S P O R T: CASE LAW OF THE COURT OF JUSTICE …...S P O R T: C A S E L A W O F T H E C O U R T O F J...

S P O R T: CASE LAW OF THE COURT OF JUSTICE OF THE E.C. ISBN 978-960-92616-5-4 Marios Papaloucas www.sportlaw.gr www.papaloukas.gr

M. Papaloucas

S P O R T: CASE LAW OF THE COURT OF

JUSTICE OF THE E.C.

2008

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Index Introduction 5

1. Case T-46/92, The Scottish Football Association Case 7

2. Case C-415/93, The Jean-Marc Bosman Case 16

3. Case C-124/96, Commission v. Kingdom of Spain Case 35

4. Case C-9/98, Agostini and Ligue Francophone de Judo Case 39

5. Case C-67/98, Questore di Verona v Diego Zenatti 42

6. Case C-51/96 and C-191/97, Christelle Deliège 51

7. Case C-176/96, Jyri Lehtonen Case 62

8. Case C-150/99, Swedish State and Stockholm Lindöpark AB 71

9. Cases T-38/99 to T-50/99, Sociedade Agrícola dos Arinhos, Ld. 79

10. Case C-174/00, Kennemer Golf & Country Club 86

11. Case T-185/00, Antena 3 de Televisión SA 94

12. Case C-318/00, Bacardi-Martini SAS 109

13. Case C-206/01, Arsenal Football Club plc 116

14. Case C-243/01, Piergiorgio Gambelli and Others 125

15. Case C-438/00, Deutscher Handballbund eV and Maros Kolpak 137

16. Joined Cases T-346/02 and T-347/02, Cableuropa SA 146

17. Case C-42/02, Diana Elisabeth Lindman 181

18. Case C-270/02, Commission v Italian Republic 186

19. Case T-216/02, Fieldturf Inc. 191

20. Case C-429/02, Bacardi France SAS 198

21. Case C-338/02, Fixtures Marketing Ltd 206

22. Case C-444/02, Organismos prognostikon agonon podosf. AE (OPAP) 212

23. Case T-193/02, L. Piau v Commission & FIFA 220

24. Case C-246/04, Turn- und Sportunion Waldburg 239

25. Case C-265/03, Igor Simutenkov 246

26. Case T-33/01, Infront WM AG 253

27. Case C-89/05, United Utilities plc 278

28. Case T-477/04, TDK 283

29. Case C-345/04, Centro Equestre da Lezíria Grande 293

30. Case C-519/04, D. Meca-Medina, I. Majcen 299

31. Case C-338/04, Placanica 309

32. Case C-409/06, Winner Wetten 322

33. Case C-49/07, MOT.O.E. 323

34. Case C-359/07, SOBO Sport & Entertainment GmbH 324

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Introduction

The Court Justice of the European Communities has issued these last years

several decisions relating to the field of sports. After the Bosman case, the Court

started to acknowledge some autonomy to the athletic organisations, using exceptions

to the general rule with sentences such as “… it is permitted, as long as this rule

derived from a need inherent to the organisation of such a competition” in the

Deliege case or “…unless there are objective reasons concerning only sports as

such” in the Lehtonen case or “the restrictions imposed must be restricted to

whatever is necessary to secure a good organisation of the athletic competitions” in

the case of Meca-Medina. Finally, The Court acknowledged also the right of the

athletic organisations to undertake a regulatory action in fields which are not

exclusively athletic which the State did not undertake to regulate, such as in the case

Piau, where it acknowledged the right of FIFA to establish rules with respect to

granting professional licences to football players managers.

This of course means that the Court did not cease to repeat to the Athletic

Organisations that it remains the ultimate judge of their regulatory decisions and to

remind them of their boundaries, such as in the case Deutscher Handballbund and

Simutenkov, which referred to the prohibition of discriminations on the grounds of

nationality.

On the other hand, there were cases where the Court protected the autonomy

of athletic organisations from any State intervention. Hence, in the field of athletic

wagers, the Court, in every instance from the Zennati case to the Gambelli and

Placanica cases, deemed the state procedures for granting licences to the athletic

wagers firms to be nul. The same happened also in the case of the Italian Republic

with respect to the prohibition of imposition by the State of any restrictions to the

athletic nutrition articles. The Court handled in the same way the State restrictions

concerning TV commercials within the competition areas in the Bacardi – Martini

case.

Today, we can finally say that the Court, while it insists, generally speaking,

on its initial opinion, as expressed in the Bosman case, does acknowledge in time that,

on the one hand, there are certain particularities in the athletic field and on the other

hand, there is an area that falls within the exclusive competency of sports. It is a

shame, at any rate, that sports and athletic law, on the threshold of the

acknowledgement of their independence from the rules of the State, were compelled

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to initiate a new combat to convince the organs of the European Union that they do

not need guardians.

For the Case Law see http: //www.curia.europa.eu/ and also http: //eur-lex.europa.eu/

S P O R T: C A S E L A W O F T H E C O U R T O F J U S T I C E O F T H E E. C.

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1. Case T-46/92,

The Scottish Football Association, a company incorporated under Scots law,

established at Glasgow (United Kingdom),

applicant,

v

Commission of the European Communities,

defendant,

APPLICATION for the annulment of the Commission' s decision of 31 March 1992

relating to a procedure pursuant to Article 11(5) of Regulation No 17 of the Council

of 6 February 1962, First Regulation implementing Articles 85 and 86 of the Treaty

THE COURT OF FIRST INSTANCE

OF THE EUROPEAN COMMUNITIES (First Chamber),

gives the following Judgment

Facts and procedure 1 The applicant is incorporated under Scots law in the form of a company limited by guarantee. It consists principally of football clubs and footballing bodies, and its function is to promote football in Scotland and to represent the interests of Scots clubs at all levels. 2 On 5 December 1991 the Commission sent to the applicant a letter based on Article 11 of Regulation No 17 of the Council of 6 February 1962, First Regulation implementing Articles 85 and 86 of the Treaty (OJ, English Special Edition 1959-1962, p. 87, hereinafter "Regulation No 17"). In that letter, which reproduced the relevant extracts from Article 11 together with extracts from Article 15 of Regulation No 17, the Commission referred to a complaint made by The European Sports Network (TESN) and indicated its concern over the fact that the applicant appeared to be intending to prevent TESN from broadcasting Argentinian football matches in Scotland. The applicant had apparently contacted the Argentinian Football Association in that regard, in accordance with Article 47 of the rules of the Federation of International Football Associations (hereinafter "FIFA"), which authorized FIFA' s Executive Committee to set up a new scheme of rules governing the international broadcasting of football matches. To the Commission' s knowledge, such a new scheme of rules had not yet been set up. It was therefore not clear on what legal basis the applicant' s inquiry to the Argentinian Football Association was made. The applicant was thus requested "in order to enable the investigation of this matter to be made in full knowledge of the facts and in their correct economic context" to reply to the following questions: "1. On what legal basis was your inquiry to the Argentinian Football Association made?


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2. Are there any agreements between the National Associations in membership with FIFA governing the transmission of football matches from one country into the other, pending the setting up of a new scheme of rules under Article 47 of the FIFA statutes by the Executive Committee? 3. Are there any instructions by FIFA, its Executive Committee or any other of its legal or executive authorities relating to the application of Article 47, or the former Article 37, with respect to those transmissions, pending the setting up of a new scheme of rules? 4. Please provide copies of your correspondence with the Argentinian Football Association concerning the televising of Argentinian football by TESN." The time-limit for replying to those questions was fixed at four weeks. The Commission referred in that regard to Article 11(5) of Regulation No 17. 3 On 14 January 1992 the applicant replied as follows: "... We have received your enquiry with some surprise. It is well recognized in Scotland, and also in other countries, that the broadcasting of football matches on television can have a damaging effect on gates at live games. Our duty is to support and encourage football as a sport, both as a spectator sport and as a participative sport. Television is an excellent medium for promoting appreciation of, and support for, the game, but it can also, at the wrong time, damage the game, especially by reducing the numbers of those who would normally go to watch a football match. For these reasons, this Association is not embarrassed to state that it has a policy, and will continue that policy, of trying to ensure a balance of control over the broadcasting in Scotland of televised football games when these could damage the overall interests of the Scottish football industry, professional, semi-professional and amateur. Football associations around the world have similar concerns. We therefore regularly consult with each other as a matter of courtesy and within the framework of the game's international governing bodies, to avoid clashes between television and the live game. We feel we do not need any 'legal basis' to justify writing to another football association reminding it of our mutual interest in balancing the benefit and the damage which can result from the televising of foreign matches. We are not informed as to when FIFA will complete the planned revision of its rules on this topic. Speaking frankly, we do not understand why Mr Barron is so jumpy about this matter, nor why the Commission should have intervened in such a peremptory fashion. We are happy to meet you at any time to explain our views on the broad topic of television versus live game, but we honestly think that as to the Argentinian matter, the Commission need not be troubled about an exchange of correspondence between two fraternal associations about how the game should best be served. ..." In the absence of any response from the Commission, the applicant wrote to it on 11 March 1992 to enquire whether its letter of 14 January had been received. 4 Thereafter the Commission sent to the applicant, by telefax of 31 March 1992, a decision bearing the same date formal notification of which was received by the applicant a few days later relating to a procedure pursuant to Article 11(5) of Regulation No 17. In that decision, the Commission required the applicant to provide within two weeks from the date of notification the information requested in the letter of 5 December 1991, stating that if the applicant failed to do so it would be liable to periodic penalty payments of ECU 500 per day (Articles 1 and 2 and the Annex thereto). Article 3 of the decision states that an appeal against it may be made to the


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Court of First Instance pursuant to Articles 173 and 185 of the Treaty. In the preamble to the decision, the Commission sets out details of the complaint made by TESN (points 1 and 2), the purpose of the initial request for information and the incomplete nature of the reply given by the applicant on 14 January 1992 (point 3), the need for the information requested for the purposes of the Commission' s investigation (point 4), the time-limit considered by it to be appropriate for responding to the decision (point 6) and the amount of the periodic penalty payments to be imposed in the event of non-compliance (points 7 and 8). 5 On 15 April 1992 the applicant sent, by way of reply to that decision, a letter in which it emphasized the strong sense of injustice which it felt at the conduct of the Commission, which had not replied to either of the two letters sent to it by the applicant in January and March 1992, and stated as follows in response to the four questions asked in the decision: 1. Several legal bases could be cited to justify the applicant' s correspondence with a fellow football association. The applicant' s own charter called for it to promote football in Scotland in all its branches; writing to other associations formed part of the applicant' s discharge of this duty. The applicant had asked the Argentinian Association that it be consulted, pursuant to Article 47 of the FIFA rules and in accordance with the practice regularly followed by football associations around the world, before Argentinian football matches were transmitted in Scotland. It was clear from the correspondence between the two football associations that the applicant did not seek to prohibit the televising in Scotland of Argentinian football. 2. The FIFA rules relating to the international use and broadcasting of televised football matches were currently under review. Until that revision was completed, the applicant (together with other national football associations all over the world) would continue to respect the established convention of consulting with fellow associations before televised transmissions went ahead. 3. The applicant was aware of no instruction by FIFA, its Executive Committee or any other legal or executive authority relating to the application of Article 47 (or the former Article 37) of the FIFA rules with respect to those transmissions. 4. The applicant annexed to its letter copies of the letters to the Argentinian association. Procedure and forms of order sought by the parties 6 Those were the circumstances in which, by application lodged at the Registry of the Court of First Instance on 10 June 1992, the applicant brought the present action. 7 After the action had been brought, the Commission confirmed, by letter sent to the applicant on 24 June 1992, that the answers given by the applicant in its letter of 15 April 1992 were sufficient to supply the information requested in its decision and that, consequently, the applicant had fully complied with the decision. 8 The written procedure before the Court of First Instance followed the usual course. The Commission did not, however, lodge a rejoinder. By a document lodged on 17 July 1992, the Commission raised an objection of inadmissibility. By order of the Court of First Instance (First Chamber) of 28 October 1992, the decision on that objection was reserved until final judgment. Upon hearing the report of the Judge-Rapporteur, the Court of First Instance (First Chamber) decided to open the oral procedure without any preparatory inquiry. On application by the applicant, the hearing fixed for 13 October 1993 was adjourned.


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9 The oral procedure took place on 12 July 1994. The representatives of the parties made their oral submissions and gave their replies to the questions put by the Court. 10 The applicant claims that the Court should: (i) dismiss the objection of inadmissibility raised by the Commission; (ii) annul the decision addressed to it by the Commission on 31 March 1992; (iii) take such further or different steps as justice may require; (iv) order the Commission to pay the costs. The Commission contends that the Court should: (i) reject the application as inadmissible; (ii) in the alternative, dismiss it as unfounded; (iii) order the applicant to pay the costs. Admissibility 11 In support of its objection of inadmissibility, the Commission essentially maintains that, in the particular circumstances of the case, the applicant no longer has an interest in pursuing the action, since it complied with the contested decision before bringing its action, without ever challenging the Commission' s right to request the information in question. Consequently, no purpose can now be served by annulling that decision. Moreover, the applicant suffered no substantive prejudice as a result of the decision; it did not challenge it before replying, although it was informed, in Article 3, of the appeal procedures open to it. 12 The applicant considers that, if an act is illegal, it remains illegal whether or not it is complied with. It is apparent from the fourth paragraph of Article 173 of the EC Treaty that it clearly has an interest in contesting a decision which is specifically addressed to it and which threatens it with periodic penalties where such a measure was not necessary. Given that the Commission' s power to take decisions has been used in an abusive manner, the applicant considers that it has a legitimate interest in ensuring that such an abuse should not recur. The applicant further stated at the hearing that the contested decision came at a time when negotiations on televised broadcasting of football matches had been entered into at European level, and were still proceeding, between the Commission and the national football associations; in bringing its action, the applicant was seeking, therefore, to protect itself against the real risk that it might find itself confronted, in the framework of those negotiations, with further unjustified decisions of the same kind as that with which the present action is concerned. 13 Considering those circumstances, the Court finds, first, that the purely procedural complaints made by the applicant in relation to the decision are essentially that by going from the first stage of its investigation, involving a "mere" request for information, to the second stage, in which that request was made by way of a decision, the Commission acted excessively and prematurely. As is apparent from Articles 11(5), 15(1)(b) and 16(1)(c) of Regulation No 17, however, an undertaking or association of undertakings faced with such a decision runs a higher risk of sanctions than one confronted with a "mere" request for information: it may be fined if it fails to provide the information requested "within the time-limit fixed" and required to pay periodic penalty payments so as to compel it to supply "complete and correct" information. Consequently, the sole fact that the Commission requests information by way of a decision is liable to affect the legal situation of the party concerned, which, even though it may be disposed in principle to reply to the questions addressed to it, cannot be deprived of a legitimate interest in preventing the Commission from


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moving prematurely to the decision stage without first satisfying the criteria laid down by Article 11(5) of Regulation No 17. 14 That legal interest in bringing proceedings still exists even where the decision ordering information to be supplied has already been complied with by its addressee at the time when the action for annulment is brought, since that action has no suspensory effect. Furthermore, annulment per se of such a decision may have legal consequences, in particular by obliging the Commission to take the measures needed to comply with the Court' s judgment and by preventing the Commission from repeating such a practice (see the judgments of the Court of Justice in Case 53/85 AKZO Chemie v Commission [1986] 1965, paragraph 21, and Case 207/86 Apesco v Commission [1988] ECR 2151, paragraph 16). That is particularly so in the present case, given that, as the parties observed at the hearing, the negotiations at European level between the Commission and the national football associations on the televised broadcasting of football matches are still going on. So the applicant must expect to find itself faced with further requests from the Commission for information at any time. It therefore still has a legitimate interest in having the Community judicature make clear the legal conditions under which the Commission has power to act by way of decision in the matter. 15 It follows that the objection of inadmissibility raised by the Commission must be dismissed. Substance 16 The applicant advances five pleas in support of its application: breach of the obligation to state reasons laid down by Article 190 of the EC Treaty, breach of the principles of proportionality, good administration and good faith, and disregard of fundamental rights. The plea that the contested decision was not sufficiently reasoned Arguments of the parties 17 The applicant maintains that, contrary to Article 190 of the Treaty, the Commission failed to give an adequate statement of the reasons for the contested decision when it was particularly important in this case that it should fulfil its obligation in this regard. The Commission has omitted essential factual information. In particular, the decision makes no mention whatever of the letter of 11 March 1992, in which the applicant asked the Commission whether it had received its initial reply. The absence of any reference to that letter in the reasons given for the decision make it appear as though the applicant had embarked on a policy of intentional non-compliance designed to frustrate the Commission' s investigations. Lastly, contrary to what is stated in point 8 of the decision, the applicant did not "refuse", in its letter of 14 January 1992, to supply the information requested: it replied to some of the questions and offered to discuss the whole matter. 18 The Commission states that it set out, in points 1 to 4, 6 and 8 of the contested decision, the main reasons which led it to adopt it. By referring to the original complaint, the decision was inviting a comparison between the questions asked in the letter of 5 December 1991 and the answers given in the letter of 14 January 1992. That comparison shows that the Commission had every reason to treat the letter of 14 January 1992 as a refusal to provide the information requested in complete form.


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Findings of the Court 19 It is settled case-law that the purpose of the obligation to give reasons for an individual decision is to enable the Community judicature to review the legality of the decision and to provide the party concerned with an adequate indication as to whether the decision is well founded or whether it may be vitiated by some defect enabling its validity to be challenged; the scope of that obligation depends on the nature of the act in question and on the context in which it was adopted (see, for example, the judgment of the Court of Justice in Case C-181/90 Consorgan v Commission [1992] ECR I-3557, paragraph 14). 20 In the present case, the contested decision was adopted following an exchange of correspondence between the parties. It repeats verbatim the request for information which formed the subject-matter of that correspondence. It cannot therefore be argued that the decision contained any surprises for the applicant and that a particularly detailed statement of reasons was consequently necessary. 21 Next, as regards the grounds relied on by the Commission in the contested decision, it should be noted that, after summarizing the circumstances leading to the dispatch of its letter of 5 December 1991, in which it requested the applicant to supply the information in question, the Commission pointed out, in point 3, that the reply dated 14 January 1992 "failed to provide the information requested in complete form". The Commission also stated in point 4 that the information requested, in particular the applicant' s correspondence with the Argentinian Football Association, was necessary to assess the applicant' s conduct in the light of Articles 85(1) and 86 of the EC Treaty. The parties agree that that correspondence was not produced in response to the "mere" request for information addressed to the applicant by the abovementioned letter of 5 December 1991. In those circumstances, the Commission was not obliged to provide a more detailed explanation of the incomplete nature of the information provided. 22 It should be added that the applicant apparently understood the purpose of the contested decision since it provided, within the period of two weeks which it was allowed, a response which the Commission considered to be complete and satisfactory. 23 Finally, the applicant' s complaint that the Commission failed to mention in the contested decision either its offer to discuss the matter or its request for confirmation of receipt of its first letter must be regarded as being of no consequence. That omission did not prevent the applicant from apprehending the import of the contested decision or from raising the grounds of challenging that decision open to it and does not hinder review by the Court. The Commission was not obliged, therefore, to discuss those matters in its statement of reasons for the decision. 24 Consequently, the Court considers that the contested decision is to be regarded as sufficiently reasoned for the purposes of Article 190 of the Treaty and that the plea of inadequate reasoning must be dismissed. The plea of breach of the principle of proportionality Arguments of the parties 25 The applicant essentially bases this plea on the assertion that in the factual circumstances of this case the Commission acted disproportionately and excessively


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in relation to the applicant' s conduct by threatening it, in a formal decision, with the imposition of penalties when it could have achieved its objective by simply asking it, if necessary by telephone, to supplement the answers already given in its letter of 14 January 1992. As the Court of Justice held in its judgment in Case 8/55 Fédération Charbonnière de Belgique v High Authority [1954 to 1956] ECR 245, respect for the principle of proportionality is particularly important in cases which involve the imposition of penalties. 26 The applicant observes that the decisive issue in this case is whether an individual who attempts to reply to a request for information but who allegedly fails to answer satisfactorily can be threatened with financial penalties. The applicant is prepared to concede that this should be so in the case of a wilful and obstructive refusal to cooperate. However, it should not be possible to take such a measure where an individual has tried to satisfy a request for information, has offered to meet the competent officials in order to discuss the matter, has sent a follow-up letter to the Commission and has, in response, been met with silence. 27 The Commission states in reply that it is clear even from the most superficial comparison of the questions in its letter of 5 December 1991 and the answers given in the applicant' s letter of 14 January 1992 that the applicant more or less ignored the second and third questions and, as to the other questions, gave the Commission to understand that the "Argentinian matter" was not its business, whilst the offer to discuss generalities did not relate to the specific questions put to the applicant. The Commission concludes from this that it was justified in considering that its initial request for information had been refused. Faced with such a refusal, and given that Article 11 of Regulation No 17 only creates a two-stage procedure, it therefore acted lawfully and proportionately in going on to the second stage, involving a request for information by way of a decision, without more ado. 28 At the hearing the Commission made the further point that it had certain responsibilities towards TESN, which had submitted a complaint and which could have brought proceedings for failure to act. The applicant expressly acknowledged that the time-limits fixed by the Commission in the letter of 5 December 1991 and in Article 1 of the contested decision were adequate to enable a response to be given to the questions asked. Findings of the Court 29 First, the plea advanced by the applicant does not concern the inherent legality of the request for information addressed to it, since the applicant does not challenge the Commission' s power to put to it the four questions concerned. Its sole complaint is that the Commission acted prematurely and excessively in adopting the decision threatening it with periodic penalties instead of continuing to exchange informal correspondence with it. 30 Next, as regards the question whether in adopting the contested decision in the circumstances of this case the Commission correctly applied Article 11 of Regulation No 17, it should be remembered that, according to the case-law of the Court of Justice, that article lays down, for the exercise by the Commission of its power to request the information it considers necessary, a two-stage procedure, the second stage of which, involving the adoption by the Commission of a decision specifying the information required, may only be initiated if the first stage, in which a request for information is sent, has been tried without success (Case 136/79 National Panasonic v Commission [1980] ECR 2033, paragraph 10).


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31 As regards the ways in which the Commission should "try" the first stage of the preliminary investigation procedure, the Court of Justice has held that Regulation No 17 confers on the Commission wide powers of investigation and imposes on the individuals concerned the obligation to cooperate actively in the investigative measures, which means that they must make available to the Commission all information relating to the subject-matter of the investigation (Case 374/87 Orkem v Commission [1989] ECR 3283, paragraphs 22 and 27). Consequently, the applicant' s argument that the contested decision could only have been justified if it had manifestly obstructed the Commission in carrying out its task must be rejected. Given that the individuals concerned have such an obligation to cooperate actively in the initial investigation procedure, a passive reaction may in itself justify the adoption of a formal decision under Article 11(5) of Regulation No 17. 32 It is in the light of those considerations that the responses which the applicant gave in its letter of 14 January 1992 to the request for information of 5 December 1991 must therefore be considered. The Court observes in that regard that the applicant stated, in response to the first question, that it did not have to have any legal basis to justify writing to the Argentinian Football Association and, in response to the second question, that it did not have the information requested; instead of replying to the third question, it offered to give general oral explanations; and it did not provide at all the correspondence between the applicant and the Argentinian Football Association requested by the fourth question. In the Court' s view, those responses cannot be regarded as active cooperation on the part of the applicant. 33 Furthermore, the applicant stated that "we honestly think that as to the Argentinian matter, the Commission need not be troubled about an exchange of correspondence between two fraternal associations ...". Considered objectively, that remark constitutes a polite but explicit refusal to cooperate with the Commission in the matter. In those particular circumstances, the Commission was under no obligation either to pursue lengthy informal correspondence or to engage in oral discussions with the applicant, which had provided only part of the information requested. It was entitled to proceed to the second stage of the preliminary investigation procedure, involving a request for information by way of a decision, and that step cannot be regarded as excessive. 34 It follows from all the foregoing considerations that the Commission correctly applied Article 11 of Regulation No 17 and that the plea of breach of the principle of proportionality must therefore be dismissed. The plea of breach of the principle of good administration Arguments of the parties 35 The applicant, which refers to the judgments of the Court of Justice in Case 179/82 Lucchini v Commission [1983] ECR 3083 and Joined Cases 96 to 102, 104, 105, 108 and 110/82 IAZ and Others v Commission [1983] ECR 3369, maintains that it could not have known that its letter of 14 January 1992 did not meet the Commission' s request. Without any reaction from the Commission, which did not even reply to its letter of 11 March 1992, the contested decision should not have been adopted. 36 The Commission contests the relevance of the case-law cited by the applicant. Findings of the Court


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37 As is clear from the findings set out above, the applicant' s letter of 14 January 1992 did not contain all the information which the Commission considered necessary for its investigation. By stating that the Commission "need not be troubled" about the correspondence requested, the applicant should have expected that the Commission might find such a response inadequate. The mere request, made in the letter of 11 March 1992, for confirmation that the first letter of 14 January 1992 had been received does not affect this conclusion of the Court. Consequently, the applicant should have expected adoption of a decision under Article 11(5) of Regulation No 17. There was therefore no breach of the principle of good administration. The plea of breach of the principle of good faith and disregard of fundamental rights 38 The applicant maintains that the Commission failed to respect the principle of good faith by acting in an arbitrary way. The Court has already found that the applicant did not actively cooperate with the Commission during the first stage of the investigation procedure. Consequently, the applicant has not shown that good faith, capable of being breached by the Commission, existed. The same considerations apply to the plea of disregard of fundamental rights, in support of which the applicant claims that, by denying it a fair opportunity to respond to its "mere" request for information, the Commission gave the first stage of the initial investigation procedure no realistic chance of success. 39 Consequently, those pleas, which in any event would appear to be simply repetitious, cannot be upheld either. 40 It follows that the action must be dismissed in its entirety.


