ERR News asked head of the EML Merle Viirmaa what had prompted the European Commission complaint - which primarily focuses on the provision of online news, which the EML says represents unfair competition from ERR - its timing, the EML's prognosis of its potential success and other important points, in the following written interview, which forms the first part of a series of two.

First, a little background. The EML represents the private media firms, both major and minor, and totalling over 60. The sector is dominated by two groups. One is Postimees Grupp, which owns the newspaper of that name plus its regional variants, in print and online, TV channel Kanal 2, and various radio stations and print media. Ekspress Meedia operates the oldest news portal in Estonia, Delfi, as well as daily Eesti Päevaleht, weeklies Eesti Ekspress and Maaleht and other offerings from among all media types.

Add to that daily Õhtuleht and business daily Äripäev, both with their online components, other regional dailies and publications, news portal Geenius, and many other print and online/on air titles and services.

The heart of the EML's complaint revolves around ERR's online news, which it has been providing in three languages: Estonian, Russian and English, for over 10 years, and which the EML regards as unfair competition since it it funded from the state budget annually, whereas the private sector publications have to charge a subscription and carry advertising.

ERR, formed in 2007 with the merger of the previously-separate ETV and Estonian Radio - has no print titles. This is as long a suffering sector in Estonia as it is worldwide, even before the coroanvirus pandemic broke, and faces local challenges including keeping the loss-making paper delivery services open six days a week, especially to more remote areas of the country. Digital subscriptions to private media publications often effectively make up this shortfall, at least in the short- to mid-term.

ERR News: Why is the complaint being brought to the European Commission right now, over 10 years after ERR started to provide online news and at a time when Delfi and Postimees online news each get more readers than ERR?

M.V.: The ambiguity and opacity of the principles of financing ERR have been an issue for a long time. The National Audit Office (Riigikontroll) also drew attention to this in its 2016 report report to the Riigikogu.

We have repeatedly sought solutions at a national level, but unfortunately to no avail. In the spring of 2020, we decided to lodge a complaint with the European Commission, which is responsible for issues of illegal state aid.

The complaint was, however, further postponed by a change of focus with the coronavirus pandemic.

We have certainly been encouraged by similar cases in neighboring countries, which have largely led to changes in national regulations.

ERR News: Is the timing related to the state budget discussions going on through September, from which ERR is funded?

M.V.: No, this has no bearing on it.

What is the chance of it succeeding with the commission, given it gave the green light to, for example, the Nordica bailout?

In the wake of the economic crisis following the COVID-19 pandemic, the European Commission has indeed decided to impose less stringent restrictions on state aid, but this is more about stimulating the economies of the Member States. Our complaint will not be affected by that. State aid for ERR activities which are not directly necessary for the fulfillment of the state or a public task, is not necessary for economic recovery.

We are convinced that the European Commission will issue a precept to the Estonian state to specify the limits of granting state aid [to ERR], because both the free market and media freedom and diversity are fundamental European values ​​and therefore very important issues for the commission. The latter are unambiguously interlinked: The guarantee of media credibility lies precisely in the free market and free competition

At the same time, we hope that the Estonian state will not wait for the precept from the European Commission, but will make the necessary changes within its own domestic law. We want to continue the constructive dialogue within the country as soon as possible.

Is there any precedent for this kind of case?

Yes: Most European countries have been able to set national limits in similar cases in a way that is acceptable to both the national broadcaster and to the private sector media. In countries which have received an injunction from the commission (such as Finland), the situation is being regulated.

The commission itself says: "The European Commission can only take up your complaint if it is about a breach of Union law by authorities in an EU country". Does ERR breach EU laws, then?

In our view, Article 107 (1) of the Treaty on the Functioning of the European Union is being infringed; Article 107 (1) of the Treaty on the Functioning of the European Union stipulates that:

"…any aid granted by a Member State or through state resources in any form whatsoever which distorts or threatens to distort competition by favoring certain undertakings or the production of certain goods shall, insofar as it affects trade between Member States, be incompatible with the internal market".

The commission also has competence to deal with state aid under Article 108 (2) of the Treaty.

Why can't ERR, like other public broadcasters, such as the BBC, carry comprehensive online news?

The EML does not claim that ERR may not share online news and information. The question is on what principles ERR funding is built.

Legally speaking, the purpose of the ERR is to contribute to the fulfillment of the tasks of the Estonian state provided for in the Constitution of the Republic of Estonia. To this end, the national broadcaster creates programs, produces and broadcasts programs and organizes other activities:

" The objective of Public Broadcasting is to assist in the performance of the functions of the Estonian state provided by the Constitution of the Republic of Estonia. For such purposes, Public Broadcasting shall create programme services, produce and mediate programmes and organise other activities, (Estonian Public Broadcasting Act  § 4 (1)).

Thus, the legislature has considered television and radio broadcasts and related activities to be the ERR's sphere of activities. Other activities may not be prohibited for ERR, but this does not mean that the costs of these activities should be borne by the taxpayer. It is this which raises the question of state aid.

