that the RTL stations comply with the European quota provisions and reports every two years to the European Commission on the broadcast European, independent and recent productions. Although the Grand Duchy of Luxembourg reports to the European Commission on compliance with the European quota provisions (Article 4 and 5 of the Directive) by RTL4 and RTL5, the final percentages of these stations are not part of the final assessment by the Commission of those stations that fall under Luxembourg jurisdiction. In this assessment only broadcasters are included that fall under the jurisdiction of the member state in question and that also have a certain market share there. As the market shares of both Dutch-language stations RTL4 and RTL5 are too small, smaller than three percent, their percentages in this respect are not considered by the Commission. In the end this means that percentages scored by the stations RTL4 and RTL5 – although important players on the Dutch market – are not taken into consideration at all in the final assessment of compliance with European quota provisions. The Commission Indépendante de la Radiodiffusion (CIR), Independent Broadcasting Commission mainly operates in the radio domain in the Grand Duchy. The CIR has 5 members that are appointed by the Grand Duke, one is proposed by the Press Council of Luxembourg. The CIR grants licences for the local radio stations and radio stations with a limited air wave coverage and monitors compliance with the media law rules of these radio stations. CIR may revoke the licences of these radio stations on repeated violations of the rules. With respect to other media, such as television and national radio, the CIR merely has advisory authorities. At the request of the Luxembourg Ministry, the CIR issued an advice in the HMG case with respect to the issue of jurisdiction. The Conseil National des Programmes (CNP) is a member of the EPRA (European Platform of Regulatory Authorities), but in comparison with the Commissariaat and other foreign supervisory bodies, it disposes of relatively few competences to enforce compliance with the rules. The supervisory body has 25 members, appointed by various social organisations, such as political parties, trade unions and cultural associations. The CNP monitors the content of television and national (air wave) radio programmes in response to complaints and on its own initiative: the programmes are archived and checked by a monitor section. The remaining authorities of the CNP are merely advisory powers. Monitoring the content of programmes means enforcing the rules for:

- the content of commercials (sexist, discriminating nature, etc., comparable to what in the Netherlands would fall under the Dutch Advertising Standards Committee);

- the protection of minors; - the protection of human dignity.

When these rules are violated, the CNP itself is unable to impose sanctions. It may issue a publication in which it condemns (a 'blame') the behaviour of the broadcaster. This announcement is sent to all media. So far this has taken place two times with an RTL programme aimed at the Netherlands. Two Dutch viewers had lodged a complaint on the occasion of ridiculing and/or eroticising breast-feeding in the programme Sex TV with RTL5. The CNP was of the opinion that this item was unacceptable and published a condemnation. This had happened once before in response to a broadcast of the film ‘Die Heilige Hure’. Consequently, HMG was summoned by CLT-UFA to refrain from broadcasting such films in the future. The CNP can also inform the Minister who is responsible for the media of the violation and request him to revoke the broadcasting licence.