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2. In Case C-415/93,

REFERENCE to the Court under Article 177 of the EEC Treaty by the Cour d'Appel,

Liège, Belgium, for a preliminary ruling in the proceedings pending before that court

between

Union Royale Belge des Sociétés de Football Association ASBL

and

Jean-Marc Bosman,

between

Royal Club Liégois SA

and

Jean-Marc Bosman SA d'Économie Mixte Sportive de l'Union Sportive du Littoral de

Dunkerque,

Union Royale Belge des Sociétés de Football Association ASBL,

Union des Associations Européennes de Football (UEFA),

and between

Union des Associations Européennes de Football (UEFA)

and

Jean-Marc Bosman,

on the interpretation of Articles 48, 85 and 86 of the EEC Treaty,

THE COURT


1 By judgment of 1 October 1993, received at the Court on 6 October 1993, the Cour d'Appel (Appeal Court), Liège, referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a set of questions on the interpretation of Articles 48, 85 and 86 of that Treaty. 2 Those questions were raised in various proceedings between (i) Union Royale Belge des Sociétés de Football Association ASBL ("URBSFA") and Mr Bosman, (ii) Royal Club Liégois SA ("RC Liège") and Mr Bosman, SA d'Économie Mixte Sportive de l'Union Sportive du Littoral de Dunkerque ("US Dunkerque"), URBSFA and Union des Associations Européennes de Football (UEFA) ("UEFA") and, (iii) UEFA and Mr Bosman. The rules governing the organization of football 3 Association football, commonly known as "football", professional or amateur, is practised as an organized sport in clubs which belong to national associations or


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federations in each of the Member States. Only in the United Kingdom are there more than one (in fact, four) national associations, for England, Wales, Scotland and Northern Ireland respectively. URBSFA is the Belgian national association. Also dependent on the national associations are other secondary or subsidiary associations responsible for organizing football in certain sectors or regions. The associations hold national championships, organized in divisions depending on the sporting status of the participating clubs. 4 The national associations are members of the Fédération Internationale de Football Association ("FIFA"), an association governed by Swiss law, which organizes football at world level. FIFA is divided into confederations for each continent, whose regulations require its approval. The confederation for Europe is UEFA, also an association governed by Swiss law. Its members are the national associations of some 50 countries, including in particular those of the Member States which, under the UEFA Statutes, have undertaken to comply with those Statutes and with the regulations and decisions of UEFA. 5 Each football match organized under the auspices of a national association must be played between two clubs which are members of that association or of secondary or subsidiary associations affiliated to it. The team fielded by each club consists of players who are registered by the national association to play for that club. Every professional player must be registered as such with his national association and is entered as the present or former employee of a specific club. Transfer rules 6 The 1983 URBSFA federal rules, applicable at the time of the events giving rise to the different actions in the main proceedings, distinguish between three types of relationship: affiliation of a player to the federation, affiliation to a club, and registration of entitlement to play for a club, which is necessary for a player to be able to participate in official competitions. A transfer is defined as the transaction by which a player affiliated to an association obtains a change of club affiliation. If the transfer is temporary, the player continues to be affiliated to his club but is registered as entitled to play for another club. 7 Under the same rules, all professional players'contracts, which have a term of between one and five years, run to 30 June. Before the expiry of the contract, and by 26 April at the latest, the club must offer the player a new contract, failing which he is considered to be an amateur for transfer purposes and thereby falls under a different section of the rules. The player is free to accept or refuse that offer. 8 If he refuses, he is placed on a list of players available, between 1 and 31 May, for "compulsory" transfer, without the agreement of the club of affiliation but subject to payment to that club by the new club of a compensation fee for "training", calculated by multiplying the player's gross annual income by a factor varying from 14 to 2 depending on the player's age. 9 1 June marks the opening of the period for "free" transfers, with the agreement of both clubs and the player, in particular as to the amount of the transfer fee which the new club must pay to the old club, subject to penalties which may include striking off the new club for debt. 10 If no transfer takes place, the player's club of affiliation must offer him a new contract for one season on the same terms as that offered prior to 26 April. If the player refuses, the club has a period until 1 August in which it may suspend him, failing which he is reclassified as an amateur. A player who persistently refuses to sign the contracts


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offered by his club may obtain a transfer as an amateur, without his club's agreement, after not playing for two seasons. 11 The UEFA and FIFA regulations are not directly applicable to players but are included in the rules of the national associations, which alone have the power to enforce them and to regulate relations between clubs and players. 12 UEFA, URBSFA and RC Liège stated before the national court that the provisions applicable at the material time to transfers between clubs in different Member States or clubs belonging to different national associations within the same Member State were contained in a document entitled Principles of Cooperation between Member Associations of UEFA and their Clubs , approved by the UEFA Executive Committee on 24 May 1990 and in force from 1 July 1990. 13 That document provides that at the expiry of the contract the player is free to enter into a new contract with the club of his choice. That club must immediately notify the old club which in turn is to notify the national association, which must issue an international clearance certificate. However, the former club is entitled to receive from the new club compensation for training and development, to be fixed, failing agreement, by a board of experts set up within UEFA using a scale of multiplying factors, from 12 to 1 depending on the player's age, to be applied to the player's gross income, up to a maximum of SFR 5 000 000. 14 The document stipulates that the business relationships between the two clubs in respect of the compensation fee for training and development are to exert no influence on the activity of the player, who is to be free to play for his new club. However, if the new club does not immediately pay the fee to the old club, the UEFA Control and Disciplinary Committee is to deal with the matter and notify its decision to the national association concerned, which may also impose penalties on the debtor club. 15 The national court considers that in the case with which the main proceedings are concerned URBSFA and RC Liège applied not the UEFA but the FIFA regulations. 16 At the material time, the FIFA regulations provided in particular that a professional player could not leave the national association to which he was affiliated so long as he was bound by his contract and by the rules of his club and his national association, no matter how harsh their terms might be. An international transfer could not take place unless the former national association issued a transfer certificate acknowledging that all financial commitments, including any transfer fee, had been settled. 17 After the events which gave rise to the main proceedings, UEFA opened negotiations with the Commission of the European Communities. In April 1991, it undertook in particular to incorporate in every professional player's contract a clause permitting him, at the expiry of the contract, to enter into a new contract with the club of his choice and to play for that club immediately. Provisions to that effect were incorporated in the Principles of Cooperation between Member Associations of UEFA and their Clubs adopted in December 1991 and in force from 1 July 1992. 18 In April 1991, FIFA adopted new Regulations governing the Status and Transfer of Football Players. That document, as amended in December 1991 and December 1993, provides that a player may enter into a contract with a new club where the contract between him and his club has expired, has been rescinded or is to expire within six months. 19 Special rules are laid down for "non-amateur" players, defined as players who have received, in respect of participation in or an activity connected with football, remuneration in excess of the actual expenses incurred in the course of such participation, unless they have reacquired amateur status.


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20 Where a non-amateur player, or a player who assumes non-amateur status within three years of his transfer, is transferred, his former club is entitled to a compensation fee for development or training, the amount of which is to be agreed upon between the two clubs. In the event of disagreement, the dispute is to be submitted to FIFA or the relevant confederation. 21 Those rules have been supplemented by UEFA regulations "governing the fixing of a transfer fee", adopted in June 1993 and in force since 1 August 1993, which replace the 1991 "Principles of Cooperation between Member Associations of UEFA and their Clubs". The new rules retain the principle that the business relationship between the two clubs are to exert no influence on the sporting activity of the player, who is to be free to play for the club with which he has signed the new contract. In the event of disagreement between the clubs concerned, it is for the appropriate UEFA board of experts to determine the amount of the compensation fee for training or development. For non-amateur players, the calculation of the fee is based on the player's gross income in the last 12 months or on the fixed annual income guaranteed in the new contract, increased by 20% for players who have played at least twice in the senior national representative team for their country and multiplied by a factor of between 12 and 0 depending on age. 22 It appears from documents produced to the Court by UEFA that rules in force in other Member States also contain provisions requiring the new club, when a player is transferred between two clubs within the same national association, to pay the former club, on terms laid down in the rules in question, a compensation fee for transfer, training or development. 23 In Spain and France, payment of compensation may only be required if the player transferred is under 25 years of age or if his former club is the one with which he signed his first professional contract, as the case may be. In Greece, although no compensation is explicitly payable by the new club, the contract between the club and the player may make the player's departure dependent on the payment of an amount which, according to UEFA, is in fact most commonly paid by the new club. 24 The rules applicable in that regard may derive from the national legislation, from the regulations of the national football associations or from the terms of collective agreements. Nationality clauses 25 From the 1960s onwards, many national football associations introduced rules ("nationality clauses") restricting the extent to which foreign players could be recruited or fielded in a match. For the purposes of those clauses, nationality is defined in relation to whether the player can be qualified to play in a country's national or representative team. 26 In 1978, UEFA gave an undertaking to Mr Davignon, a Member of the Commission of the European Communities, that it would remove the limitations on the number of contracts entered into by each club with players from other Member States and would set the number of such players who may participate in any one match at two, that limit not being applicable to players established for over five years in the Member State in question. 27 In 1991, following further discussions with Mr Bangemann, a Vice-President of the Commission, UEFA adopted the "3 + 2" rule permitting each national association to limit to three the number of foreign players whom a club may field in any first division match in their national championships, plus two players who have played in the country


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of the relevant national association for an uninterrupted period of five years, including three years as a junior. The same limitation also applies to UEFA matches in competitions for club teams. Facts of the cases before the national court 28 Mr Bosman, a professional footballer of Belgian nationality, was employed from 1988 by RC Liège, a Belgian first division club, under a contract expiring on 30 June 1990, which assured him an average monthly salary of BFR 120 000, including bonuses. 29 On 21 April 1990, RC Liège offered Mr Bosman a new contract for one season, reducing his pay to BFR 30 000, the minimum permitted by the URBSFA federal rules. Mr Bosman refused to sign and was put on the transfer list. The compensation fee for training was set, in accordance with the said rules, at BFR 11 743 000. 30 Since no club showed an interest in a compulsory transfer, Mr Bosman made contact with US Dunkerque, a club in the French second division, which led to his being engaged for a monthly salary in the region of BFR 100 000 plus a signing-on bonus of some BFR 900 000. 31 On 27 July 1990, a contract was also concluded between RC Liège and US Dunkerque for the temporary transfer of Mr Bosman for one year, against payment by US Dunkerque to RC Liège of a compensation fee of BFR 1 200 000 payable on receipt by the Fédération Française de Football ("FFF") of the transfer certificate issued by URBSFA. The contract also gave US Dunkerque an irrevocable option for full transfer of the player for BFR 4 800 000. 32 Both contracts, between US Dunkerque and RC Liège and between US Dunkerque and Mr Bosman, were however subject to the suspensive condition that the transfer certificate must be sent by URBSFA to FFF in time for the first match of the season, which was to be held on 2 August 1990. 33 RC Liège, which had doubts as to US Dunkerque's solvency, did not ask URBSFA to send the said certificate to FFF. As a result, neither contract took effect. On 31 July 1990, RC Liège also suspended Mr Bosman, thereby preventing him from playing for the entire season. 34 On 8 August 1990, Mr Bosman brought an action against RC Liège before the Tribunal de Première Instance (Court of First Instance), Liège. Concurrently with that action, he applied for an interlocutory decision ordering RC Liège and URBSFA to pay him an advance of BFR 100 000 per month until he found a new employer, restraining the defendants from impeding his engagement, in particular by requiring payment of a sum of money, and referring a question to the Court of Justice for a preliminary ruling. 35 By order of 9 November 1990, the judge hearing the interlocutory application ordered RC Liège and URBSFA to pay Mr Bosman an advance of BFR 30 000 per month and to refrain from impeding Mr Bosman's engagement. He also referred to the Court for a preliminary ruling a question (in Case C-340/90) on the interpretation of Article 48 in relation to the rules governing transfers of professional players ("transfer rules"). 36 In the meantime, Mr Bosman had been signed up by the French second-division club Saint-Quentin in October 1990, on condition that his interlocutory application succeeded. His contract was terminated, however, at the end of the first season. In February 1992, Mr Bosman signed a new contract with the French club Saint-Denis de la Réunion, which was also terminated. After looking for further offers in Belgium and


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France, Mr Bosman was finally signed up by Olympic de Charleroi, a Belgian third-division club. 37 According to the national court, there is strong circumstantial evidence to support the view that, notwithstanding the "free" status conferred on him by the interlocutory order, Mr Bosman has been boycotted by all the European clubs which might have engaged him. 38 On 28 May 1991, the Cour d'Appel, Liège, revoked the interlocutory decision of the Tribunal de Première Instance in so far as it referred a question to the Court of Justice for a preliminary ruling. But it upheld the order against RC Liège to pay monthly advances to Mr Bosman and enjoined RC Liège and URBSFA to make Mr Bosman available to any club which wished to use his services, without it being possible to require payment of any compensation fee. By order of 19 June 1991, Case C-340/90 was removed from the register of the Court of Justice. 39 On 3 June 1991, URBSFA, which, contrary to the situation in the interlocutory proceedings, had not been cited as a party in the main action before the Tribunal de Première Instance, intervened voluntarily in that action. On 20 August 1991, Mr Bosman issued a writ with a view to joining UEFA to the proceedings which he had brought against RC Liège and URBSFA and bringing proceedings directly against it on the basis of its responsibility in drafting the rules as a result of which he had suffered damage. On 5 December 1991, US Dunkerque was joined as a third party by RC Liège, in order to be indemnified against any order which might be made against it. On 15 October and 27 December 1991 respectively, Union Nationale des Footballeurs Professionnels ("UNFP"), a French professional footballers'union, and Vereniging van Contractspelers ("VVCS"), an association governed by Netherlands law, intervened voluntarily in the proceedings. 40 In new pleadings lodged on 9 April 1992, Mr Bosman amended his initial claim against RC Liège, brought a new preventive action against URBSFA and elaborated his claim against UEFA. In those proceedings, he sought a declaration that the transfer rules and nationality clauses were not applicable to him and an order, on the basis of their wrongful conduct at the time of the failure of his transfer to US Dunkerque, against RC Liège, URBSFA and UEFA to pay him BFR 11 368 350 in respect of the damage suffered by him from 1 August 1990 until the end of his career and BFR 11 743 000 in respect of loss of earnings since the beginning of his career as a result of the application of the transfer rules. He also applied for a question to be referred to the Court of Justice for a preliminary ruling. 41 By judgment of 11 June 1992, the Tribunal de Première Instance held that it had jurisdiction to entertain the main actions. It also held admissible Mr Bosman's claims against RC Liège, URBSFA and UEFA seeking, in particular, a declaration that the transfer rules and nationality clauses were not applicable to him and orders penalizing the conduct of those three organizations. But it dismissed RC Liège's application to join US Dunkerque as a third party and indemnifier, since no evidence of fault in the latter's performance of its obligations had been adduced. Finally, finding that the examination of Mr Bosman's claims against UEFA and URBSFA involved considering the compatibility of the transfer rules with the Treaty, it made a reference to the Court of Justice for a preliminary ruling on the interpretation of Articles 48, 85 and 86 of the Treaty (Case C-269/92). 42 URBSFA, RC Liège and UEFA appealed against that decision. Since those appeals had suspensive effect, the procedure before the Court of Justice was suspended. By order of 8 December 1993, Case C-269/92 was finally removed from the register


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following the new judgment of the Cour d'Appel, Liège, out of which the present proceedings arise. 43 No appeal was brought against UNFP or VVCS, who did not seek to intervene again on appeal. 44 In its judgment ordering the reference, the Cour d'Appel upheld the judgment under appeal in so far as it held that the Tribunal de Première Instance had jurisdiction, that the actions were admissible and that an assessment of Mr Bosman's claims against UEFA and the URBSFA involved a review of the lawfulness of the transfer rules. It also considered that a review of the lawfulness of the nationality clauses was necessary, since Mr Bosman's claim in their regard was based on Article 18 of the Belgian Judicial Code, which permits actions "with a view to preventing the infringement of a seriously threatened right", and Mr Bosman had adduced factual evidence suggesting that the damage which he fears that the application of those clauses may impede his career will in fact occur. 45 The national court considered in particular that Article 48 of the Treaty could, like Article 30, prohibit not only discrimination but also non-discriminatory barriers to freedom of movement for workers if they could not be justified by imperative requirements. 46 With regard to Article 85 of the Treaty, it considered that the FIFA, UEFA and URBSFA regulations might constitute decisions of associations of undertakings by which the clubs restrict competition between themselves for players. Transfer fees were dissuasive and tended to depress the level of professional sportsmen's pay. In addition, the nationality clauses prohibited foreign players'services from being obtained over a certain quota. Finally, trade between Member States was affected, in particular by the restriction of players'mobility. 47 Furthermore, the Cour d'Appel thought that URBSFA, or the football clubs collectively, might be in a dominant position, within the meaning of Article 86 of the Treaty and that the restrictions on competition mentioned in connection with Article 85 might constitute abuses prohibited by Article 86. 48 The Cour d'Appel dismissed UEFA's request that it ask the Court of Justice whether the reply to the question submitted on transfers would be different if the system permitted a player to play freely for his new club even where that club had not paid the transfer fee to the old club. It noted in particular that, because of the threat of severe penalties for clubs not paying the transfer fee, a player's ability to play for his new club remained dependent on the business relationships between the clubs. 49 In view of the foregoing, the Cour d'Appel decided to stay the proceedings and refer the following questions to the Court of Justice for a preliminary ruling: "Are Articles 48, 85 and 86 of the Treaty of Rome of 25 March 1957 to be interpreted as: (i) prohibiting a football club from requiring and receiving payment of a sum of money upon the engagement of one of its players who has come to the end of his contract by a new employing club; (ii) prohibiting the national and international sporting associations or federations from including in their respective regulations provisions restricting access of foreign players from the European Community to the competitions which they organize?" 50 On 3 June 1994, URBSFA applied to the Belgian Cour de Cassation (Court of Cassation) for review of the Cour d'Appel's judgment, requesting that the judgment be extended to apply jointly to RC Liège, UEFA and US Dunkerque. By letter of 6 October 1994, the Procureur Général (Principal Crown Counsel) to the Cour de


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Cassation informed the Court of Justice that the appeal did not have suspensive effect in this case. 51 By judgment of 30 March 1995, the Cour de Cassation dismissed the appeal and held that as a result the request for a declaration that the judgment be extended was otiose. The Cour de Cassation has forwarded a copy of that judgment to the Court of Justice. The request for measures of inquiry 52 By letter lodged at the Court Registry on 16 November 1995, UEFA requested the Court to order a measure of inquiry under Article 60 of the Rules of Procedure, with a view to obtaining fuller information on the role played by transfer fees in the financing of small or medium-sized football clubs, the machinery governing the distribution of income within the existing football structures and the presence or absence of alternative machinery if the system of transfer fees were to disappear. 53 After hearing again the views of the Advocate General, the Court considers that that application must be dismissed. It was made at a time when, in accordance with Article 59(2) of the Rules of Procedure, the oral procedure was closed. The Court has held (see Case 77/70 Prelle v Commission [1971] ECR 561, paragraph 7) that such an application can be admitted only if it relates to facts which may have a decisive influence and which the party concerned could not put forward before the close of the oral procedure. 54 In this case, it is sufficient to hold that UEFA could have submitted its request before the close of the oral procedure. Moreover, the question whether the aim of maintaining a balance in financial and competitive terms, and in particular that of ensuring the financing of smaller clubs, can be achieved by other means such as a redistribution of a portion of football takings was raised, in particular by Mr Bosman in his written observations. Jurisdiction of the Court to give a preliminary ruling on the questions submitted 55 The Court's jurisdiction to give a ruling on all or part of the questions submitted by the national court has been challenged, on various grounds, by URBSFA, by UEFA, by some of the governments which have submitted observations and, during the written procedure, by the Commission. 56 First, UEFA and URBSFA have claimed that the main actions are procedural devices designed to obtain a preliminary ruling from the Court on questions which meet no objective need for the purpose of settling the cases. The UEFA regulations were not applied when Mr Bosman's transfer to US Dunkerque fell through; if they had been applied, that transfer would not have been dependent on the payment of a transfer fee and could thus have taken place. The interpretation of Community law requested by the national court thus bears no relation to the actual facts of the cases in the main proceedings or their purpose and, in accordance with consistent case-law, the Court has no jurisdiction to rule on the questions submitted. 57 Secondly, URBSFA, UEFA, the Danish, French and Italian Governments and, in its written observations, the Commission have claimed that the questions relating to nationality clauses has no connection with the disputes, which concern only the application of the transfer rules. The impediments to his career which Mr Bosman claims arise out of those clauses are purely hypothetical and do not justify a preliminary ruling by the Court on the interpretation of the Treaty in that regard.


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58 Thirdly, URBSFA and UEFA pointed out at the hearing that, according to the judgment of the Cour de Cassation of 30 March 1995, the Cour d'Appel did not accept as admissible Mr Bosman's claims for a declaration that the nationality clauses in the URBSFA regulations were not applicable to him. Consequently, the issues in the main proceedings do not relate to the application of nationality clauses and the Court should not rule on the questions submitted on that point. The French Government concurred in that conclusion, subject however to verification of the scope of the judgment of the Cour de Cassation. 59 As to those submissions, it is to be remembered that, in the context of the cooperation between the Court of Justice and the national courts provided for by Article 177 of the Treaty, it is solely for the national court before which the dispute has 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 submits to the Court. Consequently, where the questions submitted by the national court concern the interpretation of Community law, the Court of Justice is, in principle, bound to give a ruling (see, inter alia, Case C-125/94 Aprile v Amministrazione delle Finanze dello Stato [1995] ECR I-0000, paragraphs 16 and 17). 60 Nevertheless, the Court has taken the view that, in order to determine whether it has jurisdiction, it should examine the conditions in which the case was referred to it by the national court. The spirit of cooperation which must prevail in the preliminary-ruling procedure requires the national court, for its part, to have regard to the function entrusted to the Court of Justice, which is to assist in the administration of justice in the Member States and not to deliver advisory opinions on general or hypothetical questions (see, inter alia, Case C-83/91 Meilicke v ADV/ORGA [1992] ECR I-4871, paragraph 25). 61 That is why the Court has held that it has no jurisdiction to give a preliminary ruling on a question submitted by a national court where it is quite obvious that the interpretation of Community law sought by that court bears no relation to the actual facts of the main action or its purpose (see, inter alia, Case C-143/94 Furlanis v ANAS [1995] ECR I-0000, paragraph 12) or where the problem is hypothetical and the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it (see, inter alia, Meilicke, cited above, paragraph 32). 62 In the present case, the issues in the main proceedings, taken as a whole, are not hypothetical and the national court has provided this Court with a clear statement of the surrounding facts, the rules in question and the grounds on which it believes that a decision on the questions submitted is necessary to enable it to give judgment. 63 Furthermore, even if, as URBSFA and UEFA contend, the UEFA regulations were not applied when Mr Bosman's transfer to US Dunkerque fell through, they are still in issue in the preventive actions brought by Mr Bosman against URBSFA and UEFA (see paragraph 40 above) and the Court's interpretation as to the compatibility with Community law of the transfer system set up by the UEFA regulations may be useful to the national court. 64 With regard more particularly to the questions concerning nationality clauses, it appears that the relevant heads of claim have been held admissible in the main proceedings on the basis of a national procedural provision permitting an action to be brought, albeit for declaratory purposes only, to prevent the infringement of a right which is seriously threatened. As is clear from its judgment, the national court considered that application of the nationality clauses could indeed impede Mr Bosman's career by reducing his chances of being employed or fielded in a match by a club from


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another Member State. It concluded that Mr Bosman's claims for a declaration that those nationality clauses were not applicable to him met the conditions laid down by the said provision. 65 It is not for this Court, in the context of these proceedings, to call that assessment in question. Although the main actions seek a declaratory remedy and, having the aim of preventing infringement of a right under threat, must necessarily be based on hypotheses which are, by their nature, uncertain, such actions are none the less permitted under national law, as interpreted by the referring court. Consequently, the questions submitted by that court meet an objective need for the purpose of settling disputes properly brought before it. 66 Finally, the judgment of the Cour de Cassation of 30 March 1995 does not suggest that the nationality clauses are extraneous to the issues in the main proceedings. That court held only that URBSFA's appeal against the judgment of the Cour d'Appel rested on a misinterpretation of that judgment. In its appeal, URBSFA had claimed that that court had held inadmissible a claim by Mr Bosman for a declaration that the nationality clauses contained in its regulations were not applicable to him. However, it would appear from the judgment of the Cour de Cassation that, according to the Cour d'Appel, Mr Bosman's claim sought to prevent impediments to his career likely to arise from the application not of the nationality clauses in the URBSFA regulations, which concerned players with a nationality other than Belgian, but of the similar clauses in the regulations of UEFA and the other national associations which are members of it, which could concern him as a player with Belgian nationality. Consequently, it does not appear from the judgment of the Cour de Cassation that those latter nationality clauses are extraneous to the main proceedings. 67 It follows from the foregoing that the Court has jurisdiction to rule on the questions submitted by the Cour d'Appel, Liège. Interpretation of Article 48 of the Treaty with regard to the transfer rules 68 By its first question, the national court seeks in substance to ascertain whether Article 48 of the Treaty precludes the application of rules laid down by sporting associations, under which a professional footballer who is a national of one Member State may not, on the expiry of his contract with a club, be employed by a club of another Member State unless the latter club has paid to the former a transfer, training or development fee. Application of Article 48 to rules laid down by sporting associations 69 It is first necessary to consider certain arguments which have been put forward on the question of the application of Article 48 to rules laid down by sporting associations. 70 URBSFA argued that only the major European clubs may be regarded as undertakings, whereas clubs such as RC Liège carry on an economic activity only to a negligible extent. Furthermore, the question submitted by the national court on the transfer rules does not concern the employment relationships between players and clubs but the business relationships between clubs and the consequences of freedom to affiliate to a sporting federation. Article 48 of the Treaty is accordingly not applicable to a case such as that in issue in the main proceedings. 71 UEFA argued, inter alia, that the Community authorities have always respected the autonomy of sport, that it is extremely difficult to distinguish between the economic and the sporting aspects of football and that a decision of the Court concerning the


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situation of professional players might call in question the organization of football as a whole. For that reason, even if Article 48 of the Treaty were to apply to professional players, a degree of flexibility would be essential because of the particular nature of the sport. 72 The German Government stressed, first, that in most cases a sport such as football is not an economic activity. It further submitted that sport in general has points of similarity with culture and pointed out that, under Article 128(1) of the EC Treaty, the Community must respect the national and regional diversity of the cultures of the Member States. Finally, referring to the freedom of association and autonomy enjoyed by sporting federations under national law, it concluded that, by virtue of the principle of subsidiarity, taken as a general principle, intervention by public, and particularly Community, authorities in this area must be confined to what is strictly necessary. 73 In response to those arguments, it is to be remembered that, having regard to the objectives of the Community, sport is subject to Community law only in so far as it constitutes an economic activity within the meaning of Article 2 of the Treaty (see Case 36/74 Walrave v Union Cycliste Internationale [1974] ECR 1405, paragraph 4). This applies to the activities of professional or semi-professional footballers, where they are in gainful employment or provide a remunerated service (see Case 13/76 Donà v Mantero [1976] ECR 1333, paragraph 12). 74 It is not necessary, for the purposes of the application of the Community provisions on freedom of movement for workers, for the employer to be an undertaking; all that is required is the existence of, or the intention to create, an employment relationship. 75 Application of Article 48 of the Treaty is not precluded by the fact that the transfer rules govern the business relationships between clubs rather than the employment relationships between clubs and players. The fact that the employing clubs must pay fees on recruiting a player from another club affects the players'opportunities for finding employment and the terms under which such employment is offered. 76 As regards the difficulty of severing the economic aspects from the sporting aspects of football, the Court has held (in Donà, cited above, paragraphs 14 and 15) that the provisions of Community law concerning freedom of movement of persons and of provision of services do not preclude rules or practices justified on non-economic grounds which relate to the particular nature and context of certain matches. It stressed, however, that such a restriction on the scope of the provisions in question must remain limited to its proper objective. It cannot, therefore, be relied upon to exclude the whole of a sporting activity from the scope of the Treaty. 77 With regard to the possible consequences of this judgment on the organization of football as a whole, it has consistently been held that, although the practical consequences of any judicial decision must be weighed carefully, this cannot go so far as to diminish the objective character of the law and compromise its application on the ground of the possible repercussions of a judicial decision. At the very most, such repercussions might be taken into consideration when determining whether exceptionally to limit the temporal effect of a judgment (see, inter alia, Case C-163/90 Administration des Douanes v Legros and Others [1992] ECR I-4625, paragraph 30). 78 The argument based on points of alleged similarity between sport and culture cannot be accepted, since the question submitted by the national court does not relate to the conditions under which Community powers of limited extent, such as those based on Article 128(1), may be exercised but on the scope of the freedom of movement of workers guaranteed by Article 48, which is a fundamental freedom in the Community system (see, inter alia, Case C-19/92 Kraus v Land Baden-Wuerttemberg [1993] ECR I-1663, paragraph 16).


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79 As regards the arguments based on the principle of freedom of association, it must be recognized that this principle, enshrined in Article 11 of the European Convention for the Protection of Human Rights and Fundamental Freedoms and resulting from the constitutional traditions common to the Member States, is one of the fundamental rights which, as the Court has consistently held and as is reaffirmed in the preamble to the Single European Act and in Article F(2) of the Treaty on European Union, are protected in the Community legal order. 80 However, the rules laid down by sporting associations to which the national court refers cannot be seen as necessary to ensure enjoyment of that freedom by those associations, by the clubs or by their players, nor can they be seen as an inevitable result thereof. 81 Finally, the principle of subsidiarity, as interpreted by the German Government to the effect that intervention by public authorities, and particularly Community authorities, in the area in question must be confined to what is strictly necessary, cannot lead to a situation in which the freedom of private associations to adopt sporting rules restricts the exercise of rights conferred on individuals by the Treaty. 82 Once the objections concerning the application of Article 48 of the Treaty to sporting activities such as those of professional footballers are out of the way, it is to be remembered that, as the Court held in paragraph 17 of its judgment in Walrave, cited above, Article 48 not only applies to the action of public authorities but extends also to rules of any other nature aimed at regulating gainful employment in a collective manner. 83 The Court has held that the abolition as between Member States of obstacles to freedom of movement for persons and to freedom to provide services would be compromised if the abolition of State barriers could be neutralized by obstacles resulting from the exercise of their legal autonomy by associations or organizations not governed by public law (see Walrave, cited above, paragraph 18). 84 It has further observed that working conditions in the different Member States are governed sometimes by provisions laid down by law or regulation and sometimes by agreements and other acts concluded or adopted by private persons. Accordingly, if the scope of Article 48 of the Treaty were confined to acts of a public authority there would be a risk of creating inequality in its application (see Walrave, cited above, paragraph 19). That risk is all the more obvious in a case such as that in the main proceedings in this case in that, as has been stressed in paragraph 24 above, the transfer rules have been laid down by different bodies or in different ways in each Member State. 85 UEFA objects that such an interpretation makes Article 48 of the Treaty more restrictive in relation to individuals than in relation to Member States, which are alone in being able to rely on limitations justified on grounds of public policy, public security or public health. 86 That argument is based on an false premiss. There is nothing to preclude individuals from relying on justifications on grounds of public policy, public security or public health. Neither the scope nor the content of those grounds of justification is in any way affected by the public or private nature of the rules in question. 87 Article 48 of the Treaty therefore applies to rules laid down by sporting associations such as URBSFA, FIFA or UEFA, which determine the terms on which professional sportsmen can engage in gainful employment. Whether the situation envisaged by the national court is of a purely internal nature.


