Silvio Berlusconi suffered a fresh setback on Wednesday after the European Commission threatened action over the Italian TV system, which critics say is dominated by the former premier's private network Mediaset and state broadcaster RAI.
The EC specifically criticised a media law passed by the previous, Berlusconi government in 2004 which it said appeared to consolidate the positions of Mediaset and RAI and hamper would-be rivals from entering the digital market. The EC sent a formal letter to the Italian government which now has two months to address the commission's concerns. Failure to do so could result in legal action and ultimately a hefty fine.
The rapping strengthened the hand of Premier Romano Prodi, who narrowly unseated Berlusconi in April and has put media reform high on his government's agenda.
Prodi's centre-left coalition is fiercely opposed to the media law, expressing similar criticisms to Brussels. Communications Minister Paolo Gentiloni said the government would reply to the letter as required, adding that he was sure its media reform plans would satisfy the EC.
"Europe asks us not to favour dominant positions during the transition from analogue to digital. That's one of the aims of the reforms we are putting together to introduce greater pluralism and competition in the TV system," he said.
In its letter, the EC said the so-called Gasparri law appeared to clash with European competition rules and demanded clarification. It said the law had introduced "unjustified restrictions" in the supply of broadcasting services to the "unjustified advantage" of existing operators, namely the three-channel Mediaset, the three-channel RAI and the small, two-channel La 7, owned by telecommunications giant Telecom Italia.
Mediaset and RAI together account for some 90% of Italy's audience share and take 93% of money spent on TV advertising, with 66% going to Publitalia, the lucrative advertising arm of Berlusconi's business empire.
The media law passed in April 2004 watered down legislation on dominant positions, allowing cross-ownershipof newspapers, TV and radio, as well as setting a December 2006 deadline for terrestial networks to switch to digital.
Berlusconi's centre-right coalition insisted the law would throw the market open to competition, protect minor players and regulate the switch to digital. But the EC said the reforms favoured existing broadcasters in the changeover.
"The law may indeed preclude the access to digital of new operators which are not active in analogue transmissions, preventing them from experimenting with the new technologies and creating their own digital networks," it said.
"The dominating operators are also allowed to maintain their control of analogue frequencies and networks up until the moment they pass to digital, preventing rival operators from benefitting from the new technologies," the EC said. Former communications minister Maurizio Gasparri, who drew up the law, issued a statement defending the legislation.
Gasparri insisted the law was in line with European directives and had allowed the media market to grow. He said the only problem was the "lack of businessmen ready to invest resources" in the system.
Berlusconi's Forza Italia party said the EC had not criticised the law but merely asked for "clarification regarding specific aspects".
Critics of the law alleged at the time that it had been tailor-made to boost Berlusconi's media interests. The legislation sidestepped a Constitutional Court ruling which ordered the Berlusconi channel Rete 4 to close down or move to satellite.
Although the law prevented broadcasters from accounting for more than 20% of the national advertising pie, it expanded definition of the market, lifting its total value to some 26 billion euros. Critics say the reform has allowed Berlusconi's
companies to sell as much as 2 billion euros annually in extra advertising.
The then president Carlo Azeglio Ciampi sent a first draft back to parliament for modification, complaining that it failed to guarantee media pluralism and favoured the creation of dominant positions in the advertising sector. Prodi has vowed to overhaul the broadcasting system.
But political observers speculate that Prodi's weak majority could make it extremely difficult for him to pass legislation perceived as damaging to the former premier's interests.
Prodi's government hangs by a thread in the Senate, where it has only two more seats than the Berlusconi-led opposition.
