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Case C-34/08, Azienda Agricola Disarò Antonio and Others

2009-07-14T22:43:00.004+02:00

Validity of Regulation 1788/2003 on milk levy upheld

This reference for a preliminary ruling concerned the validity of Regulation 1788/2003 establishing a levy in the milk and milk products sector. The claimants in the main proceedings were milk producers and members of Cooperativa Milka, a cooperative society which, by virtue of its status as ‘first purchaser’, was responsible for collecting the levy in accordance with Art. 11(1) of Regulation 1788/2003. Considerable sums were being demanded from those companies by way of that levy.

The claimants in the main proceedings objected to those sums before the Italian courts, contesting the validity of Regulation 1788/2003, as well as the criterion on the basis of which, under that regulation, the guaranteed total quantity for the whole of the Community was to be allocated between the Member States and, more specifically, the way in which that criterion had been applied in the case of the Italian Republic.

They submitted in essence that, for the purposes of determining the ‘national reference quantity’ as fixed by Regulation 1788/2003, account ought also to have been taken of the fact that the Italian Republic had a milk production deficit. They furthermore questioned whether Regulation 1788/2003 was compatible with the objectives of the common agricultural policy as laid down in Art. 33 EC.

The national court first of all asked whether the fact that Regulation 1788/2003 did not take into account, for the purposes of determining the national reference quantity, the fact that the Member State concerned had a milk production deficit was capable of affecting the compatibility of that regulation with the objectives laid down, in particular, in Art. 33(1)(a) and (b) EC. Furthermore, the national court asked whether Regulation 1788/2003 infringed the principle of non‑discrimination or the principle of proportionality, or Art. 33 EC.

Whether fact Member State had milk production deficit relevant factor
The Court pointed out that the main purpose of Regulation 1788/2003, as described in the third recital in the preamble thereto, was to address the imbalance between supply and demand in the context of milk products with regard to both reductions and increases in the reference quantity. In order to achieve that purpose, a concerted effort was required by all Community producers in equal measure (see Case 179/84 Bozzetti [1985]).

The Court argued that the mechanism of the common agricultural market was predicated on the assumption that, where domestic demand for milk exceeded supply, the Member States could import milk, especially from Member States where demand was lower than supply.

The Court therefore found that the fact that a Member State had a milk production deficit was not a relevant factor for the purposes of determining the national reference quantity (see also Case C‑203/86 Spain v Council [1988]).

Compatibility of Regulation 1788/2003 with Article 33(1) EC
With regard to the question whether Regulation 1788/2003 was compatible with the objectives of the common agricultural policy as laid down in Art. 33 EC, the Court of Justice reiterated that the Community legislature enjoyed a wide discretion in matters concerning the common agricultural policy, commensurate with the political responsibilities given to it by Arts 34 EC to 37 EC (see
Joined Cases C-37/06 and C‑58/06 Viamex Agrar Handel and ZVK [2008]).

As regards, more specifically, the objectives of the common agricultural policy as laid down in Art. 33 EC, the Community institutions must make sure that a way was found to pursue those objectives in harmony and on an ongoing basis, where this became necessary as a result of conflicts which might arise between those objectives when they were pursued in isolation, and, where necessary, gave any one of them temporary priority in order to satisfy the demands of the economic factors or conditions in the light of which their decisions were made (see, in particular, Case C-311/90 Hierl [1992]).

The Court found that, by temporarily according priority to the objective of “stabilising markets” as laid down in Art. 33(1) EC, the Council had not exceeded its discretion by adopting Regulation 1788/2003.

Principle of non‑discrimination
The Court stressed that that under the second subparagraph of Art. 34(2) EC, the common organisation of agricultural markets must exclude any discrimination between producers and consumers within the Community.

It reiterated that the principle of non-discrimination required that comparable situations must not be treated differently and that different situations must not be treated in the same way unless such treatment was objectively justified (see Case C‑273/04 Poland v Council [2007], on which I wrote this post).

The Court held that even if Regulation 1788/2003, which applied to all recipients of reference quotas alike, did in fact place a heavier burden on small producers than on large producers, the fact that a measure adopted within the framework of the common organisation of the market might affect producers in different ways, depending upon the particular nature of their production, did not constitute discrimination if that measure was determined on the basis of objective criteria which were adapted to meet the needs of the general common organisation of the market. The Court argued that that was true of the milk quota and levy system, which was arranged in such a way that national and individual reference quantities were set at such a level that their total did not exceed the overall guaranteed reference quantity for each Member State. It followed that Regulation 1788/2003 was compatible with the principle of non‑discrimination.

Proportionality principle
The Court finally held that it was necessary to adopt Regulation 1788/2003 in order to reduce the imbalance between supply and demand on the milk and milk products market, as well as the resulting structural surplused , in order to achieve better market equilibrium. It followed that Regulation 1788/2003 was also compatible with the principle of proportionality.

Text of Judgment

Case C‑504/07, Antrop and Others

2009-07-13T23:52:00.007+02:00

Court further clarifies Altmark criteria

Carris was a public undertaking which, by administrative contract, obtained a public service concession for passenger transport by bus , electric vehicles and mechanical lifts within the administrative limits of the city of Lisbon.

The STCP was a public undertaking which held a public service concession for passenger transport within the administrative limits of the city of Oporto, pursuant to a law converting a municipal service into a limited company.

In accordance with its public service obligations, Carris was, inter alia, required to ensure that the conceded service operated smoothly and continuously under the price conditions specified by the awarding authority.

The STCP, for its part, was a public undertaking which held a public service concession for passenger transport within the administrative limits of the city of Oporto, pursuant to a law converting a municipal service into a limited company.

In return for the provision of the urban passenger transport services, Carris and the STCP had, for many years, enjoyed various advantages awarded by the State. These consisted of, inter alia, compensation payments, capital injections and State credit guarantees.

Outside the geographical limits of the areas covered by their respective concessions, Carris and the STCP, without being subject to a public service obligation, also operated bus routes on which other undertakings were active, inter alia Antrop and Others.

Those latter undertakings provided transport services under the public service delegation regime and were subject to rules concerning routes, times and fares. The activity of Carris and SCTP on those routes led Antrop and Others to claim a distortion of competition and challenge Resolution 52/2003.

Antrop and Others submitted that their only resource was operating revenue from the fares charged, so that operating losses from their activity were covered exclusively by their own capital, whereas any losses, the investment costs and the capital costs of Carris and the STCP were covered by public subsidy. The award of that subsidy was consequently a factor distorting competition.

Therefore, the appellants in the main proceedings claimed that the part of Resolution 52/2003 under challenge infringed the national legislation relating to competition and the provisions of Community law on State aid, in particular Arts 86 EC, 87(1) EC, 88 EC and 89 EC, Regulations 1191/69 and Regulation 1107/70.

In those circumstances, the issue was raised before the national court of the need for an order for reference to the Court of Justice. The referring Court inter alia asked whether the grant by a Member State of compensation payments, such as those at issue in the main proceedings, to transport undertakings holding a public service concession and which were entitled, within specific urban districts, to carry on their activity on an exclusive basis because of the public service obligations to which they were subject, constituted State aid prohibited by Art. 87(1) EC where, in addition, those undertakings also carried on their activity in competition with private operators outside those specified districts and where it was not possible to calculate the additional cost deriving from the performance of the public service obligations.

The Court reiterated that Article 87 EC was one of the general provisions of the Treaty on State aid, whereas Art. 73 EC created an exception in the field of transport to the general rules applicable to State aid, by providing that aids which met the needs of coordination of transport or represented reimbursement for the discharge of certain obligations inherent in the concept of a public service were compatible with the Treaty. The Court also reiterated that Regulation 1191/69 established a system which the Member States must comply with when they consider imposing public service obligations on undertakings in the land transport sector (see Case C-280/00, Altmark Trans and Regierungspräsidium Magdeburg (2003)).

Art. 10 of Regulation 1191/69 provided, inter alia, that the amount of the compensation must, in the case of an obligation to operate or to carry, be equal to the difference between the reduction in financial burden and the reduction in revenue of the undertaking if the whole or the relevant part of the obligation in question were terminated for the period of time under consideration. However, where the calculation of economic disadvantage was made by allocating among the various parts of its transport activities the total costs borne by the undertaking in respect of those transport activities, the amount of the compensation was to be equal to the difference between the costs allotable to that part of the undertaking’s activities affected by the public service obligation and the corresponding revenue.

Since the activities of Carris and the STPC outside their respective areas of exclusivity were not subject to a public service obligation, it was not possible to ascertain on the basis of reliable data from the accounts of those two undertakings the difference between the costs imputable to the parts of their activities in the areas covered by the respective concessions and the corresponding income. Consequently, it was not possible to calculate the additional cost deriving from the performance of public service obligations by those undertakings.

The Court held that, accordingly, the requirement set out in Art. 10 of Regulation 1191/69 was not fulfilled, since the costs imputable to the part of the activity of Carris and the STPC carried out in the areas in which each was granted an exclusive concession could not be clearly established.

The Court reiterated that in such a case, since the compensation payments paid to those undertakings were not granted in accordance with Regulation 1191/69, they were consequently not compatible with Community law and it was therefore unnecessary to examine them in the light of the Treaty provisions relating to State aid, in particular Art. 87(1) EC (see Altmark, paragraph 65).

The Court concluded that Regulation 1191/69 precluded the grant of compensation payments, such as those at issue in the main proceedings, where it was not possible to determine the amount of the costs imputable to the activity of the undertakings concerned carried out in the performance of their public service obligations. The Court held that where a national court found certain aid measures to be incompatible with Regulation 1191/69, it was a matter for that court to establish all the consequences, under national law, as regards the validity of the acts giving effect to those measures.

Text of judgment

Case C‑241/07, JK Otsa Talu OÜ v PRIA

2009-07-13T23:16:00.009+02:00

Court confirms principles of equal treatment, protection of legitimate expectations, and others, applying to implementing measures

This case concerned the interpretation of Regulation 1257/1999 on support for rural development from the European Agricultural Guidance and Guarantee Fund (EAGGF).

On 26 May 2005, Agrofarm submitted an application to the PRIA for area payments and support for environmentally-favourable production. Having already made the necessary preparations in 2004, Agrofarm was ready to give a commitment to implement that type of production in order to obtain rural development support. However, the application was rejected and Agrofarm appealed.

The referring court asked whether the provisions of Art. 24(1) of Regulation 1257/1999, read in conjunction with Arts 37(4) and 39 thereof, precluded a Member State from changing, on the ground of insufficient budgetary resources, the conditions for the grant of rural development support in order to restrict the class of eligible applicants to farmers already concerned by a decision to grant such support in the previous budgetary year.

The Court first of held that, in order to guarantee the transparency of the measures contemplated, the Member States were to establish, in accordance with Art. 41 of Regulation 1257/1999, rural development plans, including, inter alia, the description of the support measures for rural development such as agri-environmental measures and an indicative overall financial table summarizing the national and Community financial resources.

Those programs were to be submitted to the Commission which must appraise the plans to determine whether they were consistent with the regulation, although that approval did not confer on them the nature of an act of Community law (see, to that effect, Case C-336/00 Huber [2002]). The Member States must try to manage their financial resources adequately so as to enable each eligible applicant, within the meaning of that regulation, to benefit from rural development support.

However, the Court held that Member States might lay down further or more restrictive conditions for granting Community support for rural development provided that such conditions were consistent with the objectives and requirements laid down in the regulation and that support measures might, where necessary, be subsequently revised by the Member States in order to ensure compatibility and consistency.

The Court furthermore reiterated that, subject to the compatibility and consistency with the objectives and provisions of Regulation 1257/1999, and compliance with the general principles of Community law, with which the Member States must comply when they implement Community rules (see, to that effect, Joined Cases C-181/04 to C-183/04 Elmeka (2006)), such as the principles of equal treatment, the protection of legitimate expectations, and proportionality, the national authorities had the option of using a measure other than the one provided for in the Development Plan.

The Court reiterated that the principle of equal treatment required that comparable situations must not be treated differently and that different situations must not be treated in the same way unless such treatment was objectively justified (Joined Cases C-453/03, C-11/04, C-12/04 and C-194/04 ABNA and Others [2005]).

The Court held that a farmer who submitted an application for rural development support for the first time was not in the same situation as a farmer who, in accordance with a decision already made, was bound to comply with a certain number of obligations with respect to his commitment to engage in environmentally-favourable farming.

As regards the principle of the protection of legitimate expectations, the Court held that, in the field of the common agricultural policy, economic operators were not justified in having a legitimate expectation that an existing situation which was capable of being altered by the competent authorities in the exercise of their discretionary power would be maintained (see Case C-310/04 Spain v Council [2006]).

The Court concluded that Article 24(1) of Regulation 1257/1999, read in conjunction with Arts 37(4) and 39 thereof, did not preclude a Member State from restricting, on account of insufficient budgetary resources, the class of recipients of rural development support to farmers already concerned by a decision to grant such support in the previous budgetary year.

Text of Judgment

Case C- 553/07, Rotterdam v Rijkeboer

2009-06-21T22:42:00.003+02:00

This case concerned a preliminary question from the Dutch Raad van State (Council of State) on the interpretation of Arts 6 and 12 of Directive 95/46.