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88 UEFA considers that the disputes pending before the national court concern a purely internal Belgian situation which falls outside the ambit of Article 48 of the Treaty. They concern a Belgian player whose transfer fell through because of the conduct of a Belgian club and a Belgian association. 89 It is true that, according to consistent case-law (see, inter alia, Case 175/78 Regina v Saunders [1979] ECR 1129, paragraph 11; Case 180/83 Moser v Land Baden-Wuerttemberg [1984] ECR 2539, paragraph 15; Case C-332/90 Steen v Deutsche Bundespost [1992] ECR I-341, paragraph 9; and Case C-19/92 Kraus, cited above, paragraph 15), the provisions of the Treaty concerning the free movement of workers, and particularly Article 48, cannot be applied to situations which are wholly internal to a Member State, in other words where there is no factor connecting them to any of the situations envisaged by Community law. 90 However, it is clear from the findings of fact made by the national court that Mr Bosman had entered into a contract of employment with a club in another Member State with a view to exercising gainful employment in that State. By so doing, as he has rightly pointed out, he accepted an offer of employment actually made, within the meaning of Article 48(3)(a). 91 Since the situation in issue in the main proceedings cannot be classified as purely internal, the argument put forward by UEFA must be dismissed. Existence of an obstacle to freedom of movement for workers 92 It is thus necessary to consider whether the transfer rules form an obstacle to freedom of movement for workers prohibited by Article 48 of the Treaty. 93 As the Court has repeatedly held, freedom of movement for workers is one of the fundamental principles of the Community and the Treaty provisions guaranteeing that freedom have had direct effect since the end of the transitional period. 94 The Court has also held that the provisions of the Treaty relating to freedom of movement for persons are intended to facilitate the pursuit by Community citizens of occupational activities of all kinds throughout the Community, and preclude measures which might place Community citizens at a disadvantage when they wish to pursue an economic activity in the territory of another Member State (see Case 143/87 Stanton v INASTI [1988] ECR 3877, paragraph 13, and Case C-370/90 The Queen v Immigration Appeal Tribunal and Surinder Singh [1992] ECR I-4265, paragraph 16). 95 In that context, nationals of Member States have in particular the right, which they derive directly from the Treaty, to leave their country of origin to enter the territory of another Member State and reside there in order there to pursue an economic activity (see, inter alia, Case C-363/89 Roux v Belgium [1991] ECR I-273, paragraph 9, and Singh, cited above, paragraph 17). 96 Provisions which preclude or deter a national of a Member State from leaving his country of origin in order to exercise his right to freedom of movement therefore constitute an obstacle to that freedom even if they apply without regard to the nationality of the workers concerned (see also Case C-10/90 Masgio v Bundesknappschaft [1991] ECR I-1119, paragraphs 18 and 19). 97 The Court has also stated, in Case 81/87 The Queen v H.M. Treasury and Commissioners of Inland Revenue ex parte Daily Mail and General Trust plc [1988] ECR 5483, paragraph 16, that even though the Treaty provisions relating to freedom of establishment are directed mainly to ensuring that foreign nationals and companies are treated in the host Member State in the same way as nationals of that State, they also prohibit the Member State of origin from hindering the establishment in another Member State of one of its nationals or of a company incorporated under its legislation which comes within the definition contained in Article 58. The rights guaranteed by


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Article 52 et seq. of the Treaty would be rendered meaningless if the Member State of origin could prohibit undertakings from leaving in order to establish themselves in another Member State. The same considerations apply, in relation to Article 48 of the Treaty, with regard to rules which impede the freedom of movement of nationals of one Member State wishing to engage in gainful employment in another Member State. 98 It is true that the transfer rules in issue in the main proceedings apply also to transfers of players between clubs belonging to different national associations within the same Member State and that similar rules govern transfers between clubs belonging to the same national association. 99 However, as has been pointed out by Mr Bosman, by the Danish Government and by the Advocate General in points 209 and 210 of his Opinion, those rules are likely to restrict the freedom of movement of players who wish to pursue their activity in another Member State by preventing or deterring them from leaving the clubs to which they belong even after the expiry of their contracts of employment with those clubs. 100 Since they provide that a professional footballer may not pursue his activity with a new club established in another Member State unless it has paid his former club a transfer fee agreed upon between the two clubs or determined in accordance with the regulations of the sporting associations, the said rules constitute an obstacle to freedom of movement for workers. 101 As the national court has rightly pointed out, that finding is not affected by the fact that the transfer rules adopted by UEFA in 1990 stipulate that the business relationship between the two clubs is to exert no influence on the activity of the player, who is to be free to play for his new club. The new club must still pay the fee in issue, under pain of penalties which may include its being struck off for debt, which prevents it just as effectively from signing up a player from a club in another Member State without paying that fee. 102 Nor is that conclusion negated by the case-law of the Court cited by URBSFA and UEFA, to the effect that Article 30 of the Treaty does not apply to measures which restrict or prohibit certain selling arrangements so long as they apply to all relevant traders operating within the national territory and so long as they affect in the same manner, in law and in fact, the marketing of domestic products and of those from other Member States (see Joined Cases C-267/91 and C-268/91 Keck and Mithouard [1993] ECR I-6097, paragraph 16). 103 It is sufficient to note that, although the rules in issue in the main proceedings apply also to transfers between clubs belonging to different national associations within the same Member State and are similar to those governing transfers between clubs belonging to the same national association, they still directly affect players'access to the employment market in other Member States and are thus capable of impeding freedom of movement for workers. They cannot, thus, be deemed comparable to the rules on selling arrangements for goods which in Keck and Mithouard were held to fall outside the ambit of Article 30 of the Treaty (see also, with regard to freedom to provide services, Case C-384/93 Alpine Investments v Minister van Financiën [1995] ECR I-1141, paragraphs 36 to 38). 104 Consequently, the transfer rules constitute an obstacle to freedom of movement for workers prohibited in principle by Article 48 of the Treaty. It could only be otherwise if those rules pursued a legitimate aim compatible with the Treaty and were justified by pressing reasons of public interest. But even if that were so, application of those rules would still have to be such as to ensure achievement of the aim in question and not go beyond what is necessary for that purpose (see, inter alia, the judgment in Kraus, cited above, paragraph 32, and Case C-55/94 Gebhard [1995] ECR I-0000, paragraph 37).


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Existence of justifications 105 First, URBSFA, UEFA and the French and Italian Governments have submitted that the transfer rules are justified by the need to maintain a financial and competitive balance between clubs and to support the search for talent and the training of young players. 106 In view of the considerable social importance of sporting activities and in particular football in the Community, the aims of maintaining a balance between clubs by preserving a certain degree of equality and uncertainty as to results and of encouraging the recruitment and training of young players must be accepted as legitimate. 107 As regards the first of those aims, Mr Bosman has rightly pointed out that the application of the transfer rules is not an adequate means of maintaining financial and competitive balance in the world of football. Those rules neither preclude the richest clubs from securing the services of the best players nor prevent the availability of financial resources from being a decisive factor in competitive sport, thus considerably altering the balance between clubs. 108 As regards the second aim, it must be accepted that the prospect of receiving transfer, development or training fees is indeed likely to encourage football clubs to seek new talent and train young players. 109 However, because it is impossible to predict the sporting future of young players with any certainty and because only a limited number of such players go on to play professionally, those fees are by nature contingent and uncertain and are in any event unrelated to the actual cost borne by clubs of training both future professional players and those who will never play professionally. The prospect of receiving such fees cannot, therefore, be either a decisive factor in encouraging recruitment and training of young players or an adequate means of financing such activities, particularly in the case of smaller clubs. 110 Furthermore, as the Advocate General has pointed out in point 226 et seq. of his Opinion, the same aims can be achieved at least as efficiently by other means which do not impede freedom of movement for workers. 111 It has also been argued that the transfer rules are necessary to safeguard the worldwide organization of football. 112 However, the present proceedings concern application of those rules within the Community and not the relations between the national associations of the Member States and those of non-member countries. In any event, application of different rules to transfers between clubs belonging to national associations within the Community and to transfers between such clubs and those affiliated to the national associations of non-member countries is unlikely to pose any particular difficulties. As is clear from paragraphs 22 and 23 above, the rules which have so far governed transfers within the national associations of certain Member States are different from those which apply at the international level. 113 Finally, the argument that the rules in question are necessary to compensate clubs for the expenses which they have had to incur in paying fees on recruiting their players cannot be accepted, since it seeks to justify the maintenance of obstacles to freedom of movement for workers simply on the ground that such obstacles were able to exist in the past. 114 The answer to the first question must therefore be that Article 48 of the Treaty precludes the application of rules laid down by sporting associations, under which a professional footballer who is a national of one Member State may not, on the expiry of


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his contract with a club, be employed by a club of another Member State unless the latter club has paid to the former club a transfer, training or development fee. Interpretation of Article 48 of the Treaty with regard to the nationality clauses 115 By its second question, the national court seeks in substance to ascertain whether Article 48 of the Treaty precludes the application of rules laid down by sporting associations, under which, in matches in competitions which they organize, football clubs may field only a limited number of professional players who are nationals of other Member States. Existence of an obstacle to freedom of movement for workers 116 As the Court has held in paragraph 87 above, Article 48 of the Treaty applies to rules laid down by sporting associations which determine the conditions under which professional sports players may engage in gainful employment. It must therefore be considered whether the nationality clauses constitute an obstacle to freedom of movement for workers, prohibited by Article 48. 117 Article 48(2) expressly provides that freedom of movement for workers entails the abolition of any discrimination based on nationality between workers of the Member States as regards employment, remuneration and conditions of work and employment. 118 That provision has been implemented, in particular, by Article 4 of Regulation (EEC) No 1612/68 of the Council of 15 October 1968 on freedom of movement for workers within the Community (OJ, English Special Edition, 1968(II), p. 475), under which provisions laid down by law, regulation or administrative action of the Member States which restrict by number or percentage the employment of foreign nationals in any undertaking, branch of activity or region, or at a national level, are not to apply to nationals of the other Member States. 119 The same principle applies to clauses contained in the regulations of sporting associations which restrict the right of nationals of other Member States to take part, as professional players, in football matches (see the judgment in Donà, cited above, paragraph 19). 120 The fact that those clauses concern not the employment of such players, on which there is no restriction, but the extent to which their clubs may field them in official matches is irrelevant. In so far as participation in such matches is the essential purpose of a professional player's activity, a rule which restricts that participation obviously also restricts the chances of employment of the player concerned. Existence of justifications 121 The existence of an obstacle having thus been established, it must be considered whether that obstacle may be justified in the light of Article 48 of the Treaty. 122 URBSFA, UEFA and the German, French and Italian Governments argued that the nationality clauses are justified on non-economic grounds, concerning only the sport as such. 123 First, they argued, those clauses serve to maintain the traditional link between each club and its country, a factor of great importance in enabling the public to identify with its favourite team and ensuring that clubs taking part in international competitions effectively represent their countries. 124 Secondly, those clauses are necessary to create a sufficient pool of national players to provide the national teams with top players to field in all team positions.


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125 Thirdly, they help to maintain a competitive balance between clubs by preventing the richest clubs from appropriating the services of the best players. 126 Finally, UEFA points out that the "3 + 2" rule was drawn up in collaboration with the Commission and must be revised regularly to remain in line with the development of Community policy. 127 It must be recalled that in paragraphs 14 and 15 of its judgment in Donà, cited above, the Court held that the Treaty provisions concerning freedom of movement for persons do not prevent the adoption of rules or practices excluding foreign players from certain matches for reasons which are not of an economic nature, which relate to the particular nature and context of such matches and are thus of sporting interest only, such as, for example, matches between national teams from different countries. It stressed, however, that that restriction on the scope of the provisions in question must remain limited to its proper objective. 128 Here, the nationality clauses do not concern specific matches between teams representing their countries but apply to all official matches between clubs and thus to the essence of the activity of professional players. 129 In those circumstances, the nationality clauses cannot be deemed to be in accordance with Article 48 of the Treaty, otherwise that article would be deprived of its practical effect and the fundamental right of free access to employment which the Treaty confers individually on each worker in the Community rendered nugatory (on this last point, see Case 222/86 Unectef v Heylens and Others [1987] ECR 4097, paragraph 14). 130 None of the arguments put forward by the sporting associations and by the governments which have submitted observations detracts from that conclusion. 131 First, a football club's links with the Member State in which it is established cannot be regarded as any more inherent in its sporting activity than its links with its locality, town, region or, in the case of the United Kingdom, the territory covered by each of the four associations. Even though national championships are played between clubs from different regions, towns or localities, there is no rule restricting the right of clubs to field players from other regions, towns or localities in such matches. 132 In international competitions, moreover, participation is limited to clubs which have achieved certain results in competition in their respective countries, without any particular significance being attached to the nationalities of their players. 133 Secondly, whilst national teams must be made up of players having the nationality of the relevant country, those players need not necessarily be registered to play for clubs in that country. Indeed, under the rules of the sporting associations, foreign players must be allowed by their clubs to play for their country's national team in certain matches. 134 Furthermore, although freedom of movement for workers, by opening up the employment market in one Member State to nationals of the other Member States, has the effect of reducing workers'chances of finding employment within the Member State of which they are nationals, it also, by the same token, offers them new prospects of employment in other Member States. Such considerations obviously apply also to professional footballers. 135 Thirdly, although it has been argued that the nationality clauses prevent the richest clubs from engaging the best foreign players, those clauses are not sufficient to achieve the aim of maintaining a competitive balance, since there are no rules limiting the possibility for such clubs to recruit the best national players, thus undermining that balance to just the same extent.


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136 Finally, as regards the argument based on the Commission's participation in the drafting of the "3 + 2" rule, it must be pointed out that, except where such powers are expressly conferred upon it, the Commission may not give guarantees concerning the compatibility of specific practices with the Treaty (see also Joined Cases 142/80 and 143/80 Amministrazione delle Finanze dello Stato v Essevi and Salengo [1981] ECR 1413, paragraph 16). In no circumstances does it have the power to authorize practices which are contrary to the Treaty. 137 It follows from the foregoing that Article 48 of the Treaty precludes the application of rules laid down by sporting associations under which, in matches in competitions which they organize, football clubs may field only a limited number of professional players who are nationals of other Member States. Interpretation of Articles 85 and 86 of the Treaty 138 Since both types of rule to which the national court's question refer are contrary to Article 48, it is not necessary to rule on the interpretation of Articles 85 and 86 of the Treaty. The temporal effects of this judgment 139 In their written and oral observations, UEFA and URBSFA have drawn the Court's attention to the serious consequences which might ensue from its judgment for the organization of football as a whole if it were to consider the transfer rules and nationality clauses to be incompatible with the Treaty. 140 Mr Bosman, whilst observing that such a solution is not indispensable, has suggested that the Court could limit the temporal effects of its judgment in so far as it concerns the transfer rules. 141 It has consistently been held that the interpretation which the Court, in the exercise of the jurisdiction conferred upon it by Article 177 of the Treaty, gives to a rule of Community law clarifies and where necessary defines the meaning and scope of that rule as it must be, or ought to have been, understood and applied from the time of its coming into force. It follows that the rule as thus interpreted can, and must, be applied by the courts even to legal relationships arising and established before the judgment ruling on the request for interpretation, provided that in other respects the conditions for bringing before the courts having jurisdiction an action relating to the application of that rule are satisfied (see, inter alia, Case 24/86 Blaizot v University of Liège and Others [1988] ECR 379, paragraph 27). 142 It is only exceptionally that the Court may, in application of the general principle of legal certainty inherent in the Community legal order, be moved to restrict the opportunity for any person concerned to rely upon the provision as thus interpreted with a view to calling in question legal relationships established in good faith. Such a restriction may be allowed only by the Court, in the actual judgment ruling upon the interpretation sought (see, inter alia, the judgments in Blaizot, cited above, paragraph 28, and Legros, cited above, paragraph 30). 143 In the present case, the specific features of the rules laid down by the sporting associations for transfers of players between clubs of different Member States, together with the fact that the same or similar rules applied to transfers both between clubs belonging to the same national association and between clubs belonging to different national associations within the same Member State, may have caused uncertainty as to whether those rules were compatible with Community law.


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144 In such circumstances, overriding considerations of legal certainty militate against calling in question legal situations whose effects have already been exhausted. An exception must, however, be made in favour of persons who may have taken timely steps to safeguard their rights. Finally, limitation of the effects of the said interpretation can be allowed only in respect of compensation fees for transfer, training or development which have already been paid on, or are still payable under an obligation which arose before, the date of this judgment. 145 It must therefore be held that the direct effect of Article 48 of the Treaty cannot be relied upon in support of claims relating to a fee in respect of transfer, training or development which has already been paid on, or is still payable under an obligation which arose before, the date of this judgment, except by those who have brought court proceedings or raised an equivalent claim under the applicable national law before that date. 146 With regard to nationality clauses, however, there are no grounds for a temporal limitation of the effects of this judgment. In the light of the Walrave and Donà judgments, it was not reasonable for those concerned to consider that the discrimination resulting from those clauses was compatible with Article 48 of the Treaty.

On those grounds,

THE COURT,

in answer to the questions referred to it by the Cour d'Appel, Liège, by judgment

of 1 October 1993, hereby rules:

1. Article 48 of the EEC Treaty precludes the application of rules laid down by sporting associations, under which a professional footballer who is a national of one Member State may not, on the expiry of his contract with a club, be employed by a club of another Member State unless the latter club has paid to the former club a transfer, training or development fee. 2. Article 48 of the EEC Treaty precludes the application of rules laid down by sporting associations under which, in matches in competitions which they organize, football clubs may field only a limited number of professional players who are nationals of other Member States. 3. The direct effect of Article 48 of the EEC Treaty cannot be relied upon in support of claims relating to a fee in respect of transfer, training or development which has already been paid on, or is still payable under an obligation which arose before, the date of this judgment, except by those who have brought court proceedings or raised an equivalent claim under the applicable national law before that date.


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3. Case C-124/96,


applicant,

v

Kingdom of Spain,

defendant,

supported by

United Kingdom of Great Britain and Northern Ireland

intervener,

APPLICATION for a declaration that, by providing that VAT exemption for services

closely linked to sport or physical education applied only to private establishments

whose membership fees did not exceed a specified amount, the Kingdom of Spain

infringed Article 13(A)(1)(m) of the Sixth Council Directive 77/388/EEC of 17 May

1977 on the harmonisation of the laws of the Member States relating to turnover taxes

— Common system of value added tax: uniform basis of assessment,

THE COURT (Sixth Chamber),

gives the following

Judgment

1. By application lodged at the Court Registry on 17 April 1996, the Commission of the European Communities brought an action under Article 169 of the EC Treaty for a declaration that, by providing that exemption from value added tax ('VAT‘) for services closely linked to sport or physical education applied only to private establishments whose membership fees did not exceed a specified amount, the Kingdom of Spain had infringed Article 13(A)(1)(m) of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1; 'the Sixth Directive‘). The Sixth Directive 2. Article 13(A) of the Sixth Directive provides that certain activities in the public interest are exempt from VAT. In particular, in Part A, headed 'Exemptions for certain activities in the public interest‘, Article 13 of the Sixth Directive provides: '1. Without prejudice to other Community provisions, Member States shall exempt the following under conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of such exemptions and of preventing any possible evasion, avoidance or abuse: ...


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(m) certain services closely linked to sport or physical education supplied by non-profit-making organisations to persons taking part in sport or physical education; ... 2. (a) Member States may make the granting to bodies other than those governed by public law of each exemption provided for in (1)(b), (g), (h), (i), (l), (m) and (n) of this article subject in each individual case to one or more of the following conditions: — they shall not systematically aim to make a profit, but any profits nevertheless arising shall not be distributed, but shall be assigned to the continuance or improvement of the services supplied, — they shall be managed and administered on an essentially voluntary basis by persons who have no direct or indirect interest, either themselves or through intermediaries, in the results of the activities concerned, — they shall charge prices approved by the public authorities or which do not exceed such approved prices or, in respect of those services not subject to approval, prices lower than those charged for similar services by commercial enterprises subject to value added tax, — exemption of the services concerned shall not be likely to create distortions of competition such as to place at a disadvantage commercial enterprises liable to value added tax.‘ The national legislation 3. The relevant Spanish legislation is Article 20 of Law No 37 of 28 December 1992 on Value Added Tax ('Law No 37/92‘), as amended by Article 13 of Law No 42 of 30 December 1994 ('Law No 42/94‘). The relevant provision is Article 20(1), point 13, which exempts: 'Services supplied to individuals taking part in sport or physical education, whoever the person or body in charge of supplying the service may be, provided that such services are directly linked to sport or physical education and are supplied by the following persons or bodies: ... (d) private sports bodies or establishments of a social nature whose entry fees do not exceed the following amounts: - admission or entry fees: PTA 265 000 - periodic fees: PTA 4 000 monthly.‘ The pre-litigation procedure 4. By letter of 22 December 1992, the Commission informed the Kingdom of Spain that it regarded the provisions of Article 8, point 13, of the Spanish Law on Value Added Tax (Law No 30/85 of 2 August 1985, amended by Law No 10/90 of 15 October 1990) as incompatible with Article 13(A)(1)(m) of the Sixth Directive. 5. By letter of 28 May 1993, the Spanish authorities replied that the Spanish legislation applicable was Article 20(1), point 13, of Law No 37/92, and that the latter did not infringe the Sixth Directive. 6. Taking account of that reaction and the arguments put forward by the Kingdom of Spain, the Commission addressed a reasoned opinion to the Kingdom of Spain on 10 October 1994, in which it maintained that the Spanish provisions were incompatible with the Sixth Directive.


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7. By letter of 10 April 1995, the Kingdom of Spain essentially reiterated the arguments already put forward in its reply to the letter of 22 December 1992. 8. Subsequently, by Law No 42/94, the Kingdom of Spain partially amended Article 20(1), point 13, of Law No 37/92. The Commission took the view that that amendment removed only part of the failure to fulfil obligations and did nothing to alter the quantitative restrictions imposed on private sports bodies or establishments. Substance 9. In support of its action, the Commission maintains that the restriction of VAT exemption by Article 20(1), point 13, of Law No 37/92 to private sports establishments charging membership fees not exceeding the amounts specified in that article is contrary to Article 13(A) of the Sixth Directive. It submits that the additional requirement imposed by the Spanish legislation is not authorised either by the introductory sentence of Article 13(A)(1), or by the wording of Article 13(A)(1)(m), or by the third indent of Article 13(A)(2)(a) of the Sixth Directive. 10. The Spanish Government, supported by the United Kingdom Government, begins by arguing that the introductory sentence of Article 13(A)(1) of the Sixth Directive shows that Member States have a wide discretion in implementing the exemptions provided for. 11. It should be observed in that regard that the conditions which may be laid down pursuant to Article 13(A)(1) of the Sixth Directive to do not in any way affect the definition of the subject-matter of the exemptions envisaged by that provision (Case 8/81 Becker v Finanzamt Münster-Innenstadt [1982] ECR 53, paragraph 32). 12. Those conditions are intended to ensure the correct and straightforward application of the exemptions and refer to measures intended to prevent any possible evasion, avoidance or abuse (Becker, cited above, paragraphs 33 and 34). 13. The argument based on the introductory sentence of Article 13(A)(1) must therefore be rejected. 14. The Spanish Government then argues, concerning the exemption of supplies of services referred to in Article 13(A)(1)(m), that, unlike other exemptions envisaged by that provision, letter (m) provides for the exemption of 'certain‘ supplies of services. In its submission, that permits Member States to limit the scope of Article 13(A)(1)(m), not only by expressly excluding certain services provided by sports establishments from the exemption, but also by applying 'other criteria‘, such as the amount of the consideration for the services in question. 15. On that point, it is clear from Article 13(A)(1)(m) of the Sixth Directive that the exemption in question concerns supplies of services closely linked to sport or physical education provided by non-profit-making bodies. 16. It is undisputed that, under the Spanish legislation, the exemption envisaged under Article 13(A)(1)(m) of the Sixth Directive is granted only to private sports bodies or establishments of a social nature which charge membership fees not exceeding certain amounts. 17. To apply the criterion of the amount of membership fees may lead to results contrary to Article 13(A)(1)(m). As the Advocate General has pointed out at paragraph 5 of his Opinion, to apply such a criterion may result, first, in a non-profit-making body being excluded from the benefit of the exemption provided for by the provision and, secondly, in a profit-making body being able to benefit from it. 18. Moreover, there is nothing in that provision to the effect that a Member State, when granting an exemption for a certain supply of services closely linked to sport or


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physical education provided by non-profit-making bodies, may make that exemption subject to any conditions other than those laid down in Article 13(A)(2). 19. It follows that the limitation of the exemption for supplies of services closely linked to sport or physical education to private sports bodies or establishments of a social nature whose membership fees do not exceed a certain amount is contrary to Article 13(A)(1)(m) of the Sixth Directive. 20. Finally, the Spanish Government argues that the fixing of a ceiling on the amount of fees in respect of the exemption of the supply of services envisaged in Article 13(A)(1)(m) falls within the concept of prices approved by the public authorities within the meaning of the third indent of Article 13(A)(2)(a), and is therefore justified by virtue of that latter provision. 21. On that point, it is sufficient to note that that provision does not imply that a Member State, by making the exemption envisaged in Article 13(A)(1)(m) subject to one or more conditions laid down in paragraph 2(a) of that provision, may alter the scope of the latter. 22. Moreover, as the Commission has rightly pointed out, Article 13(A)(2)(a) of the Sixth Directive provides that Member States may make the grant of the exemptions envisaged subject to compliance with one or more of the conditions mentioned by that provision. The latter therefore excludes a restriction of the exemption of supplies of services closely linked to sport or physical education to private sports bodies or establishments of a social nature which charge membership fees not exceeding a certain amount without taking into account the nature and particular circumstances of each sporting activity. 23. Accordingly, by providing that the exemption from VAT in respect of supplies closely linked to sport or physical education applies only to private establishments whose membership fees do not exceed a certain amount, the Kingdom of Spain has failed to fulfil its obligations under Article 13(A)(1)(m) of the Sixth Directive.

On those grounds,


hereby:

Declares that, by providing that the exemption from value added tax in respect of supplies closely linked to sport or physical education applies only to private establishments whose membership fees do not exceed a certain amount, the Kingdom of Spain has failed to fulfil its obligations under Article 13(A)(1)(m) of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment.


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4. Case C-9/98,

REFERENCE to the Court under Article 177 of the EC Treaty by the Tribunal de

Première Instance de Namur (Belgium) for a preliminary ruling in the proceedings

pending before that court between

Ermanno Agostini,

Emanuele Agostini,

And

Ligue Francophone de Judo et Disciplines Associées ASBL,

Ligue Belge de Judo ASBL,

on the interpretation of Articles 6, 48 and 59 of the EC Treaty, Regulation (EEC) No

1612/68 of the Council of 15 October 1968 on freedom of movement for workers

within the Community (OJ, English Special Edition 1968(II), p. 475) and Council

Directive 73/148/EEC of 21 May 1973 on the abolition of restrictions on movement

and residence within the Community for nationals of Member States with regard to

establishment and the provision of services (OJ 1973 L 172, p. 14),

THE COURT,

makes the following

Order

1. By order of 5 January 1998, received at the Court on 15 January 1998, the Tribunal de Première Instance (Court of First Instance), Namur, referred to the Court for a preliminary ruling under Article 177 of the EC Treaty several questions on the interpretation of Articles 6, 48 and 59 of that Treaty, Regulation (EEC) No 1612/68 of the Council of 15 October 1968 on freedom of movement for workers within the Community (OJ, English Special Edition 1968(II), p. 475) and Council Directive 73/148/EEC of 21 May 1973 on the abolition of restrictions on movement and residence within the Community for nationals of Member States with regard to establishment and the provision of services (OJ 1973 L 172, p. 14). 2. That order was made in proceedings between Ermanno and Emanuele Agostini and the Ligue Francophone de Judo et Disciplines Associées ASBL and the Ligue Belge de Judo ASBL. 3. Since it considered that the dispute before it raised questions of interpretation of a number of Community provisions, the national court referred the following questions to the Court for a preliminary ruling: 'Is it consistent or not with the Treaty of Rome, in particular Articles 6, 48 and 59 et seq. thereof, and with Regulation No 1612/68 and Council Directive 73/148 to prohibit a national of a Member State of the European Union from taking part in a sporting competition, whether as a professional, semi-professional or amateur, on the ground that the person in question does not possess the nationality of the Member State on whose territory the competition is organised, where it is known that that person is the


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child of workers who are established in that Member State and has himself acquired the status of worker on the territory of that Member State? Must the answer to that question be different in the case of taking part in a competition to find the national champion of the Member State concerned? Further, may the person in question claim the right to be treated in the same way as nationals of that State with respect to the teams selected by the national sports federation of the Member State concerned for participation in major international tournaments and competitions such as the European or World Championships or the Olympic Games, or may the national federations reserve such selection for their nationals exclusively? 4. It must be observed at the outset that in order to reach an interpretation of Community law which will be of use to the national court, it is essential that the national court define the factual and legislative context of the questions it is asking or, at the very least, explain the assumptions of fact on which those questions are based (see, in particular, Joined Cases C-320/90 to C-322/90 Telemarsicabruzzo and Others v Circostel and Others [1993] ECR I-393, paragraph 6, and the orders in Case C-157/92 Banchero [1993] ECR I-1085, paragraph 4; Case C-66/97 Banco de Fomento e Exterior v Pechim and Others [1997] ECR I-3757, paragraph 7; and Joined Cases C-128/97 and C-137/97 Testa and Modesti [1998] ECR I-2181, paragraph 5). 5. It should be pointed out that the information provided in orders for reference not only enables the Court usefully to reply but also gives the Governments of the Member States and other interested parties the opportunity to submit observations pursuant to Article 20 of the EC Statute of the Court (order in Banco de Fomento e Exterior, paragraph 8). 6. In the present case, the order for reference does not contain sufficient information to meet those requirements. The national court merely asks the questions without giving any information whatever on their basis. It does not describe the factual context of the dispute or the assumptions of fact on which it is based, nor does itexplain the national legislative context, nor the precise reasons which have prompted it to consider the interpretation of Community law and deem it necessary to refer questions to the Court for a preliminary ruling. 7. On the contrary, the court expressly states that it is 'not addressing the facts at present, nor indeed the law. 8. In those circumstances the Court is unable to give a ruling, in the absence of any information at all on the applicants' professional, semi-professional or amateur status, the nature of the competitions which are the subject of the main proceedings, the rules of selection for and participation in those competitions, or the applicable national legislation. 9. Thus the information in the order for reference, by not referring precisely enough to the factual and legal situations addressed by the national court, does not enable the Court to give a useful interpretation of Community law. 10. In those circumstances it must be held, pursuant to Articles 92 and 103(1) of the Rules of Procedure, that the questions referred to the Court for a preliminary ruling are manifestly inadmissible.

