(CN) — Europe's highest court on Wednesday said a German law meant to protect the revenues of regional television by banning national broadcasters from targeting regional markets with ads may be unlawful because it winds up giving an unfair advantage to internet advertising services.
In 2016, the German state of Bavaria prohibited television broadcasters from inserting advertising meant for its regional market into national programs. The German law is designed to ensure regional and local television broadcasters are not boxed out of advertising revenues, but the prohibition does not apply to internet advertising services.
It was this aspect of the law that the European Court of Justice said might be unfair. The Luxembourg-based court found the ban on regional advertising for national broadcasters may give internet services a leg up.
The ruling came in a case involving an Austrian-based chain of clothing stores – Fussl Modestraße Mayr – that wanted to run TV ads in Bavaria, where it also has stores. The company is seeking to run ads only in Bavaria during programming offered by ProSieben, a national German television network that features reality TV shows and American-made shows. The German law blocked it from airing its ads only in Bavaria.
The Regional Court in Stuttgart is hearing the case and asked the EU court to weigh in on whether the German law restricting regional TV advertising complies with EU laws, in particular when it comes treating businesses equally.
In its ruling, the EU court said it was up to the Stuttgart court to determine whether there was “an objective and reasonable criterion” for the law to exist. But it also said the law “could be contrary to the principle of equal treatment” since it places “national television broadcasters, as well as resident and non-resident advertisers, in a less favorable position than providers of internet advertising services.”
That's because internet services, such as those offering video-on-demand and streaming, “are entitled to differentiate their advertising by region in the same way as national print media,” the ruling said.
The court also noted that regional TV programs already risk losing revenues as advertisers opt to sell their goods on internet services and that lifting a ban on regional advertising on national TV programs would not pose a greater risk of lost revenues.
Finally, the court said the advertising ban “may go beyond what is necessary” to preserve Germany's range of regional and local programs.
Courthouse News reporter Cain Burdeau is based in the European Union.
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