6. Jurisdiction issues in other European countries An increasing number of European countries are confronted with similar jurisdiction issues. There is at a present a case in Belgium that strongly resembles the one in the Netherlands. After expiration of their Belgium licences, the television stations RTL TVI en Club RTL operating under RTL Group, have not applied for new ones. RTL Group is of the opinion that Luxembourg should have the jurisdiction of the programmes and as from 1 January 2006 RTL Group only disposes of Luxembourg licences for both stations. Plug TV, a third station of RTL Group, is also broadcast under Luxembourg licence, even though a Belgium licence was granted in 2004 that is valid until 2011. The Belgium supervisory body for the French-speaking community (CSA) holds the view that, in the light of the establishment criteria of the Directive, there is no reason for moving the jurisdiction from Belgium to Luxembourg. According to the Belgium authorities, there have been no changes in the organisation or decision making process of the broadcaster, and the centre of the broadcasting activities still lies in Brussels. It is for this reason that the CSA wishes to continue the monitoring of the programmes and, by imposing an administrative sanction, may want to provoke legal proceedings with respect to the jurisdiction. In many countries it is a question of broadcasters that enjoy more advertising options based on their domicile than when they were to establish themselves in the country which their broadcasts (primarily) target. Some programmes aimed at Sweden are broadcast under British jurisdiction. As a result of this, the broadcasters in question are not held to the regulation in the Scandinavian countries, which is much stricter than the British regulation especially in the field of advertising and sponsoring. Contrary to the United Kingdom, commercials for children are banned in Sweden. At the present time, the Swedish authorities contest the British status of the programme Kanal 5 as the broadcasting organisation that is responsible for this programme is domiciled in Sweden, in their opinion. The programme is a main competitor of TV4, the most popular commercial broadcasting programme of Sweden. TV4 claims that their yearly losses amount to 36 million EUR due to the unequal competition position. In Ireland and Austria we find the situation that broadcasters from the United Kingdom and Germany respectively, include special components in their programming that are aimed at the neighbouring countries. In those cases the commercials also specifically target the public of the neighbouring countries. This among others results in the fact that commercials originating from the United Kingdom that target the Irish public do not have to take the ban on advertising strong liquor into account, nor the stricter rules in Ireland with respect to commercials for children. In Austria, the from Germany operating commercial television stations, including German-speaking RTL stations, hold a large share of the advertising market through commercial windows aimed at Austrian viewers. According to the Austrian supervisory body these commercial windows take up more than ninety percent of the advertising revenues for commercial television, which puts the domestic broadcasters at a serious disadvantage. Sometimes the issue boils down to a possible circumvention of the provisions for programme quota or the protection of minors. In Latvia, for instance, the station 3+ (Baltics) does not have to maintain the minimum percentages for original productions in Latvian as the responsible broadcaster is domiciled in the United Kingdom. Because the station broadcasts in a non-EU language - Russian - it does not have to comply with the European quota provisions. Neighbouring country Estonia has a similar matter at hand with programma 3+ (Estonia) broadcast under a British licence. The Polish supervisory body of the broadcaster estimates that currently some 23 stations specifically target the Polish market from outside Poland. A significant number of programme suppliers is operating from the United Kingdom. According to the Polish authorities, various programmes do not adhere to the rules that apply in Poland, especially concerning the protection of minors.


In a memorandum of 13 May 2005, a group of thirteen countries, in addition to the Netherlands consisting of: Belgium. Estonia, Ireland, Latvia. Lithuania, Malta, Austria, Poland, Portugal, Slovenia, the Czech Republic and Sweden has called up the European Commission not to ignore the jurisdiction problems during the revision process of the Directive. The current Directive is based on the so-called ‘country of origin principle’: the country where the broadcaster is established and from which the broadcasts originate, is authorised and not the country at which the broadcasts are aimed (country of reception). The Commission views this as the cornerstone of the Directive and a consequence of the freedom of establishment in Europe and does not seem to have the intention to make material changes in this respect. Most member states agree with the country of origin principle, but urge the Commission nevertheless to make it possible for a member state to draw up rules for a programme that is primarily targeted at that member state. In this context one may consider weighting the language of the broadcast in determining the authority of a country to set rules and/or carry out monitoring activities. The considerations of the current Directive have a ban on a u-turn construction, i.e. a conscious establishment in a certain member state (for example, Luxembourg) in order to circumvent the regulation of another member state (the Netherlands, for example). In practice it is very difficult for a member state to prove that a broadcaster is making use of a u-turn construction. The burden of evidence rests entirely with the member state of reception and a (subjective) intention of broadcasting organisation to circumvent regulation, is hard to prove. it is for this reason that the Netherlands and the other countries that signed the memorandum are of the opinion that the options for a member state to act against broadcasts from another member state that are primarily targeted at the former member state, should be enhanced.