On those grounds,

THE COURT

hereby orders:


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The request for a preliminary ruling submitted by the Tribunal de Première Instance de Namur by order of 5 January 1998 is inadmissible


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5. Case C-67/98

Questore di Verona v

Diego Zenatti

I - Introduction 1. This preliminary reference by the Consiglio di Stato (Italian Council of State, hereinafter 'the national court) raises the question whether the Court's interpretation in Schindler of the Treaty rules on freedom to provide services in the context of national restrictions on the sale of lottery tickets is equally applicable to national legislation regulating the taking of bets. II - Legal and factual context 2. Mr Diego Zenatti (hereinafter the 'defendant) runs what the national court has described as a centre for the exchange of information on bets and has acted since March 1997 as an intermediary in Italy for a British company specialising in taking bets, SSP Overseas Betting Ltd (hereinafter 'SSP). The defendant passes on bets placed by Italian clients on sporting events abroad by faxing or sending via the Internet betting forms completed by its clients, with attached photocopies of bank transfer documents. He also receives photocopies sent by SSP and transmits them to his clients. The defendant states that he merely acts as an intermediary and denies engaging in bookmaking or having any influence on the terms of the betting transaction, which are fixed by SSP in London. He is paid a percentage of the turnover arising from bets submitted to SSP. He states that he does not act exclusively on behalf of SSP and describes his business as a data transmission centre, which is open to all persons who wish to transmit data either within Italy or abroad. 3. The Questore di Verona (Public Prosecutor, Verona, hereinafter 'the Prosecutor) ordered the defendant on 16 April 1997 to cease taking bets, because these activities were subject to the requirement of an authorisation which the defendant did not possess and to which - pursuant to Article 88 of the Italian Royal Decree No 773 of 18 June 1931 approving the consolidated version of the laws on public order (hereinafter 'the 1931 Decree) - he was not entitled. The defendant requested the Tribunale Amministrativo Regionale del Veneto (Regional Administrative Court, Veneto, hereinafter 'the Tribunale) to review the legality of the Prosecutors decision and to take interim measures. The Tribunale ordered the contested decision to be suspended. The Prosecutor appealed to the national court against the suspension of his decision by the Tribunale. 4. Article 88(1) of the 1931 Decree provides as follows: 'No licence shall be granted for the taking of bets, with the exception of bets on races, regattas, ball games and other similar contests where the taking of bets is a precondition for the competition to take place ... . It then makes express reference to the establishment of a monopoly on betting on horse races in favour of the bodies authorised to conduct such events. 5. Article 88(1) of the 1931 Decree is considered by the national court to have been amended by the general provisions of Article 19 of Law No 241 of 7 August 1990, introducing new rules on administrative procedure and rights of access, as amended by Article 2 of Law No 537 of 24 December 1993. This substitutes for the licensing


- 43 -

process referred to in Article 88(1), a procedure whereby a notice of commencement of activity is submitted by the person concerned to the competent public authority, attesting to compliance with any legal requirements. The authority has 60 days in which to verify such compliance. However, this procedural change does not appear to have affected the prohibition on taking of bets expressed by the 1931 Decree. 6. The organisation of betting is permitted in respect of sporting events run by the Comitato Olimpico Nazionale Italiano (the national Olympic Committee, hereinafter 'CONI) and of horse races. The Minister for Finance fixes the levy to be paid from gross betting receipts from these events to CONI and to the Unione Nazionale Incremento Razze Equine (the national equine organisation, hereinafter 'UNIRE) respectively. The use to which these monies are put is also regulated by the same legislative instruments, provision being made for investment in sporting infrastructure and training, particularly in poorer areas, and for the support of horse racing and of horse breeding. Article 6 of Legislative Decree No 496 of 14 April 1948 reserved to CONI and UNIRE the right to take bets in respect of events organised by them or under their supervision. If they did not wish to exercise this role, the Ministry of Finance could, by virtue of Article 2 of that Legislative Decree, either organise betting directly itself or entrust this task to persons who furnished adequate financial and moral guarantees as defined by the Ministry's inspectorate general of lotteries. It appears that CONI organised a pools forecasting competition in respect of sports for which it was responsible, administered through some 15 000 newsagents, while UNIRE granted between 300 and 350 concessions for on- and off-course totalisator betting on horse races. Legislation adopted between 1995 and 1997 provides for the concessions for the organisation of betting for sporting events governed by CONI and UNIRE to be granted pursuant to a call for tenders, in return for payment of the relevant leviesand subject to compliance with ministerial guidelines regarding the proper management of betting activity. 7. Article 718 of the Italian Penal Code penalises the holding or facilitating of a game of chance in a public place or a place open to the public or in private. Article 4 of Law No 401 of 13 December 1989 penalises anyone who unlawfully organises a lottery or bets or prediction contests, which are reserved by law to the State or its agents. Participation in such unlawful betting is also prohibited. Article 1933 of the Italian Civil Code provides that no action lies for payment of a gaming or betting debt, nor can an action lie for recovery where the debt has been paid voluntarily following a game or bet not involving fraud. According to Article 2035 of the Civil Code, there is no right to sue for recovery in the case of services which are contrary to public morality. 8. There are, however, no restrictions on private individuals resident in Italy placing bets directly, by post, telephone, fax or internet, with bookmakers established outside Italy. None the less, it appears that a foreign bookmaking undertaking which advertised its services in Italy would be liable to prosecution. 9. With regard to the conclusion of contracts with a cross-border character, Article 1327(1) of the Italian Civil Code provides that where, at the request of the promoter, or because of the nature of the activity, or according to custom, a contract is to be executed without any prior communication, the contract is concluded at the time and place where performance begins. 10. The national court considers, pursuant to Article 1327(1) of the Civil Code, that betting contracts passed on to SSP by the defendant on behalf of Italian clients are concluded in Italy, as this is the place where the better, accepting the bookmaker's offer to the public, commences performance by placing the bet and tendering the required


- 44 -

sum of money. Article 88(1) of the 1931 Decree is, therefore, applicable, in its view, due to this link between the conclusion of the betting contract and Italian territory. 11. The national court takes the view that the ruling in Schindler regarding national regulation of lotteries can be applied by analogy to the Italian legislation on betting. It states that the Italian rules are not discriminatory. They are founded upon social and ethical repugnance to private enrichment from games of chance and to an economically unproductive activity which is injurious to thrift and individual dignity. The interest in controlling betting on public policy grounds is illustrated by Article 718 of the Penal Code and by Article 4 of Law No 401 of 1989; the importance of public morality concerns is illustrated by Articles 1933 and2035 of the Civil Code. It refers the following question to the Court for a preliminary ruling pursuant to Article 234 EC (ex Article 177): 'Do the Treaty provisions on the provision of services preclude rules such as the Italian betting legislation in view of the social policy concerns and of the concern to prevent fraud that justify it? III - Observations 12. Written and oral observations have been submitted by the defendant, the Kingdom of Spain, the Italian Republic, the Portuguese Republic, the Republic of Finland, the Kingdom of Sweden and the Commission of the European Communities. Written observations only were submitted by the Federal Republic of Germany and the Kingdom of Norway, while oral observations were also submitted by the Kingdom of Belgium and the French Republic. 13. The defendant claims that his activity is not unlawful under Italian law, as he does not himself organise betting. He compares his activity to the placing of bets by individuals by internet or with credit cards. He also argues that the betting contracts are subject to United Kingdom rather than Italian law. In his view, the betting contract is concluded at the moment of payment of the bet in Britain, so that United Kingdom courts have jurisdiction in respect of contractual disputes between Italian betters and SSP. 14. The defendant submits that the Court's reasoning in Schindler is not applicable in his case, as betting on sporting events is not a game of chance but of informed prediction of the result. 15. Furthermore, the defendant invokes the reasoning in Reisebüro Broede v Sandker, in which the Court held that freedom to provide services under Article 49 EC (ex Article 59) 'may be restricted only by rules which are justified by overriding reasons in the general interest, in so far as that interest is not safeguarded by the rules to which the provider of the service is subject in the Member State where he is established. In this regard, he stresses that the activity of SSP is subject to authorisation and strict supervision in the United Kingdom. The amounts involved in his activities are too small to permit money laundering. In addition, his business could, if necessary, be subjected to a levy in order to fund sporting activity in Italy. Furthermore, the defendant asserts that Italy's policy is inconsistent, as more damaging types of gambling, such as lotteries, are freely permitted and widely advertised in the country. 16. The defendant claims to be an access provider within the meaning of Commission Directive 90/388/EEC of 28 June 1990 on competition in the markets for telecommunications services and of European Parliament and Council Directive 97/13/EC of 10 April 1997 on a common framework for general authorisations and individual licences in the field of telecommunications services. He relies upon the eighth recital in the preamble to Directive 90/388/EEC, which identifies only a limited


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number of possible justifications of restrictions on the freedom to supply telecommunications services, and on the 25th recital, which states that telecommunications services should not be subject to any restriction as regards free access by users to such services, except where this is warranted by an essential requirement in proportion to the objective pursued. 17. The Commission and the Member States which have submitted observations argue that betting constitutes an economic activity which, in this case, falls within the scope of the Community rules on freedom to provide services. Whether or not the defendant's activity constitutes the organisation of betting under Italian law, or involves the conclusion of contracts governed by Italian private law, is not material to the question whether, as a matter of Community law, Italy may suppress it because of its intrinsic links with betting operations in the United Kingdom. The Commission and Sweden raise the possibility that the Treaty provisions on establishment may be applicable, depending on the nature of the relationship between the defendant and SSP. The Commission notes that the right of establishment can be exercised through the appointment of an independent agent on a permanent basis in another Member State, while adding that the result would be the same in either case. 18. The Commission and the various Member States are unanimous in submitting that the Italian legislation is a justified restriction on the provision of services. The judgment in Schindler makes express reference to other types of gambling. Common features of the two cases include the cross-border character of the transactions, involving competitions whose rules are set by companies established abroad, making supervision by the authorities of the relevant Member State impossible. All agree that Member States have a wide discretion to adopt non-discriminatory measures, in keeping with their socio-cultural traditions, restricting or prohibiting the organisation of lotteries or games of chance by undertakings established either in their territory or elsewhere in the Community, in the interests of the protection of consumers and their families and of the prevention of crime, or in order to finance charitable, cultural or sporting activities. However, Italy stresses that the organisation of betting is, in principle, prohibited in its territory, on grounds of human dignity and of public order and public morality, and that it is permitted on an exceptional basis to serve the merely secondary objective of funding socially desirable projects. IV - Analysis 19. I should observe, first of all, that the taking of bets by bookmakers clearly constitutes an economic activity and that the same holds true for the activities of the defendant, who transmits bets and proof of payment from customers to a bookmaker and the results of bets and any winnings from the bookmaker to his customers. In circumstances where the activity in question is not totally prohibited in all the Member States, neither the questionable morality of betting, nor the element of chance involved, nor the recreational aspect of such activity, nor the regulation by many Member States of the use of profits arising therefrom, deprives it of its economic character. 20. Secondly, the regulation of betting and bookmaking and of related activities such as those of the defendant has not been harmonised at Community level. I do not accept the defendant's argument that harmonisation of certain rules regarding the provision of telecommunications services deprives the Member States of the power to regulate the content of material transmitted by telephone, fax or internet. First, it does not appear that Directives 90/388/EEC and 97/13/EC apply to what might be described as the retail-level activities of the defendant. It follows, secondly, that the possible essential requirements justifying restrictions on the use of the public telecommunications


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network listed in the eighth recital in the preamble to Directive 90/388/EEC, such as security of network operations and interoperability, are not relevant to the defendant's activities and cannot be taken as excluding other grounds for national regulation of his activity. 21. It is necessary, next, to determine whether the regulation of the defendant's economic activities in relation to betting falls to be examined under the Treaty provisions on freedom to provide services (Articles 49 and 50 EC (ex Articles 59 and 60)) or under those guaranteeing the right of establishment (Article 43 EC (ex Article 52)). Although the criteria applicable both to the identification of restrictions on the exercise of these rights and to the possible justification of such restrictions are essentially the same, a potential practical difference arises from the fact that a service provider may only be subjected to national restrictions, imposed in the general interest, in so far as that interest is not safeguarded by rules appliedin his State of establishment. As will be seen below, this is of relevance to one of the two principal grounds of justification invoked by Italy in the present case. 22. The defendant is himself established in Italy. However, it can be argued that his activities constitute the provision of cross-border services of two types: passing on bets from Italian-based clients to SSP and acting on behalf of SSP in Italy. The 'Tourist Guides cases suggest that the former type of cross-border economic activity can constitute a service, even though it is undertaken by and on behalf of persons who are all established in a single Member State. However, the category of services is, in the scheme of the Treaty, a residual category of economic activities, so that the provisions on services are subordinate to those on the right of establishment. The concept of establishment is a broad one, relating essentially to stable and continuous participation in the economic life of a Member State other than that where an economic actor originates, whereas services are understood as normally pursued on a temporary basis. It is worthwhile quoting the Court's remarks in this regard in Gebhard: '[T]he temporary nature of the activities has to be determined in the light, not only of the duration of the provision of the service, but also of its regularity, periodicity or continuity. The fact that the provision of services is temporary does not mean that the provider of services within the meaning of the Treaty may not equip himself with some form of infrastructure in the host Member State (including an office, chambers or consulting rooms) in so far as such infrastructure is necessary for the purposes of performing the services in question. The Court has also observed, in Case 205/84 Commission v Germany, that an insurance undertaking which maintains a permanent presence in another Member State comes within the scope of the Treaty provisions on establishment even if that presence does not take the form of a branch or agency, but consists merely of an office managed by a person who is independent but authorised to act on apermanent basis for the undertaking, as would be the case with an agency. Such a form of establishment may be contrasted with the provision of services via an intermediary who is not an authorised agent of the foreign undertaking. In the present case, the defendant states that he does not act exclusively for SSP because his transmission centre sends messages, documents and data of all sorts on behalf of clients. It is not apparent that he acts for any other bookmakers. The possibility that the defendant's relationship with SSP is one which is more permanent and more closely bound up with the promotion of SSP's business in his region of Italy than that of a simple provider of occasional telecommunications services is evidenced by the fact that he is paid on the basis of betting turnover rather than in accordance with the volume of material transmitted. However, in the absence of any other evidence of the nature of the defendant's relationship with SSP, I think it


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preferable to approach the case, as the national court has done thus far, as one relating to services, while it is, of course, a matter for the national court to verify that this is appropriate before reaching final judgment in the case. Should it decide otherwise, the remarks, in the text which follows, regarding home-State regulation of SSP's activities will, of necessity, have to be discounted, but the rest of my analysis would still be applicable. 23. It is useful, as a next step in my analysis, to note certain similarities and certain differences between the context of this case and that of Schindler. First, an arguable, but in my view usual, distinction may be made between lotteries and betting on sporting events on the ground that the latter involves an element of skill absent from the former. However, it is the personal, social, moral and economic consequences of gambling of all kinds which underlie both Italy's arguments in favour of its regulation of the sector and the Court's acceptance of certain arguments of this type in Schindler. Such arguments may, of course, apply with greater or lesser force depending on the type of gambling to which they are applied. Thus, for example, the disproportion between the stake and the potential winnings is normally much greater in the case of lotteries than in the case of betting. 24. The most significant difference between the present case and Schindler is that the latter case involved a total prohibition on the type of gambling at issue, i.e. large lotteries. That prohibition was considered by the Court to be an indistinctlyapplicable restriction. Italian law, on the other hand, permits the organisation of betting on sporting events in certain circumstances. Although this is done through an exception to a general prohibition, it appears to be, in substance, a restriction imposed on the provision of organised betting services (or, as the case may be, on the establishment of betting undertakings) under the guise of the grant of special or exclusive rights to two organisations, CONI and UNIRE. Of these, UNIRE is the more relevant, as it does not appear that CONI organises betting on individual events separately from its pools competition. As the restriction on SSP's and the defendant's activities directly affects access to the Italian betting market, it is evidently one which falls within the prohibition in the first paragraph of Article 49 EC (ex Article 59). 25. Although the grant of such special or exclusive rights to national undertakings inevitably results in a disadvantage to foreign service providers operating in the same field, this is not treated as being a form of discriminatory restriction which can be maintained only by application of Articles 46 and 55 EC (ex Articles 56 and 66). Such restrictions may be justified to the extent that they serve imperative requirements in the general interest. In Mediawet, for example, the Court examined the argument that a national restriction on the supply of radio and television services could be justified by reference to cultural policy objectives. Similar justificatory arguments to those considered in Schindler may also be examined in the present context. 26. The restriction on the organised provision of betting services in the present case is prohibited by Article 49 EC (ex Article 59) unless it can be justified by overriding reasons relating to the public interest which are not already satisfied by the rules imposed on such service providers in the Member State in which they are established. The national rules in question must be such as to guarantee the achievement of the intended aim and must not go beyond that which is necessaryin order to achieve that objective. The possible justifications are essentially three in number, as they were in Schindler: the prevention of crime and the protection of consumers against fraud; avoidance of the stimulation of demand for gambling and of the consequent moral and financial harm to participants and to society in general; and the interest in ensuring that


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gambling activity is not organised for personal or commercial profit but solely for charitable, sporting or other good causes. 27. Italy rightly accepts the secondary function of the third justification pleaded. The Court stated in Schindler that the possibility of exploiting certain forms of gambling to finance public interest activities could not, in itself, be regarded as an objective justification of a restriction on a fundamental freedom, although it also remarked, cryptically, that it was 'not without relevance. It was not mentioned in the operative part of the judgment, which referred only to social policy and the prevention of fraud. I share the reservations expressed by Advocate General La Pergola in his Opinion in Läärä that such a ground of justification of a restriction is of an essentially economic character and consequently unacceptable. This assessment is reinforced by the comment of the agent for Portugal that, if gambling were opened to competition, with the consequent reduction in revenue from pre-existing gambling monopolies, the authorities would be compelled either to abandon socially useful expenditure financed in this way or to raise taxes. 28. I must, therefore, consider, firstly, the possible justification of the Italian legislation based on consumer protection and prevention of crime. It is already clear from the judgment in Schindler that this is a permissible ground on which to impose a restriction on cross-border gambling activity. It is noteworthy that the Court, when addressing this question in Schindler, did not advert, as Advocate General Gulmann had done, to the possible existence of equivalent safeguards in the Member State where the relevant service provider was established - safeguards which he thought were sufficient in that case. The Court's silence in this regard may be because other national supervisory mechanisms, no matter how stringent, were not considered to be equivalent in protective effect to a comprehensive prohibition of the gambling activity in question. In any event, there is no reason to conclude that a comparison of regulatory regimes need not be undertaken by the national court in the present case, in order to verify the necessity for the Italian restriction. When engaging in that exercise, the national courtshould, of course, bear in mind that it is the efficacy of the United Kingdom's supervision of SSP's overseas activity, such as arises from its relations with the defendant, which should be the subject of comparison with the Italian regime. 29. However, quite apart from the results of any such comparison, the necessity for the prohibition of organised betting outside the framework of the special or exclusive rights granted to UNIRE and CONI on consumer-protection and crime-prevention grounds is placed in doubt by the very fact that lawful channels for sporting betting exist in Italy under the responsibility of these two organisations. One assumes that these two organisations' gambling activities are subject to what is deemed by the authorities to be an adequate level of supervision on such grounds, without this resulting in an outright prohibition. Unless it can be demonstrated to the national court that some special risk attaches to the defendant's dealings with SSP, which cannot be countered through the application to each of the existing supervisory mechanisms in the two relevant jurisdictions, with the result that there is a greater danger of fraud or other crime than in the purely domestic context, it must be concluded that the prohibition of the taking of bets outside the limited authorised channels is overly restrictive and, therefore, cannot be justified on these grounds. The mere fact that the betting transactions involved are cross-border in character does not appear to me to be sufficient in itself to justify a greater degree of restriction. 30. On the other hand, the argument in favour of justification of the Italian rules by reference to a social policy of countering the harmful moral and financial effects of gambling on individuals and on society through limiting betting opportunities is, in my


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opinion, more plausible. This, again, is a ground of justification which was expressly accepted by the Court in Schindler. Given the particular nature of gambling, which can incite individuals to spend a large proportion of their disposable income in the hope of merely contingent rewards, Member States are entitled to take steps to avoid stimulating demand in order to protect the players and to maintain order in society. National authorities have, in this regard, particular latitude to determine what steps to take, in the light of specific social and cultural features, especially the widely differing moral and social attitudes to gambling in the Member States. Thus, the fact that certain forms of gambling are permitted, subject to necessary controls, while others, which differin their objects, rules and methods of organisation, are prohibited, may be the acceptable consequence of national choices of a socio-cultural character. 31. Furthermore, a Member State may, in my view, take steps to restrict access to a form of gambling, such as betting, which it considers to be harmful but which is not completely outlawed. In so far as the potential demand for certain types of gambling activity is greater than is considered compatible with social order, it is permissible for Member States to impose restrictions based on an assessment of needs informed by national social policy. I would agree with the view expressed by Advocate General Gulmann in Schindler that such a justification of restrictions is available even to Member States which have, in general, relatively liberal gambling regimes; otherwise, they would be prevented from acting against what, in their view, are the most dangerous forms of gambling. Limitation of supply is obviously impossible if gambling undertakings established in other Member States are free to provide services in a Member State which pursues such an objective. 32.Thus, the grant of special or exclusive rights through a restrictive system of licences or concessions may be consistent with such a policy of limitation of supply, provided this is adopted in pursuit of a genuine diminution in gambling opportunities and in the stimulation of demand through advertising. It would not be acceptable, on the other hand, if the grant of licences or concessions were simply a means of channelling the proceeds of virtually unrestricted demand into the coffers of the national authorities or of bodies engaged in public-interest activities. A Member State may not, in my view, engage either directly or through certain privileged bodies in the active promotion of officially organised gambling with the primary objective of financing social activities, however worthy, under the guise of a morally justified policy of control of gambling. This would, as I have already said, constitute a merely economic objective. It is, however, for the national court to determine whether this condition is satisfied in the case of the Italian market for betting on sporting events, in the light of the actual practice of UNIRE and that of the bookmakers to whom UNIRE has granted concessions. If it is so satisfied, the exclusion from the Italian betting market of undertakings such as SSP and the defendant, which do not appear even to have applied for a concession, may be deemed to be a justified restriction on their freedom to provide services. 33. To conclude my analysis, I would like to make two final observations. First, the exercise of Italy's police power in its own territory through the justifiedimposition of restrictions on betting cannot be affected either by the fact that contracts such as those entered into by the defendant and SSP with their clients may not be governed by Italian law, which is exclusively a private-law matter, or by the fact that the actual bookmaking is undertaken in the United Kingdom. Secondly, the fact that individuals resident in Italy can freely place bets with overseas bookmakers by telephone, fax or internet does not affect my analysis, because the likely effects of such activity on social


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order seem very small compared to those of unrestricted provision of organised betting services through representatives operating in Italian territory. V - Conclusion 34. In the light of the foregoing, I recommend that the Court respond to the question referred by the Consiglio di Stato as follows: National rules which grant special or exclusive rights to certain undertakings to take bets on sporting events and consequently restrict the freedom to provide bookmaking services are not incompatible with the Treaty provisions on the provision of services if they are imposed as part of a consistent and proportionate national policy of curbing the harmful individual and social effects of betting.


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6. Joined Cases C-51/96 and C-191/97,

REFERENCES to the Court under Article 177 of the EC Treaty (now Article 234 EC)

by the Tribunal de Première Instance de Namur, Belgium, for a preliminary ruling in

the proceedings pending before that court between

Christelle Deliège

and



Union Européenne de Judo (C-51/96)

and between

Christelle Deliège

and



François Pacquée (C-191/97),

on the interpretation of Articles 59 of the EC Treaty (now, after amendment, Article 49

EC), 60, 66, 85 and 86 of the EC Treaty (now Articles 50 EC, 55 EC, 81 EC and 82

EC),

THE COURT,


1. By order of 16 February 1996 (C-51/96), received at the Court on 21 February 1996, and by judgment of 14 May 1997 (C-191/97), received at the Court on 20 May 1997, the Tribunal de Première Instance (Court of First Instance), Namur, hearing an application for interim measures in the first case and dealing with the substance in the second, referred to the Court for a preliminary ruling under Article 177 of the EC Treaty (now Article 234 EC) two questions on the interpretation of Articles 59 (now, after amendment, Article 49 EC), 60, 66, 85 and 86 of the EC Treaty (now Articles 50 EC, 55 EC, 81 EC and 82 EC). 2. Those questions were raised in proceedings between Christelle Deliège and Ligue Francophone de Judo et Disciplines Associées ASBL (hereinafter 'LFJ), Ligue Belge de Judo ASBL (hereinafter 'LBJ) and the president of the latter, Mr Pacquée, concerning the refusal to select her to participate in the Paris International Judo Tournament in the under-52 kg category. Judo organisation and selection rules 3. Judo, a martial art, is organised at world level by the International Judo Federation ('the IJF). At European level, the membership of the European Judo Union ('the EJU) comprises the various national federations. The Belgian federation is the LBJ, which deals essentially with international competitions and is responsible for the selection of


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athletes with a view to participation in international tournaments. The LBJ is made up of two regional leagues, the Vlaamse Judofederatie ('the VJF) and the LFJ. The members of the LFJ are the two regional leagues and the clubs affiliated to them. Judokas are members of a club which is itself a member of the regional league, and the latter issues licences to members enabling them to take part in courses or competitions. The holder ofa licence is required to accept all the obligations imposed by the regional league under its statutes and regulations. 4. Traditionally, these athletes are classified according to sex and seven weight categories, giving a total of 14 different categories. At its Technical and Sports Meeting in Amsterdam on 5 February 1994 and its Ordinary Congress in Nicosia on 9 April 1994 the Directing Committee of the EJU adopted rules concerning participation in European 'Category A tournaments. Those tournaments, like the May 1996 European Championships, provided an opportunity for points to be awarded for classification on European lists as a possible basis for qualifying for the 1996 Atlanta Olympic Games. It was stipulated that only the national federations could enter their athletes and that, for each European federation, seven judokas of each sex could be entered on those lists, which meant in principle that there would be one judoka for each category. However, if no athlete was nominated in a particular category, two could be entered in another category, provided that the limit of seven men and seven women was never exceeded. As stated by the LFJ at the hearing before the Court, the judoka's nationality was irrelevant for that purpose, the only consideration being membership of the national federation. 5. In accordance with the selection criteria for the Atlanta Olympic Games adopted by the IJF on 19 October 1993 in Madrid, those qualifying for those games included, in each category, the first eight in the most recent world championships and a number of judokas for each continent (for Europe, nine men and five women in each category), to be selected on the basis of the results obtained by each judoka in a specified number of tournaments during the run-up to the Olympics. For that purpose, the EJU stated, at the abovementioned Amsterdam meeting and Nicosia congress, that account would be taken of the best three results achieved at Category A tournaments and senior European championships over the period extending from the 1995 World Championships to the 1996 European Championships. It also directed that it would be the federations which qualified, not judokas individually. The main proceedings and the questions submitted 6. Ms Deliège has practised judo since 1983 and, since 1987, has achieved excellent results in the under-52 kg category, having been declared Belgian champion on several occasions, European champion once and under-19 world champion once, as well as winning and being highly placed in international tournaments. The parties to the main proceedings disagree as to Ms Deliège's status: she claims to practise judo professionally or semi-professionally whilst the LBJ and the LFJ contend that judo is a sport which, in Europe and in Belgium in particular, is practised by amateurs. 7. Ms Deliège maintains that, since 1992, the officers of the LFJ and the LBJ have improperly frustrated her career development. She complains in particular that she was prevented from taking part in the 1992 Barcelona Olympics, that she was not selected for the 1993 World Championships or for the European Championships in 1994. In March 1995 Ms Deliège was informed that she had not been pre-selected for the Atlanta Olympics. In April 1995, when preparing for participation in the European Championships to be held in May, she was excluded from the Belgian team in favour of


