The commercial television station TV3 has received legal advice that RTE's current funding arrangements violate EU rules on State aid. Last March TV3 submitted a formal complaint to the European Commission on the matter.
A spokesman for the Department of Arts, Heritage, Gaeltacht and the Islands confirmed last night that it had been contacted by the Commission about the complaint and had responded. He declined to comment further.
Mr Mark Deering, director of regulatory and legal affairs at TV3, pointed out yesterday that RTE now received £70 million a year in licence fee and £80 million from its commercial activities, including advertising.
His concern was that RTE was using the licence fee to compete with stations such as TV3 in the commercial arena. It amounted to "State aid" and was "a distortion of competition", which is prohibited by the EU.
Similar complaints to the European Commission had been made by commercial broadcasting companies in Spain, Italy, Germany and France, he said.
Undue delay in processing the Spanish complaint, made in 1993, had led the European Court of Justice to find last September that the Commission had failed to act on the matter.
An action by the French complainants had led to a similar finding by the European Court three months ago, he said, since when the processing of the complaints "had been speeded up".
In a submission to the Newspaper Commission, which reported in 1996, the National Newspapers of Ireland argued that RTE's use of the licence fee distorted competition in the marketplace.
It proposed that the fee be phased out and, while that was taking place, there be total transparency by RTE where the use of the fee for public service purposes was concerned. It called also for strict adherence by RTE to codes of standards on sponsorship, cross-promotion and such matters.
In its legal advice to TV3, the McCann FitzGerald law firm said there was need "for a clear and measurable definition of the public service obligation for which RTE is compensated . . ." This should be linked "with an accounting transparency requirement", it said.
As a general principle, "sport and entertainment programming should not be included in the public service remit", the solicitors advised, and where RTE decided to broadcast such programmes this should be only where sufficient commercial revenue was generated to cover the costs.
To ensure transparency, RTE should be required to implement separate accounting, "to allocate with precision the assets, resources, costs and revenues attributable to the fulfilment of its public service remit," the advice said.
It concluded that while TV3 "strongly believes that public service broadcasting has a very important role to play in Irish society" the current RTE financing arrangements should be changed "not only to comply with EU law but also to reflect the changed reality of broadcasting in Ireland".