7. Options for an equal competitive environment As long as RTL Nederland and competitors such as SBS Broadcasting and Talpa are confronted with different rules, while at the same time targeting the same viewers and advertisers, it can hardly be said that the Netherlands has an equal competitive environment for commercial broadcasters. There are a few options to make the competition relations on the television market more equal. The first option – which can be realised within a reasonably short term – is that the Netherlands liberalizes its media legislation on certain points by adjusting it to the minimum level of the Directive and, through this, to the Luxembourg system. This will entail that the sophisticated and detailed rules of the Dutch Media Act and the Media Decree are simplified or even cancelled. One may think of enabling ‘slogans' in sponsor announcements, a liberalisation of the possibilities for individual commercials and allowing ‘split screen’ advertising. Recently, the Commissariaat expressed itself in favour of allowing more commercial breaks during film broadcasts This liberalisation is included in a proposal to amend the Media Act. In this option, the Netherlands refrains from setting stricter or more detailed rules; a possibility that the Directive explicitly grants the member states from the viewpoint of protection of the public or consumer. It remains to be seen whether through the adjustment of the Dutch media legislation to the most liberal and least detailed provisions of the Directive, all differences between the Netherlands and Luxembourg will be eliminated.


Through the different manner in which the monitoring of the broadcasters is organised in Luxembourg and as a result of differences in interpretation between the two member states of in themselves identical rules, there might still be a different environment between the Dutch commercial broadcasters and the RTL stations. It is for this reason that the Commissariaat continues to urge to revise the jurisdiction criteria in the coming revision of the Directive. The amendment proposal submitted on 15 December 2005 by the European Commission does not contain an adjustment of the jurisdiction criteria. However, it cannot be excluded that the European Parliament, which has a co-deciding role in the procedure (the so-called co-decision procedure) will still submit amendments in the field of jurisdiction. Possibly the European Parliament and the Council of Ministers, who together have the final say in the revision of the Directive, may see the necessity of adjustment of the jurisdiction criteria now that it becomes increasingly clear that this is not an isolated problem in Europe. The situation in which a station exclusively targets the market of a member state without that station falling under the media regulation of that member state, is not merely limited to the Netherlands. More countries are faced with the same issue and put it that their television markets are (potentially) disrupted by broadcasters that target their public from abroad.


Annex 1 Figures and Charts

Chart 1. Evening programme offer on Dutch television 2005

18-24 hours

2005 NL1 NL2 NL3 PB RTL4 RTL5 RTL7 RTL SBS6 NET5 Veronica SBS Talpa News and current topics 16.4 15.7 10.8 14.2 22.6 0.0 0.2 7.6 12.2 0.0 0.0 4.0 0.0 Serious information/ education 6.2 5.7 5.1 5.7 1.9 5.7 5.9 4.5 6.1 2.2 1.5 3.2 0.6 Art & Culture 12.0 0.5 9.8 7.5 0.0 0.1 0.5 0.2 2.7 0.1 0.5 1.1 0.0 Human Interest 30.0 5.9 9.0 14.8 28.4 12.0 22.1 20.8 25.6 1.1 8.9 11.9 24.2 Leisure time, advice and service 0.4 1.1 2.3 1.3 10.3 8.8 8.8 9.3 6.1 7.7 6.0 6.6 1.0 Other information/ education 2.7 2.2 7.0 4.0 0.5 0.3 0.2 0.3 0.9 0.1 0.0 0.4 0.0 Dutch series 1.8 4.1 3.7 3.2 8.8 5.2 4.4 6.1 0.1 0.7 0.0 0.3 8.4