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an athlete affiliated to the VJF. In December 1995 she was prevented from taking part in the Basel Category A International Tournament. 8. The LFJ alleges that Ms Deliège has had numerous differences of opinion with the trainers, selectors and officers of the LFJ and the LBJ and that she lacks discipline, having in one instance been penalised by temporary suspension from all federation activities. Moreover, she encountered difficulties relating to the sport itself in that in Belgium there are at least four high-ranking judokas in the under-52 kg category. The LBJ states that decisions on the selection of athletes to participate in the various tournaments and championships are taken by its national sports committee, a body with joint VJF and LFJ membership. 9. The events directly giving rise to the main proceedings concern participation in the Paris Category A International Tournament of 10 and 11 February 1996. Because the LBJ had selected two other athletes who, in Ms Deliège's view, had achieved less outstanding results than her own, on 20 January 1996 Ms Deliège made an application for interim measures to the Tribunal de Première Instance, Namur. Case C-51/90 10. Ms Deliège asked the Tribunal de Première Instance, Namur, to make an interim order directing the LFJ and the LBJ to complete all the necessary formalities for her participation in the Paris Tournament and that the Court of Justice be requested to give a preliminary ruling on the question of the possible illegality of the rules laid down by the EJU regarding the limited number of athletes from each national federation and the authorisations issued by the federations for participation in individual Category A tournaments, having regard to Articles 59, 60, 66, 85 and 86 of the Treaty. By a writ of 9 February 1996, Ms Deliège sought to have the EJU joined as a party to the proceedings and asked the court to order all Category A tournament organisers to accept on a provisional basis any registration on her part, whether or not she had been selected by her national federation. 11. By order of 6 February 1996 the judge of the Tribunal de Première Instance, Namur, hearing applications for interim measures dismissed Ms Deliège's application as regards her participation in the Paris tournament but made an order restraining the LBJ and the LFJ from taking any decision involving non-selection of the defendant for any forthcoming competition until the parties had been given a further hearing on the other heads of claim. 12. By order of 16 February 1996 the same judge declared inadmissible the application for an order requiring the EJU to become a party to the proceedings. 13. The national court also stated that, by virtue of the case-law of the Court, sport is subject to Community law only in so far as it may constitute an economic activity within the meaning of Article 2 of the EC Treaty (now, after amendment, Article 2 EC). As a result of recent developments in the way sports operate, the distinction between amateur and professional athletes had become less clear. Leading sports personalities could receive, in addition to grants and other assistance, higher levels of income because of their celebrity status, with the result that they provided services of an economic nature. 14. According to the national court, Ms Deliège claims, on what seems, prima facie, to be an adequate legal basis, that she must be regarded as a provider of services within the meaning of Articles 59, 60 and 66 of the Treaty. The systematic requirement of a quota and selection at national level would appear to constitute a barrier to the freedom to pursue an activity of an economic nature. Moreover, it cannot reasonably be


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contended that the access to competitions sought by Ms Deliège would mean that anybody would be allowed to participate in any tournament, since permission to compete could be open to anyone satisfying objective requirements in terms of sporting skills, as demonstrated by experience in other comparable sports. 15. Taking account inter alia of the imminence of the Atlanta Olympics and the relative brevity of sports careers at a high level, the national court therefore considered that Ms Deliège's request that a question be referred for a preliminary ruling was 'ostensibly appropriate. The fact that no proceedings had been commenced on the substance did not preclude a reference being made. The question could be seen as contributing to the outcome of the proceedings for interim measures or as a measure of inquiry to expedite the proceedings on the substance, the initiation of which appeared to be being contemplated by the plaintiff. 16. Consequently, the judge of the Tribunal de Première Instance, Namur, hearing applications for interim measures sought from the Court a preliminary ruling as to: 'Whether or not rules requiring professional or semi-professional sportsmen or persons aspiring to such status to have been authorised or selected by their national federation in order to be able to compete in an international competition and laying down national entry quotas or similar competitions are contrary to the Treaty of Rome, in particular Articles 59 to 66 and Articles 85 and 86. 17. Finally, as regards the adoption of a delaying measure, the national court held that the claims made by Ms Deliège against the LBJ and the LFJ could not be upheld. However, he considered that it was appropriate to afford the plaintiff protectionagainst serious harm by adopting a delaying measure which would not adversely affect the interests of other athletes. 18. Pending the outcome of proceedings on the substance, he therefore ordered the LBJ and the LFJ not to take any measure liable to restrict or prevent the free exercise by the plaintiff of her activity as a judoka, in particular in national or international competitions, which was not objectively justified either by reference to her physical ability or conduct or by a comparative assessment of her merits as against those of competing athletes. That measure would cease to be effective one month after the order was made unless an action on the substance was brought by Ms Deliège. Case C-191/97 19. By writs of 27 February and 1 March 1996 Ms Deliège brought an action against the LFJ, the LBJ and Mr Pacquée before the Tribunal de Première Instance, Namur. She sought, first, a ruling that the system of selecting judokas for international tournaments, as established by the rules of the two abovementioned federations, was illegal in that it empowers them to act in a way which might encroach upon the right of judokas freely to provide services and upon their professional freedom, second, a reference to the Court of Justice for a preliminary ruling, third, the adoption of a delaying measure in the event of such a ruling being sought, and, lastly, an order that the LFJ and the LBJ pay her damages of BEF 30 million. 20. In its judgment, the national court considered that there was a clear risk that the Court of Justice might declare inadmissible the question submitted in Case C-51/96 on the ground that the judge hearing the application for interim measures had disposed of all outstanding matters. It therefore decided that it would be inappropriate to await the judgment of the Court of Justice in the first case and that, since the answer to the question raised in the proceedings before it was uncertain, it should seek a preliminary ruling from the Court of Justice.


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21. As regards Ms Deliège's application for a delaying measure, the national court considered that it would be very difficult, or even impossible, in practice to impose such a measure whilst safeguarding the interests of all parties, and the plaintiff had not made any specific suggestion in that regard. 22. In those circumstances, the Tribunal de Première Instance, Namur, stayed proceedings pending a preliminary ruling from the Court of Justice as to: 'Whether or not it is contrary to the Treaty of Rome, in particular Articles 59, 85 and 86 of the Treaty, to require professional or semi-professional athletes or persons aspiring to professional or semi-professional activity to be authorised by their federation in order to be able to compete in an international competition which does not involve national teams competing against each other. The jurisdiction of the Court to answer the questions referred to it and their admissibility 23. The LFJ, the LBJ, Mr Pacquée, the Belgian, Greek and Italian Governments and the Commission have submitted, on various grounds, that the Court has no jurisdiction to answer the question submitted in Case C-51/96 and that all or part of that question is inadmissible. 24. First, it is submitted that the national court dealt with all the heads of claim put forward by the plaintiff and thus ceased to be seised of the case. Since the main proceedings had come to an end when the matter was referred to the Court of Justice, the latter's ruling would be of no relevance for the national court. In such circumstances, it is clear from Case 338/85 Pardini v Ministero del Commercio con l'Estero [1988] ECR 2041 and Case C-159/90 Society for the Protection of Unborn Children Ireland [1991] ECR I-4685 that the Court has no jurisdiction to give a ruling. 25. Next, the question is of a hypothetical nature and concerns a matter - amateur sport - which is not subject to Community law. 26. Finally, the national court did not give adequate details of the factual and legislative context of the question, a requirement which is of particular importance in the field of competition, which is characterised by complex factual and legal situations (Joined Cases C-320/90 to C-322/90 Telemarsicabruzzo [1993] ECR I-393). 27. The jurisdiction of the Court to answer all or part of the question referred in Case C-191/97 and the admissibility of that question are also contested by the LFJ, the LBJ and Mr Pacquée and by the Greek Government and the Commission. The latter submit in particular that the national court did not give sufficient details of the factual and legislative background, that the question concerns a matter unconnected with Community law, that the rights of defence of the EJU and the IJF have been infringed and that the question is hypothetical in so far as it relates to events other than those involving competition between national teams. 28. The Court would observe, first, that the issue whether the questions submitted by the national court concern a matter unconnected with Community law, either because amateur sport falls outside the scope of the Treaty or because the events referred to by that court involve national teams, relates to the substance of the questions submitted, not to their admissibility. 29. Second, as regards the alleged breach of the rights of defence of the IJF and the EJU, it is not for the Court to determine whether the decision whereby a matter is brought before it was taken in accordance with the rules of national law governing the organisation of the courts and their procedure (see, in particular,Case C-39/94 SFEI and Others [1996] ECR I-3547, paragraph 24, and Case C-105/94 Celestini v Saar-Sektkellerei Faber [1997] ECR I-2971, paragraph 20). It follows that it is unnecessary


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for the Court to address the question whether the IJF and the EJU should have been joined as parties to the main proceedings. 30. Third, according to settled case-law, the need to provide an interpretation of Community law which will be of use to the national court makes it necessary that the national court define the factual and legal context of the questions it is asking or, at the very least, explain the factual circumstances on which those questions are based. Those requirements are of particular importance in certain areas, such as that of competition, where the factual and legal situations are often complex (see in particular Telemarsicabruzzo, cited above, paragraphs 6 and 7, Case C-67/96 Albany [1999] ECR I-0000, paragraph 39, and Joined Cases C-115/97 to C-117/97 Brentjens' [1999] ECR I-0000, paragraph 38). 31. The information provided in orders for reference must not only be such as to enable the Court to reply usefully but must also give the Governments of the Member States and other interested parties an opportunity to submit observations pursuant to Article 20 of the EC Statute of the Court of Justice. It is the Court's duty to ensure that the opportunity to submit observations is safeguarded, bearing in mind that, by virtue of the abovementioned provision, only the orders for reference are notified to the interested parties (see, in particular, the order in Case C-458/93 Saddik [1995] ECR I- 511, paragraph 13, and the judgments cited above in Albany, paragraph 40, and Brentjens', paragraph 39). 32. As regards Case C-191/97, which it is appropriate to consider first, it is clear from the observations of the parties to the main proceedings, the Governments of the Member States, the Norwegian Government and the Commission, submitted pursuant to the abovementioned provision of the EC Statute of the Court of Justice, that the information contained in the order for reference duly enabled them to take a position on the question referred to the Court in so far as it relates to the Treaty rules on the freedom to provide services. 33. Furthermore, even though the Greek, Spanish and Italian Governments may have taken the view in this case that the information provided by the national court was not sufficient to enable them to take a position on the question whether the plaintiff in the main proceedings pursues an economic activity within the meaning of the Treaty, it must be emphasised that those Governments and the other interested parties were able to submit their observations on the basis of the account of the facts given by that court. 34. Moreover, the information contained in the judgment making the reference was supplemented by that contained in the file forwarded by the national court and the written observations submitted to the Court. All that information, set out in the Report for the Hearing, was brought to the notice of the Governments of the Member States and other interested parties for the purposes of the hearing, in thecourse of which they were able, where appropriate, to supplement their observations (see also, to that effect, Albany, cited above, paragraph 43, and Brentjens', also cited above, paragraph 42). 35. The information supplied by the national court, supplemented as necessary by the abovementioned details also sufficiently apprises the Court of the factual and legislative background to the main proceedings to enable it to interpret the Treaty rules on freedom to provide services in the light of the circumstances of those proceedings. 36. On the other hand, in so far as the question submitted relates to competition rules applicable to undertakings, the Court does not consider that it has sufficient information to enable it to give any guidance as to definition of the relevant market or markets involved in the main proceedings. The judgment making the reference likewise does not clearly disclose the nature and the number of the undertakings operating in the said market or markets. Furthermore, the information supplied by the national court does not


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enable the Court to give an informed ruling as to the existence and extent of trade between Member States or as to the possibility of such trade being affected by the rules for the selection of judokas. 37. It must therefore be held that the judgment making the reference does not contain sufficient information to meet the requirements referred to in paragraphs 30 and 31 of this judgment regarding the competition rules. 38. As far as the question submitted in Case C-51/96 is concerned, the order for reference likewise does not contain sufficient details to enable the Court to give an informed ruling on the interpretation of the competition rules applicable to undertakings. On the other hand, the information set out in that order, supplemented as necessary by the details contained in the written observations submitted pursuant to Article 20 of the EC Statute of the Court of Justice and set out in the Report for the Hearing, together with the information contained in the judgment making the reference in Case C-191/97, enabled the interested parties to take a position as to the interpretation of the rules on freedom to provide services and sufficiently apprised the Court of the factual and legislative background to enable it to reply usefully on that issue. 39. Notwithstanding their slightly different wording, the questions submitted in both cases are essentially the same and, accordingly, it is unnecessary to give further consideration to the arguments specifically challenging the admissibility of the question in Case C-51/96. 40. It follows that the Court should answer the questions submitted to the extent to which they relate to interpretation of the Treaty rules on freedom to provide services. The questions are inadmissible, however, in so far as they concern interpretation of the competition rules applicable to undertakings. Interpretation of Article 59 of the Treaty 41. It is to be remembered at the outset that, having regard to the objectives of the Community, sport is subject to Community law only in so far as it constitutes an economic activity within the meaning of Article 2 of the Treaty (see Case 36/74 Walrave and Koch v Union Cycliste Internationale [1974] ECR 1405, paragraph 4, and Case C-415/93 Union Royale Belge des Sociétés de Football Association and Others v Bosman [1995] ECR I-4921, paragraph 73). The Court has also recognised that sporting activities are of considerable social importance in the Community (Bosman, paragraph 106). 42. That case-law is also supported by the Declaration on Sport (Declaration 29) annexed to the final act of the Conference which adopted the text of the Amsterdam Treaty, which emphasises the social significance of sport and calls on the bodies of the European Union to give special consideration to the particular characteristics of amateur sport. In particular, that declaration is consistent with the abovementioned case-law in so far as it relates to situations in which sport constitutes an economic activity. 43. It must be recalled that the Treaty provisions concerning freedom of movement for persons do not prevent the adoption of rules or practices excluding foreign players from certain matches for reasons which are not of an economic nature, which relate to the particular nature and context of such matches and are thus of sporting interest only, such as, for example, matches between national teams from different countries. The Court stressed, however, that that restriction on the scope of the provisions in question must remain limited to its proper objective and cannot be relied upon to exclude the


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whole of a sporting activity (see Case 13/76 Donà v Mantero [1976] ECR 1333, paragraphs 14 and 15, and Bosman, paragraphs 76 and 127). 44. The selection rules at issue in the main proceedings do not relate to events between teams or selected competitors from different countries comprising only nationals of the State of which the Federation which selected them is a member, such as the Olympic Games or certain world or European championships, but reserve participation, by the national federation, in certain other international events of a high level to athletes who are affiliated to the federation in question, regardless of their nationality. The mere circumstance that the placings achieved by athletes in those competitions are taken into account in determining which countries may enter representatives for the Olympic Games cannot justify treating those competitions as events between national teams which might fall outside the scope of Community law. 45. The LFJ submits in particular that sports associations and federations are entitled freely to determine the conditions governing access to competitions which concern only amateur sportsmen. 46. In that regard, it is important to note that the mere fact that a sports association or federation unilaterally classifies its members as amateur athletes does not in itself mean that those members do not engage in economic activities within the meaning of Article 2 of the Treaty. 47. As regards the nature of the rules at issue, it is clear from the judgments in Walrave and Koch (paragraphs 17 and 18) and Bosman (paragraphs 82 and 83), cited above, that the Community provisions on the free movement of persons and services not only apply to the action of public authorities but extend also to rules of any other nature aimed at regulating gainful employment and the provision of services in a collective manner. The abolition as between Member States of obstacles to freedom of movement for persons and to freedom to provide services would be compromised if the abolition of State barriers could be neutralised by obstacles resulting from the exercise, by associations or organisations not governed by public law, of their legal autonomy. 48. It follows that the Treaty, and in particular Articles 59, 60 and 66 thereof, may apply to sporting activities and to the rules laid down by sports associations of the kind at issue in the main proceedings. 49. In view of the foregoing considerations and the conflicting views expressed before the Court, it is important to verify whether an activity of the kind engaged in by Ms Deliège is capable of constituting an economic activity within the meaning of Article 2 of the Treaty and more particularly, the provision of services within the meaning of Article 59 of that Treaty. 50. In the context of judicial cooperation between national courts and the Court of Justice, it is for national courts to establish and to evaluate the facts of the case (see in particular Case 139/85 Kempf v Staatssecretaris van Justitie [1986] ECR 1741, paragraph 12) and for the Court of Justice to provide the national court with such guidance on interpretation as may be necessary to enable it to decide the dispute (Case C-332/88 Alimenta [1990] ECR I-2077, paragraph 9). 51. In that connection, it is important to note first that the judgment making the reference in Case C-191/97 refers among other things to grants awarded on the basis of earlier sporting results and to sponsorship contracts directly linked to the results achieved by the athlete. Moreover, Ms Deliège stated to the Court - and produced supporting documents - that she had received, by reason of her sporting achievements, grants from the Belgian French-speaking Community and from the Belgian Inter-Federal and Olympic Committee and that she has been sponsored by a banking institution and a motor-car manufacturer.


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52. As regards, next, the concepts of economic activities and the provision of services within the meaning of Articles 2 and 59 of the Treaty respectively, it must be pointed out that those concepts define the field of application of one of thefundamental freedoms guaranteed by the Treaty and, as such, may not be interpreted restrictively (see, to that effect, Case 53/81 Levin v Staatssecretaris van Justitie [1982] ECR 1035, paragraph 13). 53. As regards more particularly the first of those concepts, according to settled case-law (Donà, cited above, paragraph 12, and Case 196/87 Steymann v Staatssecretaris van Justitie [1988] ECR 6159, paragraph 10), the pursuit of an activity as an employed person or the provision of services for remuneration must be regarded as an economic activity within the meaning of Article 2 of the Treaty. 54. However, as the Court held in particular in Levin (paragraph 17) and Steymann (paragraph 13), the work performed must be genuine and effective and not such as to be regarded as purely marginal and ancillary. 55. As regards the provision of services, under the first paragraph of Article 60 services are considered to be 'services within the meaning of the Treaty where they are normally provided for remuneration, in so far as they are not governed by the provisions relating to freedom of movement for goods, capital and persons. 56. In that connection, it must be stated that sporting activities and, in particular, a high-ranking athlete's participation in an international competition are capable of involving the provision of a number of separate, but closely related, services which may fall within the scope of Article 59 of the Treaty even if some of those services are not paid for by those for whom they are performed (see Case 352/85 Bond van Adverteerders and Others v Netherlands State [1988] ECR 2085, paragraph 16). 57. For example, an organiser of such a competition may offer athletes an opportunity of engaging in their sporting activity in competition with others and, at the same time, the athletes, by participating in the competition, enable the organiser to put on a sports event which the public may attend, which television broadcasters may retransmit and which may be of interest to advertisers and sponsors. Moreover, the athletes provide their sponsors with publicity the basis for which is the sporting activity itself. 58. Finally, as regards the objections expressed in the observations submitted to the Court according to which, first, the main proceedings concern a purely internal situation and, second, certain international events fall outside the territorial scope of the Treaty, it must be remembered that the Treaty provisions on the freedom to provide services are not applicable to activities which are confined in all respects within a single Member State (see, most recently, Case C-108/98 RI.SAN. [1999] ECR I-0000, paragraph 23, and Case C-97/98 Jägerskiöld [1999] ECR I-0000, paragraph 42). However, a degree of extraneity may derive in particular from the fact that an athlete participates in a competition in a Member State other than that in which he is established. 59. It is for the national court to determine, on the basis of those criteria of interpretation, whether Ms Deliège's sporting activities, and in particular her participation in international tournaments, constitutes an economic activity within the meaning of Article 2 of the Treaty and, more particularly, the provision of services within the meaning of Article 59 of the Treaty. 60. If it is assumed that Ms Deliège's activity can be classified as a provision of services, it is necessary to consider whether the selection rules at issue in the main proceedings constitute a restriction on the freedom to provide services within the meaning of Article 59 of the Treaty. 61. It must be pointed out that, in contrast to the rules applicable to the Bosman case, the selection rules at issue in the main proceedings do not determine the conditions


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governing access to the labour market by professional sportsmen and do not contain nationality clauses limiting the number of nationals of other Member States who may participate in a competition. 62. Furthermore, Ms Deliège, a Belgian national, does not contend that the choice made by the LBJ, which did not select her to take part in the tournament, was based on her nationality. 63. In addition, as indicated in paragraph 44 of this judgment, those selection rules relate not to a tournament whose purpose is to set national teams against each other but to a tournament in which, once selected, the athletes compete on their own account. 64. In that context, it need only be observed that, although selection rules like those at issue in the main proceedings inevitably have the effect of limiting the number of participants in a tournament, such a limitation is inherent in the conduct of an international high-level sports event, which necessarily involves certain selection rules or criteria being adopted. Such rules may not therefore in themselves be regarded as constituting a restriction on the freedom to provide services prohibited by Article 59 of the Treaty. 65. Moreover, the adoption, for the purposes of an international sports tournament, of one system for selecting participants rather than another must be based on a large number of considerations unconnected with the personal situation of any athlete, such as the nature, the organisation and the financing of the sport concerned. 66. Although a selection system may prove more favourable to one category of athletes than another, it cannot be inferred from that fact alone that the adoption of that system constitutes a restriction on the freedom to provide services. 67. Accordingly, it naturally falls to the bodies concerned, such as organisers of tournaments, sports federations or professional athletes' associations, to lay down appropriate rules and to make their selections in accordance with them. 68. In that connection, it must be conceded that the delegation of such a task to the national federations, which normally have the necessary knowledge and experience, is the arrangement adopted in most sporting disciplines, which is based in principle on the existence of a federation in each country. Moreover, it must be pointed out that the selection rules at issue in the main proceedings apply both to competitions organised within the Community and to those taking place outside it and involve both nationals of Member States and those of non-member countries. 69. The answer to the questions submitted must therefore be that a rule requiring professional or semi-professional athletes or persons aspiring to take part in a professional or semi-professional activity to have been authorised or selected by their federation in order to be able to participate in a high-level international sports competition, which does not involve national teams competing against each other, does not in itself, as long as it derives from a need inherent in the organisation of such a competition, constitute a restriction on the freedom to provide services prohibited by Article 59 of the Treaty.

On those grounds,

THE COURT,

in answer to the questions referred to it by the Tribunal de Première Instance de

Namur by order of 16 February 1996 and by judgment of 14 May 1997, hereby

rules:


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A rule requiring professional or semi-professional athletes or persons aspiring to take part in a professional or semi-professional activity to have been authorised or selected by their federation in order to be able to participate in a high-level international sports competition, which does not involve national teams competing against each other, does not in itself, as long as it derives from a need inherent in the organisation of such a competition, constitute a restriction on the freedom toprovide services prohibited by Article 59 of the EC Treaty (now, after amendment, Article 49 EC).


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7. Case C-176/96,

REFERENCE to the Court under Article 177 of the EC Treaty (now Article 234 EC) by

the Tribunal de Première Instance, Brussels, for a preliminary ruling in the proceedings


Jyri Lehtonen,

Castors Canada Dry Namur-Braine ASBL

and

Fédération Royale Belge des Sociétés de Basket-ball ASBL (FRBSB),

intervener:

Ligue Belge - Belgische Liga ASBL,

on the interpretation of Articles 6, 48 of the EC Treaty (now, after amendment, Articles

12 EC and 39 EC), 85 and 86 of the EC Treaty (now Articles 81 EC and 82 EC),



1. By order of 23 April 1996, received at the Court on 22 May 1996, the Tribunal de Première Instance (Court of First Instance), Brussels, hearing an application for interim relief, referred to the Court for a preliminary ruling under Article 177 of the EC Treaty (now Article 234 EC) a question on the interpretation of Articles 6, 48 of the EC Treaty (now, after amendment, Articles 12 EC and 39 EC), 85 and 86 of the EC Treaty (now Articles 81 EC and 82 EC). 2. That question was raised in proceedings between Mr Lehtonen and Castors Canada Dry Namur-Braine ASBL (hereinafter «Castors Braine») and Fédération Royale Belge des Sociétés de Basket-ball ASBL (hereinafter 'the FRBSB) and Ligue Belge - Belgische Liga ASBL (hereinafter 'the BLB) concerning the right of Castors Braine to field MrLehtonen in matches in the first division of the Belgian national basketball championship. Rules on the organisation of basketball and on transfer periods 3. Basketball is organised at world level by the International Basketball Federation (FIBA). The Belgian federation is the FRBSB, which governs both amateur and professional basketball. The BLB, which consisted on 1 January 1996 of eleven of the twelve basketball clubs in the first division of the Belgian national championship, has the objective of promoting basketball at the highest level and representing top-grade Belgian basketball at national level, in particular in the FRBSB. 4. In Belgium the national men's first division basketball championship is divided into two stages: a first stage in which all clubs take part, and a second stage which includes only the best-placed clubs (play-off matches to decide the national title) and the clubs at the bottom of the league table (play-off matches to decide which clubs will stay in the first division).


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5. The FIBA rules governing international transfers of players apply in their entirety to all the national federations (Rule 1(b)). For national transfers, the national federations are recommended to take the international rules as guidance and draw up their own rules on transfers of players in the spirit of the FIBA rules (Rule 1(c)). Those rules define a foreign player as a player who does not possess the nationality of the State of the national federation which has issued his licence (Rule 2(a)). A licence is the necessary authorisation given by a national federation to a player to allow him to play basketball for a club which is a member of that federation. 6. Rule 3(c) of the FIBA rules prescribes generally that, for national championships, clubs are not allowed, after the deadline fixed for the zone in question as defined by FIBA, to include in their teams players who have already played in another country in the same zone during that season. For the European zone the deadline for the registration of foreign players is 28 February. After that date it is still possible for players from other zones to be transferred. 7. Under Rule 4(a) of the FIBA rules, when a national federation receives an application for a licence for a player who has previously been licensed in a federation of another country, it must, before issuing him with a licence, obtain a letter of release from that federation. 8. According to the FRBSB rules, a distinction must be drawn between affiliation, which binds the player to the national federation, registration, which is the link between the player and a particular club, and qualification, which is the necessary condition for a player to be able to take part in official competitions. A transfer is defined as the operation by which an affiliated player obtains a change of registration. 9. Rule 140 et seq. of the FRBSB rules concern transfers between Belgian clubs of players affiliated to the FRBSB, which may take place during a defined period in each year, which in 1995 ran from 15 April to 15 May and in 1996 from 1 to 31 May of the year preceding the championship in which the club in question takes part. No player may be registered with more than one Belgian club in any one season. 10. In the version applicable at the material time, Rule 244 of the FRBSB rules stated: 'Players who are not registered with the club or who are suspended may not be fielded. This prohibition also applies to friendly matches and tournaments. ... Any contravention will be punished by [a] fine ... Foreign or professional players (Law of 24 February 1978) who join after 31 March of the current season will no longer be qualified to play in competition, cup, and play-off matches of the current season. 11. Rule 245(4) stated: 'Players of foreign nationality, including EU nationals, are qualified only if they have completed the formalities relating to affiliation, registration and qualification. They must in addition comply with the FIBA rules to obtain a licence ... The main proceedings 12. Mr Lehtonen is a basketball player of Finnish nationality. During the 1995/1996 season he played in a team which took part in the Finnish championship, and after that was over he was engaged by Castors Braine, a club affiliated to the FRBSB, to take part in the final stage of the 1995/1996 Belgian championship. To that end the parties on 3 April 1996 concluded a contract of employment for a remunerated sportsman, under which Mr Lehtonen was to receive BEF 50 000 net per month as fixed remuneration and an additional BEF 15 000 for each match won by the club. That engagement had been registered with the FRBSB on 30 March 1996, the player's letter of release having


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been issued on 29 March 1996 by the federation of origin. On 5 April 1996 the FRBSB informed Castors Braine that if FIBA did not issue the licence the club might be penalised and that if it fielded Mr Lehtonen it would do so at its own risk. 13. Despite that warning Castors Braine fielded Mr Lehtonen in the match of 6 April 1996 against Belgacom Quaregnon. The match was won by Castors Braine. On 11 April 1996, following a complaint by Belgacom Quaregnon, the competition department of the FRBSB penalised Castors Braine by awarding to the other club by 20-0 the match in which Mr Lehtonen had taken part in breach of the FIBA rules on transfers ofplayers within the European zone. In the following match, against Pepinster, Castors Braine included Mr Lehtonen on the team sheet but in the end did not field him. The club was again penalised by the award of the match to the other club. As it ran the risk of being penalised again each time it included Mr Lehtonen on the team sheet, or even of being relegated to the lower division in the event of a third default, Castors Braine dispensed with the services of Mr Lehtonen for the play-off matches. 14. On 16 April 1996 Mr Lehtonen and Castors Braine brought proceedings against the FRBSB in the Tribunal de Première Instance, Brussels, sitting to hear applications for interim relief. They sought essentially for the FRBSB to be ordered to lift the penalty imposed on Castors Braine for the match of 6 April 1996 against Belgacom Quaregnon, and to be prohibited from imposing any penalty whatever on the club preventing it from fielding Mr Lehtonen in the 1995/1996 Belgian championship, on pain of a monetary penalty of BEF 100 000 per day of delay in complying with the order. 15. By agreement of 17 April 1996, the parties to the main proceedings agreed to submit 'agreed submissions by which they would seek a reference to the Court of Justice for a preliminary ruling, the dispute between them being frozen pending the Court's judgment. In those circumstances, the penalties imposed would be maintained, fines would not be imposed on Castors Braine, and Castors Braine would not field Mr Lehtonen in the play-off matches, all rights of the parties being otherwise reserved. 16. At the hearing on 19 April 1996, the BLB applied for leave to intervene in support of the FRBSB and the parties lodged their agreed submissions. The question referred for a preliminary ruling 17. In her order of 23 April 1996, the judge of the Tribunal de Première Instance, Brussels, hearing applications for interim relief considered first that there was nothing to prevent her from referring a question to the Court of Justice. She then found that, at the date on which the proceedings were brought, the condition of urgency was indisputably satisfied, since Castors Braine wished to field Mr Lehtonen in forthcoming championship matches. Finally, she took note of the agreement between the parties to enable a reference to be made to the Court, under the terms of which Castors Braine would not field Mr Lehtonen during the current championship, while the FRBSB undertook for its part to suspend all penalties. 18. In those circumstances the Tribunal de Première Instance, Brussels, after allowing the BLB's application to intervene, stayed proceedings and referred the following question to the Court for a preliminary ruling: 'Are the rules of a sports federation which prohibit a club from playing a player in the competition for the first time if he has been engaged after a specified date contrary to the Treaty of Rome (in particular Articles 6, 48, 85 and 86) in the case of aprofessional player who is a national of a Member State of the European Union, notwithstanding the sporting reasons put forward by the federations to justify those rules, namely the need to prevent distortion of the competitions?