As is well known, this Directive deals with the protection of individuals with regard to the processing of personal data and on the free movement of such data. It has been a controversial Directive ever since it was first proposed. The crux of this controversy has been that the Community Legislature simply cannot adopt fundamental rights legislation, as it has no legal power to do so. The Court of Justice in Opinion 2/94 confirmed that no Treaty provisions conferred any general power Community institutions to enact rules on fundamental rights.

The present case, however, dealt with the scope rather than then the legal basis of Directive 95/46. As described by Advocate General Ruiz-Jarabo Colomer, the reference was made in “a field of knotty problems, namely, the deletion of personal information held by a local authority which had been disclosed to third parties and the resulting right of access to data relating to the processing of that information”.

Directive 95/46 was transposed into Netherlands law by the Law on the protection of personal data (Wet bescherming persoonsgegevens), and certain laws were adapted in order to take account of the Directive. Such was the case of the Law at issue in the main proceedings: the Law on personal data held by local authorities (Wet gemeentelijke basisadministratie persoonsgegevens ; ‘the Wet GBA’).

Article 103(1) of the Wet GBA provided that, on request, the College must notify a data subject in writing, within four weeks, whether data relating to him from the local-authority personal records had, in the year preceding the request, been disclosed to a purchaser or to a third party.

Mr Rijkeboer had requested the Board of Alderman of Rotterdam to notify him of all instances in which data relating to him from the local-authority personal records had, in the two years preceding the request, been disclosed to third parties. He wished to know the identity of those persons and the content of the data disclosed to them. Mr Rijkeboer, who had moved to another municipality, wished to know in particular to whom his former address had been disclosed.

The Board complied with that request only in part by notifying him only of the data relating to the period of one year preceding his request, by application of Art. 103(1) of the Wet GBA.
Mr Rijkeboer appealed. The referring court asked whether the restriction, provided for in Art. 103(1) of the Wet GBA, on the communication of data to one year prior to the relevant request was compatible with Art. 12(a) of Directive 95/46, whether or not read in conjunction with Art. 6(1)(e) of that directive and the principle of proportionality.

The Court of Justice, however, stressed that under the system of judicial cooperation established by Art. 234 EC, it was for the Court of Justice to interpret provisions of Community law, whereas the interpretation of national provisions was a matter for the national courts (see, inter alia, Case C‑449/06 Gysen [2008]).

The Court of Justice therefore held that “the national court should be understood, essentially, as seeking to determine whether, pursuant to the Directive and, in particular, to Art. 12(a) thereof, an individual’s right of access to information on the recipients or categories of recipient of personal data regarding him and on the content of the data communicated might be limited to a period of one year preceding his request for access.”

Two categories of data
The Court of Justice pointed out that a case such as that of Mr Rijkeboer involved two categories of data.

The first concerned personal data kept by the local authority on a person, such as his name and address, which constituted, in the present case, the basic data. It was apparent from the oral observations submitted by the College and the Netherlands Government that those data might be stored for a long time. They constituted “personal data” within the meaning of Art. 2(a) of the Directive, because they represented information relating to an identified or identifiable natural person (see also Joined Cases C- 465/00, C 138/01 and C 139/01 Österreichischer Rundfunk and Others [2003]; Case C 101/01-Lindqvist [2003]; and Case C 524/06 Huber [2008]).

The second category concerned information on recipients or categories of recipient to whom those basic data were disclosed and on the content thereof and thus related to the processing of the basic data. In accordance with the national legislation at issue in the main proceedings, that information was stored for only one year.

The Court held that the time-limit on the right of access to information on the recipient or recipients of personal data and on the content of the data disclosed, which was referred to in the main proceedings, thus concerned that second category of data.

Whether time-limit authorised
The Court of Justice subsequently examined whether Art. 12(a) of the Directive authorised such a time-limit.
The Court stressed that the purpose of the Directive was to protect the fundamental rights and freedoms of natural persons, and in particular their right to privacy with respect to the processing of personal data, and thus to permit the free flow of personal data between Member States.

The Court held that the right to privacy meant that the data subject might be certain that his personal data were processed in a correct and lawful manner, and in particular, that the basic data regarding him were accurate and that they were disclosed to authorised recipients.

The Court held that In order to carry out the necessary checks, the data subject must have a right of access to the data relating to him which were being processed.

In that regard, Art. 12(a) of the Directive provided for a right of access to basic data and to information on the recipients or categories of recipient to whom the data were disclosed.

According to the Court, that right of access was necessary to enable the data subject to exercise the rights set out in Art. 12(b) and (c) of the Directive, that was to say, where the processing of his data did not comply with the provisions of the Directive, the right to have the controller rectify, erase or block his data, (paragraph (b)), or notify third parties to whom the data had been disclosed of that rectification, erasure or blocking, unless this proved impossible or involved a disproportionate effort (paragraph (c)).

Art. 12(a) of Directive 95/46
The Court held that Article 12(a) of the Directive required Member States to ensure a right of access to information on the recipients or categories of recipient of personal data and on the content of the data disclosed not only in respect of the present but also in respect of the past.

It was for Member States to fix a time-limit for storage of that information and to provide for access to that information which constituted a fair balance between, on the one hand, the interest of the data subject in protecting his privacy, in particular by way of his rights to object and to bring legal proceedings and, on the other, the burden which the obligation to store that information represented for the controller.

Rules limiting the storage of information on the recipients or categories of recipient of personal data and on the content of the data disclosed to a period of one year and correspondingly limiting access to that information, while basic data was stored for a much longer period, did not constitute a fair balance of the interest and obligation at issue, unless it could be showed that longer storage of that information would constitute an excessive burden on the controller. It was, however, for national courts to make those determinations.

Text of Judgment

On Directive 95/46, see also this article I wrote for the Common Market Law Review in 2005.

Case C-362/06 P, Sahlstedt

2009-05-03T20:59:00.001+02:00

This case concerned Decision 2005/101, by which the Commission had adopted, pursuant to the Habitats Directive, the list of sites of Community importance for the Boreal biogeographical region.

These areas are designated following a three-stage procedure described in Art. 4 of the Directive.
In the first stage, the Member States propose to the Commission of the European Communities a list of sites of Community importance in their territory with a view to the conservation of types of natural habitat or species of flora or fauna covered by the Directive.

The list is to be accompanied by all the relevant information – not only scientific, ecological and geographical, but also economic and social– and must be communicated to the Commission in the three years following notification of the Directive.

Then, in the second stage, the Commission, acting in the context of a procedure involving an ad hoc committee, is to adopt a list of sites selected as sites of Community importance. That list is to be established within six years of notification of the Directive.

That is followed by the third and final stage, which is described in Art. 4(4) of the Directive. It marks the end of the procedure for designating special areas of conservation.

The Directive provides that once a site of Community importance has been adopted in accordance with the procedure laid down in paragraph 2, the Member State concerned shall designate that site as a special area of conservation as soon as possible and within six years at most.

Some of the land covered by the sites listed in the decision belonged to private persons; those landowners included all the appellants, with the exception of one, which was an association of approximately 163 000 farmers and foresters.

They requested the Court to set aside the order in Case T-150/05 Sahlstedt and Others v Commission [2006], by which the Court of First Instance dismissed their action for annulment of the aforementioned Decision by which these areas were designated in accordance with the third subparagraph of Art. 4(2) of the Directive.

The Court stressed that under Art. 230(4) EC, any natural or legal person might institute proceedings against a decision addressed to that person or against a decision which, although in the form of a regulation or a decision addressed to another person, was of direct and individual concern to the former. The Court pointed out that the contested decision was not addressed to the appellants. However, the Court reiterated that proceedings brought by a natural or legal person against a decision addressed to another person were admissible if the decision was of direct and individual concern to the former raised an absolute bar to proceeding, which the Community judicature might consider at any time, even of its own motion (see, for instance, Case C‑341/00 P Conseil national des professions de l’automobile and Others v Commission [2001] and Case C‑176/06 P Stadtwerke Schwäbisch Hall and Others v Commission [2007]).

In line with its famous Plaumann case law, the Court held that persons other than those to whom a decision was addressed might claim to be individually concerned only if that decision affected them by reason of certain attributes which were peculiar to them or by reason of circumstances in which they were differentiated from all other persons and by virtue of those factors distinguished them individually just as in the case of the person addressed by such a decision. (Case 25/62 Plaumann v Commission [1963]).

The Court held that the contested decision was, vis-à-vis any person concerned, of general application inasmuch as it applied to all economic operators who, in whatever capacity, carried on or were likely to carry on activities in the areas concerned which could jeopardise the conservation objectives of the Habitats Directive.

However, the Court had reiterated that the fact that a provision was, by its nature and scope, a provision of general application inasmuch as it applied to the economic operators concerned in general, did not of itself prevent that provision from being of individual concerned to some. Where the decision affected a group of persons who were identified or identifiable when that measure was adopted by reason of criteria specific to the members of the group, those persons might be individually concerned by that measure inasmuch as they formed part of a limited class of economic operators. However, the fact that it was possible to determine more or less precisely the number, or even the identity, of the persons to whom a measure applied by no means implied that that measure must be regarded as being of individual concern to those persons where it was established that that application took effect by virtue of an objective legal or factual situation defined by the measure in question (see e.g. Case C‑451/98 Antillean Rice Mills v Council [2001]; the order in Case C‑96/01 P Galileo and Galileo International v Council [2002]; and the order in Case C‑503/07 P Saint-Gobain Glass Deutschland v Commission [2008]).

The Court held that in the present case it appeared that the contested decision was of concern to the appellants only in so far as they had rights in the lands covered by some of the sites of Community interest adopted by the Commission, by virtue of an objective legal or factual situation defined by the measure in question and not in accordance with criteria specific to the category of landowners.

Moreover, since the contested decision was not adopted in the light of the specific situation of the landowners, it could not be regarded as a group of individual decisions addressed to each landowner.

The Court concluded that, with the exception of the aforementioned association, the appellants could not be regarded as individually concerned by the contested decision for the purposes of Art. 230(4) EC.

With regard to the association, the Court held that the defence of the general and collective interests of a category of persons was not sufficient to establish the admissibility of an action for annulment brought by an association. In the absence of special circumstances, such as the role which it could have played in a procedure leading to the adoption of the measure in question, such an association was not entitled to bring an action for annulment on behalf of its members where the latter could not do so individually (see, in particular, the order in Case C‑409/96 P Sveriges Betodlares and Henrikson v Commission [1997]).

Since natural or legal persons who own land within the sites of Community interest adopted by the contested decision were not individually concerned by that decision, even supposing that the association included such persons among its members, it could not, of itself, be regarded as individually concerned by that decision.

Text of Judgment

Case C‑431/07 P, Bouygues and Bouygues Télécom v Commission

2009-04-26T22:23:00.001+02:00

Retroactive reduction of fees for 3G licences not constituting State Aid

On July 28, 2000, the French government launched a call for applications for the award of four licences for the introduction of UMTS mobile and wireless communications systems in metropolitan France. The final date for lodging applications was set at January 31, 2001, and applications could be withdrawn until 31 May 2001.

Only two applications were received – from Société française du radiotéléphone – SFR (‘SFR’) and from France Télécom mobiles, which a few months later became Orange France SA (‘Orange’).

The French authorities considered that a further call for applications was necessary in order to ensure genuine competition. Without waiting for the launch of the supplementary call for applications, two initial UMTS licences were issued to SFR and Orange by two decrees dated July 18, 2001. Those two licences were granted in return for payment of fees amounting in total to EUR 4 954 593 000, to be paid in installments, the first of which was due on 31 September 2001 and the last on June 30,2016

Following the launch of the supplementary call for applications, the third UMTS licence was awarded to Bouygues Télécom on December 3, 2002, in return for payment of fees consisting of a fixed component in the amount of EUR 619 209 795.27, to be paid on September 30 of the year in which the licence was awarded or at the time of the award if that date fell after September 30, and a variable component to be paid annually before June 30 of each year for the use of the frequencies during the preceding year and calculated as a percentage of the turnover generated through the use of those frequencies. A fourth licence could not be awarded for lack of an applicant.

Moreover, in two further decrees concerning SFR and Orange respectively, the Minister for Industry amended, inter alia, the provisions regarding fees for the provision and operation of frequencies by replacing them with provisions identical to those applied to Bouygues Télécom.

On January 31, 2003, following a complaint from Bouygues and Bouygues Télécom concerning a series of aid measures which the French authorities had adopted in favour of France Télécom, the European Commission initiated the investigation procedure laid down in Art. 88(2) EC with regard to some of those measures, but not the measure aligning the fees due from SFR and Orange with those fixed for Bouygues Télécom.

The Commission eventually decided on the basis of Art. 88 EC not to raise objections to the measure aligning the fees, on the ground that it did not entail aid elements for the purposes of Art. 87(1) EC.

Bouygues and Bouygues Télécom brought an action for annulment of this decision, alleging infringement by the Commission, first, of Art. 87(1) EC inasmuch as the amendment of the fees to be paid by Orange and SFR constituted, in their view, State aid within the meaning of that provision and, secondly, of Art. 88(2) EC inasmuch as the case gave rise to serious difficulties and the Commission should therefore had initiated the formal procedure laid down in that provision.

