In the context of the transition from analog to digital terrestrial television, national broadcasters were obligated to cover 96% or 98% of the Spanish population (for private and public broadcasters, respectively). To achieve the digital transition, Spanish authorities split the territory into three areas (I, II and III). Because of the risk of signal not reaching the stated percentage, the authorities put public funding in place for the digitalization of Area II.
A complaint was made by a European satellite operator that this constituted non-notified state aid liable to distort competition between the terrestrial and satellite broadcasting platforms. The Commission then adopted a decision declaring the unlawfulness of this measure because of its selectivity of the advantage being conferred and its incompatibility with the internal market. In the same decision, the Commission ordered the recovery of aid from the recipients.
Through its judgement in Case C-70/16 P Comunidad Autónoma de Galicia and Retegal v. Commision, the Court of Justice annulled the Commission's decision because it is not supported by an adequate statement of reasons. The Court noted that a measure that benefits only one economic sector or some of the undertakings in that sector is not necessarily selective. In the courts words:
"The statement of reasons in the decision at issue…contains no indication of the reasons why undertakings active in the broadcasting sector should be regarded as being in a factual and legal situation comparable to that of undertakings active in other sectors or why undertakings using terrestrial technology should be regarded as being in a factual and legal situation comparable to that of undertakings using other technologies. The Commission’s argument that no reasoning was necessary in that respect, since the selectivity condition is automatically satisfied if a measure applies exclusively to a specific economic sector or to undertakings in a particular geographic area, cannot be accepted. The Court has held that a measure which benefits only one economic sector or some of the undertakings in that sector is not necessarily selective. It is selective only if, within the context of a particular legal regime, it has the effect of conferring an advantage on certain undertakings over others, in a different sector or the same sector, which are, in the light of the objective pursued by that regime, in a comparable factual and legal situation (judgment of 21 December 2016,Commission v Hansestadt Lübeck, C‑524/14, EU:C:2016:971, paragraph 58)"