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Jurisdiction of the Court to answer the question and admissibility of the question 19. It may be noted to begin with that, as the Court held in Case 338/85 Pardini v Ministero del Commercio con l'Estero [1988] ECR 2041, paragraph 11, and Case C-159/90 Society for the Protection of Unborn Children Ireland v Grogan [1991] ECR I-4685, paragraph 12, a national court is empowered to make a reference to the Court for a preliminary ruling under Article 177 of the Treaty only if a dispute is pending before it in the context of which it is called on to give a decision which could take into account the preliminary ruling. Conversely, the Court has no jurisdiction to hear a reference for a preliminary ruling when at the time it is made the procedure before the court making it has already been concluded. 20. In the present case, after the Tribunal de Première Instance had taken note of the agreement between the parties, it decided to refer a question to the Court for a preliminary ruling, while reserving its decision on the remainder of the case. It follows that it will still have to rule on the lawfulness from the point of view of Community law of the penalties imposed on Castors Braine and on the possible consequences of those penalties. On that occasion it will be called on to give a decision in which the Court's ruling will necessarily have to be taken into account. Consequently, it cannot be argued that that court, in the context of the procedure for applications for interim relief, is not entitled to refer a question to the Court for a preliminary ruling and that the Court has no jurisdiction to answer it. 21. The Italian Government and the Commission contest the admissibility of the question, on the ground that the order for reference does not contain a sufficient account of the legal and factual context of the main proceedings. 22. According to settled case-law, the need to provide an interpretation of Community law which will be of use to the national court makes it necessary that the national court define the factual and legal context of the questions it is asking or, at the very least, explain the factual circumstances on which those questions are based. Those requirements are of particular importance in certain areas, such as that of competition, where the factual and legal situations are often complex (see, in particular, Joined Cases C-320/90 to C-322/90 Telemarsicabruzzo and Others [1993] ECR I-393, paragraphs 6 and 7, Case C-67/96 Albany International v Stichting Bedrijfspensioenfonds Textielindustrie [1999] ECR I-0000, paragraph 39, and Joined Cases C-115/97 to C-117/97 Brentjens' Handelsonderneming v Stichting Bedrijfspensioenfonds voor de Handel in Bouwmaterialen [1999] ECR I-0000, paragraph 38). 23. The information provided in decisions making references must not only enable the Court to reply usefully but also give the governments of the Member States and other interested parties the opportunity to submit observations pursuant to Article 20 of the EC Statute of the Court of Justice. It is the Court's duty to ensure that that opportunity is safeguarded, bearing in mind that, by virtue of the abovementioned provision, only the decisions making references are notified to the interested parties (see inter alia the order in Case C-458/93 Saddik [1995] ECR I-511, paragraph 13, and the judgments in Albany International, paragraph 40, and Brentjens' Handelsonderneming, paragraph 39). 24. In the main proceedings, it appears, first, from the observations submitted by the parties, the Governments of the Member States and the Commission pursuant to Article 20 of the EC Statute of the Court of Justice that the information in the order for reference enabled them properly to state their position on the question put to the Court, in so far as it concerns the Treaty rules on freedom of movement for workers. 25. Furthermore, although the Italian Government may have considered that the information provided by the national court did not enable it to take a position on


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whether, in the main proceedings, Mr Lehtonen is to be regarded as a worker within the meaning of Article 48 of the Treaty, it must be observed that that Government and the other interested parties were able to submit observations of the basis of that court's statements of fact. 26. Moreover, the information in the order for reference was supplemented by the material in the case-file forwarded by the national court and the written observations submitted to the Court. All that material, which was included in the Report for the Hearing, was brought to the notice of the Governments of the Member States and the other interested parties for the purposes of the hearing, at which they had an opportunity, if necessary, to amplify their observations (see also, to that effect, Albany International, paragraph 43, and Brentjens' Handelsonderneming, paragraph 42). 27. Second, the information provided by the national court, supplemented as far as necessary by the above material, gives the Court sufficient knowledge of the factual and legal context of the main proceedings to enable it to interpret the Treaty rules relating to the principle of the prohibition of discrimination on grounds of nationality and on freedom of movement for workers with respect to the situation which is the subject of those proceedings. 28. In so far as the question put concerns the competition rules applicable to undertakings, on the other hand, the Court considers that it does not have enough information to give guidance as to the definition of the market or markets at issue in the main proceedings. Nor does the order for reference show clearly the character and number of undertakings operating on that market or markets. In addition, the information provided by the national court does not enable the Court to make meaningful findings as to the existence and volume of trade between Member States or as to the possibility of that trade being affected by the rules on transfers of players. 29. The order for reference therefore does not contain sufficient information to satisfy the requirements described in paragraphs 22 and 23 above, as far as the competition rules are concerned. 30. Accordingly, the Court should answer the question referred in so far as it relates to the interpretation of the Treaty rules on the principle of the prohibition of discrimination on grounds of nationality and on freedom of movement for workers. The question is inadmissible, however, in so far as it relates to the interpretation of the competition rules applicable to undertakings. Substance 31. In the light of the above, the national court's question must be understood as essentially asking whether Articles 6 and 48 of the Treaty preclude the application of rules laid down in a Member State by sporting associations which prohibit a basketball club from fielding players from other Member States in matches in the national championship, where the transfer has taken place after a specified date. Scope of the Treaty 32. It should be noted, as a preliminary point, that, having regard to the objectives of the Community, sport is subject to Community law in so far as it constitutes an economic activity within the meaning of Article 2 of the EC Treaty (now, after amendment, Article 2 EC) (see Case 36/74 Walrave v Union Cycliste Internationale [1974] ECR 1405, paragraph 4, and Case C-415/93 Union Royale Belge des Sociétés de Football Association and Others v Bosman and Others [1995] ECR I-4921, paragraph


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73). The Court has also acknowledged that sport has considerable social importance in the Community (see Bosman, paragraph 106). 33. That case-law is also supported by Declaration No 29 on sport annexed to the Final Act of the conference which adopted the text of the Treaty of Amsterdam, which emphasises the social importance of sport and calls on the institutions of the European Union inter alia to give special consideration to the particular characteristics of amateur sport. In particular, that declaration is consistent with the above case-law, in that it concerns situations where sport constitutes an economic activity. 34. The Treaty provisions concerning freedom of movement for persons do not preclude rules or practices excluding foreign players from certain matches for reasons which are not of an economic nature, which relate to the particular nature and context of such matches and are thus of sporting interest only, as in the case of matches between national teams from different countries. The Court has, however, stated that that restriction on the scope of the Treaty must remain limited to its proper objective, and may not be relied on to exclude therefrom the whole of a sporting activity (see Case13/76 Donà v Mantero [1976] ECR 1333, paragraphs 14 and 15, and Bosman, paragraphs 76 and 127). 35. As to the character of the rules at issue in the main proceedings, it follows from Walrave, paragraphs 17 and 18, and Bosman, paragraphs 82 and 83, that the Community provisions on freedom of movement for persons and freedom to provide services not only apply to the action of public authorities but extend also to rules of any other nature aimed at regulating gainful employment and the provision of services in a collective manner. The abolition as between Member States of obstacles to freedom of movement for persons and freedom to provide services would be compromised if the abolition of State barriers could be neutralised by obstacles resulting from the exercise of their legal autonomy by associations or organisations not governed by public law. 36. In those circumstances, it must be stated that the Treaty, in particular Articles 6 and 48, may apply to sporting activities and to rules laid down by sports associations, such as those at issue in the main proceedings. The principle of prohibition of discrimination on grounds of nationality 37. According to settled case-law, Article 6 of the Treaty, which lays down as a general principle that there shall be no discrimination on grounds of nationality, applies independently only to situations governed by Community law for which the Treaty lays down no specific rules prohibiting discrimination (see, inter alia, Case C-179/90 Merci Convenzionali Porto di Genova v Siderurgica Gabrielli [1991] ECR I-5889, paragraph 11, and Case C-379/92 Peralta [1994] ECR I-3453, paragraph 18). 38. As regards workers, that principle has been implemented and specifically applied by Article 48 of the Treaty. Existence of an economic activity and whether Mr Lehtonen is a worker 39. In the light of the foregoing and of the arguments presented at the hearing, it must be ascertained whether a basketball player such as Mr Lehtonen may carry on an economic activity within the meaning of Article 2 of the Treaty, and, more particularly, whether he may be regarded as a worker within the meaning of Article 48 of the Treaty. 40. In the context of the judicial cooperation between national courts and the Court of Justice in connection with references for a preliminary ruling, it is for the national court to establish and evaluate the facts of the case (see, inter alia, Case 139/85 Kempf v


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Staatssecretaris van Justitie [1986] ECR 1741, paragraph 12) and for the Court of Justice to provide the national court with such interpretative information as may benecessary to enable it to decide the dispute (Case C-332/88 Alimenta v Doux [1990] ECR I-2077, paragraph 9). 41. It must be pointed out, first, that the order for reference describes Mr Lehtonen as a professional basketball player. He and Castors Braine produced to the Court the contract of employment as a remunerated sportsman, mentioned in paragraph 12 above, under which he was to be paid a fixed monthly remuneration and bonuses. 42. Next, with respect to the concepts of economic activity within the meaning of Article 2 and worker within the meaning of Article 48 of the Treaty, it must be observed that these concepts define the scope of one of the fundamental freedoms guaranteed by the Treaty and, as such, may not be interpreted restrictively (see, to that effect, Case 53/81 Levin v Staatssecretaris van Justitie [1982] ECR 1035, paragraph 13). 43. With respect more specifically to the former concept, it is settled case-law (Donà, paragraph 12, and Case 196/87 Steymann v Staatssecretaris van Justitie [1988] ECR 6159, paragraph 10) that work as a paid employee or the provision of services for remuneration must be regarded as an economic activity within the meaning of Article 2 of the Treaty. 44. However, as the Court held inter alia in Levin, paragraph 17, and Steymann, paragraph 13, those activities must be effective and genuine activities and not such as to be regarded as purely marginal and ancillary. 45. As to the concept of worker, it must be borne in mind that, according to settled case-law, it may not be interpreted differently according to each national law but has a Community meaning. It must be defined in accordance with objective criteria which distinguish the employment relationship by reference to the rights and duties of the persons concerned. The essential feature of an employment relationship is that for a certain period of time a person performs services for and under the direction of another person, in return for which he receives remuneration (see, in particular, Case 66/85 Lawrie-Blum v Land Baden-Württemberg [1986] ECR 2121, paragraphs 16 and 17). 46. It appears from the findings of fact made by the national court and from the documents produced to the Court that Mr Lehtonen had entered into a contract of employment with a club in another Member State with a view to exercising gainful employment in that State. As he has rightly submitted, he thereby accepted an offer of employment actually made, within the meaning of Article 48(3)(a) of the Treaty. Existence of an obstacle to freedom of movement for workers 47. Since a basketball player such as Mr Lehtonen must be regarded as a worker within the meaning of Article 48 of the Treaty, the Court must consider whether the rules ontransfer periods referred to in paragraphs 6 and 9 to 11 above constitute an obstacle to freedom of movement for workers, prohibited by that article. 48. It is true that stricter transfer deadlines apply to players coming from other Belgian basketball clubs. 49. Those rules are nevertheless liable to restrict the freedom of movement of players who wish to pursue their activity in another Member State, by preventing Belgian clubs from fielding in championship matches basketball players from other Member States where they have been engaged after a specified date. Those rules consequently constitute an obstacle to freedom of movement for workers (see, to that effect, Bosman, paragraphs 99 and 100).


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50. The fact that the rules in question concern not the employment of such players, on which there is no restriction, but the extent to which their clubs may field them in official matches is irrelevant. In so far as participation in such matches is the essential purpose of a professional player's activity, a rule which restricts that participation obviously also restricts the chances of employment of the player concerned (see Bosman, paragraph 120). Existence of justifications 51. The existence of an obstacle to freedom of movement for workers having thus been established, it must be ascertained whether that obstacle may be objectively justified. 52. The FRBSB, the BLB and all the governments which submitted observations to the Court submit that the rules on transfer periods are justified on non-economic grounds concerning only sport as such. 53. On this point, it must be acknowledged that the setting of deadlines for transfers of players may meet the objective of ensuring the regularity of sporting competitions. 54. Late transfers might be liable to change substantially the sporting strength of one or other team in the course of the championship, thus calling into question the comparability of results between the teams taking part in that championship, and consequently the proper functioning of the championship as a whole. 55. The risk of that happening is especially clear in the case of a sporting competition which follows the rules of the Belgian first division national basketball championship. The teams taking part in the play-offs for the title or for relegation could benefit from late transfers to strengthen their squads for the final stage of the championship, or even for a single decisive match. 56. However, measures taken by sports federations with a view to ensuring the proper functioning of competitions may not go beyond what is necessary for achieving the aim pursued (see Bosman, paragraph 104). 57. In the main proceedings, it appears from the rules on transfer periods that players from a federation outside the European zone are subject to a deadline of 31 March rather than 28 February, which applies only to players from federations in the European zone, which includes the federations of the Member States. 58. At first sight, such a rule must be regarded as going beyond what is necessary to achieve the aim pursued. It does not appear from the material in the case-file that a transfer between 28 February and 31 March of a player from a federation in the European zone jeopardises the regularity of the championship more than a transfer in that period of a player from a federation not in that zone. 59. However, it is for the national court to ascertain the extent to which objective reasons, concerning only sport as such or relating to differences between the position of players from a federation in the European zone and that of players from a federation not in that zone, justify such different treatment. 60. In the light of all the foregoing, the answer to the national court's question, as reformulated, must be that Article 48 of the Treaty precludes the application of rules laid down in a Member State by sporting associations which prohibit a basketball club from fielding players from other Member States in matches in the national championship, where they have been transferred after a specified date, if that date is earlier than the date which applies to transfers of players from certain non-member countries, unless objective reasons concerning only sport as such or relating to differences between the position of players from a federation in the European zone and that of players from a federation not in that zone justify such different treatment.


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On those grounds,


in answer to the question referred to it by the Tribunal de Première Instance,

Brussels, by order of 23 April 1996, hereby rules:

Article 48 of the EC Treaty (now, after amendment, Article 39 EC) precludes the application of rules laid down in a Member State by sporting associations which prohibit a basketball club from fielding players from other Member States in matches in the national championship, where they have been transferred after a specified date, if that date is earlier than the date which applies to transfers of players from certain non-member countries, unless objective reasons concerning only sport as such or relating to differences between the position of players from a federation in the European zone and that of players from a federation not in that zone justify such different treatment.


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8. Case C-150/99,


the Svea Hovrätt, Sweden, for a preliminary ruling in the proceedings pending before

that court

Between

Svenska Staten (Swedish State)

and

Stockholm Lindöpark AB

and between

Stockholm Lindöpark AB

and

Svenska Staten (Swedish State)

on the interpretation of Article 13A(1)(m) and Article 13B(b) of the Sixth Council

Directive (77/388/EEC) of 17 May 1977 on the harmonisation of the laws of the

Member States relating to turnover taxes - Common system of value added tax: uniform

basis of assessment (OJ 1977 L 145, p. 1),

THE COURT (Fifth Chamber),

gives the following

Judgment

1. By order of 26 March 1999, received at the Court on 23 April 1999, the Svea Hovrätt (Svea Court of Appeal) referred to the Court for a preliminary ruling under Article 177 of the EC Treaty (now Article 234 EC) three questions on the interpretation of Article 13A(1)(m) and Article 13B(b) of the Sixth Council Directive (77/388/EEC) of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes - Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1, 'the Sixth Directive). 2. The three questions have been raised in proceedings between the Swedish State and Stockholm Lindöpark AB ('Lindöpark) concerning damages claimed by Lindöpark from the Swedish State on the ground that, at the time of the Kingdom of Sweden's accession to the European Union, it incorrectly transposed the Sixth Directive, in particular Article 13 thereof. Community legislation 3. Article 2 of the Sixth Directive provides as follows: 'The following shall be subject to value added tax:

1. the supply of goods or services effected for consideration within the territory of the country by a taxable person acting as such;

2. the importation of goods.


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4. Article 6(1) of the Sixth Directive provides as follows: '1. Supply of services shall mean any transaction which does not constitute a supply of goods within the meaning of Article 5. Such transactions may include inter alia: - assignments of intangible property whether or not it is the subject of a document establishing title, - obligations to refrain from an act or to tolerate an act or situation, - the performances of services in pursuance of an order made by or in the name of a public authority or in pursuance of the law. 5. Article 13A(1) of the Sixth Directive is worded as follows: 'Without prejudice to other Community provisions, Member States shall exempt the following under conditions which they shall lay down for the purpose of ensuring thecorrect and straightforward application of such exemptions and of preventing any possible evasion, avoidance or abuse: ... (m) certain services closely linked to sport or physical education supplied by non-profit-making organisations to persons taking part in sport or physical education; .... 6. Article 13B of the Sixth Directive provides: 'Without prejudice to other Community provisions, Member States shall exempt the following under conditions which they shall lay down for the purpose for ensuring the correct and straightforward application of the exemptions and of preventing any possible evasion, avoidance or abuse: (a) ... (b) the leasing or letting of immovable property excluding: 1. the provision of accommodation, as defined in the laws of the Member States, in the hotel sector or in sectors with a similar function, including the provision of accommodation in holiday camps or on sites developed for use as camping sites; 2. the letting of premises and sites for parking vehicles; 3. lettings of permanently installed equipment and machinery; 4. hire of safes. Member States may apply further exclusions to the scope of this exemption. 7. Article 17 of the Sixth Directive, as worded pursuant to amendment by Council Directive 91/680/EEC of 16 December 1991 (OJ 1991 L 376, p. 1), provides: '1. The right to deduct shall arise at the time when the deductible tax becomes chargeable. 2. In so far as the goods and services are used for the purposes of his taxable transactions, the taxable person shall be entitled to deduct from the tax which he is liable to pay: (a) value added tax due or paid in respect of goods or services supplied or to be supplied to him by another taxable person liable for the tax within the territory of the country; (b) value added tax due or paid in respect of imported goods within the territory of the country; ... National legislation 8. Under Article 1 of Chapter 1 of the Mervärdesskattelagen (1994:200) (Swedish VAT Law: hereinafter 'the VAT Law), VAT is to be paid to the State on inter alia supplies of taxable goods or services effected during the course of business. Chapter 3, Article 1, of


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the VAT Law provides that supplies of goods or services and imports are to be taxable, unless provision to the contrary is made in that chapter. For a taxable person, the counterpart of being subject to tax is that he may, under Article 3 of Chapter 8 of the VAT Law, deduct input tax on acquisitions or imports for the purposes of his business. 9. Articles 2 and 3 of Chapter 3 of the VAT Law set out various exemptions in relation to immovable property. According to the order for reference, the first paragraph of Article 2 provides for 'an exemption in the case of transactions relating to immovable property, including the assignment and grant of leases, tenancy rights, housing cooperative rights, leasehold rights, servitudes and other rights in immovable property. Prior to 1 January 1997, that provision contained a second paragraph which was worded as follows: 'The exemption from value added tax shall also cover the supply of premises or other facilities or part thereof for the purpose of the practice of sport or physical education, as well as the related supply of accessories or other arrangements for the practice of sport or physical education. 10. That provision was repealed by amending legislation which entered into force on 1 January 1997. The main proceedings and the questions referred for a preliminary ruling 11. Lindöpark is a development company which runs a golf course for the exclusive use of businesses, which are thus able to offer both their staff and their clients an opportunity to play golf on the course. 12. Under the second paragraph of Article 2 of Chapter 3 of the VAT Law, which was in force until 1 January 1997, the 'company golf activity run by Lindöpark was exempt from VAT. Lindöpark was therefore not entitled to deduct input VAT incurred ongoods and services used for the purposes of that activity. Since the amendment of that provision entered into force on 1 January 1997, Lindöpark's activities have been subject to VAT and it is therefore entitled to deduct input VAT. 13. Lindöpark contends that the legislation in force until 1 January 1997 constituted a breach of its rights, at least from the time of the Kingdom of Sweden's accession to the European Union, that is, from 1 January 1995. It therefore brought proceedings against the Swedish State before the Solna Tingsrätt (Solna District Court), seeking damages of SEK 500 000. This sum purportedly represents the input tax paid between 1 January 1995 and 31 December 1996, which Lindöpark was not entitled to deduct during that period, with interest amounting to SEK 41 632 from the date when the deductions could theoretically have been made. Lindöpark claims that the Swedish State had failed to implement the Sixth Directive correctly so far as Article 13 was concerned. 14. By judgment of 29 September 1997, the Solna Tingsrätt upheld Lindöpark's claims and ordered the Swedish State to pay it damages of SEK 500 000, together with interest to run from the date on which the action was commenced. 15. The Swedish State appealed against that judgment to the Svea Hovrätt. Lindöpark also appealed in so far as its claim had not been fully upheld. 16. Since the Svea Hovrätt was uncertain about the interpretation of the Sixth Directive, and in particular Article 13 thereof, in the circumstances of the case, it decided to stay proceedings and to refer the following questions to the Court of Justice for a preliminary ruling: '1. Do the provisions of Article 13A(1)(m) and 13B(b) of the Sixth VAT Directive preclude national legislation providing for a general exemption from VAT for the supply of sports facilities, as laid down in the second paragraph of Article 2 of Chapter


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3 of the Mervärdesskattelagen (1994:200), in the version in force before 1 January 1997? 2. Does Article 13, in combination with Articles 2, 6 and 17 of the Sixth VAT Directive, confer on individuals rights on which they can rely as against Member States before a national court? In the event that the first two questions are answered in the affirmative: 3. Does the implementation and application of the exemption provided for in the second paragraph of Article 2 of Chapter 3 of the Mervärdesskattelagen (1994:200) entail a sufficiently serious (clear) infringement of Community law such as to render a Member State liable in damages? The first question 17. By its first question, the national court is asking essentially whether the provisions of Article 13A(1)(m) and 13B(b) of the Sixth Directive preclude national legislation from providing for a general exemption from VAT for the supply of premises and other facilities and the related supply of accessories or other arrangements for the practice of sport or physical education, including services supplied by profit-making organisations. 18. The supply of premises and other facilities and the related supply of accessories or other arrangements for the practice of sport or physical education constitute supplies of services within the meaning of Article 6 of the Sixth Directive. Therefore, those activities are, in principle, subject to VAT under Article 2(1) of the directive. 19. By way of exception to the principle laid down in Article 2, Article 13A(1)(m) of the Sixth Directive provides for an exemption from tax for supplies of services linked to sport or physical education. That exemption is, however, specifically limited to supplies provided by non-profit-making organisations. It follows that, where such services are supplied by profit-making suppliers, they cannot fall within the scope of the exemption. Chapter 3 of the VAT Law, in so far as it provides, in the second paragraph of Article 2, for a general exemption for such supplies without restricting its scope to non-profit-making suppliers, is therefore inconsistent with the wording of the relevant provisions of the Sixth Directive. 20. As justification for the national rules, the Swedish State argues that another provision applies in the case before the national court, namely Article 13B(b) of the Sixth Directive, which exempts the leasing and letting of immovable property. Since the main characteristic of Lindöpark's activities is the letting out to clients of a golf course, which is immovable property, it was proper to apply the exemption to Lindöpark's activities. 21. As to that argument, the Court is called upon, in the context of the questions referred by the national court, to provide that court with the criteria for determining whether a provision of national law such as that at issue is consistent with the Sixth Directive. It is for the national court, which alone has jurisdiction in that regard, to resolve the main proceedings in the light of their particular facts. 22. As regards the national legislation at issue, it is certainly not impossible that in certain circumstances a supply of premises for the practice of sport or physical education may constitute the letting of immovable property and thus fall within the scope of the exemption in Article 13B(b) of the Sixth Directive. However, the national legislation does not refer to a particular case but provides for a general exemption for all services linked to the practice of sport or physical education without making any distinction, among those services, between those that constitute the letting of immovable property and other services. By so doing, it introduces a new category of exemption for which the Sixth Directive does not provide.


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23. Therefore, the answer to be given to the first question must be that the provisions of Article 13A(1)(m) and 13B(b) of the Sixth Directive preclude national legislation from providing for a general exemption from VAT for the supply of premises and other facilities and the related supply of accessories or other arrangements for the practice of sport or physical education, including services supplied by profit-making organisations. 24. As regards the application of Article 13B(b) of the Sixth Directive to the case before the national court, the Court of Justice can do no more than provide guidance based on well-established case-law to the national court and it is for that court to determine this point in the dispute before it. 25. First, it has consistently been held that the terms used to specify the exemptions provided for by Article 13 of the Sixth Directive are to be interpreted strictly since they constitute exceptions to the general principle that VAT is to be levied on all services supplied for consideration by a taxable person (see, inter alia, Case 348/87 Stichting Uitvoering Financiële Acties v Staatssecretaris van Financiën [1989] ECR 1737, paragraph 13; Case C-358/97 Commission v Ireland [2000] ECR I-0000, paragraph 52; and Case C-359/97 Commission v United Kingdom [2000] ECR I-0000, paragraph 64). 26. Second, services linked to the practice of sport or physical education must, so far as is possible, be considered as a whole. According to the case-law of the Court of Justice, in order to determine the nature of a taxable transaction, regard must be had to all the circumstances in which the transaction in question takes place in order to identify its characteristic features (see Case C-231/94 Faaborg-Gelting Linien v Finanzamt Flensburg [1996] ECR I-2395, paragraph 12). As the Commission has rightly pointed out, the activity of running a golf course generally entails not only the passive activity of making the course available but also a large number of commercial activities, such as supervision, management and continuing maintenance by the service-provider, provision of other facilities and so forth. In the absence of quite exceptional circumstances, letting out a golf course cannot therefore constitute the main service supplied. 27. Finally, account should be taken of the fact that permission to use a golf course will normally be restricted as regards the purpose for which it is used and the period of its use. According to the case-law of the Court, the period of enjoyment of immovable property is an essential element of a lease (judgments cited above in Commission v Ireland, paragraph 56, and Commission v United Kingdom, paragraph 68). 28. It is for the national court to determine, in the light of those factors, whether the activity in question in the main proceedings may be considered exempt from VAT under Article 13B(b) of the Sixth Directive. The second question 29. By its second question, the national court asks essentially whether the provisions of Article 17(1) and (2) of the Sixth Directive, read together with those of Articles 2, 6 and 13, are sufficiently clear, precise and unconditional for an individual to rely on them as against a Member State before a national court. 30. In order to answer that question, it is sufficient to refer to the Court's well-established case-law on the circumstances in which a directive may be relied on (see Case 8/81 Becker v Finanzamt Münster-Innenstadt [1982] ECR 53, paragraphs 17 to 25). 31. It follows from that case-law that, despite the relatively wide discretion enjoyed by the Member States in implementing certain provisions of the Sixth Directive, individuals may effectively plead before national courts the provisions of the directive which are sufficiently clear, precise and unconditional (see Case C-10/92 Balocchi v


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Ministero delle Finanze [1993] ECR I-5105, paragraph 34, and Case C-62/93 BP Soupergaz v Greek State [1995] ECR I-1883, paragraph 34). 32. The Court has already specifically recognised that Article 17(1) and (2) (BP Soupergaz, paragraph 36) and Article 13B(d)(1) (Becker, paragraph 49) of the Sixth Directive have those characteristics. Article 2 and Article 6 (only paragraph 1 of which has any bearing on this case) and Article 13B(b) also satisfy the criteria established by the case-law cited in paragraph 31 above, as the Advocate General observes in paragraphs 45 and 46 of his Opinion. 33. The answer to the second question must therefore be that the provisions of Article 17(1) and (2) of the Sixth Directive, read together with those of Articles 2, 6(1) and 13B(b), are sufficiently clear, precise and unconditional for an individual to rely on them as against a Member State before a national court. The third question 34. By its third question, the national court asks essentially whether the implementation of a general exemption from VAT for the supply of premises and other facilities and the related supply of accessories or other arrangements for the practice of sport or physical education, where no such general exemption is to be found in the Sixth Directive, constitutes a serious breach of Community law that can render a Member State liable in damages. 35. As a preliminary point, it should be kept in view that in its answer to the second question the Court has found that the provisions of Article 17(1) and (2) of the Sixth Directive, read together with Articles 2, 6(1) and 13B(b), confer on individuals rights on which they may rely as against the Member State concerned before a national court. It follows that Lindöpark may properly pursue the debts which it claims to be owed by the Swedish State and may do so retroactively, basing its claim directly on the provisions of the Sixth Directive which are in its favour. At first sight, therefore, anaction for damages founded on the Court's case-law relating to the liability of Member States for breaches of Community law does not seem necessary. 36. Further, in answer to the question, it should be borne in mind that it has also consistently been held that the principle that a Member State may incur liability for loss and damage caused to individuals as a result of breaches of Community law for which it can be held responsible is inherent in the system of the Treaty (see, in particular, Joined Cases C-46/93 and C-48/93 Brasserie du Pêcheur and Factortame [1996] ECR I-1029, paragraph 31; Joined Cases C-178/94, C-179/94 and C-188/94 to C-190/94 Dillenkofer and Others v Germany [1996] ECR I-4845, paragraph 20; Joined Cases C-283/94, C-291/94 and C-292/94 Denkavit International and Others v Bundesamt für Finanzen [1996] ECR I-5063, paragraph 47; and Case C-319/96 Brinkmann Tabakfabriken v Skatteministeriet [1998] ECR I-5255, paragraph 24). 37. Likewise, the Court, having regard to the circumstances of the case, held that Community law confers a right to reparation where three conditions are met: the rule of law infringed must be intended to confer rights on individuals; the breach must be sufficiently serious; and there must be a direct causal link between the breach of the obligation resting on the State and the damage sustained by the injured parties (Brasserie du Pêcheur and Factortame, paragraph 51; Dillenkofer, paragraphs 21 and 23; Denkavit, paragraph 48; Brinkmann, paragraph 25; see also Case C-140/97 Rechberger and Others v Austria [1999] ECR I-3499, paragraph 21; and Case C-424/97 Haim v Kassenzahnärztliche Vereinigung Nordrhein [2000] ECR I-5148, paragraph 36).


