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164 LEVY FUNDING, STATE INFLUENCE & APPLICATION OF COMMUNITY LAW – DOWNIE 16[2006/2007]4 ULR

is determined by the parliaments and governments of the liability to pay the fees arose out of the mere fact of possession
Länder in light of the advice of an independent commission of a receiver and was not in consideration of actual use of the
(known as the KEF). services provided by the broadcasters.
The task of invoicing and collecting the fee has been The broadcasters had argued before the court that it could
delegated by the public broadcasters to an unincorporated not be held to be a determining factor that the broadcasting
association known as the GEZ. This has no legal personality fee was provided for by law, otherwise all German doctors,
and has no capacity to bring legal proceedings but acts for and lawyers and architects would be ‘financed by the state’ because
on behalf of the public broadcasters. In pursuing unpaid fees, the levels of their fees are fixed by the state. The court
the GEZ issues a notice of liability which describes it as acting responded as follows:
as an official authority and, if the fee is not paid, payment can
be enforced by administrative proceedings. Even though those levels are regulated by the State, the
consumer always enters of his own free will into a
The Proceedings contractual relationship with the members of those
professions and always receives an actual service. In
In 2005, the GEZ awarded a contract for the cleaning of its addition, the financing of the activities of members of
premises to one of GEWA’s competitors. GEWA raised those professions is neither ensured nor guaranteed by
proceedings in the German courts alleging that the GEZ had the State. 7
failed to comply with the procurement rules in awarding the
cleaning contract. Those remarks echoed those of the Advocate General as to
The public broadcasters argued that they (and thus the the insulation of the public broadcasters from normal
GEZ) were not contracting authorities within the meaning of competitive pressures. 8
the procurement rules, given, in particular, that the public As regards the procedures for the levying of the fee, the
broadcasting services which they provided were financed for court considered it clear from the relevant treaty that the issuing
the most part by the broadcasting fee and that there was no of notices of liability to the charge constituted an act of an
public funding nor public control of those services. official authority and that, in recovering unpaid fees, the
Having found that the first two conditions for broadcasters enjoyed the powers of a public authority.
characterising the public broadcasters as ‘bodies governed by Lastly, the court observed that, in light of the functional
public law’ were satisfied, the Oberlandesgericht (Higher approach which needed to be adopted in such cases, it was
Regional Court) Düsseldorf decided to make a reference to immaterial
the European Court of Justice in respect of the third condition.
In that context, the referring court was satisfied that the … whether the financial resources [made available to the
German public authorities did not exercise any management contracting authority] pass through the State budget, the
supervision in respect of the broadcasters or any influence on State first collecting the fee and then making the fee income
appointments to their governing bodies. The only issue still to available to the public broadcasting bodies, or whether
be determined was whether the broadcasters’ activities were the State grants to those bodies the right to collect the fee
financed for the most part by the state or by other contracting themselves. 9
authorities.
Thus, the court concluded, a form of financing (such as that
The Judgment at issue in the case) which is brought into being by a measure
of the state, is guaranteed by the state and is secured by methods
The European Court of Justice (Fourth Chamber) began its of charging and collection which fall within public authority
consideration of the issue referred by pointing out that the powers, satisfied the condition of ‘financed … by the state’
concept of ‘financed … by the state’ must, in light of the for the purpose of the procurement rules.
objectives pursued by the EU procurement directives, receive Thus, the court held that the relevant financing condition
what it described as a ‘functional interpretation’. 5 was satisfied when the activities of public broadcasting bodies
The court then pointed out that the fees collected by the such as those in the relevant proceedings are financed for the
GEZ had their origin in the relevant treaty on broadcasting, most part by a fee payable by persons who possess a receiver,
that is, a measure of the state, and was not the result of any which is imposed, calculated and levied according to rules such
contractual arrangement entered into between the broadcasters as those in the relevant proceedings.
and their customers. Furthermore, the determination of the
amount of the fee was a matter for the state (on the basis of
6
the advice of the KEF). In addition, the court noted that
7 See paragraph 46 of the judgment.
8 As he put it, at paragraph 63 of his opinion, ‘[t]hat form of sheltered
activity in the market frees the broadcasters of any uncertainty as to
their income, since they have the State’s guarantee, manifested in the
5 See paragraph 40 of the judgment. budgets drawn up by the KEF. Accordingly, even if the argument that
6 The court observed, at paragraph 43 of the judgment, that the the origin of the funds is private were accepted, the confident assurance
parliaments and governments of the Länder were free to depart from which the broadcasters can have in the arrival of their pecuniary resources
the expert advice received in certain limited circumstances. However, it does not differ from that they may have when capital is placed directly at
noted that even if they had been obliged to follow without qualification their disposal by the State’. The Advocate General also remarked, at
the recommendations of the KEF, it would remain the case that the paragraph 64 of the opinion, on the fact that the broadcasters ‘are freed
mechanism for fixing the amount of the fee was established by the state, from resorting to private credit in the critical situation of insolvency,
which had thereby transferred public authority powers to a commission which reinforces the public character of the subsidy’.
of experts. 9 See paragraph 46 of the judgment.
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