The Court of First Instance dismissed the action. Bouygues and Bouygues Télécom appealed, alleging, inter alia, breach of the obligation to state reasons and a number of errors of law in the application of Art. 87 EC.

Statement of reasons
The Court first of all held that the grounds stated for the judgment under appeal made it possible, to the requisite legal standard, to understand the reasons for which the Court of First Instance held that, by reason of the general scheme of the system, the reduction in the fees due from Orange and SFR and, accordingly, the waiver of the claims against them could not be regarded as State aid.

The Court furthermore held that the procedure under Art. 88(2) EC was essential whenever the Commission had serious difficulties in determining whether aid was compatible with the common market. The Commission might therefore restrict itself to the preliminary examination under Art. 88(3) EC when taking a decision in favour of aid only if it was able to satisfy itself after the preliminary examination that the aid was compatible with the common market.

The Court reiterated that if, on the other hand, the initial examination led the Commission to the opposite conclusion or if it did not enable it to overcome all the difficulties involved in determining whether the aid was compatible with the common market, the Commission was under a duty to obtain all the requisite opinions and for that purpose to initiate the procedure provided for in Art. 88(2) EC (see, inter alia, Case C‑521/06 P Athinaïki Techniki v Commission [2008], on which I wrote this post).

Not state aid
In the present case, the French authorities decided to award the UMTS licences by way, precisely, of a comparative selection procedure. The Court of Justice pointed out it was only because of the partial failure of the first call for applications, which did not enable enough licences to be awarded to ensured genuine competition in the market for telecommunications services, that the French authorities considered it necessary to seek further applications.

According to the Court, in such a situation the French authorities had three options open to them: to re-commence the procedure ab initio; to launch a new call for additional applications without retroactively amending the amount due from Orange and SFR by way of UMTS licence fees; or to launch a new call but with a retroactive amendment of those fees.

The Court argued that the option of re-commencing the procedure ab initio would have made it impossible to meet the 1 January 2002 deadline fixed by Art. 3(1) of Decision 128/1999 as the date on which Directive 97/13 had to be implemented by the Member States with regard to the coordinated and progressive introduction of UMTS services in their territory.

Similarly, the option of requiring Orange and SFR to pay fees substantially higher than those charged to Bouygues Télécom, even though none of the three operators, for reasons not entirely of their own making, had yet entered the market and even though the characteristics of the licences were identical, would have constituted discrimination against Orange and SFR.

The Court thus argued that the application of one of those two options would not have enabled the French authorities to comply with the requirements of Community law.

The Court held that in those circumstances, in the context of the option ultimately chosen by the French authorities, waiver of the claims at issue as a result of the retroactive alignment of the UMTS licence fees due from Orange and SFR with those charged to Bouygues Télécom was inevitable.

The Court found that only that option could, at the material time, reduce the risked, on the one hand, of a late launch of UMTS services, since it ensured that at least two of the licences had been awarded by the date fixed in Art. 3(1) of Decision No 128/1999. On the other hand, that option also excluded the possibility that the three operators might suffer discrimination, since the very purpose of the alignment of the fees was to take account of the fact that, at the time that the licence was awarded to Bouygues Télécom, none of the three operators had entered the market – for reasons not of their own choosing – with the result that their situation was, for that reason, comparable.

It followed that, in those circumstances, the Court of First Instance did not err in law when it held that the Community framework for telecommunications services and, in particular, the principle of non-discrimination, required the French authorities to align the fees due from Orange and SFR with those charged to Bouygues Télécom.

The Court reiterated that categorisation as aid required that all the conditions set out in Art. 87(1) EC be fulfilled. As was well known, Art. 87(1) EC lays down four cumulative conditions: (i) there must be an intervention by the State or through State resources; (ii) the intervention must be liable to affect trade between Member States; (iii) it must conferred an advantage on the recipient; and (iv) it must distort or threaten to distort competition.

Since the Court of First Instance did not err in law when it held that the waiver of State resources was not sufficient to prove the existence of State aid inasmuch as the abandonment of the claims against Orange and SFR was inevitable because of the general scheme of the system, the first of these conditions was not satisfied.

No discrimination
The Court furthermore reiterated that discrimination could arise only through the application of different rules to comparable situations or the application of the same rule to different situations. In the present case, the fact that UMTS licences were awarded to Orange and SFR at an earlier date could justify, or even required, that the related fees be set higher than the fees charged to Bouygues Télécom only if the economic value of those licences could be regarded, by dint merely of having been awarded earlier, as being of greater value than the licence awarded to the latter undertaking.

The Court held that it was clear that that was not so in the present case. Although it was true that a licence had an economic value, that value depended on the time when each of the operators concerned entered the market (see also Case C‑462/99 Connect Austria [2003]). In other words, the economic value of a licence derived, in particular, from the possibility for the licence holder to make used of the rights attached to the licence which, in the present case, meant the possibility of occupying public wireless space in order to use UMTS technology.

The Court held that the fact that the licences were awarded to the three operators concerned at different dates did not lead to the conclusion that, at the date on which the licence was awarded to Bouygues Télécom, the operators were in a different situation in relation to the objective of Directive 97/13, namely that of ensuring that operators obtain access to the UMTS market under the same conditions. Consequently, the Court of First Instance did not err in law by holding that the three operators concerned were in the same situation.

The Court of Justice also dismissed the last ground of appeal, alleging errors in the legal characterisation of the facts, and therefore dismisses the appeal.

Text of Judgment

Case C‑301/06, Ireland v Parliament and Council

2009-03-25T23:11:00.008+01:00

>> Court upholds validity of the Data Retention Directive

In 2004, France, Ireland, Sweden, and the United Kingdom submitted to the Council a draft of a framework decision based on arts 31(1)(c) and 34(2)(b) EU. The draft concerned the retention of data processed and stored in connection with the provision of publicly available electronic communications services or data in public communication networks for the purposes of the prevention, investigation, detection and prosecution of criminal offences, including terrorism.

Taking the view that this draft framework decision consisted of two parts, namely, obligations on operators to retain traffic data relating to users of their services for a certain period and obligations concerning access to and exchange of those data by the competent authorities in criminal matters, the Commission stated that it favoured art. 95 EC as the legal basis for the continuous measures in the first part of the draft framework decision.

In 2005, the Commission adopted a proposal for a directive of the European Parliament and of the Council, based on art. 95 EC, on the retention of data processed in connection with the provision of public electronic communication services and amending Directive 2002/58. The Council opted for a directive on the legal basis of the EC Treaty, rather than for the adoption of a framework decision. After the European Parliament issued its opinion in accordance with the co-decision procedure under art. 251 EC, the Council adopted Directive 2006/24 by qualified majority. Ireland and the Slovak Republic voted against it. Ireland subsequently brought the present proceedings, claiming that the Court should annul Directive 2006/24 on the ground that Directive 2006/24 could not be based on art. 95 EC since its “centre of gravity” did not concern the functioning of the internal market. The sole objective of the directive, or at least its principal objective, was, it was contended, the investigation, detection and prosecution of crime.

The Court first of held that the question of the areas of competence of the European Union presented itself differently depending on whether the competence in issue had already been accorded to the European Union in the broad sense or had not yet been accorded to it. In the first hypothesis, it was a question of ruling on the division of areas of competence within the Union and, more particularly, on whether it was appropriate to proceed by way of a directive based on the EC Treaty or by way of a framework decision based on the EU Treaty. By contrast, in the second hypothesis, it was a question of ruling on the division of areas of competence between the Union and the Member States and, more particularly, on whether the Union had encroached on the latters’ areas of competence. The present case came under the first of those two hypotheses.

Conditions use of Article 95 EC
The Court reiterated that the Community legislature might have recourse to art. 95 EC in particular where disparities existed between national rules which were such as to obstruct the fundamental freedoms or to create distortions of competition and thus had a direct effect on the functioning of the internal market. Although recourse to art. 95 EC as a legal basis was possible if the aim was to prevent the emergence of future obstacles to trade resulting from the divergent development of national laws, the emergence of such obstacles must be likely and the measure in question must be designed to prevent them (see for instance the case law cited (and discussed) in this post)

The Court essentially held that these conditions were fulfilled in the present case. It found that it was apparent that the differences between the various national rules adopted on the retention of data relating to electronic communications were liable to have a direct impact on the functioning of the internal market and that it was foreseeable that that impact would become more serious with the passage of time. Such a situation justified the Community legislature in pursuing the objective of safeguarding the proper functioning of the internal market through the adoption of harmonised rules.

Article 47 EU
The Court furthermore held that it was the task of the Court to ensure that acts which, according to one party, fell within the scope of Title VI of the Treaty on European Union and which, by their nature, were capable of having legal effects, did not encroach upon the powers conferred by the EC Treaty on the Community. In so far as the amendment of Directive 2002/58 effected by Directive 2006/24 came within the scope of Community powers, Directive 2006/24 could not be based on a provision of the EU Treaty without infringing art. 47 thereof (see Case C-91/05 Commission v Council [2008], which I discussed here).

Substantive content of Directive 2006/24
The Court held that in order to determine whether the legislature had chosen a suitable legal basis for the adoption of Directive 2006/24, it was also appropriate to examine the substantive content of its provisions. Directive 2006/24 regulated operations which were independent of the implementation of any police and judicial cooperation in criminal matters. It harmonised neither the issue of access to data by the competent national law-enforcement authorities nor that relating to the use and exchange of those data between those authorities. Those matters, which fell, in principle, within the area covered by Title VI of the EU Treaty, had been excluded from the provisions of that directive.

The Court thus concluded that the substantive content of Directive 2006/24 was directed essentially at the activities of service providers in the relevant sector of the internal market, to the exclusion of State activities coming under Title VI of the EU Treaty. In light of that substantive content, Directive 2006/24 related predominantly to the functioning of the internal market. It followed that Directive 2006/24 had to be adopted on the basis of art. 95 EC. The present action must accordingly be dismissed.

Text of Judgment

Case C-45/07, Commission v Greece

2009-03-25T22:44:00.006+01:00

>> Court of Justice holds Greek IMO proposal infringing Community principles, reiterating its famous AETR case law

In this case, the Commission sought a declaration from the Court that, by submitting to the International Maritime Organisation (or “IMO”, (headquarters above)) a proposal for monitoring the compliance of ships and port facilities with the requirements of the International Convention for the Safety of Life at Sea ( “the SOLAS Convention”) and the International Ship and Port Facility Security Code ( “the ISPS Code”), the Greece had failed to fulfil its obligations under arts 10 EC, 71 EC and 80(2) EC.

Greece had asked the IMO Maritime Safety Committee to examine the creation of check lists or other appropriate tools for assisting the Contracting States of the SOLAS Convention in monitoring whether ships and port facilities complied with the requirements of Chapter XI-2 of the Annex to that convention and the ISPS Code. The Commission argued that, since the adoption of Regulation 725/2004 , integrating both Chapter XI-2 of the Annex to the SOLAS Convention and the ISPS Code into Community law, the Community had enjoyed exclusive competence to assume international obligations in the area covered by that regulation. It argued that, therefore, the Community alone was competent to ensure that the standards on the subject were properly applied at Community level and to discuss with other IMO Contracting States the correct implementation of or subsequent developments in those standards, in accordance with the two measures referred to.

The Commission found that the Member States therefore no longer had competence to submit to the IMO national positions on matters falling within the exclusive competence of the Community, unless expressly authorised to do so by the Community.

AETR-case
The Court reiterated that under art. 3(1)(f) EC, the setting of a common policy in the sphere of transport was specifically mentioned as one of the objectives of the Community. Under art. 10 EC, the Member States must both take all appropriate measures to ensure fulfilment of the obligations arising out of the EC Treaty or resulting from action taken by the institutions and also abstain from any measure which might jeopardise the attainment of the objectives of the Treaty (Case 22/70 Commission v Council [1971]).

The Court held that to the extent to which Community rules were promulgated for the attainment of the objectives of the Treaty, the Member States could not, outside the framework of the Community institutions, assume obligations which might affect those rules or alter their scope. The provisions of Regulation 725/2004 , which had as its legal basis art. 80(2) EC, the second subparagraph of which referred to art. 71 EC, were Community rules promulgated for the attainment of the objectives of the Treaty.

Infringement Articles 10, 71 and 80(2) EC
(a) In asking the IMO Maritime Safety Committee to examine the creation of check lists or other appropriate tools for assisting the Contracting States of the SOLAS Convention in monitoring whether ships and port facilities complied with the requirements of Chapter XI-2 of the Annex to that convention and the ISPS Code, Greece submitted to that committee a proposal which initiated a procedure which could lead to the adoption by the IMO of new rules in respect of Chapter XI-2 and or/the ISPS code.

The adoption of such new rules would as a consequence have an effect on Regulation 725/2004 , the Community legislature having decided to incorporate in substance both of those international instruments into Community law. Since it set in motion such a procedure with the contested proposal, Greece took an initiative likely to affect the provisions of Regulation 725/2004 , which was an infringement of the obligations under arts 10, 71 and 80(2) EC.