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38. Although, in principle, it is for the national courts to determine whether the conditions for State liability for breach of Community law are met, the Court of Justice may nevertheless indicate certain circumstances which the national courts may take into account in their evaluation. In the present case, the national court inquires about the conditions for there to be a sufficiently serious breach of Community law. 39. On that point, according to the case-law of the Court, a breach is sufficiently serious where, in the exercise of its legislative powers, a Member State has manifestly and gravely disregarded the limits on the exercise of its powers. Factors which the competent court may take into consideration include the clarity and precision of the rule breached (Rechberger, paragraph 50). 40. As the Court found in answering the first two questions, it is evident from the provisions of the VAT Law at issue in the main proceedings that the general exemption enacted by the Swedish legislature has no basis in the Sixth Directive and therefore became clearly incompatible with the directive as from the date of the Kingdom of Sweden's accession to the European Union. Given the clear wording of the Sixth Directive, the Member State concerned was not in a position to make any legislative choices and had only a considerably reduced, or even no, discretion. In those circumstances, the mere infringement of Community law may be sufficient to establish the existence of a sufficiently serious breach (see Case C-5/94 The Queen v Ministryof Agriculture, Fisheries and Food, ex parte Hedley Lomas (Ireland) [1996] ECR 1-2553, paragraph 28; and Dillenkofer, paragraph 25). Furthermore, the fact that the national legislation at issue in the main proceedings was repealed with effect from 1 January 1997, two years after Sweden's accession, indicates that the Swedish legislature had become aware that it was incompatible with Community law. 41. The Swedish State contends that, even assuming a breach of Community law, it was in any event excusable since the Court had not yet clarified the relevant provisions of the Sixth Directive and the Commission had not initiated any infringement proceedings, which left it with no reliable guidance as to the effect of the relevant Community law. That contention must be rejected. As the Advocate General makes clear in paragraphs 73 and 74 of his Opinion, there could be no reasonable doubt, capable of extenuating the alleged breach, as to the import of the provisions in question. 42. The answer to the third question must therefore be that the implementation of a general exemption from VAT for the supply of premises and other facilities and for the related supply of accessories or other arrangements for the purposes of the practice of sport or physical education, where no such exemption is to be found in Article 13 of the Sixth Directive, constitutes a serious breach of Community law that can render a Member State liable in damages.

On those grounds,


in answer to the questions referred to it by the Svea Hovrätt by order of 26 March

1999, hereby rules:

1. The provisions of Article 13A(1)(m) and 13B(b) of the Sixth Council Directive (77/388/EEC) of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes - Common system of value added tax: uniform basis of assessment, preclude national legislation from providing for a general exemption from value added tax for the supply of premises and other facilities and the related supply of


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accessoriesor other arrangements for the practice of sport or physical education, including services supplied by profit-making organisations. 2. The provisions of Article 17(1) and (2) of Directive 77/388, read together with those of Articles 2, 6(1) and 13B(b), are sufficiently clear, precise and unconditional for an individual to rely on them as against a Member State before a national court. 3. The implementation of a general exemption from value added tax for the supply of premises and other facilities and for the related supply of accessories or other arrangements for the purposes of the practice of sport or physical education, where no such exemption is to be found in Article 13 of Directive 77/388, constitutes a serious breach of Community law that can render a Member State liable in damages.


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9. Cases T-38/99 to T-50/99,

Sociedade Agrícola dos Arinhos, Ld., established in Lisbon (Portugal),

Sociedade Agrícola do Monte da Aldeia, Ld., established in Lisbon,

António José da Veiga Teixeira, residing in Coruche (Portugal),

Sociedade Agrícola Monte da Senhora do Carmo SA, established in Almeirim

(Portugal),

Sociedade Agrícola de Perescuma SA, established in Almeirim,

Sociedade Agrícola Couto de Fornilhos SA, established in Moura (Portugal),

Casa Agrícola da Raposeira, Ld., established in Coruche,

José de Barahona Núncio, residing in Évora (Portugal),

Prestase - Prestação de Serviços e Contabilidade, Ld., established in Lisbon,

Sociedade Agro-Pecuária da Herdade do Zambujal, Ld., established in Palmela

(Portugal),

Francisco Luís Pinheiro Caldeira, residing in Campo Maior (Portugal),

Sociedade Agrícola Cabral de Ascensão, Ld.², established in Horta dos Arcos, Serpa

(Portugal),

Joaquim Inácio Passanha Braancamp Sobral, residing in Lisbon,

applicants,

supported by

Portuguese Republic,

intervener,

v

Commission of the European Communities

defendant,

APPLICATION for annulment of Article 2(a) of Commission Decision 98/653/EC of

18 November 1998 concerning emergency measures made necessary by the occurrence

of bovine spongiform encephalopathy in Portugal (OJ 1998 L 311, p. 23), inasmuch as

it prohibits the dispatch from Portugal to Spain and France of fighting bulls intended

for cultural and sporting events,


OF THE EUROPEAN COMMUNITIES (Fourth Chamber),

gives the following


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Judgment

Facts and relevant provisions 1. The 13 applicants are Portuguese breeders of fighting bulls. Those bulls are intended for cultural and sporting events which, in the countries of the European Union, are organised only in Portugal, Spain and France. That breed of bulls is bred only in those three Member States. 2. On 10 November 1998, after having learned of the imminent adoption of a Community decision on the export of Portuguese bovine animals, the Portuguese association of breeders of fighting bulls sent a fax to the President of the Commission containing a statement intended to draw his attention to the particular situation of Portuguese fighting bulls. 3. On 18 November 1998, the Commission adopted Decision 98/653/EC concerning emergency measures made necessary by the occurrence of bovine spongiform encephalopathy in Portugal (OJ 1998 L 311, p. 23; the contested decision). That decision is based on the EC Treaty, Council Directive 90/425/EEC of 26 June 1990 concerning veterinary and zootechnical checks applicable in intra-Community trade in certain live animals and products with a view to the completion of the internal market (OJ 1990 L 224, p. 29), as last amended by Directive 92/118/EEC (OJ 1993 L 62, p. 49), and in particular on Article 10(4) thereof, and on Council Directive 89/662/EEC of 11 December 1989 concerning veterinary checks in intra-Community trade with a view to the completion of the internal market (OJ 1989 L 395, p. 13), as last amended by Directive 92/118, and in particular on Article 9(4) thereof. 4. In recital 3 in the preamble to the contested decision, the Commission states that missions on issues related to bovine spongiform encephalopathy (BSE) were carried out in Portugal in 1996, from which it was apparent that not all risk factors were adequately managed. In addition, a follow-up mission, conducted by the Food and Veterinary Office of the Commission from 28 September to 2 October 1998, had confirmed certain continued shortcomings in the enforcement of the measures to control the risk factors. 5. Article 2 of the contested decision states: Portugal shall ensure that the following are not dispatched from its territory to other Member States or to third countries: (a) live bovine animals and bovine embryos; .... 6. Under Article 4 of that decision, Portugal is to ensure that until 1 August 1999 meat, products and material derived from bovine animals slaughtered in Portugal are not dispatched from its territory to other Member States or to non-member States. 7. Article 16(1) of the contested decision provided: This decision shall be reviewed within 18 months after its adoption at the latest, pending an overall examination of the situation, in particular in view of the development of the incidence of the disease and the effective enforcement of the relevant measures, and in the light of new scientific information. 8. Under Article 18 of that decision, it is addressed to the Member States. 9. he prohibition on dispatch outside Portugal laid down in the contested decision was later extended until 1 February 2000 by Commission Decision 99/517/EC of 28 July 1999 (OJ 1999 L 197, p. 45), which also made a number of amendments to the contested decision. 10. The contested decision was also amended by Commission Decision 1999/713/EC of 21 October 1999 (OJ 1999 L 281, p. 90). That decision, which introduces a number of exceptions to the prohibition on dispatch laid down by the contested decision, allows, in


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particular, for the possibility of dispatching fighting bulls from Portugal to other Member States, subject to certain conditions. 11. The contested decision was again amended by Commission Decision 2000/104/EC of 31 January 2000 (OJ 2000 L 29, p. 36). The temporal restriction on the prohibition on dispatch provided for in Article 4 of the contested decision was lifted. In addition, Article 16 thereof was amended in order to provide for the review of the contested decision, as amended, by 18 May 2000 at the latest, pending an overall examination of the situation. 12. By Decisions 2000/371/EC and 2000/372/EC of 6 June 2000 (OJ 2000 L 134, pp. 34 and 35), the Commission took up the option provided for in Article 3(7) of the contested decision, as inserted by Decision 99/713, and set at 7 June 2000 the date on which the dispatch of fighting bulls from Portugal to France and Spain may commence. Procedure and forms of order sought by the parties 13. By applications lodged at the Registry of the Court of First Instance on 12 February 1999, the applicants brought actions for annulment of Article 2(a) of the contested decision, inasmuch as it prohibits the dispatch from Portugal of fighting bulls. Those actions were joined when they were registered and thus form a single case. 14. By separate document lodged at the Registry of the Court of First Instance on 19 April 1999, seven of the applicants in the main proceedings brought, pursuant to Articles 185 and 186 of the EC Treaty (now Articles 242 EC and 243 EC) and Article 104 et seq. of the Rules of Procedure, an application for interim measures. They claimed that the judge hearing the application should suspend the operation of Article 2(a) of the contested decision, inasmuch as it prohibits the dispatch from Portugal of fighting bulls, and adopt any other interim measure which he deemed appropriate. 15. By order of 9 August 1999, the President of the Court of First Instance dismissed the application for interim measures. 16. By order of 14 October 1999, the President of the Fourth Chamber of the Court of First Instance granted the Portuguese Government's application to intervene in support of the form of order sought by the applicants. 17. The parties to the present applications were expressly requested by the Court to take a view on the amendment of the contested decision made by Decision 99/713 and on the effect of that amendment on the present case. The applicants maintained their applications unchanged. 18. On hearing the report of the Judge-Rapporteur, the Court decided to open the oral procedure. 19. The parties presented oral argument and answered the questions put to them by the Court at the hearing on 20 September 2000. 20. The applicants claim that the Court should: - annul Article 2(a) of the contested decision, inasmuch as it prohibits the dispatch from Portugal to Spain and France of fighting bulls intended for cultural and sporting events held in those two Member States; - order the Commission to pay the costs in their entirety. 21. The intervener claims that the Court should: - declare the applications well founded and, consequently, annul the contested decision in accordance with the form of order sought by the applicants; - order the Commission to pay the costs. 22. The Commission contends that the Court should: - dismiss the applications as inadmissible or, in the alternative, unfounded; - order the applicants to pay the costs.


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Law 23. The applicants put forward essentially two pleas in law. The first alleges an error in the premisses of the contested decision and failure to provide a statement of reasons; the second alleges breach of Articles 30, 34 and 36 of the EC Treaty (now, after amendment, Articles 28 EC, 29 EC and 30 EC) and the principle of proportionality. The Commission contests those pleas and itself raises the plea that the applications are inadmissible. Admissibility Arguments of the parties 24. The Commission contends that the contested decision is not of individual concern to any of the applicants, since their factual situation does not have particular characteristics which distinguish them individually in the same way as the addressee of the decision. 25. In that regard, the Commission submits that the applicants' situation must not be distinguished from that of the Portuguese breeders of other bovine animals. It contends, in particular, that the fact that fighting bulls are bred only to take part in sporting and bull-fighting events does not prevent the animal, once it has been killed in the ring, from being able to enter the food chain, its meat being able, in particular, to be eaten in specialised restaurants. 26. At the hearing, the defendant again stated that the fax sent by the applicants to the President of the Commission which contained a statement of their position was sent only 10 days before the contested decision was formally adopted. At that time, the draft decision had already been drawn up on the basis of an opinion of the Standing Veterinary Committee adopted in October 1998 in accordance with the relevant legislation. 27. The applicants submit that they satisfy the conditions as to standing laid down in the fourth paragraph of Article 173 of the EC Treaty (now, after amendment, the fourth paragraph of Article 230 EC), since the contested decision is of direct and individual concern to them. 28. They claim that there are factual circumstances which distinguish them from the other breeders and traders of live bovine animals to which, in theory, the prohibition at issue applies. 29. First, the applicants breed a unique breed of bovine animals intended for fighting in cultural and sporting events which take place only in Portugal, Spain and France. Those fighting bulls are different from all other bovine animals; it is logical to export them even if, because of the protection of public health, they must be destroyed after the fight. 30. Second, they are entered in the Portuguese herd book of fighting bulls and in the Spanish herd book of the breed of fighting bulls. The second entry is independent of the first, since it is subject to the particular requirements of Spanish legislation. 31. Third, in order to dispatch or transport their bulls to Spain or France, the applicants are subject to the rules which are specifically applicable to fighting bulls (which are not applicable to other bovine animals) and which ensure strict control of all the animals transported. Those rules are a fundamental part of the body of safeguards relating to the traceability of animals.


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32. Fourth, before the contested decision was even adopted, through the association of which they are members (the Portuguese association of breeders of fighting bulls), the applicants drew the Commission's attention to the particular characteristics of fighting bulls and of the rules which are applicable to them and requested it to take account of those characteristics. That association has neither an economic or business activity of its own nor an activity which is independent of that of its members. 33. In that regard, the applicants point out that, on 20 July 1998, together with the other members of the Portuguese association of breeders of fighting bulls, they submitted a complaint to the Commission requesting it to intervene in connection with the problems caused by the Spanish authorities concerning the export of fighting bulls entered in the Portuguese herd book. In that complaint, they communicated to the Commission information enabling it to understand the particular nature of the legislation applicable to fighting bulls as compared with that applicable to other bovine animals. 34. In addition, on 10 November 1998, in response to information concerning the imminent adoption of a decision completely prohibiting the export of bovine animals, the applicants sent to the President of the Commission by fax a statement intended to draw his attention to the particular situation of Portuguese fighting bulls. In that statement, the applicants insist on the fact that it would be possible to adopt other measures (such as the obligation to burn bulls after the show) which, whilst being equally protective of public health, would have less restrictive effects on intra-Community trade. 35. Finally, the applicants add that most of them had concluded contracts with Spanish and French operators for the sale of fighting bulls intended for Spanish and/or French rings during the 1999 bull-fighting season. The performance of those contracts was made impossible by the contested decision. Findings of the Court 36. Under the fourth paragraph of Article 173 of the Treaty, any natural or legal person may 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, is of direct and individual concern to the former. 37. It is settled case-law that persons other than those to whom a decision is addressed may claim to be individually concerned within the meaning of the fourth paragraph of Article 173 of the Treaty if that decision affects their legal position by reason of certain attributes peculiar to them or by reason of a factual situation which differentiates them from all other persons and distinguishes them individually in the same way as the addressee (Case 25/62 Plaumann v Commission [1963] ECR 95, 107; Case C-309/89 Codorniu v Council [1994] ECR I-1853, paragraph 20; and Case T-435/93 ASPEC and Others v Commission [1995] ECR II-1281, paragraph 62). The purpose of the fourth paragraph of Article 173 of the Treaty is to ensure that legal protection is also available to a person who, whilst not the person to whom the contested measure is addressed, is in fact affected by it in the same way as is the addressee (Case 222/83 Municipality of Differdange and Others v Commission [1984] ECR 2889, paragraph 9). 38. Accordingly, in the light of that case-law, it is necessary to determine whether the contested decision affects the applicants by reason of certain attributes peculiar to them or there is a factual situation which differentiates them, in respect of that decision, from all other operators to which it may potentially apply. 39. In the present case, the contested decision adopts emergency measures made necessary by the occurrence of BSE in Portugal. It lays down a prohibition on


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dispatching live bovine animals, meat and other products derived from bovine animals slaughtered in Portugal. The grounds for that prohibition are the protection of public health. From the outset, that prohibition was supposed to be temporary, and the decision was to be reviewed within 18 months after its adoption at the latest, pending an examination of the situation as a whole. 40. The applicants claim, first of all, that the bulls which they breed are intended to fight at cultural and sporting events and that, accordingly, there is still a reason to export them even if, after the fight, they must be destroyed. Furthermore, they assert that the bulls in question are entered in the Portuguese and Spanish herd books of fighting bulls and that the export and transportation of those animals to Spain and France are subject to specific rules which ensure strict control of all the animals exported. 41. The Court finds that those factors do not constitute a particular situation differentiating the applicants, in respect of the contested decision, from any other breeder or exporter of bovine animals affected by the prohibition on dispatch laid down by that decision. 42. The fact that the bulls exported by the applicants have different characteristics and are subject to breeding conditions and a set of specific controls unlike those for other bovine animals does not concern the way in which the decision in question affects the applicants. 43. That decision, inasmuch as it prohibits the dispatch of bovine animals, does not affect the applicants by reason of certain attributes peculiar to them or a factual situation which differentiates them from all other operators. It concerns them only by reason of their objective status as exporters of bovine animals, by the same token as all other operators exercising the same activity of dispatching from Portugal. Thus the contested decision is addressed in general and abstract terms to indeterminate classes of persons and applies to objectively determined situations. 44. The applicants' arguments must therefore be rejected. 45. The applicants also assert that, before the contested decision was adopted and, in particular, through the Portuguese association of breeders of fighting bulls, of which they are members, they drew the Commission's attention to the particular characteristics of fighting bulls and of the legislation which is applicable to them and that they requested it to take account of those characteristics. 46. It must be borne in mind that, even if all the letters and all the contacts referred to by the applicants may have been relevant to the subject-matter of the contested decision, it is clear from the case-law that the fact that a person intervenes, in one way or another, in the procedure leading to the adoption of a Community measure is not such as to differentiate that person from any other in respect of the measure in question except where the Community legislation applicable grants him certain procedural safeguards (order in Case T-585/93 Greenpeace and Others v Commission [1995] ECR II-2205, paragraphs 56 and 63; and judgment in Joined Cases T-481/93 and T-484/93 Exporteurs in Levende Varkens and Others v Commission [1995] ECR II-2941, paragraphs 55 and 59). 47. In the present case, the applicants' argument must be analysed in the context of the Community legislation applicable in this case and, in particular, in the light of Directives 89/662 and 90/425, in that they concern the taking of emergency measures which are necessary in order to avert any danger where it is found that there is an outbreak of an epizootic disease, any new serious and contagious disease or another cause likely to constitute a serious hazard to animals or to human health.


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48. None of the provisions of that legislation requires the Commission, in order to take such emergency measures, to follow a procedure during which the applicants, whether themselves or through their representatives, would have the right to be heard. Accordingly, the interventions referred to by the applicants cannot confer on them standing to bring proceedings under the fourth paragraph of Article 173 of the Treaty. 49. Finally, the applicants claim that they have concluded contracts for the sale of fighting bulls intended to fight in Spain and France during the 1999 bull-fighting season, the performance of which was made impossible by the decision. 50. Admittedly, the Court of Justice and the Court of First Instance have already held actions for annulment of measures of a legislative nature to be admissible where an overriding provision of law required the bodies responsible for them to take into account the applicants' particular situation (see Joined Cases T-480/93 and T-483/93 Antillean Rice Mills and Others v Commission [1995] ECR II-2305, paragraphs 67 to 78; and Case T-135/96 UEAPME v Council [1998] ECR II-2335, paragraph 90), and the existence of contracts entered into by an applicant which are affected by the contested measure may, in certain cases, distinguish such a particular situation (Case 11/82 Piraiki-Patraiki and Others v Commission [1985] ECR 207, paragraphs 28 to 31; and Case C-152/88 Sofrimport v Commission [1990] ECR I-2477, paragraphs 11 to 13). 51. However, the present case is different from those which gave rise to the judgments cited, in that such an obligation does not exist in this case. Accordingly, that argument cannot be accepted. 52. In those circumstances, the condition of admissibility requiring that the applicants be individually concerned by the contested measure has not been satisfied in this case. 53. Consequently, their applications must be dismissed as inadmissible.

On those grounds,

THE COURT OF FIRST INSTANCE (Fourth Chamber)

hereby:

Dismisses the applications as inadmissible;


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10. Case C-174/00,


Hoge Raad der Nederlanden (Netherlands) for a preliminary ruling in the proceedings

pending before that court

between

Kennemer Golf & Country Club

and

Staatssecretaris van Financiën,

on the interpretation of Article 13A(1)(m) of the Sixth Council Directive 77/388/EC of

17 May 1977 on the harmonisation of the laws of the Member States relating to

turnover taxes - Common system of value added tax: uniform basis of assessment (OJ

1977 L 145, p. 1),


gives the following

Judgment

1. By judgment of 3 May 2000, received at the Court on 9 May 2000, the Hoge Raad der Nederlanden (Supreme Court of the Netherlands) referred to the Court for a preliminary ruling under Article 234 EC, three questions on the interpretation of Article 13A(1)(m) of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes - Common system of value added tax: uniform basis of assessment (OJ 1997 L 145, p. 1, hereinafter the Sixth Directive). 2. The questions have been raised in proceedings between Kennemer Golf & Country Club (hereinafter Kennemer Golf) and the Staatssecretaris van Financiën concerning the value added tax (hereinafter VAT) which Kennemer Golf was charged on certain transactions which it carried out in connection with the practice of the sport of golf. Law applicable The Community legislation 3. Article 2 of the Sixth Directive provides: The following shall be subject to value added tax: 1. The supply of goods or services effected for consideration within the territory of the country by a taxable person acting as such; 2. The importation of goods. 4. Article 4(1) of the Sixth Directive provides: Taxable person shall mean any person who independently carries out in any place any economic activity specified in paragraph 2, whatever the purpose or results of that activity. 5. Article 13A(1) of the Sixth Directive is worded as follows: Without prejudice to other Community provisions, Member States shall exempt the following under conditions which they shall lay down for the purpose of ensuring the


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correct and straightforward application of such exemptions and of preventing any possible evasion, avoidance or abuse: ... (m) certain services closely linked to sport or physical education supplied by non-profit-making organisations to persons taking part in sport or physical education; .... 6. Article 13A(2) is worded as follows: (a) Member States may make the granting to bodies other than those governed by public law of each exemption provided for in (1)(b), (g), (h), (i), (l), (m) and (n) of this Article subject in each individual case to one or more of the following conditions: - they shall not systematically aim to make a profit, but any profits nevertheless arising shall not be distributed, but shall be assigned to the continuance or improvement of the services supplied, ... The national legislation 7. Article 11(1) of the Wep op de Omzetbelasting (Law on turnover tax) 1968 (Staatsblad 1968 No L 329) of 28 June 1968: Subject to conditions to be laid down by administrative regulation, the following shall be exempt from tax ...: ... (e) the services rendered to their members by bodies having as their object the practice or promotion of sport, with the exception ... (f) supplies of goods and services of a social and cultural nature to be defined by administrative regulation, provided that the trader does not aim to make a profit and there is no serious distortion of competition in relation to traders who aim to make a profit. 8. The administrative regulation mentioned in paragraph 1 of the Law referred to in the paragraph above is the Uitvoeringsbesluit Omzetbelasting 1968 (1968 Decree on the implementation of turnover tax, Staatsblad 1968, No 423) of 12 August 1968. In Article 7(1) and annex B it provides that the following are in particular to be treated as exempt supplies of goods and services: (b) supplies of goods and services [of a social and cultural character] made as such by the organisations listed hereinafter, provided that they do not aim to make a profit: ... 21. organisations whose activities consists in providing facilities for the practice of sports, solely in respect of such services. The main proceedings and the questions referred for a preliminary ruling 9. Kennemer Golf is a Netherlands association having about 800 members. Its objects, according to its Articles of Association, are the pursuit and promotion of sport and games, in particular golf. It owns facilities for this purpose, including a golf course and clubhouse, in the municipality of Zandvoort (Netherlands). 10. Members of Kennemer Golf must pay an annual subscription fee as well as an admission fee. They are required to participate in an interest-free debenture loan issued by Kennemer Golf. 11. Besides the use of the facilities by members of Kennemer Golf, non-members may use the course and the associated facilities in return for payment of a day subscription fee. According to the case-file, Kennemer Golf earns relatively large sums in this way,


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amounting to approximately one third of the amounts paid by members as annual subscription fees. 12. During the years prior to the 1994 tax year, Kennemer Golf made an operating surplus which was then appropriated as a provisional reserve fund for non-annual expenditure. This also happened in relation to the tax year in question, 1994. 13. In the belief that its services to non-members were exempt from VAT, under Article 11(1)(f) of the Wet op de Omzetbelasting 1968 and Articles 7(1) and annex B(b), point 21, of the Uitvoeringsbesluit Omzetbelasting 1968, Kennemer Golf did not pay tax on those services for the 1994 tax year. The tax authorities, however, considered that Kennemer Golf was aiming to make a profit and imposed an additional assessment to VAT in relation to those services. 14. When Kennemer Golf's objection to that decision was dismissed by the tax authorities, it appealed to the Gerechtshof (Regional Court of Apeal) Amsterdam (Netherlands). That court dismissed the appeal on the ground that if Kennemer Golf was systematically making profits the presumption had to be that it was seeking to achieve operating surpluses and was pursuing a profit-making aim. 15. Kennemer Golf then appealed against that judgment of the Gerechtshof Amsterdam, to the Hoge Raad der Nederlanden. That court, taking the view that the decision in the case depended on the interpretation of the national VAT provisions in the light of the corresponding provisions of the Sixth Directive, decided to stay proceedings and refer the following questions to the Court for a preliminary ruling: 1.(a) Where it is necessary to establish whether or not a body aims to make a profit as referred to in Article 13(A)(1)(m) of the Sixth Directive, must account be taken solely of earnings from the services referred to in that provision or must earnings from other services provided by it also be taken into consideration? (b) If, in determining whether or not the aim is to make a profit, account must be taken solely of the services supplied by the body as referred to in Article 13(A)(1)(m) of the Sixth Directive and not total earnings, must only the costs incurred directly for the services be taken into consideration or also a proportion of the body's other costs? 2.(a) Is there a direct link, within the meaning of inter alia the judgment of the Court of Justice of the European Communities in Case 102/86 Apple and Pear Development Council [1988] ECR 1443, in the case of subscription fees charged by an association which, pursuant to the object laid down in its articles of association, provides its members with sports facilities in the context of an association and, if not, is the association to be regarded as a taxable person within the meaning of Article 4(1) of the Sixth Directive only in so far as it also provides benefits for which it receives direct consideration? (b) Must the total amount of the annual subscription fees from the members whom the association provides with sports facilities be included in the earnings of a body in the form of an association which are to be taken into account in determining whether or not the aim is to make a profit as described in the first question even where no direct link exists between the various services provided by the association for its members and the subscription fee paid by them? 3. Does the fact that a body uses surpluses which it systematically aims to make for the purpose of its benefits in the form of a facility to play a type of sport as provided for in Article 13(A)(1)(m) of the Sixth Directive justify the conclusion that it does not aim to make a profit within the meaning of that provision, or is such a conclusion possible only where the intention is incidentally and not systematically to make operating surpluses which are used as described? In answering these questions must account also be taken of the first indent of Article 13(A)(2)[(a)] of the Sixth Directive and, if so, how


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is that provision to be interpreted? In particular, in the second part of the provision must systematically be read between arising and shall, or merely incidentally? The first question 16. By part (a) of its first question, the national court is asking essentially whether Article 13A(1)(m) of the Sixth Directive is to be interpreted as meaning that the categorisation of an organisation as non-profit-making must be based exclusively on the services referred to in that provision or on all the organisation's activities. 17. According to the Netherlands Government, only the specific services referred to in that provision of the Sixth Directive should be considered. Otherwise unreasonable results might occur and fraud or abuses could be encouraged. That approach, in its view, is consonant with the general scheme of the common system of VAT, which always looks at the specific transaction and not at the person of the supplier. 18. On this point, it must be observed, as both the United Kingdom Government and the Commission point out, that it is clear from the wording of Article 13A(1)(m) of the Sixth Directive that the provision explicitly relates to certain services ... supplied by non-profit-making organisations and that none of the language versions of that provision contains wording which might suggest, owing to its ambiguity, that the expression non-profit-making refers to services and not to organisations. 19. Moreover, all the exemptions listed in Article 13A(1)(h) to (p) of the Sixth Directive cover organisations acting in the public interest in a social, cultural, religious or sports setting or in a similar setting. The purpose of the exemptions is therefore to provide more favourable treatment, in the matter of VAT, for certain organisations whose activities are directed towards non-commercial purposes. 20. The interpretation advocated by the Netherlands Government, whereby only services provided for the abovementioned purposes should be taken into consideration, would mean, as the Advocate General points out in paragraph 23 of his Opinion, that commercial undertakings, normally acting with a view to profit, could in principle seek exemption from VAT when, exceptionally, they provide services to which the qualifying adjective non-profit-making could be attached. Such a result could not, however, be consonant with the wording and aim of the provision in question. 21. If the categorisation of an organisation as non-profit-making must be based on the nature of the organisation itself and not on the services which it provides in the form of those specified in Article 13A(1)(m), it follows that, in order to determine whether such an organisation meets the conditions for application of that provision, account must be taken of all its activities, including those which it provides by way of extension to the services covered by that provision. 22. The answer to be given to part (a) of the first question must therefore be that Article 13A(1)(m) of the Sixth Directive is to be interpreted as meaning that the categorisation of an organisation as non-profit-making must be based on all the organisation's activities. 23. In view of that reply, it is not necessary to reply to part (b) of the first question. The third question 24. By its third question, which it is appropriate to examine before the second question owing to its close link to the first question, the national court is asking, essentially, whether Article 13A(1)(m) of the Sixth Directive, read together with the first indent of paragraph (2)(a) of that provision, is to be interpreted as meaning that an organisation may be categorised as non-profit-making even if it systematically seeks to achieve surpluses which it then uses for the purposes of the provision of its services.