Dutch films 0.4 0.8 2.5 1.3 0.0 0.3 1.8 0.7 0.1 0.2 0.3 0.2 0.4

Foreign series 9.1 7.2 7.5 7.9 12.5 27.4 20.2 20.1 10.7 48.4 29.5 29.5 4.6

Foreign films 5.4 2.3 7.3 5.1 4.6 25.1 18.6 16.2 18.3 35.0 39.6 31.1 8.6

Game shows & quizzes quizzen

8.4 11.4 4.0 7.9 3.9 0.3 2.0 2.1 1.8 0.0 2.3 1.4 7.4 Cabaret & satire 0.3 1.9 5.2 2.5 0.1 0.0 0.0 0.0 0.5 0.1 0.1 0.2 0.2 Other entertainment 4.6 4.2 7.0 5.3 5.6 2.2 12.3 6.7 3.6 3.3 7.2 4.7 28.9 Sports 0.1 29.2 1.4 10.1 0.0 12.3 2.5 5.0 10.9 0.0 2.8 4.6 14.0

Music 2.2 7.4 2.4 4.0 0.6 0.1 0.2 0.3 0.0 0.0 1.1 0.4 1.8

Children 0.1 0.5 15.0 5.4 0.1 0.1 0.2 0.1 0.3 1.0 0.3 0.5 0.0

Broadcast time 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Source data: SKO (Dutch Audience Research Foundation)

In the above chart, the news programming on RTL5 (RTLZ) has not been included as this programme is broadcast during the day. That programme as well, offers a lot of news and (financial) information specifically targeted at the Netherlands. The categorisation in the above chart is based on the own statements of the broadcasters, which explains why despite the programmes NSE and Barend & Van Dorp Talpa scores ‘0’ in the category news and current topics.


Chart 2. European television stations in which RTL Group has an interest

Country Station Interest RTL Group

Licence

Belgium RTL TVI 66% Luxembourg (Service des Média et Communications)

Belgium CLUB RTL 66% Luxembourg Belgium PLUG TV 66% Belgium (CSA, French-speaking community of Belgium)

and Luxembourg (Service des Média et Communications)

Germany RTL TELEVISION 100% German (NLM, Nedersaksen)

Germany RTL II 35.9% German (LPR, Hessen)

Germany VOX 99.7% German (ULR, Schleswig-Holstein.

Germany SUPER RTL 50% German (LFR, Noordrijn Westfalen)

Germany RTL SHOP 100% German (no permission required: teleshopping)

Germany N-TV 50% German (MABB, Berlin-Brandenburg)

Germany TRAUMPARTNER TV 100% German (MABB, Berlin-Brandenburg)

France M6* 48.8% French (CSA)

France RTL9 35% Luxembourg Hungary RTL KLUB 49% Hungarian (ORTT)

Luxembourg RTL TELE 100% Luxembourg Luxembourg DEN 2.RTL 100% Luxembourg Croatia RTL TELEVIZIJA 65.5% Croatian (Council for Electronic Media of

The Republic of Croatia)

The Netherlands RTL4 100% Luxembourg The Netherlands RTL5 100% Luxembourg The Netherlands RTL7 100% Luxembourg Portugal TVI 15.7% Portuguese (AACS)

Spain ANTENA 3 17.2% Spanish (Min. of Science and Technique) Russia REN TV 30% Russian (Federal Service for Supervision/Ministry of

Culture and Mass communication) United Kingdom FIVE 100% British (OFCOM)

* M6 also exploits 10 theme channels


Chart 3. Tasks and powers media authorities Grand Duchy of Luxembourg

Institute/supervisory body

Granting licences Monitoring Rules Sanctions

Ministère d’Etat,

Service des Médias et des Communications & Commissiare du Gouvernement

Yes: all TV, national radio and radio with large coverage programme

Yes: all TV, national radio and radio with large coverage on compliance with licence conditions, each broadcaster has its own Commissiare du Gouvernement In charge of the supervision

- duration, volume, Length, form and interruption commercial messages - clandestine advertising; - teleshopping; - sponsoring; - European, Independent and recent productions.