Reliance on Article 307(1) EC
The Court furthermore held that the competence of the Member States, which stemmed from that provision, did not imply that they had an external competence to take initiatives likely to affect the provisions of the regulation. Article 307(1) EC was designed to apply only if there was an incompatibility between, on the one hand, an obligation arising under the international convention, concluded by Greece before its accession to the Community and by which that State became an IMO member, and, on the other, an obligation arising under Community law.

The whole thrust of Greece’s argument was that its submission of the contested proposal to the IMO Maritime Safety Committee was not at variance with that Member State’s obligations under Community law, which ruled out precisely the possibility of relying on art. 307(1) EC. Furthermore, Greece did not establish that it was required to submit the contested proposal to that committee by virtue of the IMO’s founding documents and/or legal instruments drew up by that international organisation.

Text of Judgment

Case C-19/08, Migrationsverket v Petrosian

2009-03-25T22:16:00.003+01:00

>> Court of Justice defines scope of Articles 20(1)(d) and 20(2) of Dublin II Regulation

This case concerned the question whether arts 20(1)(d) and 20(2) of Regulation 343/2003 (the Dublin II Regulation) were to be interpreted as meaning that responsibility for the examination of an application for asylum passed to the Member State where the application was lodged if the transfer was not carried out within six months after a temporary decision had been made to suspend the transfer and irrespective of when the final decision was made on whether the transfer was to be carried out.

The defendants in the present case were members of an Armenian family who had applied for asylum in Sweden while there. The Migrationsverket (Swedish Immigration Board) found that the family had earlier applied for asylum in, inter alia, France, and therefore ordered the transfer of the family to France. This decision was eventually annulled by a Swedish Court by reference to a leading judgment of the referring Court in which it had been held that article 20(1)(d) of Regulation 343/2003 was to be interpreted as meaning that the period for implementing the transfer was to run from the day of the decision provisionally to suspend execution. Since execution of the decision was suspended by a Swedish Court on August 23, 2006, it was now found that the time-limit for execution of the transfer expired on February 24, 2007, from which date (i) responsibility for examining the applications for asylum of the members of the family laid once more with Sweden pursuant to article 20(2) of Regulation No 343/2003; and (ii) the persons concerned could no longer be transferred to France. The Migrationsverket appealed against this judgment, arguing that, following the adoption of a suspensive decision, the period for implementation of the transfer was suspended, with the result that it would run for six months as from the date the suspended decision would once again be enforceable.

The Court held that it was not evident from the actual wording of arts 20(1)(d) and 20(2) of Regulation 343/2003 whether the period for implementation of the transfer began to run as from the time of the provisional judicial decision suspending the implementation of the transfer procedure, or only as from the time of the judicial decision ruling on the merits of that procedure. In interpreting a provision of Community law it was necessary to consider not only its wording, but also the context in which it occurred and the objective pursued by the rules of which it was part.

Distinction between two situations under art. 20(1)(d)
The Court held that a distinction must be drawn between two situations. In the first situation, it followed from the wording of art. 20(1)(d) of Regulation 343/2003 that, where there was no provision for an appeal to have suspensive effect, the period for implementation of the transfer started to run as from the time of the decision, explicit or presumed, by which the requested Member State agreed to take back the person concerned, irrespective of the uncertainties surrounding the appeal against the decision ordering his transfer which the asylum seeker might have lodged before the courts of the requesting Member State. In that case only the practical details of the implementation of the transfer remained to be determined, including setting the date thereof. It was in that context that article 20(1)(d) of Regulation 343/2003 allowed the requesting Member State six months in which to carry out the transfer.

In the second situation, where the requesting Member State provided for an appeal which might have suspensive effect and the court of that Member State gave its decision such effect, art. 20(1)(d) of Regulation 343/2003 provided that the period for transfer started to run as from the time of the “decision on an appeal or review”. In that situation, the start of that period should be determined in such a manner as to allow the Member States, as in the first situation, a six-month period which they were deemed to require in full in order to determine the practical details for carrying out the transfer. In order to ensure the effectiveness of art. 20(1)(d) of Regulation 343/2003 laying down the period for implementation of the transfer, that period must begin to run not as from the time of the provisional judicial decision suspending the implementation of the transfer procedure, but only as from the time of the judicial decision which ruled on the merits of the procedure and which was no longer such as to prevent its implementation.

An interpretation of art. 20(1)(d) of Regulation 343/2003, laying down the starting point for calculating the period granted to the requesting Member State for proceeding with the transfer of an asylum applicant, could not lead to a finding that, for the sake of observing Community law, the requesting State must disregard the suspensive effect of a provisional judicial decision taken in the context of an appeal capable of having such effect, which it nevertheless wished to introduce into its domestic law.

Principle of procedural autonomy of Member States
(a) If the interpretation of art. 20(1)(d) of Regulation 343/2003 to the effect that the period for implementation of the transfer began to run as from the time of the provisional decision having suspensive effect were to prevail, a national court wishing to reconcile compliance with the time-limit with compliance with a provisional judicial decision having suspensive effect would be placed in the position of having to rule on the merits of the transfer procedure before expiry of that time-limit by a decision which might, owing to lack of sufficient time granted to the courts, had been unable to take satisfactory account of the complex nature of the proceedings. Such an interpretation would run counter to the principle of procedural autonomy of the Member States (see Case C-13/01 Safalero [2003] and Case C-432/05 Unibet [2007], on which I wrote here).

It followed that arts 20(1)(d) and 20(2) of Regulation 343/2003 were to be interpreted as meaning that, where the legislation of the requesting Member State provided for suspensive effect of an appeal, the period for implementation of the transfer began to run, not as from the time of the provisional judicial decision suspending the implementation of the transfer procedure, but only as from the time of the judicial decision which ruled on the merits of the procedure and which was no longer such as to prevent its implementation.

Text of Judgment

Case C-205/07, Gysbrechts and Santurel-Inter

2009-03-25T21:52:00.007+01:00

>> Articles 29 EC not precluding prohibition of requiring advance or any payment before expiry of period for withdrawal in the case of distance selling

Gysbrechts was the business manager of Santurel, a company specialising in the wholesale and retail sale of food supplements. Most of the sales were done over the internet, with the goods ordered being dispatched by post. Following a complaint, the Belgian Economic Inspection Board carried out an investigation as a result of which Santurel-Inter and Gysbrechts were found guilty of offences under the distance-selling provisions of the Belgian Law on consumer protection. The offences consisted in failure to comply with art. 80(3) of the Belgian Law on consumer protection, which prohibited demands for an advance or payment from the consumer before the expiry of the period for withdrawal of seven working days. More specifically, the issue was the interpretation of that provision by the Belgian authorities to the effect that it was prohibited to require a consumer to provide his credit card number before the expiry of the period for withdrawal of seven working days. Gysbrechts and Santurel were found to have required consumers not residing in Belgium to provide the number of their payment card before expiry of the period for withdrawal. In appeal, the national court asked whether articles 28 to 30 EC precluded a provision relating to distance selling which prohibited a supplier from requiring an advance or any payment before expiry of the period for withdrawal.

No exhaustive harmonisation
The prohibition laid down by art. 80(3) of the Law on consumer protection came within the scope of Directive 97/7. A national measure in an area which had been the subject of exhaustive harmonisation at Community level must be assessed in the light of the provisions of that harmonising measure and not those of the Treaty. However, the Court held that in the present case, it was clear that the harmonisation effected by Directive 97/7 was not exhaustive. Member States might introduce or maintain, in the area covered by the directive, more stringent provisions to ensure a higher level of consumer protection, provided that power was exercised with due regard for the Treaty. It followed that such a provision did not dispense with the need to examine the compatibility of the national measure at issue in the main proceedings with arts 28 to 30 EC. (see also: Case C‑322/01 Deutscher Apothekerverband [2003]).

Infringement of Article 29 EC
The Court held that the compatibility of a provision such as that at issue in the main proceedings with art. 29 EC must be examined by taking into account also the national authorities’ interpretation of it, namely that suppliers were not allowed to require that consumers provided their payment card number, even though the suppliers undertook not to use it before expiry of the period for withdrawal. Even if a prohibition such as that at issue in the main proceedings was applicable to all traders active in the national territory, its actual effect was none the less greater on goods leaving the market of the exporting Member State than on the marketing of goods in the domestic market of that Member State. Therefore, a national measure prohibiting a supplier in a distance sale from requiring an advance or any payment before expiry of the period for withdrawal constituted a measure having equivalent effect to a quantitative restriction on exports. The same was true of a measure prohibiting a supplier from requiring that consumers provided their payment card number, even if the supplier undertook not to use it to collect payment before expiry of the period for withdrawal.

The Court reiterated that consumer protection might constitute a legitimate objective in the public interest capable of justifying a restriction on the free movement of goods. It remained to be determined whether that provision, as it was interpreted by the national authorities, was proportionate to the objective pursued. In order for national rules to comply with the principle of proportionality, it must be ascertained not only whether the means which they employed were suitable for the purpose of ensuring the attainment of the objectives pursued but also whether those means did not go beyond what was necessary to attain those objectives (Joined Cases C-158/04 and C-159/04 Alfa Vita Vassilopoulos and Carrefour-Marinopoulos [2006]).

The Court found that the prohibition on requiring an advance or any payment before expiry of the period for withdrawal and the prohibition on requesting that purchasers provided their payment card number were capable of ensuring a high level of consumer protection in distance selling, in particular in relation to the exercise of the right to withdraw. However, the imposition on a supplier of a prohibition on requiring that a consumer provided his payment card number went beyond what was necessary to attain the objective pursued. The value of the prohibition on a supplier requiring a consumer’s payment card number resided only in the fact that it eliminated the risk that the supplier might collect the price before expiry of the period for withdrawal. If, however, that risk materialised, the supplier’s action was, in itself, a contravention of the prohibition laid down by the provision at issue in the main proceedings, a prohibition which must be regarded as an appropriate and proportionate measure to attain the objective pursued.

It followed art. 29 EC did not preclude national rules which prohibited a supplier, in cross-border distance selling, from requiring an advance or any payment from a consumer before expiry of the withdrawal period, but did preclude a prohibition, under those rules, on requesting, before expiry of that period, the number of the consumer’s payment card.

Text of Judgment

Case C-285/07, A.T. v Finanzamt Stuttgart-Körperschaften

2009-03-25T11:40:00.007+01:00

>> German tax legislation infringing Articles 8 of Merger Directive

This case concerned the question whether art. 8(1) and (2) of Directive 90/434 (the Merger Directive) precluded legislation of a Member State under which, in consequence of an exchange of shares, the shareholders of the acquired company were taxed on the capital gains arising from the transfer and the capital gain was deemed to correspond to the difference between the initial cost of acquiring the shares transferred and their market value, unless the acquiring company carried over the historical book value of the shares transferred in its own tax balance sheet.

AT was a German company which had a controlling holding (89.5%) in a German GmbH. Since financial markets rules required it to divest itself of that holding it transferred its shares in the GmbH during the course of 2000 to a French company, in exchange for new shares amounting to 1.47% of the capital issued by that company. The French company valued the German GmbH shares in its trading and tax balance sheets at the market value ascribed to them in the transfer contract instead of at their lower book value. AT sought to value the shares which it had been allotted in the French company at the book value of the GmbH shares for which the French company’s shares had been exchanged. German tax provisions imposed a particular qualifying condition that share exchanges had to meet in order for any charge to capital gains tax to be deferred. The transaction in question did not fulfil that condition. German tax authorities considered, therefore that A.T. was obliged to attribute the market value used by the French company in valuing the GmbH shares and therefore treated the share exchange between AT and the French company as giving rise to a taxable capital gain corresponding to the difference between the initial cost of acquiring the shares in the GmbH and their market value. AT appealed against the tax assessment notices.

Aim of the Merger Directive
By imposing that fiscal neutrality requirement with regard to the shareholders of the acquired company, Directive 90/434 aimed to ensure that an exchange of shares concerning companies from different Member States was not hampered by restrictions, disadvantages or distortions arising in particular from the tax provisions of the Member States. The Court however stressed that that fiscal neutrality requirement was not unconditional. Under art. 8(2) of Directive 90/434, the Member States were to make the application of art. 8(1) conditional upon the shareholder’s not attributing to the securities received a value for tax purposes higher than the value attributed to the securities exchanged immediately before the exchange of shares.

No discretion Member States
The Court held that the mandatory and clear wording of art. 8(1) and (2) of Directive 90/434 offered no indication whatsoever that the Community legislature intended to leave Member States discretion with regard to implementation which would permit them to make the fiscal neutrality provided for in favour of the shareholders of the acquired company subject to additional conditions. According to the Court, to leave the Member States such discretion would be contrary to the very objective of the directive.

Article 11(1)(a) of Directive 90/434
The Court reiterated that the Member States must grant the tax advantages provided for under Directive 90/434 in respect of the exchanges of shares referred to in art. 2(d) thereof, unless those operations had as their principal objective or as one of their principal objectives tax evasion or tax avoidance within the meaning of art. 11(1)(a) of the directive. It was, however, only by way of exception and in specific cases that Member States might, pursuant to art. 11(1)(a) of Directive 90/434, refuse to apply or withdraw the benefit of all or any part of the provisions of the directive. In order to determine whether the planned operation had such an objective, the competent national authorities could not confine themselves to applying predetermined general criteria but must carry out a general examination of each particular case (see Case C-28/95 Leur-Bloem [1997] and Case C‑321/05 Kofoed [2007]).