Such state aid is presumed to be unlawful if it distorts free competition. Online news is not only produced by ERR, but also by private media companies. If the state finances only the online news produced by ERR from the state budget, this is detrimental to those private media companies. Consequently, state aid should be inadmissible here. This is a simplified approach, but may help to clarify the content of the complaint.

The association of journalists (EAL) has come out in support of ERR. Shouldn't journalists, rather than big business, be listened to first and foremost, on journalistic questions?

Our complaint is also made directly in the interests of the journalists themselves. State intervention significantly reduces the economic opportunities for private media companies to invest in editorial work, plus the jobs of journalists working in private media companies are at risk.

In addition, journalists need both a strong national broadcasting and private media. Thus, solving the problem is important in the interests of preserving the greatest value of the press - freedom of speech - as well as the jobs of journalists.

Eesti Ekspress, Õhtuleht and Äripäev do not carry English news about Estonia, and for Postimees it's only a small proportion of their work. Does this not endanger Estonia being without comprehensive news for those who do not read Estonian, with all the attendant security, business, cultural and other considerations then left out?

Additional opportunities arising from fair competition would allow our editorial offices to develop this part of their businesses as well.

Isn't the complaint simply the result of ERR's relative success online in recent years – in other words, had there been little or no growth, we wouldn't be having this conversation?

The number of users of ERR online news has been able to grow, mainly because its content is free of charge for the user, and free of advertising. Of course, we also appreciate the work of our colleagues, but understandably, people prefer a free product to a paid one when choosing. Unfortunately, private media cannot offer free products and services.

We might also add that while the main focus of our complaint is on online news production, the base is much broader: From the transparency of ERR funding to Jupiter, which mainly offers foreign films and series, again for free. Should Netflix-like products still be offered at the taxpayer's expense?

Isn't it the case that a "rising tide lifts all the ships in the harbor" - in other words, increasing online news readership with ERR can also find its way to the private sector (and vice versa)?

In our view, this is neither relevant nor correct. Private media companies have brought the reader to online news in Estonia, and their market share would certainly be significantly higher if ERR online news had not been distributed free of charge. The information must be balanced and diverse, and the size of the market share of a state media is certainly not what a democratic state should strive towards.

Isn't the move also political in that a prominent government minister (Martin Helme) has recently attacked one of the private sector channels (Delfi) as "fake news"?

No, to our knowledge, the attitudes of government members and politicians in general towards ERR and the private media do not differ significantly (Martin Helme also attacked ERR, whose supervisory board he sat on at the time, last year - ed.).

Ultimately, isn't it up to the readers to decide for themselves, in a free market?

Exactly so, but the problem is that this is not a free market (although it ought to be). Some market participants receive funding from the state budget by providing so-called free content; the other party/ies must sell its content for a fee for its own production.

ERR as a non-commercial site which carries no advertisements, requires no subscription fee and is bound by its own best practice, as well as the law, in a way the private sector is not – for instance gossip or salacious topics have to be largely avoided – means that this is comparing apples and oranges in any case?

We consider this to be a subjective opinion. There is a lot of entertainment and so-called gossip content, as well as very good press, in both ERR and the private channels. Today, media business models have changed around the world, and today the amount of funding for print media from advertising revenue is minimal.

If the print sector is in decline, with other related issues such as Omniva/Eesti post delivery costs, demographic changes etc., causing harm to the private sector, how is that ERR's fault? ERR can (and has) even highlighted these issues in its news pieces?

We don't blame ERR for this in any way. Moreover, in our complaint we do not criticize ERR itself, but the fact that state that has failed to change the regulation of media services in good time. This has not happened only in Estonia. Other European countries have also needed a reminder from the European Commission.

We are asking the state for equal treatment and not to intervene in a free market. Equal treatment would ensure the financial security and independence of the private media, which would help us to further accelerate the digitalization of our business model through fair remuneration for our work.

Why is it only online news which is seemingly under fire, and not TV or radio – given these do not require a subscription fee in quite the same way?

ERR as a public service broadcaster is set up to perform public functions. According to the law, the purpose of ERR is to create television and radio programs, produce and broadcast programs. The media union's complaint does not concern the production of ERR's television and radio programs or their public funding.

The 2007 act which created ERR by merging radio and TV makes no mention of online news, only referring to the website as a place to report things like budget and development plans. Is this at the heart of the complaint?

What matters is not only that the law does not cover online news, but also that the law does not comply with EU state aid rules regarding ERR funding.

Is it not the case that the 2007 act simply needs amending, as acts often are?

Many pieces of legislation need to be amended, but this one must take into account EU state aid rules.

Ultimately, we highly acknowledge the work of our ERR colleagues and hope that the public and private media can work together and complement each other. In order to solve the problem, it is therefore not reasonable to wait for the commission's decision - we want to start a national dialogue right away.

A second interview on the same topic with ERR board chair Erik Roose is here.

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