Europe Drops Threat Cut Coin Hollywood

EU withdraws proposal for cap on production subsidies

BRUSSELS — European governments are free to continue using public coin to woo Hollywood productions now that regulators have withdrawn a threat to cap the use of subsidies as bait.

A complicated series of caps for non-European productions was proposed last year when the European Commission began revising public subsidy rules. The aim was to prevent European Union countries using subsidies to compete among themselves for prestigious Hollywood projects. The bigger a movie’s production budget, the tighter the cap.

These caps have disappeared from the latest draft of the policy, known as Cinema Communication, which was released for comment on April 30. Arguments that additional safeguards are needed to prevent distortions in the European market have also gone, leaving the policy with a much more positive attitude to foreign productions and the contribution they make to the local industry.

However, the Commission says it will monitor developments in this area to ensure that competition takes place primarily on the basis of quality and price, rather than on the basis of state aid.

Proposals that would have limited territorial spending requirements have also gone. Now governments will be able to demand that up to 160% of aid awarded to a production is spent locally, as long as this does not exceed 80% of the overall production budget. But restrictions on the origin of goods, services or workers used by a production will be prohibited.

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