Article 11(1)(a) of Directive 90/434 could not therefore provide a basis for tax legislation of a Member State, such as that at issue in the main proceedings, which refused in a general way to grant the tax advantages provided for under Directive 90/434 in respect of the exchange of shares operations covered by that directive, solely on the ground that the acquiring company had not, in its fiscal balance sheet, valued the shares transferred at their historical book value, and, in consequence, such legislation could not be regarded as compatible with that directive.

Infringement Art. 8 Merger Directive
It followed that article 8(1) and (2) of Directive 90/434 precluded legislation of a Member State under which, in consequence of an exchange of shares, the shareholders of the acquired company were taxed on the capital gains arising from the transfer and the capital gain was deemed to correspond to the difference between the initial cost of acquiring the shares transferred and their market value, unless the acquiring company carried over the historical book value of the shares transferred in its own tax balance sheet.

Text of judgment

Case C‑209/07, Competition Authority v BIDS

2008-11-21T14:48:00.009+01:00

>> Art. 81 infringement must be examined first by looking at object of agreement concerned. Only when analysis not revealing effect on competition sufficiently deleterious should actual effects be considered.

In light of the high overcapacity in the Irish beef processing industry, processors formed the so-called Beef Industry Development Society Ltd (BIDS). BIDS purchased cattle from breeders, slaughters and de-boned them, and then sold the beef in Ireland and abroad.

The processors wished to reduce the overcapacity through agreed arrangements. The standard form of contract provided that the stayers were to compensate the goers, the amount of that compensation to be determined by the parties. BIDS was to pay the compensation to the goers. The stayers were to repay BIDS by means of a levy of EUR 2 per head of cattle up to their traditional cattle kill volume and EUR 11 above that volume.

In return, the goers undertook to decommission or put beyond use their processing plants or sell them only to persons established outside the island of Ireland, or, if necessary, to the stayers on condition that they be used as back-up equipment or spare parts; not to use the land on which those plants were situated for the purposes of beef or veal processing for a period of five years; and not to compete with the stayers in the beef and veal processing market in Ireland for two years.

By its question, the national court asked, in essence, whether agreements with features such as those of the BIDS arrangements were to be regarded, by reason of their object alone, as being anti‑competitive and prohibited by Art. 81(1) EC or whether, on the other hand, it was necessary, in order to reach such a conclusion, first to demonstrate that such agreements had anti-competitive effects.

The Competition Authority, the Belgian Government and the Commission of the European Communities all submitted that the object of the BIDS arrangements was obviously anti-competitive so that there was no need to analyse their actual effects and that those arrangements were concluded in breach of the prohibition laid down in Art. 81(1) EC.

The Court of Justice rejected the argument of BIDS that those arrangements should be analysed in the light of their actual effects on the market. The Court pointed out that to come within the prohibition laid down in Art. 81(1) EC, an agreement must have “as [its] object or effect the prevention, restriction or distortion of competition within the common market”. According to the Court, the alternative nature of that requirement, indicated by the conjunction “or”, led, first, to the need to consider the precise purpose of the agreement, in the economic context in which it was to be applied.

The Court, referring to LTM, held that where, however, an analysis of the clauses of that agreement did not reveal the effect on competition to be sufficiently deleterious, its consequences should then be considered. For it to be caught by the prohibition it was necessary to find that those factors were present which showed that competition had in fact been prevented or restricted or distorted to an appreciable extent (Case 56/65 LTM [1966]).

The Court held that in deciding whether an agreement was prohibited by Art. 81(1) EC, there was therefore no need to take account of its actual effects once it appeared that its object was to prevent, restrict or distort competition within the common market. That examination must be made in the light of the agreement’s content and economic context. (see, inter alia, Joined Cases 56/64 and 58/64 Consten and Grundig v Commission [1966]).

The distinction between “infringements by object” and “infringements by effect” arose from the fact that certain formed of collusion between undertakings could be regarded, by their very nature, as being injurious to the proper functioning of normal competition.

The Court held that to determine whether an agreement came within the prohibition laid down in Art. 81(1) EC, close regard must be paid to the wording of its provisions and to the objectives which it was intended to attain. In that regard, even supposing it to be established that the parties to an agreement acted without any subjective intention of restricting competition, but with the object of remedying the effects of a crisis in their sector, such considerations were irrelevant for the purposes of applying that provision.

The Court held that an agreement might be regarded as having a restrictive object even if it did not have the restriction of competition as its sole aim but also pursued other legitimate objectives.

It was only in connection with Art. 81(3) EC that matters such as those relied upon by BIDS might, if appropriate, be taken into consideration for the purposes of obtaining an exemption from the prohibition laid down in Art. 81(1) EC (see: Case C‑551/03 P General Motors v Commission [2006]).

According to the Court, the object of the BIDS arrangements was to change, appreciably, the structure of the market through a mechanism intended to encourage the withdrawal of competitors. The BIDS arrangements were intended, essentially, to enable several undertakings to implement a common policy which had as its object the encouragement of some of them to withdraw from the market and the reduction, as a consequence, of the overcapacity which affected their profitability by preventing them from achieving economies of scale.

The Court held that that type of arrangement conflicted patently with the concept inherent in the EC Treaty provisions relating to competition, according to which each economic operator must determine independently the policy which it intended to adopt on the common market. The Court stated that Art. 81(1) EC was intended to prohibit any form of coordination which deliberately substituted practical cooperation between undertakings for the risks of competition.

According to the Court, the means put in place to attain the objective of the BIDS arrangements included restrictions whose object was also anti-competitive.

It followed an agreement with features such as those of the standard form of contract had as its object the prevention, restriction or distortion of competition within the meaning of Art. 81(1) EC.

Text of judgment

Case C-214/07, Commission v France

2008-11-21T10:50:00.005+01:00

>> Court articulates criteria absolute impossibility of giving effect to decision

Decision 2004/343 classified as a State aid scheme a scheme of tax exemptions provided for in three provisions of the French General Tax Code. These provisions exempted companies created to take over the activities of industrial firms in difficulty from corporation tax for a period of two years.

Those newly created companies could also benefit, with the agreement of the competent local authorities, from exemption from business tax and property tax for a period of two years.

In the present case, the Commission contended that France, in failing to recover sums accorded to companies taking over the activities of firms in difficulty, had failed to implement the decision within the prescribed time period.

The Commission therefore sought a declaration that France infringed Arts 5 and 6 of that decision, Article 249(4) EC and Article 10 EC.

France’s defence was that its authorities had done all that they could to recover the aid concerned, and that to ask them to recover the aid any faster would be to demand the impossible. It argued that this was particularly the case where the companies which received the aid had subsequently ceased to trade, or had sold their assets.

The Court of Justice reiterated hat the only defence available to a Member State in opposing an application by the Commission under Art. 88(2) EC for a declaration that it had failed to fulfil its obligations was to plea that it was absolutely impossible for it properly to implement the decision (see Case C-177/06 Commission v Spain [2007]).

The Court held that, in the event of difficulties, the Commission and the Member State must, pursuant to the principle of genuine cooperation as laid down in Art. 10 EC, work together in good faith with a view to overcoming those difficulties whilst fully observing the Treaty provisions and, in particular, the provisions on State aid.

The condition that it be absolutely impossible to implement a decision was not fulfilled where the defendant Member State merely informed the Commission of the legal, political or practical difficulties involved in implementing the decision, without taking any real steps to recover the aid from the undertakings concerned, and without proposing to the Commission any alternative arrangements for implementing the decision which could have enabled those difficulties to be overcome.

Nor could a Member State simply make general and abstract statements without referring to specific individual cases, analysed in the light of all the steps actually taken to implement the decision.

The Court held that, as regards recipients which had ceased their activity and transferred their asset, it was for the national authorities to check whether the financial conditions of the transfer complied with market conditions. The national authorities might take into consideration, in particular, the form of the transfer, for example, public tendering, deemed to ensured that a sale took place under market conditions (see Case C-277/00 Germany v Commission [2004]).

France claimed, in its exchanges with the Commission, an absolute impossibility of implementation vis-à-vis 204 undertakings which had ceased their activity. However, according to the Court, it provided no evidence that it had taken any concrete steps to examine the situation of each of them and to determine whether or not it necessitated recovery pursuant to the criteria set out above.

The Court held that France did not provide evidence even of having taken advantage of the Commission’s acceptance, in the context of cooperation under Art. 10 EC, of a review restricted only to the most significant asset transfers

It followed that there was no absolute impossibility of implementation and that the complaint based on an infringement of Art. 5 of the decision was well-founded. The Court argued it did not need to examine the head of claim based on Art. 6 of the decision and seeking a declaration that France had failed to inform the Commission of the measures taken and to be taken in order to implement the decision, since the Member State did not in fact implement the decision within the prescribed period.

Text of Judgment

Case C-324/07, Coditel Brabant

2008-11-18T14:38:00.019+01:00

Following a call for tenders, Coditel applied for a concession to operate the cable television network of the Municipality of Uccle. However, the Uccle municipal council (town hall pictured above) subsequently decided to sell the network rather than grant a concession, after which Coditel submitted a purchase bid under the terms of the relevant tender.

The only offer which was in conformity with the tender and permissible, namely the Coditel bid, was the lowest. Brutélé, an inter-municipal cooperative society whose members were municipalities and an inter-municipal association whose members in turn were solely municipalities, also responded to the call for tenders but not with a purchase bid but with an offer of affiliation.

In November 2000, the Municipality of Uccle decided not to sell the municipal cable television network. It furthermore decided that the municipality should become a member of Brutélé. Coditel appealed against these decisions.

The Belgian Conseil d’État asked whether Arts 43 and 49 EC, the principles of equal treatment and of non-discrimination on grounds of nationality and the concomitant obligation of transparency precluded a public authority from awarding, without calling for competition, a public service concession to an inter-municipal cooperative society of which all the members were public authorities, where those public authorities exercised over that cooperative society control similar to that exercised over their own departments and where that society carried out the essential part of its activities with those public authorities.

Furthermore, the referring Court asked whether, subject to verification of the facts by the referring court as regards the degree of independence enjoyed by the inter-municipal cooperative society in question, the control exercised by the public authorities might be regarded as enabling those authorities to exercise over the cooperative society control similar to that exercised over their own departments.

Thirdly, it asked whether, where a public authority joined an inter-communal cooperative of which all the members were public authorities in order to transfer to that cooperative society the management of a public service, it was possible, in order for the control which those member authorities exercised over the cooperative to be regarded as similar to that which they exercised over their own departments, for it to be exercised jointly by those authorities, decisions being taken by a majority, as the case might be.

The Court of Justice first of all held that, by becoming a member of Brutélé, the Municipality of Uccle entrusted it with the management of its cable television network. Brutélé’s remuneration came not from the municipality but from payments made by the users of that network. That method of remuneration was characteristic of a public service concession. The Court reiterated that the application of Articles 12, 43 and 49 EC, as well as of the general principles of which they were the specific expression, was precluded if the control exercised over the concessionaire by the concession-granting public authority was similar to that which the authority exercised over its own departments and if, at the same time, that entity carried out the essential part of its activities with the controlling authority or authorities (see Case C‑107/98 Teckal [1999] and Case C-458/03 Parking Brixen [2005]).

The Court stressed that in order to determine whether a concession-granting public authority exercised a control similar to that which it exercised over its own departments, it was necessary to take account of all the legislative provisions and relevant circumstances. It must follow from that examination that the concessionaire in question was subject to a control which enabled the concession-granting public authority to influence that entity’s decisions. It must be a case of a power of decisive influence over both strategic objectives and significant decisions of that entity (see Case C-340/04, Carbotermo & Consorzio v. Comune di Busto Arsizio [2006], on which I wrote this post).

The fact that the concession-granting public authority held, alone or together with other public authorities, all of the share capital in a concessionaire, tended to indicate – generally, but not conclusively – that that contracting authority exercised over that company a control similar to that which it exercised over its own departments.

The Court held that subject to verification of the facts by the referring court as regards the degree of independence enjoyed by the inter-municipal cooperative society in question, in circumstances such as those of the case before the referring court, where decisions regarding the activities of an inter-municipal cooperative society owned exclusively by public authorities were taken by bodies, created under the statutes of that society, which were composed of representatives of the affiliated public authorities, the control exercised over those decisions by the public authorities might be regarded as enabling those authorities to exercise over the cooperative society control similar to that exercised over their own departments.

The Court furthermore reiterated that where several public authorities controlled a concessionaire, the condition relating to the essential part of that entity’s activities might be met if account was taken of the activities which that entity carried out with all those authorities. The control exercised over the concessionaire by a concession-granting public authority must be similar to that which the authority exercised over its own departments, but not identical in every respect. The control exercised over the concessionaire must be effective, but it was not essential that it be exercised individually. (see Case C-340/04, Carbotermo & Consorzio v. Comune di Busto Arsizio [2006] and Case C-458/03 Parking Brixen [2005]).