Yes: only revoke licence on repeated violations

Commission Indépendante de la Radiodiffusion (CIR), Independent Broadcasting Comm ission

Yes: local radio and radio with limited coverage

Yes: all TV, national radio and radio with large coverage programme

Rules Media Act radio Yes: only revoke licence on repeated violations

Conseil National des Programmes (CNP)

No Yes: all TV, national radio and radio with large coverage programme

- content commercial messages - protection of minors; - protection of human dignity

No: may issue a publication on the violation and/or ask the Minister to take measures (revoke licence)


Annex 2 History jurisdiction issue RTL4 and RTL5 The supervision of RTL4 and RTL5 has been the subject of legal proceedings for ten years. In the autumn of 1996 the Commissariaat announced a survey to examine in how far both programmes needed to fall under Dutch jurisdiction. After an extensive survey, the Commissariaat found that both programmes indeed needed a licence for commercial broadcasters on the basis of the Media Act. For determining the place of establishment, it is of importance according to the Directive, where the head office is located, where programming decisions are taken and where a significant part of the broadcaster’s staff is employed. Once the establishment criteria through a reference in the Media Act also became enforceable in the Netherland, the Commissariaat notified the Holland Media Groep (HMG) – the predecessor of RTL Nederland – on 20 November 1997 that the programmes RTL4 and RTL5 needed to comply with the Media Act and required a licence from the Commissariaat. The Commissariaat was of the opinion that the programming decisions were taken at the Dutch head office and that a significant part of the staff was employed there. HMG and parent company and/or licence holder CLT-UFA, however, took the position that, on the grounds of the establishment criteria, Luxembourg had to be considered the responsible member state. After the first decision of the Commissariaat of 20 November 1997, there were various objection and appeal proceedings and requests for a provisional arrangement (summary procedure). SBS put it that the RTL stations as a result of the Luxembourg regulation and supervision had more options in the field of advertising and sponsoring and that this was a case of unfair competition. As SBS as direct competitor was (possibly) directly harmed in its interests, the broadcaster was allowed by the Commissariaat and the court to the proceedings as stakeholder in the sense of the Dutch General Administrative Law Act (Awb). Twice the matter was submitted to the highest administrative court division of the Netherlands, the Administrative Law Division of the Dutch Council of State. On both instances the Division ruled in accordance with the decision of the Amsterdam court that the Commissariaat had rightfully assumed that RTL4 and RTL5 needed to fall under Dutch jurisdiction. Nevertheless the decision of the Commissariaat was both times reversed for procedure reasons and the Commissariaat was unable to take any measures. In its final decision in this matter, on 6 August 2003, the Division stated that the Commissariaat determined on the basis of rightful factual related arguments that HMG should be considered as a broadcasting organisation established in the Netherlands that is responsible for RTL4 and RTL5, and as such needed to fall under Dutch jurisdiction. But as Luxembourg sees no reason to give up the supervision, this would create a situation in which two member states, the Netherlands and Luxembourg, exercise jurisdiction over the programmes. According to the Division, double supervision is in conflict with the European principle and, for procedure reasons, it has granted the appeal by HMG and CLT-UFA and reversed the earlier decision of the Commissariaat. In its decision, the Division mentioned some procedure options to end the Luxembourg jurisdiction. The Division suggested the Commissariaat to request the Luxembourg supervisor to terminate the supervision. In the event of a refusal, legal proceedings might be instituted with the Luxembourg court. Another suggestion was that the Dutch authorities would start violation proceedings against Luxembourg on the grounds of Article 227 of the EC Treaty. The Division also pointed out the possibility of an arbitration procedure on the grounds of Article 239 of the EC Treaty, in which both the Netherlands and Luxembourg refer the matter to the European Court. At that time, the Commissariaat had no more legal options to pursue. The Commissariaat requested the State Secretary to take this matter up and to consider whether a solution might be reached at the level of the member states the Netherlands and Luxembourg.

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