Belgian Court Upholds Local Production Funding Rules for Streaming Services

The Constitutional Court of Belgium has dismissed a legal challenge by Netflix regarding European Union regulations mandating streaming platforms to finance local productions in French-speaking Belgium. This case revolves around a 2023 law enacted by the Wallonia-Brussels Federation, which requires streaming services, including Netflix and Disney+, to increase their investment in local French-language content from 2.2% of their regional turnover to 9.5% by 2027. The court's ruling affirms the majority of the investment obligations, although it has referred specific application questions to the EU Court of Justice for further clarification.

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The Wallonia-Brussels Federation, home to approximately 4.6 million French-speaking residents, implemented these funding requirements as part of the European Audiovisual Media Services Directive (AVMSD). This directive mandates that foreign streaming services invest a portion of their revenue into local productions, allowing individual countries to determine the specifics of these obligations. The ruling comes amid a broader review of the AVMSD in Europe, coinciding with increased lobbying efforts from U.S. streaming platforms to modify their obligations under this directive.

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Julie-Jeanne Régnault, managing director of the European Producers Club, expressed support for the court's decision, emphasizing the affirmation of member states' authority in cultural policy. She noted that the preliminary questions referred to the EU Court of Justice do not challenge the validity of the funding scheme but rather focus on the specifics of eligible investments.

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Conversely, Netflix and Disney+ have criticized the investment requirements as disproportionate, arguing that they are unreasonable given the size of the local creative community and contrary to the principles of the EU single market. A spokesperson for Netflix acknowledged the court's decision and indicated that the company would study the ruling in detail, expressing agreement that the European Court of Justice is the appropriate venue for further examination of the matter.

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The case's referral to the EU Court of Justice could lead to a new judicial context for the ongoing debate over local production funding. The first hearing in this court is anticipated not to occur before June, potentially prolonging the resolution of this significant issue affecting streaming services in Europe.

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While the Belgian court upheld the majority of the investment obligations, the specific modalities of these obligations remain under scrutiny, with the EU Court of Justice set to provide further insights. The ongoing discussions around the AVMSD and the lobbying efforts from U.S. streaming platforms indicate a complex landscape for future regulations.

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“We welcome the Court’s decision to reject most of Netflix’s complaints, reaffirming Member States’ competence in cultural policy and their broad margin of discretion in determining the level of financing obligations,” — Julie-Jeanne Régnault, Managing Director, European Producers Club

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“Commented a Netflix spokesperson: “We acknowledge the Belgian Constitutional Court’s decision regarding our challenge to the Wallonian investment obligation and the referral to the European Court of Justice.” — Netflix Spokesperson

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