The Court concluded that where a public authority joined an inter-communal cooperative of which all the members were public authorities in order to transfer to that cooperative society the management of a public service, it was possible, in order for the control which those member authorities exercised over the cooperative to be regarded as similar to that which they exercised over their own departments, for it to be exercised jointly by those authorities.

Text of judgment

Case C-248/07, Trespa v Nova Haven- en Vervoerbedrijf

2008-11-14T10:05:00.006+01:00

>> Court clarifies several concepts of Regulation 2454/93

This reference for a preliminary ruling concerned the interpretation of Arts 1a, 291 and 297 of Regulation 2454/93, which implemented Regulation 2913/92 establishing the Community Customs Code.

The reference was made in proceedings between Trespa and Nova with regard to an action brought by Trespa seeking damages and reimbursement of administrative costs incurred as a result of errors allegedly committed by Nova.

The referring court asked whether Art. 291(1) of the implementing regulation was to be interpreted as meaning that the concept of “person importing the goods or having them imported for free circulation” contained therein referred not only to the importer for whom the goods were destined but also to the customs agent who made the customs declaration.

Secondly, the referring court asked whether Art. 297(1) of the implementing regulation, read in conjunction with Art. 1a of that regulation, was to be interpreted as meaning that in the case where goods were imported into Belgium and then transported to the Netherlands, there was a transfer of goods within the Community. In addition, it wished to know whether, in such a case, the person referred to in Art. 291 of the implementing regulation must held the authorisation referred to in that Article.

Finally, it asked whether the term “transferee” in Art. 297(1) of the implementing regulation referred to a customs agent who carried out customs formalities on behalf of the ultimate importer. The Commission questioned the admissibility of the reference for a preliminary ruling. It submitted that the dispute in the main proceedings concerned the private law relationship between the parties to the main proceedings, which was governed by the Belgian Civil Code, and that the relevance of the questions to the resolution of that dispute was not obvious.

The Court first of all that in the context of Art. 234 EC, it was solely for the national court before which the dispute had been brought, and which must assume responsibility for the subsequent judicial decision, to determine in the light of the particular circumstances of the case both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submitted to the Court. (See, inter alia, Case C-144/04 Mangold [2005]; Case C‑217/05 Confederación Española de Empresarios de Estaciones de Servicio [2006]; and Case C‑119/05 Lucchini [2007]).

The Court held that questions on the interpretation of Community law referred by a national court, in the factual and legislative context which that court was responsible for defining and the accuracy of which was not a matter for the Court to determine, enjoyed a presumption of relevance.

The presumption that questions referred by national courts for a preliminary ruling were relevant might be rebutted only in exceptional cases, where it was quite obvious that the interpretation which was sought of Community law bore no relation to the actual facts of the main action or to its purpose or where the problem was hypothetical or the Court did not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it (see Case C-105/03 Pupino [2005]; and Case C-467/05 Dell’Orto [2007], on which I wrote this post).

The Court found that, in the present case, interpretation of the Community customs legislation would enable it to be known whether a customs agent must, in the circumstances of the main proceedings, hold an end-used authorisation. The question was neither hypothetical nor one which bore no relation to the actual facts or purpose of the dispute in the main proceedings.

The Court reiterated that it could not resolve a dispute concerning the facts. Such a dispute, like any other assessment of the facts involved, was within the province of the national court. In the present case, however, the Court had sufficient information to interpret the Community rules concerned and to give useful answers distinguishing, as necessary, the different hypothetical situations. The reference for a preliminary ruling was therefore admissible (see Case C-279/06 CEPSA [2008]).

The Court held that Article 291(1) of the implementing regulation was to be interpreted as meaning that the concept of “person importing the goods or having them imported for free circulation” contained therein referred to the person for whom the goods were destined and who intended to assign them to the prescribed end-use, irrespective of whether he made the customs declaration himself or had that done by a representative within the meaning of Art. 5 of the Customs Code.

That concept did not refer to the representative of that person before the customs authorities, disregarding those cases in which that person was deemed to act in his own name and on his own behalf pursuant to the second subparagraph of Art. 5(4) of that code and who must therefore be considered an importer.

Furthermore, Article 297(1) of the implementing regulation must be interpreted as meaning that there had been no transfer of goods within the Community in a situation where goods were imported into Belgium then transported to the Netherlands, if the person authorised acts on behalf of the ultimate importer, which was for the national court to ascertain.

The mere fact that the goods were imported into and cleared through customs in Belgium then transported to the Netherlands was irrelevant to the establishment of the existence of a transfer within the meaning of that provision. Where goods were transferred, the transferee must hold an authorisation issued in accordance with Art. 291 of that regulation.

Finally, the Court held that the concept of “transferee” contained in Art. 297(1) of the implementing regulation did not refer to a customs agent who carried out customs formalities on behalf of the importer.

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Case T‑69/04 Schunk and Schunk v Commission

2008-11-13T22:44:00.009+01:00

>> Court confirms Commission’s decision carbon cartel (II)

For the facts of this case see this post. The applicants of the present case requested the Court to annul the decision of the Commission or, in the alternative, reduce the amount of the fine imposed. In support of their action, the applicants claimed, first, that the Commission erred in law by assuming that the first applicant, SG, which was a finance holding company, was jointly and severally liable for the fine imposed on its subsidiary, the second applicant, SK.

Further, they pleaded that the contested decision had an unlawful legal basis, since Art. 15 of Regulation 17/621 gave the Commission a margin of discretion in relation to the amount of fines and was therefore incompatible with the principle of legal certainty and with higher ranking Community law.

In addition, they argued that the Commission discriminated against the applicants relative to other undertakings in fixing the amount of the imposed fines, incorrectly assessed the deterrent effect of the fines and the cooperation of the applicants, and failed to have regard to material circumstances.

The Commission requested the Court to exercise its unlimited jurisdiction under Article 229 EC and Article 17 of Regulation 17 and to increase the amount of the fine imposed on the applicants, which challenged for the first time before the Court the facts set out in the statement of objections.

The Court first of all held that the principle that penalties must have a proper legal basis was a corollary of the principle of legal certainty, which constituted a general principle of Community law and required, inter alia, that any Community legislation, in particular when it imposed or permitted the imposition of sanctions, must be clear and precise so that the persons concerned might know without ambiguity what rights and obligations flew from it and might take steps accordingly.

The Court held that that principle, which formed part of the constitutional traditions common to the Member States and which had been enshrined in various international treaties, in particular in Art. 7 ECHR must be observed in regard both to provisions of a criminal nature and to specific administrative instruments imposing or permitting the imposition of administrative sanctions.

It applied not only to the provisions which established the elements of an offence, but also to those which defined the consequences of contravening them. (see Case 169/80 Gondrand Frères and Garancini [1981]; Case 137/85 Maizena [1987]; Case C‑143/93 van Es Douane Agenten [1996]; and Joined Cases C‑74/95 and C‑129/95 X [1996]).

The Court held that Article 15(2) of Regulation 17, while leaving the Commission a certain discretion, laid down the criteria and limits to which it was subject in the exercise of its power to impose fines. Although the Commission’s previous practice in taking decisions did not in itself serve as a legal framework for fines in competition matters, the fact remained that, under the principle of equal treatment, which was a general principle of law which the Commission must observe, the Commission must not treat comparable situations differently and different situations in the same way, unless such treatment was objectively justified. (see Case C‑167/04 P JCB Service v Commission [2006]; and Case C‑76/06 P Britannia Alloys & Chemicals v Commission [2007]).

The Court stated that the Commission might at any time adjust the level of fines if the proper application of the Community competition rules so required, since such an alteration of an administrative practice might then be regarded as objectively justified by the objective of general prevention of infringements of the Community competition rules. (see inter alia, Joined Cases 100/80 to 103/80 Musique diffusion française and Others v Commission [1983]).

The Court furthermore held that the conditions under which SG was made an addressee of the Decision were clearly stated in that decision. The Court held that in the specific case of a parent company holding 100% of the capital of a subsidiary which had committed an infringement, there was a simple presumption that the parent company exercised decisive influence over the conduct of its subsidiary and that they therefore constituted a single undertaking within the meaning of Art. 81 EC. It was for a parent company which disputed before the Community judicature a Commission decision fining it for the conduct of its subsidiary to rebut that presumption by adducing evidence to establish that its subsidiary was independent.

The Court held that the Commission was right in finding that the applicants had infringed Art. 81 EC in participating in a complex of agreements and concerted practices.

With regard to the admissibility of the Commission’s counterclaim, the Court of First Instance held that it n the context of its unlimited jurisdiction accorded to it by Art. 229 EC and Art. 17 of Regulation 17, the powers of the Community judicature were not limited to declaring the contested decision void, as provided in Art. 231 EC, but allowed it to vary the penalty imposed by that decision.

The Community judicature was therefore empowered, in addition to carrying out a mere review of the lawfulness of the penalty, to substitute its own appraisal for the Commission’s and, consequently, to cancel, reduce or increase the fine or penalty payment imposed.

Accordingly, there was nothing preventing the Commission from also referring to the Community judicature the question of the amount of the fine and from applying to have that fine increased. (see inter alia Case C‑3/06 P Groupe Danone v Commission [2007]).

The Court concluded that unlimited jurisdiction could be exercised by the Community judicature only in the context of the review of acts of the Community institutions, more particularly in actions for annulment. The sole effect of Art. 229 EC was to enlarge the scope of the powers of the Community judicature in the context of the action referred to in Art. 230 EC. Therefore, the applicants’s arguments that the application to increase the Commission’s fine was incompatible with Art. 230 EC and failed to have regard to the subject matter of the action defined in the application, was rejected.

Text of Judgment

Case T‑68/04, SGL Carbon v Commission

2008-11-13T22:36:00.007+01:00

>> Court confirms Commission’s decision carbon cartel (I)

This case concerned a Commission decision imposing fines a number of companies for infringement of Article 81(1) EC and Article 53(1) EEA by taking part in a series of agreements and concerted practices on the market in carbon and graphite-based products for electrical and mechanical applications.

According to the Commission, the six companies, among which where SGL Carbon and Schunk GmbH (see this post) operated a secret cartel between October 1988 and December 1999.

The cartel consisted of fixing, directly or indirectly, sales prices and other trading conditions applicable to customers, sharing markets, in particular by allocating customers, and engaging in co-ordinated actions (quantity restrictions, price increases and boycotts) against competitors which were not members of the cartel.

During October 1988 and December 1999 the companies, which controlled 93% of the European market, held more than 140 meetings to decide price increases for a broad range of products as well as for large individual customers and to ward off outside competition by undercutting the few rivals left.

The top meetings, which they called “summits”, provided strategic direction and solved problems while the detailed price and other arrangements were worked out and agreed in “technical committee” meetings.

SGL Carbon brought the present action against the Commission, requesting the Court to annul the decision of the Commission or, in the alternative, reduce the amount of the fine imposed.

Deterrent effect of in fines
The Court inter alia held that the Commission’s practice in taking decisions did not serve as a legal framework for the fines imposed in competition matters, that framework being constituted solely by Regulation 17, and decisions in other cases could gave only an indication for the purpose of determining whether there might be discrimination, since the facts of those cases, such as markets, products, the undertakings and periods concerned, were not likely to be the same.

The fact that the Commission, in the past, imposed fines of a certain level for certain types of infringement did not mean that it was estopped from raising that level, at any time, to ensured the implementation of Community competition policy and to strengthen the deterrent effect of fines. (see inter alia C‑169/04 P JCB Service v Commission [2006] and Case C‑76/06 P Britannia Alloys & Chemicals v Commission [2007]).

The Court held that the Commission had the power to decide the level of fines so as to reinforce their deterrent effect where infringements of a given type, although established as being unlawful at the outset of Community competition policy, were still relatively frequent on account of the profit that certain of the undertakings concerned were able to derive from them.

The deterrent effect of a fine imposed for infringement of the Community competition rules could not be assessed by reference solely to the particular situation of the undertaking sanctioned. (see, inter alia, Joined Cases 100/80 to 103/80 Musique diffusion française and Others v Commission [1983]and Case T‑224/00 Archer Daniels Midland and Archer Daniels Midland Ingredients v Commission [2003]).

The complaint of SGL Carbon alleging disproportionate and/or discriminatory treatment of the applicant in relation to the setting of the starting amount of the fine and in light of the Commission’s practice in taking decisions, was therefore rejected.

The Court held that it was open to the Commission to consider it necessary to set the amount of the fine at a sufficiently dissuasive level within the limits laid down in Regulation 17.

Division into categories
The Court also held that the Commission’s division of the undertakings concerned in three categories, namely large, medium and small operators, was not an unreasonable way of taking account of their relative importance on the market in order to set the starting amount, as long as it did not lead to a grossly inaccurate representation of the market concerned.

The Court however stressed that, to check whether a division of the members of a cartel into categories was consistent with the principles of equal treatment and proportionality, it could review whether that division was coherent and objectively justified (see also Case T‑213/00 CMA CGM and Others v Commission [2003] and Joined Cases T‑236/01, T-239/01, T‑244/01 to T‑246/01, T-251/01 and T-252/01 Tokai Carbon and Others v Commission [2004]).

