€265 million public funding granted to the Ciudad de la Luz must be recovered by Spain, according to the Commission
The European Commission asks to Spain to recover €265 million public funding granted by the Valencia Regional Government to the Ciudad de la Luz film studio. According to the Commission, no private investor would have accepted to invest on the same terms and that the public funding massively distorts competition between major European film studios.
Following an in-depth investigation that started in 2008, the Commission concluded that Spain must recover €265 million from Ciudad de la Luz film studio complex. In particular, the Commission concluded that no private investor would have accepted to invest on the same terms and that the public funding massively distorts competition between major European film studios.
Joaquín Almunia, Commission Vice President in charge of competition policy, highlighted that Spain's cinema sector is dynamic and competitive, thus there no need to spend public money to finance a new operator, but above all, this penalises the existing players and potential new entrants, who have to operate without state funding. Mr Almunia also added that the consequences can be disastrous in the current economic climate.
The Spanish authorities considered that the public support was not caught by EU state aid rules, as a private investor would have invested on the same terms, on the basis of the original business plan. The Commission had serious doubts that a decision to invest in a greenfield project away from the big centres of audiovisual activity such as Madrid and Barcelona could result from commercial considerations. This was supported by reactions to the Commission's call for comments on the measure in 2008.