The Court furthermore held the complaint of SGL Carbon alleging disproportionate and/or discriminatory treatment of the applicant in relation to the setting of the starting amount of the fine, and in respect of the duration of the infringement and the Commission’s practice in taking decisions, must be rejected.

The Court stressed that respect for the principle of equal treatment must be reconciled with the principle of legality, according to which a person might not rely, in support of his claim, on an unlawful act committed in favour of a third party. (see Case 134/84 Williams v Court of Auditors [1985])

Since all other complaints were also rejected, the action was dismissed in its entirety.
Text of Judgment

Case C-141/07, Commission v Germany

2008-11-13T21:35:00.003+01:00

>> German Law on Pharmacies infringing Art. 28 but justified on grounds of public health

By its application the Commission sought a declaration from the Court that, by providing in Paragraph 14(5) and (6) of the German Law on Pharmacies that the conclusion of a contract for the supply of medicinal products was subject to cumulative conditions whose effect was to make it impossible in practice for a hospital in Germany to be supplied on a regular basis by pharmacies established in other Member States, Germany had failed to fulfil its obligations under Arts 28 EC and 30 EC.

In support of its action, the Commission claimed that the cumulative conditions laid down by the contested provisions relating to contracts for the supply of medicinal products constituted a selling arrangement within the meaning of Keck and Mithouard but none the less fell within the scope of Art. 28 EC, given that the effect of those conditions was that access to the market was more difficult for goods from Member States other than Germany than it was for domestic products.

The Commission pointed out that under the contested provisions the contracting pharmacy was responsible for the provision of all of the services associated with the supply of medicinal products. Since some of those services, such as provision of emergency supplies, could only be provided by a pharmacist who had his dispensary in the vicinity of the hospital to be supplied, the choice of such a pharmacy was necessarily restricted to those situated near to that hospital. In this way, goods from other Member States had access to the market which was more restricted than that of domestic products.

The Court first of all held that Community law did not detract from the power of the Member States to organise their social security systems and to adopt, in particular, provisions intended to govern the consumption of pharmaceutical products in order to promote the financial stability of their health-care insurance schemes and the organisation and delivery of health services and medical care.

However, in exercising that power, the Member States must comply with Community law, in particular the provisions of the Treaty on the free movement of goods. Accordingly, this action was restricted to determining whether the Member States had acted in compliance with the rules of that Treaty relating to the free movement of goods. As Community law stood at present, since there had been no harmonisation at Community level of the rules on the provision of medicinal products to hospitals, the Member States continued to be empowered to lay down rules on that subject, subject to compliance with the provisions of the Treaty, in particular the provisions on the free movement of goods (see also Case C‑120/95 Decker [1998] and C‑372/04 Watts [2006]).

Reiterating its Dassonville case law, the Court held that the free movement of goods was a fundamental principle of the Treaty which was expressed in the prohibition, set out in Art. 28 EC, on quantitative restrictions on imports between Member States and all measures having equivalent effect. The prohibition of measures having equivalent effect to quantitative restrictions which was set out in Art. 28 EC covered all legislation of the Member States that was capable of hindering, directly or indirectly, actually or potentially, intra-Community trade.

The Court added that national provisions restricting or prohibiting certain selling arrangements which, first, applied to all relevant traders operating within the national territory and, second, affected in the same manner, in law and in fact, the marketing of domestic products and those from other Member States were not liable to hinder, directly or indirectly, actually or potentially, trade between Member States within the meaning of the Dassonville line of case-law.

The Court held that paragraph 14 of the Law on Pharmacies laid down the requirements which external pharmacies must meet if they were to be eligible to supply medicinal products to hospitals in Germany. However, the contested provisions did not concern the characteristics of the medicinal products, but concerned solely the arrangements permitting their sale. Consequently. Therefore , they had to be regarded as concerning selling arrangements within the meaning of Keck and Mithouard.

Pharmacies established in other Member States, unless they were in a border region and near to the German hospital concerned, which wished to conclude a supply contract with such a hospital must either transfer their dispensary to the vicinity of the hospital concerned or open another pharmacy near to the hospital. Consequently, as regards the supply of medicinal products to German hospitals, those provisions did not affect in the same way products marketed by pharmacies established in the territory of Germany and those marketed by pharmacies situated in another Member State.

For a national measure to be characterised as discriminatory or protective within the meaning of the rules on the free movement of goods, it was not necessary for it to have the effect of favouring national products as a whole or of placing only imported products at a disadvantage and not national products. Equally irrelevant was the circumstance, that a pharmacy established in another Member State had the opportunity to supply medicinal products to the hospital’s internal pharmacy or to an external pharmacy which satisfied the cumulative conditions laid down in the contested provisions.

Since the contested provisions were liable to hinder intra-Community trade, they must be considered as a measure having equivalent effect to a quantitative restriction on imports within the meaning of Art. 28 EC, without it being necessary to prove that they had had an appreciable effect on such trade. (see also Case C‑166/03 Commission v France [2004]).

The Court, however, added that the contested provisions reflected concerns for public health which were within the ambit of Art. 30 EC. Consequently, they were, in principle, capable of justifying a restriction on the free movement of goods. However, legislation which was such as to restrict a fundamental freedom guaranteed by the Treaty, such as the free movement of goods, could be justified only if it was appropriate for securing the attainment of the objective pursued and did not go beyond what was necessary in order to attain it.

The Court held that since Art. 30 EC was an exception, to be strictly interpreted, to the rule of free movement of goods within the Community, it was for the national authorities to demonstrate that those provisions were necessary in order to achieve the declared objective, and that this objective could not be achieved by less extensive prohibitions or restrictions of lesser extent or having less effect on intra-Community trade.

When assessing whether the principle of proportionality had been observed in the field of public health, account must be taken of the fact that a Member State had the power to determine the degree of protection which it wished to afford to public health and the way in which that degree of protection was to be achieved. Since that degree of protection might vary from one Member State to the other, Member States must be allowed discretion. Consequently, the fact that one Member State imposed less strict rules than another Member State did not mean that the latter’s rules were disproportionate.

The Court held that the contested provisions could be seen to be necessary to the achievement of the objective of ensuring a high level of public health protection and clearly did not go beyond what was necessary.

While objectives of a purely economic nature could not justify a restriction on the fundamental principle of free movement of goods, none the less, as regards interests of an economic nature concerning the maintenance of a balanced medical and hospital service open to all, such an objective might also fell within one of the derogations, on grounds of public health, in so far as it contributed to the attainment of a high level of health protection.

In the light of the foregoing, the contested provisions must be considered to be justified on grounds relating to the protection of public health. The Court held that the Commission’s action must therefore be dismissed.

Text of Judgment

Case T‑345/05, Mote v European Parliament

2008-11-13T10:16:00.003+01:00

>> Court of First Instance reiterates that it will only review review legality of acts of the European Parliament intended to produce legal effects vis-à-vis third parties

In November 2003, criminal proceedings were brought against Ashley Neil Mote, a British citizen, on the ground that various State benefits he had received between 1996 and 2002 had been obtained on the basis of false declarations.

Following his election to the European Parliament in June 2004, Mr Mote applied for the criminal proceedings pending against him to be stayed, relying on the privileges and immunities that he enjoyed in his capacity as a Member of the European Parliament.

The Attorney General of England and Wales asked the European Parliament to confirm that the prosecution brought against the applicant did not infringe the Protocol on the Privileges and Immunities of the European Communities of 8 April 1965 annexed to the Treaty establishing a single Council and a single Commission, in particular Art. 8 thereof and, in the event that Mr Mote was held to enjoy any privilege or immunity under the Protocol, to waive that privilege or immunity.

By decision of July 5, 2005, the plenary assembly of the Parliament decided to waive Mr Mote’s immunity. He subsequently sought annulment of this decision, arguing inter alia that the Parliament should have determined that the privilege conferred by Article 8 of the Protocol had been infringed.

The Parliament submitted that the application should be declared inadmissible on the ground that the applicant was not directly concerned, for the purposes of Art. 230(4) EC, by the decision to waive immunity, in particular in that such a decision left a discretion to its addressee.

The Court first of all reiterated that the European Community was based on the rule of law inasmuch as neither its Member States nor its institutions could avoid a review of the question whether their acts were in conformity with the constitutional charter, the Treaty, which established a complete system of legal remedies and procedures designed to permit the Court of Justice to review the legality of acts of the institutions. Acts adopted by the Parliament had not, as a matter of principle, been excluded from actions for annulment. (Case 294/83 Les Verts v Parliamen[1986] ;and Case C-314/91 Weber v Parliament [1993]).

The Court of First Instance held that under Art. 230(1) EC, the Court of Justice was to review the legality of acts of the Parliament intended to produce legal effects vis-à-vis third parties. Acts of the Parliament which related only to the internal organisation of its work could not be challenged in an action for annulment.

That class of measures included acts of the Parliament which either did not have legal effects or had legal effects only within the Parliament as regards the organisation of its work and were subject to review procedures laid down in its Rules of Procedure.

By contrast, acts of the Parliament which produced or were intended to produce legal effects in regard to third parties or, in other words, acts whose legal effects went beyond the internal organisation of the work of the institution were open to challenge before the Community judicature. (see, inter alia, the order in Case 78/85 Group of the European Right v Parliament [1986]; and the order in Case C-68/90 Blot and Front national v Parliament [1990]).

Members, elected as representatives of the peoples of the States brought together in the Community, must, with respect to an act emanating from the Parliament and producing legal effects as regards the conditions under which the electoral mandate was exercised, be regarded as third parties within the meaning of Art. 230(1) EC. (see Joined Cases T-222/99, T-327/99 and T‑329/99 Martinez and Others v Parliament [2001]).

The Court stated that a decision by which the Parliament waived the immunity of one of its Members had legal effects going beyond the internal organisation of the Parliament since the decision made it possible for proceedings to be brought against that Member in respect of the matters identified. The contested decision therefore was an act which produced or was intended to produce legal effects with respect to third parties. It followed that it was possible for the Community judicature to review its legality under Art. 230(1) EC.

Mr Mote inter alia submitted that there was a lack of full and adequate reasons for the contested decision without stating the points on which he felt that reasons were lacking. He did not specify the matters of law and fact which, in his opinion, required further explanation on the part of the Parliament. This plea was therefore declared inadmissible.

The applicant made the complaint that the Committee on Legal Affairs failed to examine his requests or suggestions for seeking further information for the first time in his reply. The Court however found, that complaint also to be inadmissible, as it specifically concerned the investigation of the Committee on Legal Affairs in respect of the application for waiver of immunity and not the examination of the factors which should have been taken into account by the Parliament in adopting the contested decision, and therefore could not be regarded as constituting an amplification of the complaints made in the original application.

It followed from all of the above that the application had to be dismissed.

Text of Judgment

See also Judgment of the Court of Justice in Joined Cases C-200/07, C-201/07 Marra [2008], delivered exactly a week later.

Joined Cases C-468/06 to C-478/06, Sot. Lélos kai Sia

2008-09-30T23:43:00.004+02:00

>> Court finds that Greek pharmaceuticals company abused its dominant position by refusing to meet ordinary orders by wholesalers in order to prevent parallel exports

GlaxoSmithKline AEVE was the Greek subsidiary of GlaxoSmithKline, which held the marketing authorisation in Greece for certain prescription-only medicines and imported, warehoused and distributed pharmaceutical products of the GSK group in Greece.

In 2000, GlaxoSmithKline AEVE stopped meeting the orders of the Greek wholesalers who bought the medicines in question for distribution in Greece and export to other Member States, citing a shortage of the products at issue.

The company denied responsibility, and, altering its system of distribution, began itself to distribute those medicines to Greek hospitals and pharmacies.

In February 2001, GlaxoSmithKline AEVE started once more to supply the wholesalers with limited quantities of the medicinal products on the ground that the supply of medicines on the Greek market had to some extent normalised and that stocks had been reconstituted.

The wholesalers brought an action claiming that the sales policy of GlaxoSmithKline AEVE breached both Greek and Community competition law.

The referring court asked whether there is an abuse of a dominant position contrary to Art. 82 EC if a pharmaceuticals company occupying such a position on the national market for certain medicinal products refused to meet orders sent to it by wholesalers on account of the fact that those wholesalers are involved in parallel exports of those products to other Member States.

The Court of Justice reiterated that the refusal by an undertaking occupying a dominant position on the market of a given product to meet the orders of an existing customer constituted abuse of that dominant position under Art. 82 EC where, without any objective justification, that conduct was liable to eliminate a trading party as a competitor. (see Joined Cases 6/73 and 7/73 Istituto Chemioterapico Italiano and Commercial Solvents v Commission [1974] and Case 27/76 United Brands and United Brands Continentaal v Commission [1978]).

The Court held that It was common ground between the parties in the main proceedings that, by refusing to meet the Greek wholesalers’ orders, GlaxoSmithKline AEVE aimed to limit parallel exports by those wholesalers to the markets of other Member States in which the selling prices of the medicinal products in dispute were higher.

The Court reiterated that a practice by which an undertaking in a dominant position aimed to restrict parallel trade in the products that it put on the market constituted abused of that dominant position, particularly when such a practice had the effect of curbing parallel imports by neutralising the more favourable level of prices which might apply in other sales areas in the Community or when it aimed to create barriers to re-importations which came into competition with the distribution network of that undertaking. Indeed, parallel imports enjoyed a certain amount of protection in Community law because they encouraged trade and helped reinforce competition. (see Case 26/75 General Motors Continental v Commission [1975], Case 226/84 British Leyland v Commission [1986], and Case C-373/90 X [1992]).

The Court held that an undertaking in a dominant position for the purpose of marketing a product - which cashed in on the reputation of a brand name known to and valued by consumers - could not stop supplying a long-standing customer who abode by regular commercial practice, if the orders placed by that customer were in no way out of the ordinary. Such conduct was inconsistent with the objectives laid down in Art. 3(1)(g) EC, which were set out in detail in Art. 82 EC, since the refusal to sell would limit the markets to the prejudice of consumers and would amount to discrimination which might in the end eliminate a trading party from the relevant market.

According to the Court, “there could be no escape from the prohibition laid down in Art. 82 EC for the practices of an undertaking in a dominant position which were aimed at avoiding all parallel exports from a Member State to other Member States, practices which, by partitioning the national markets, neutralised the benefits of effective competition in terms of the supply and the prices that those exports would obtain for final consumers in the other Member States.” Para. 66

In order to appraise whether the refusal by a pharmaceuticals company to supply wholesalers involved in parallel exports constituted a reasonable and proportionate measure in relation to the threat that those exports represented to its legitimate commercial interests, it must be ascertained whether the orders of the wholesalers were out of the ordinary. (see Case 27/76 United Brands and United Brands Continentaal v Commission [1978]).

It was for the referring court to ascertain whether the orders were ordinary in the light of both the previous business relations between the pharmaceuticals company holding a dominant position and the wholesalers concerned and the size of the orders in relation to the requirements of the market in the Member State concerned (see Case 77/77 Benzine en Petroleum Handelsmaatschappij and Others v Commission [1978]).

Text of Judgment

Case C-43/07, Arens-Sikken

2008-09-30T23:13:00.007+02:00

>> Court finds Dutch rules concerning the assessment of inheritance duties and transfer duties incompatible with Articles 56 and 58 EC

This case is largely similar to Case C-11/07, Eckelkamp (delivered the same day), on which I wrote this post.

The referring court asked whether the combined provisions of Articles 56 and 58 precluded rules concerning the assessment of inheritance duties and transfer duties payable in respect of an immovable property situated in that Member State which, for the assessment of those duties, made no provision for the deductibility of overendowment debts resulting from a testamentary parental partition inter vivos where the person whose estate was being administered was residing, at the time of death, not in that State, in which the immovable property was situated, but in another Member State, whereas provision was made for such deductibility where the person concerned was residing, at the time of death, in the first-mentioned State.

The referring court also asked whether the answer this question might be different if the Member State in which the person whose estate was being administered was residing at the time of death grants, under rules applicable in its territory on the prevention of double taxation, a tax credit in respect of inheritance duties payable in another Member State on asset situated in the territory of that other State.

The Court of justice reiterated that in the absence of a definition in the EC Treaty of “movement of capital” for the purposes of Art. 56(1) EC, the nomenclature annexed to Directive 88/361 had indicative value, subject to the qualification, contained in the introduction to the nomenclature, that the list set out therein was not exhaustive (see Case C-513/03 van Hilten-van der Heijden [2006]; Case C-452/04 FidiumFinanz [2006]; Joined Cases C-463/04 and C-464/04, Federconsumatori and Others [2007]; and Case C-256/06 Jäger [2008]).

The Court of Justice held that an inheritance was a movement of capital for the purposes of Art. 56 EC, except in cases where its constituent elements were confined within a single Member State. The present case clearly did not concern a situation purely internal to a Member State.

The Court reiterated that in order for national tax rules such as those at issue in the main proceedings to be considered compatible with Articles 56 and 58 EC, the difference in treatment must concern situations which were not objectively comparable or be justified by overriding reasons in the general interest. That difference in treatment could not be justified on the ground that it concerned situations which were not objectively comparable (Case C-35/98 Verkooijen [2000]; Case C-319/02 Manninen [2004]).

Where national legislation placed the heirs of a person who, at the time of death, had the status of resident and those of a person who, at the time of death, had the status of non-resident on the same footing for the purposes of taxing an inherited immovable property which was situated in the Member State concerned, that legislation could not, without giving rise to discrimination, treat those heirs differently in the taxation of that property so far as concerned the deductibility of charges secured on it. By treating the inheritances of those two categories of persons in the same way (except in relation to the deduction of debts) for the purposes of taxing their inheritance, the national legislature had in fact admitted that there was no objective difference between them in regard to the detailed rules and conditions relating to that taxation which could justify different treatment. (see, by analogy, in relation to the right of establishment, Case 270/83 Commission v France [1986], and Case C-170/05 Denkavit Internationaal and Denkavit France [2006]).

There was no agreement between the Netherlands and the Italian Republic for the prevention of double taxation of succession duties. According to the Court, a Member State could not rely on the existence of a tax advantage granted unilaterally by another Member State in order to escape its obligations under the Treaty and, in particular, under the Treaty provisions relating to the free movement of capital.

Text of Judgment

Case C-11/07, Eckelkamp

2008-09-30T23:01:00.004+02:00

>> Court finds Belgian rules concerning the assessment of inheritance duties and transfer duties incompatible with Articles 56 and 58 EC

This case is largely similar to C-43/07, Arens-Sikken (delivered the same day), on which I wrote this post.

The referring court asked whether Arts 12, 17 and 18 EC and Arts 56 and 58 EC precluded legislation of a Member State concerning the assessment of transfer and inheritance duties payable in respect of an immovable property situated in that Member State which made no provision for the deductibility of debts secured on such property where the person whose estate was being administered was residing, at the time of death, not in that State, in which the immovable property was situated, but in another Member State, whereas provision was made for such deductibility where the person concerned was, at the time of death, residing in the first-mentioned State.

The Court of justice reiterated that in the absence of a definition in the EC Treaty of “movement of capital” for the purposes of Art. 56(1) EC, the nomenclature annexed to Directive 88/361 had indicative value, subject to the qualification, contained in the introduction to the nomenclature, that the list set out therein was not exhaustive (see Case C-513/03 van Hilten-van der Heijden [2006]; Case C-452/04 FidiumFinanz [2006]; Joined Cases C-463/04 and C-464/04, Federconsumatori and Others [2007]; and Case C-256/06 Jäger [2008]).

The Court of Justice held that an inheritance was a movement of capital for the purposes of Art. 56 EC, except in cases where its constituent elements were confined within a single Member State. The present case clearly did not concern a situation purely internal to a Member State.

The Court reiterated that in order for national tax rules such as those at issue in the main proceedings to be considered compatible with Articles 56 and 58 EC, the difference in treatment must concern situations which were not objectively comparable or be justified by overriding reasons in the general interest. That difference in treatment could not be justified on the ground that it concerned situations which were not objectively comparable (Case C-35/98 Verkooijen [2000]; Case C-319/02 Manninen [2004]).

Where national legislation placed the heirs of a person who, at the time of death, had the status of resident and those of a person who, at the time of death, had the status of non-resident on the same footing for the purposes of taxing an inherited immovable property which was situated in the Member State concerned, that legislation could not, without giving rise to discrimination, treat those heirs differently in the taxation of that property so far as concerned the deductibility of charges secured on it. By treating the inheritances of those two categories of persons in the same way (except in relation to the deduction of debts) for the purposes of taxing their inheritance, the national legislature had in fact admitted that there was no objective difference between them in regard to the detailed rules and conditions relating to that taxation which could justifiy different treatment. (see Case 270/83 Commission v France [1986], and Case C-170/05 Denkavit Internationaal and Denkavit France [2006]).

The Court held that a citizen could not be deprived of the right to rely on the provisions of the Treaty on the ground that he was profiting from tax advantages which were legally provided for by the rules in force in a Member State other than his State of residence.

Furthermore, the Member State in which the immovable property included in the estate was situated could not, in order to justify a restriction on the free movement of capital arising from its legislation, rely on the existence of a possibility, beyond its control, of a tax credit being granted by another Member State, which could, wholly or partly, offset the loss incurred by that person’s heirs as a result of the fact that, in the Member State in which the property inherited was situated, debts secured on that property were not deductible for the purposes of assessing transfer duties.

A Member State could not rely on the existence of a tax advantage granted unilaterally by another Member State in order to escape its obligations under the Treaty and, in particular, under the Treaty provisions relating to the free movement of capital.

Having regard to the foregoing, the Court found there was no need to answer the question referred for a preliminary ruling in so far as it concerned the interpretation of Arts 12 EC, 17 EC and 18 EC.

Text of Judgment

Case C-427/06, Bartsch

2008-09-30T22:54:00.011+02:00

>> National rules requiring link with Community law in order to fall within scope of Article 13 EC

In this case, the referring court asked whether the application of the prohibition under Community law of discrimination on the ground of age was mandatory where the allegedly discriminatory treatment contained no link with Community law.

The Court of Justice reiterated that where national rules fell within the scope of Community law and reference was made to the Court for a preliminary ruling, the Court must provide all the criteria of interpretation needed by the national court to determine whether those rules were compatible with the general principles of Community law (see Case C‑144/04 Mangold [2005]).

The application, which the courts of Member States must ensure, of the prohibition under Community law of discrimination on the ground of age was not mandatory where the allegedly discriminatory treatment contained no link with Community law.
Neither Directive 2000/78 nor Art. 13 EC enabled a situation such as that in issue in the main proceedings to be brought within the scope of Community law.

Article 13 EC could not, as such, bring within the scope of Community law, for the purposes of prohibiting discrimination based on age, situations which, like that in the main proceedings, did not fall within the framework of measures adopted on the basis of that Article, specifically Directive 2000/78 before the time-limit provided therein for its transposition had expired.

Text of Judgment

New CFI judge

2008-09-30T22:50:00.006+02:00

>> O'Higgins succeeding Cooke

Last July, Mr Kevin O’Higgins was appointed Judge of the Court of First Instance of the European Communities until August 31, 2013. He succeeds Mr John D. Cooke. At September 15, a formal sitting was held at the Court on the occasion of the departure of Mr John D. Cooke and the entry into office of Mr Kevin O’Higgins.
See this press release for further information (pdf).

Case T-403/05, My Travel

2008-09-29T11:46:00.010+02:00

>> CFI reiterates exceptions to right of access to Commission documents must be interpreted and applied strictly

The applicant, a United Kingdom travel company, had announced its intention to acquire the whole of the issued share capital of one of its competitors in the United Kingdom on the stock market and had notified the proposed concentration to the Commission. The Commission declared that concentration incompatible with the common market and with the EEA Agreement by virtue of Art. 8(3) of Regulation 4064/89. The applicant brought proceedings for the annulment of that decision, which was annulled in 2002 by the Court of First Instance.

Following this judgment, the Commission established a working group in order to consider whether it was appropriate to bring an appeal against that judgment and to assess the implications of that judgment on the procedures for the control of concentrations or in other areas.

In 2005, the applicant made a request to the Commission for access to a number of documents of this working group, pursuant to Regulation 1049/2001.

The Commission granted full access to three documents, only partial access to two other documents and no access to a number of others. In a subsequent decision, the Commission granted further partial access to a small number of documents.

The applicant claimed that the Court of First Instance should annul these two decisions. The Court held that the right of access to Commission documents existed as a matter of principle. A decision to refuse access was valid only if it was based on one of the exceptions laid down in Art. 4 of Regulation 1049/2001. According to the Court, in view of the objectives pursued by Regulation 1049/2001, the exceptions to that right set out in Art. 4 of the regulation must be interpreted and applied strictly. (see also Case C‑64/05 P Sweden v Commission and Others [2007] (on which I wrote this post) and Joined Cases T‑391/03 and T‑70/04 Franchet and Byk v Commission [2006]).

The mere fact that a document concerned an interest protected by an exception could not of itself justify application of that exception. The Court of First Instance held that such application might, in principle, be justified only if the institution had previously assessed, first, whether access to the document would specifically and actually undermine the protected interest and, secondly, in the circumstances referred to in Art. 4(2) and (3) of Regulation 1049/2001, whether there was no overriding public interest in disclosure.

The Court of First Instance stressed that the risk of a protected interest being undermined must be reasonably foreseeable and not purely hypothetical. That examination must be apparent from the reasons for the decision.

However, the Court of First Instance found that the Commission had correctly concluded that disclosure of the documents requested would have seriously undermined the decision-making process.

The applicant’s complaint that there was an overriding public interest in disclosure was rejected. As was its complaint that disclosure of the notes in reply from the legal service would not undermine the protection of legal advice. The Court of First Instance held that to accept that the notes in question should be disclosed would be liable to lead the legal service to display reticence and caution in the future in the drafting of such notes in order not to affect the Commission’s decision-making capacity in areas in which it was involved in its administrative capacity. It furthermore found that the risk of undermining the protection of legal advice was reasonably foreseeable and not purely hypothetical.

Text of Judgment