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25. Whilst the Finnish and United Kingdom Governments, and also the Commission, submit that the most important consideration is whether the organisation in question aims to make a profit and not the fact that it actually makes a profit, even if it does so habitually, the Netherlands Government, on the other hand, contends that the VAT exemption should not be granted when profits are made systematically. In its submission, the exemption is applicable only where surpluses are achieved occasionally or merely incidentally. 26. On that point, it must be observed first of all that it is clear from Article 13A(1)(m) of the Sixth Directive that an organisation is to be classed as being non-profit-making for the purposes of that provision by having regard to the aim which the organisation pursues, that is to say that the organisation must not have the aim, unlike a commercial undertaking, of achieving profits for its members (see, as regards the exemption provided for in Article 13A(1)(n) of the Sixth Directive, the judgment given today in Case C-267/00 Commissioners of Customs & Excise v Zoological Society of London [2002] ECR I-3353, paragraph 17). The fact that it is the aim of the organisation which is the test of eligibility for the VAT exemption is clearly borne out by most of the other language versions of Article 13A(1)(m), in which it is explicit that the organisation in question must not have a profit-making aim (see besides the French version, the German version - Gewinnstreben, the Dutch version - winst oogmerk, the Italian version - senza scopo lucrativo and the Spanish version - sin fin lucrativo). 27. It is for the competent national authorities to determine whether, having regard to the objects of the organisation in question as defined in its constitution, and in the light of the specific facts of the case, an organisation satisfies the requirements enabling it to be categorised as a non-profit-making organisation. 28. Where it is found that this is indeed the case, the fact that an organisation subsequently achieves profits, even if it seeks to make them or makes them systematically, will not affect the original categorisation of the organisation as long as those profits are not distributed to its members as profits. Clearly, Article 13A(1)(m) of the Sixth Directive does not prohibit the organisations covered by that provision from finishing their accounting year with a positive balance. Otherwise, as the United Kingdom points out, such organisations would be unable to create reserves to pay for the maintenance of, and future improvements to, their facilities. 29. The referring court is also unsure whether this interpretation can be maintained in cases where the achievement of surpluses is systematically sought by an organisation. It refers in this regard to the first indent of Article 13A(2)(a) of the Sixth Directive which would seem to suggest that the VAT exemption is to be disallowed where an organisation systematically seeks to make profits. 30. As far as that provision is concerned, it must be observed at the outset that it lays down an optional condition that the Member States are at liberty to impose as an additional condition for the grant of certain exemptions set out in Article 13A(1) of the Sixth Directive, amongst which figures the exemption covered by that same provision, under (m), which concerns the present case. The Netherlands legislature seems to require compliance with that optional condition before the benefit of that exemption can be granted. 31. As far as the interpretation of that optional condition is concerned, the Netherlands Government maintains that the exemption must be refused where an organisation systematically seeks to achieve surpluses. The Finnish and United Kingdom Governments, as well as the Commission, on the other hand, submit that systematic pursuit of profits is not of decisive importance where it is clear from both the circumstances of the case and the kind of activity actually carried on by an organisation


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that it is acting in accordance with the objects set out in its constitution and that these do not include any profit-making aim. 32. It must be observed, with regard to this point, that the first condition set out in the first indent of Article 13A(2)(a) of the Sixth Directive, namely that the organisation in question must not systematically aim to make a profit, clearly refers, in the French version of that provision, to profit, whilst the two other conditions set out there, namely that no profits should be distributed and that any profits be assigned to the continuance or improvement of the services that supplied, refer, in the French text, to bénéfices. 33. Although that distinction is not to be found in any of the other language versions of the Sixth Directive, it is borne out by the objective of the provisions contained in Article 13A thereof. As the Advocate General points out in paragraph 57 to 61 of his Opinion, it is not profits (bénéfices), in the sense of surpluses arising at the end of an accounting year, which preclude categorisation of an organisation as non-profit-making, but profit (profit) in the sense of financial advantages for the organisation's members. Consequently, as the Commission also points out, the condition set out in the first indent of Article 13A(2)(a) essentially replicates the criterion of non-profit-making organisation as contained in Article 13A(1)(m). 34. The Netherlands Government argues that such an interpretation does not take account of the fact that the first indent of Article 13A(2)(a) must, as an additional condition, necessarily have a content extending beyond that of the basic provision. In response to that argument, it suffices to observe that that condition does not refer only to Article 13A(1)(m) of the Sixth Directive but also to a large number of other compulsory exemptions which have a different content. 35. Consequently, the answer to be given to the third question must be that Article 13A(1)(m) of the Sixth Directive is to be interpreted as meaning that an organisation may be categorised as non-profit-making even if it systematically seeks to achieve surpluses which it then uses for the purposes of the provision of its services. The first part of the optional condition set out in the first indent of Article 13A(2)(a) of the Sixth Directive is to be interpreted in the same way. The second question 36. By part (a) of its second question, the national court is asking, essentially, whether Article 2(1) of the Sixth Directive is to be interpreted as meaning that annual subscription fees of the members of a sports association can constitute the consideration for the services provided by the association, even though the members who do not use or do not regularly use the association's facilities must still pay their annual subscription fee. 37. The Hoge Raad refers in this context to the case-law of the Court, in particular paragraph 12 of the judgment in Apple and Pear Development Council, in which the Court held that the concept of supply of services effected for consideration within the meaning of Article 2(1) of the Sixth Directive presupposes the existence of a direct link between the service provided and the consideration received. The Hoge Raad is doubtful whether such a direct link exists in circumstances such as those of the present case. 38. According to the Netherlands Government, in circumstances such as those in the present case, there is no direct link between the subscription fee paid by members of the association and the services which it provides. Article 2(1) of the Sixth Directive, as interpreted by the Court, requires that a specific service be paid for directly, which is not the case where certain members of a sports club do not avail themselves of the services which it offers and nevertheless pay their annual subscription fee.


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39. In that regard, according to the case-law of the Court, the basis of assessment for a provision of services is everything which makes up the consideration for the service provided and a provision of services is taxable only if there is a direct link between the service provided and the consideration received (Apple and Pear Development Council, paragraphs 11 and 12, and Case C-16/93 Tolsma [1994] ECR I-743, paragraph 13). A supply of services is therefore taxable only if there exists between the service provider and the recipient a legal relationship in which there is a reciprocal performance, the remuneration received by the provider of service constituting the value actually given in return for the service supplied to the recipient (Tolsma, paragraph 14). 40. As the Commission argues, the fact that in the case before the national court the annual subscription fee is a fixed sum which cannot be related to each personal use of the golf course does not alter the fact that there is reciprocal performance between the members of a sports association such as that concerned in the main proceedings and the association itself. The services provided by the association are constituted by the making available to its members, on a permanent basis, of sports facilities and the associated advantages and not by particular services provided at the members' request. There is therefore a direct link between the annual subscription fees paid by members of a sports association such as that concerned in the main proceedings and the services which it provides. 41. Moreover, as the United Kingdom Government rightly points out, the Netherlands Government's approach would make it possible for practically any service provider to escape VAT by recourse to all-inclusive charges and thus to set aside the taxation principles which constitute the basis of the common system of VAT established by the Sixth Directive. 42. The answer to be given to part (a) of the second question must therefore be that Article 2(1) of the Sixth Directive is to be interpreted as meaning that the annual subscription fees of members of a sports association such as that concerned in the main proceedings can constitute the consideration for the services provided by the association, even though members who do not use or do not regularly use the association's facilities must still pay their annual subscription fees. 43. In view of that reply, it is no longer necessary to answer the second part of part (a) of the second question or part (b) of that question.

On those grounds,


in answer to the questions referred to it by the Hoge Raad der Nederlanden by

judgment of 3 May 2000, hereby rules:

1. Article 13A(1)(m) of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes - Common system of value added tax: uniform basis of assessment is to be interpreted as meaning that the categorisation of an organisation as non-profit-making must be based on all the organisation's activities. 2. Article 13A(1)(m) of Directive 77/388 is to be interpreted as meaning that an organisation may be categorised as non-profit-making even if it systematically seeks to achieve surpluses which it then uses for the purposes of the provision of its services. The first part of the optional condition set out in the first indent of Article 13A(2)(a) of Directive 77/388 is to be interpreted in the same way.


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3. Article 2(1) of Directive 77/388 is to be interpreted as meaning that the annual subscription fees of the members of a sports association such as that concerned in the main proceedings can constitute the consideration for the services provided by the association, even though members who do not use or do not regularly use the association's facilities must still pay their annual subscription fees.


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11. Joined Cases T-185/00, T-216/00, T-299/00 and T-300/00,

Métropole télévision SA (M6), established in Neuilly-sur-Seine (France),

applicant in Case T-185/00,

Antena 3 de Televisión SA, established in Madrid (Spain),


Gestevisión Telecinco SA, established in Madrid,


SIC - Sociedade Independente de Comunicação SA, established in Linda-a-Velha

(Portugal),


supported by

Deutsches SportFernsehen GmbH (DSF), established in Ismaning (Germany),

intervener in Case T-299/00,

and by

Reti Televisive Italiane Spa (RTI), established in Rome (Italy),

intervener in Case T-300/00,

v


defendant,

supported by

Union européenne de radio-télévision (UER), established in Grand-Saconnex

(Switzerland),

intervener in Cases T-185/00, T-216/00, T-299/00 and T-300/00,

and by

Radiotelevisión Española (RTVE), established in Madrid,

intervener in Cases T-216/00 and T-299/00,

APPLICATION for annulment of Commission Decision 2000/400/EC of 10 May 2000

relating to a proceeding pursuant to Article 81 of the EC Treaty (Case IV/32.150 -

Eurovision) (OJ 2000 L 151, p. 18),


OF THE EUROPEAN COMMUNITIES (Second Chamber, Extended

Composition),

gives the following


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Judgment

The European Broadcasting Union and the Eurovision system 1. The European Broadcasting Union (EBU) is a professional non-profit association of radio and television organisations set up in 1950 and with its headquarters in Geneva (Switzerland). In accordance with Article 2 of its Statutes as amended on 3 July 1992, the objectives of the EBU are to represent the interests of its members in the field of programming and in legal, technical and other areas, and in particular to promote the exchange of radio and television programmes by all means - for example, Eurovision and Euroradio - and any other form of cooperation among its members and with other broadcasting organisations or their associations, as well as to assist its active members in negotiations of all kinds and, when asked, to negotiate on their behalf. 2. Eurovision constitutes the main framework for the exchange of programmes among the active members of the EBU. It has been in existence since 1954 and is one of the main objectives of the EBU. According to Article 3(6) of the EBU Statutes, in the version of 3 July 1992, Eurovision is a television programme exchange system organised and coordinated by the EBU, based on the understanding that members offer to the other members, on the basis of reciprocity, ... their coverage of sports and cultural events taking place in their countries and of potential interest to other members, thereby enabling each other to provide a high quality service in these fields to their respective national audiences. Eurovision members include active members of the EBU as well as consortia of such members. All active members of the EBU may participate in a system of joint acquisition and sharing of television rights (and of the costs relating thereto) to international sports events, which are referred to as Eurovision rights. 3. To become an active member, a broadcasting organisation must satisfy the conditions relating, inter alia, to national coverage and to the nature and financing of programming (hereinafter the membership conditions). 4. Until 1 March 1988, the benefit of EBU and Eurovision services was exclusively reserved to their members. However, when the Statutes of the EBU were amended in 1988, a new paragraph (in the current version, paragraph 7) was added to Article 3, providing that contractual access to Eurovision may be granted to associated members as well as non-members of the EBU. Applicants 5. Métropole télévision (M6) is a company incorporated under French law, which operates a national television service broadcast free-to-air via a land radio relay channel as well as by cable and satellite. 6. Since 1987, M6 has lodged an application to join the EBU six times. Each time, its application has been rejected on the ground that it does not fulfil the membership conditions laid down by the EBU Statutes. Following the last refusal of the EBU, M6 filed a complaint with the Commission on 5 December 1997, complaining of EBU's practices towards it, and in particular the refusal of its applications for admission. By decision of 29 June 1999, the Commission dismissed the applicant's complaint. The Court of First Instance, in its judgment in Métropole télévision v Commission (Case T-206/99 [2001] ECR II-1057), annulled that decision to reject the complaint on the grounds that the Commission infringed its obligations to state reasons and the obligations it has when dealing with complaints. 7. Meanwhile, on 6 March 2000, M6 filed a new complaint with the Commission, asking it to declare the EBU's membership conditions as amended in 1998 anti-competitive and not qualifying for an exemption under Article 81(3) EC. By letter of 12


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September 2000, the Commission dismissed that complaint. The applicant brought an action for annulment of that dismissal. That action was held inadmissible by order of the Court of First Instance in Case T-354/00 M6 v Commission [2001] ECR II-3177. 8. Antena 3 de Televisión SA (hereinafter Antena 3) is a company governed by Spanish law set up on 7 June 1988, which has been granted by the competent Spanish authority a concession indirectly to operate the public television service. 9. On 27 March 1990. Antena 3 lodged an application to join the EBU. By letter of 3 June 1991, Antena 3 was notified of the decision by the EBU's administrative council to refuse that application. 10. Gestevisión Telecinco SA (hereinafter Telecinco) is a company governed by Spanish law which operates a terrestrial television channel with national coverage, broadcast free-to-air. In accordance with Spanish national law, that undertaking is one of three private operators to which the Spanish authorities granted a 10-year concession in 1989 to operate indirectly the public television service. The concession for Telecinco was renewed for an additional 10 years. 11. SIC - Sociedade Independente de Comunicação SA (hereinafter SIC) is a company governed by Portuguese law whose purpose is to carry out television-related activities and which has, since October 1992, operated one of the main national television stations broadcast free-to-air in Portugal. Background to the proceedings 12. In response to a complaint of 17 December 1987 by the company Screensport, the Commission examined the rules governing the Eurovision system of joint acquisition and sharing of sport television rights to see whether they were compatible with Article 81 EC. The complaint related, in particular, to the refusal by the EBU and its members to grant sub-licences for sporting events. On 12 December 1988, the Commission sent the EBU a statement of objections referring to the rules governing the acquisition and use, within the Eurovision system, of television rights for sporting events, which are generally exclusive. The Commission stated that it was prepared to consider an exemption for those rules, on the condition that a requirement to grant sub-licences to non-members be laid down for a substantial portion of the rights in question, under reasonable conditions. 13. On 3 April 1989, the EBU notified to the Commission the provisions of its Statute and other rules governing the acquisition of television rights to sporting events, the exchange of sports programmes within the framework of Eurovision and contractual access to such programmes for third parties, in order to obtain negative clearance or, alternatively, an exemption pursuant to Article 81(3) EC. 14. After the EBU revised its rules to make it possible to obtain sub-licences for the broadcasts in question (the 1993 access scheme for non-members of the EBU, hereinafter the sub-licensing scheme), the Commission adopted, on 11 June 1993, Decision 93/403/EEC relating [to] a proceeding pursuant to Article [81] of the EEC Treaty (IV/32.150 - EBU/Eurovision System) (OJ 1993 L 179, p. 23), under which it granted an exemption pursuant to Article 81(3). That decision was annulled by judgment of the Court of First Instance in Joined Cases T-528/93, T-542/93, T-543/93 and T-546/93 Métropole Télévision and Others v Commission [1996] ECR II-649. 15. Subsequently, upon request by the Commission, the EBU adopted and submitted to the Commission, on 26 March 1999, rules granting access to Eurovision rights operated on pay-channel television (the sub-licensing rules of 1999 relating to the exploitation of Eurovision rights on pay-TV channels of 26 March 1999, hereinafter the sub-licensing rules).


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16. On 10 May 2000, the Commission adopted Decision 2000/400/EC relating to a proceeding pursuant to Article 81 of the EC Treaty (Case IV/32.150 - Eurovision) (OJ 2000 L 151, p. 18, hereinafter the contested decision), by which the Commission granted a new exemption pursuant to Article 81(3). 17. In Article 1 of the contested decision, the Commission declared that, pursuant, inter alia, to Article 81(3) EC, the provisions of Article 81(1) EC are inapplicable from 26 February 1993 until 31 December 2005 to the following notified agreements: (a) the joint acquisition of sport television rights; (b) the sharing of the jointly acquired sport television rights; (c) the exchange of the signal for sporting events; (d) the sub-licensing scheme; (e) the sub-licensing rules. 18. The sub-licensing scheme and the sub-licensing rules together constitute the access scheme for third parties to the Eurovision system. 19. In connection with the sub-licensing scheme, the contested decision states: [T]he EBU and its members undertake to grant non-member broadcasters extensive access to Eurovision sports programmes the rights for which have been acquired on an exclusive basis through collective negotiations. ... [That scheme] grants live and deferred transmission rights to third parties of jointly acquired Eurovision sports rights. In particular the non-EBU members have significant access to the unused rights, i.e. for the transmission of sporting events which are not transmitted by, or of which only a minor part are transmitted by, an EBU member. The terms and conditions of access are freely negotiated between the EBU (for transnational channels), or the member(s) in the country concerned (for national channels), and the non-member ... (paragraph 28 of the contested decision). 20. In connection with the sub-licensing rules, the contested decision specifies that a non-member of the EBU may buy television rights in order to broadcast on its pay-TV channel sports competitions which are identical or comparable to those presented by the members of Eurovision on their own pay-TV channels. The fee to be paid by the non-member is to fairly reflect the terms on which the rights were obtained by the Eurovision member (Annex II (iii) to the contested decision). 21. The declaration of exemption contained in Article 1 of the contested decision is subject to a condition and an obligation. The condition requires the EBU and its members collectively to acquire television rights to sporting events only under agreements which allow them to grant access to third parties in conformity with the access scheme or, subject to the approval of the EBU, on conditions more favourable to the non-member. The obligation requires the EBU to inform the Commission of any amendments and additions to the access scheme and of all arbitration procedures concerning disputes under the access scheme (Article 2 of the contested decision). Procedure and forms of order sought 22. M6, Antena 3, SIC and Telecinco brought their actions by applications lodged at the Registry of the Court of First Instance on 13 July, 21 August and 18 and 19 September 2000, respectively. 23. By applications lodged at the Registry of the Court of First Instance on 5, 17 and 26 January 2001, the EBU and Radiotelevisión Española (hereinafter RTVE) sought leave to intervene, the former in Cases T-185/00, T-216/00, T-299/00 and T-300/00 and the latter in Cases T-216/00 and T-299/00, in support of the forms of order sought by the defendant. Those applications were granted by orders of the President of the Fourth Chamber of the Court of First Instance on 7 February, 29 March and 7 May 2001.


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24. By letter of 22 February 2001, SIC lodged at the Registry of the Court of First Instance a request for confidentiality for parts of the application. The Court granted that request by order of the President of the Fourth Chamber of 30 April 2001. 25. By applications lodged at the Registry of the Court of First Instance on 7 March and 13 March 2001, Deutsches SportFernsehen GmbH (DSF) and Reti Televisive Italiane Spa (RTI) sought leave to intervene in Cases T-299/00 and T-300/00 respectively in support of the forms of order sought by the applicant. Those applications were granted by orders of the President of the Fourth Chamber of the Court of First Instance on 7 May and 7 June 2001. 26. Owing to a change in the composition of the Chambers of the Court of First Instance as of 20 September 2001, the Judge-Rapporteur was assigned to the Second Chamber and the present cases were therefore assigned to that Chamber. 27. By decision of the Court of First Instance of 20 February 2002, the cases were referred to a Chamber composed of five judges. 28. By order of 25 February 2002, the President of the Second Chamber (Extended Composition) joined the four cases for the purposes of the oral procedure and the judgment, pursuant to Article 50 of the Rules of Procedure of the Court of First Instance. 29. Upon hearing the report of the Judge-Rapporteur, the Court of First Instance (Second Chamber, Extended Composition) decided to open the oral procedure. Within the framework of the measures of organisation of procedure, he invited the parties to produce certain documents and to provide written responses to certain questions. 30. The oral arguments of the parties and their responses to the Court's questions were heard at the hearing on 13 and 14 March 2001. 31. In Case T-185/00, M6 claims that the Court should: - annul the contested decision; - order the Commission to pay the costs; - order the EBU to pay the costs of its intervention. 32. In Case T-216/00, Antena 3 claims that the Court should: - order the Commission to add several documents to the file; - annul the contested decision; - order the Commission to pay the costs; - order the interveners to pay the costs of their interventions. 33. In Case T-299/00, Telecinco claims that the Court should: - annul the contested decision; - order the Commission to pay the costs. 34. In Case T-300/00, SIC claims that the Court should: - order the Commission to produce certain documents; - annul the contested decision; - order the Commission to pay the costs; - order the EBU to pay the costs of its intervention. 35. In the four joined cases, the Commission contends that the Court should: - dismiss the applications; - order the applicants to pay the costs. 36. DSF, intervener in support of the form of order sought by Telecinco in Case T-299/00, claims that the Court of First Instance should annul the contested decision. 37. RTI, intervener in support of the form of order sought by SIC in Case T-300/00, claims that the Court should: - annul the contested decision; - order the Commission to pay the costs, including those of the intervener.


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38. The EBU, intervener in the four cases in support of the form of order sought by the Commission, claims that the Court should: - dismiss the applications; - order the applicants to bear the costs of their interventions. 39. The RTVE, intervener in Cases T-216/00 and T-299/00 in support of the form of order sought by the Commission, claims that the Court should: - dismiss the application; - order the applicants to bear the costs of their intervention. Law Preliminary observations 40. The applicants put forward seven pleas altogether in support of their action. The first plea, raised in the four cases, relates to infringement of the obligation to comply with the judgments of the Court of First Instance. The second plea, put forward in Cases T-216/00 and T-300/00, relates to an error as to the facts and an infringement of the obligation to provide a statement of reasons. The third plea, raised in all the cases, alleges misapplication of Article 81(1) EC. The fourth plea, raised in the four cases, concerns infringement of Article 81(3) EC. The fifth plea, raised in all the cases, is based on errors in law relating to the material and temporal scope of the contested decision. The sixth plea, raised in Case T-216/00, relates to infringement of the principle of sound administration. Finally, the seventh plea, raised in all the cases, alleges misuse of powers. 41. It is appropriate to analyse first the fourth plea, raised in all four cases, concerning infringement of Article 81(3) EC. 42. By that plea, the applicants claim that the Eurovision system does not satisfy any of the criteria for exemption laid down in Article 81(3) EC, in particular the absence of the possibility of eliminating competition in respect of a substantial part of the products in question. Further, the submissions put forward by M6 as regards the discriminatory nature of the sub-licensing scheme and the indispensable character of that discrimination should be amended, inasmuch as, by those arguments, M6 is essentially claiming that the sub-licensing scheme does not guarantee access for non-member channels to the rights acquired by the EBU, thereby leading to compartmentalisation of the market for televised rebroadcasting rights and, as a result, the elimination of competition in that market. The fourth plea, concerning infringement of Article 81(3) EC as regards the criterion relating to the absence of the possibility of eliminating competition in respect of a substantial part of the products in question Arguments of the parties 43. The applicants claim that the Commission misapplied Article 81(3)(b) EC in the present case, for two main reasons. 44. First, the Commission did not exactly define either the product market or the geographic market in question. In the absence of a definition of the relevant market, the Commission's conclusion that the agreements notified do not afford the undertakings benefiting from the exemption the possibility of eliminating competition in respect of a substantial part of the products in question can have no basis of reference. Without a


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preliminary definition it is impossible to determine whether the guarantees offered by the third party access scheme to the Eurovision system satisfy the condition in Article 81(3)(b) EC. 45. In addition, inasmuch as the contested decision accepts that major international sporting events, such as the Olympic Games or major football championships, constitute autonomous markets, the Commission should have concluded that, within those markets, the Eurovision system eliminates any competition. 46. Second, as regards the guarantees provided by the third-party access scheme to the Eurovision system which, according to the contested decision, makes it possible to avoid eliminating competition in the market, the applicants consider that if the Commission had correctly analysed the product market, it would have noted that the third-party access scheme could not avoid eliminating from competition general channels such as the applicants. First, that scheme in fact only authorises deferred transmission of sports programmes and, second, it does not really work in the case of general channels which, like the applicants, compete against EBU members. 47. The Commission, supported by the EBU, contends that it is settled practice for it to leave open the definition of the relevant product market or geographic market when, on the basis of the narrowest possible definition of the market, no problem of restriction on competition arises. 48. In the present case, the Commission considers it clear that the agreements notified affect trade between Member States (paragraph 81 of the contested decision) and that they restrict competition (paragraph 71 of the contested decision). However, the Commission considers that on the narrowest definition of the product market, such as the market for the acquisition of transmission rights for specific sporting events like the summer Olympics, and taking account of the structure of the market and all the rules governing sub-licensing for access to Eurovision sports programmes by broadcasting organisations which are not EBU members, the notified agreements do not give rise to any restriction on competition. 49. The Commission considers that, in the light of the narrowest possible definition of the market, the restrictive effects of the notified agreements have been resolved by the amendment of the agreements and by the conditions imposed by the Commission (relating to the third-party access scheme to the Eurovision system). There is therefore no need to define more precisely the markets concerned. 50. As regards the third-party access scheme to the Eurovision system, the Commission, supported by the EBU and RTVE, points out that following the changes made to that scheme, live transmission rights which are not used by EBU members are made available to their competitors. The access to deferred transmission rights imposed by the Commission was also greatly enlarged. That scheme functioned in practice and a number of competitors of EBU members had recourse to it for both live and deferred transmissions, as well as for the transmission of extracts. In short, as a result of that scheme, it was not possible to eliminate competition in a substantial part of the market, even by defining the market as narrowly as the transmission rights for the summer Olympics. Findings of the Court 51. In light of the arguments of the parties, the terms of the contested decision should first be set out as they relate to the definition of the market to which the notified agreements refer. In that regard, the contested decision specifies, in paragraphs 38 to 49:


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4.1. Product market The EBU considers that the relevant market for the assessment of the case is the market for the acquisition of the television rights to important sporting events in all disciplines of sport, irrespective of the national or international character of the event. The EBU is only active in the acquisition of television rights to sporting events of pan-European interest. The Commission shares the EBU's view that sports programmes have particular characteristics; they are able to achieve high viewing figures and reach an identifiable audience, which is a special target for certain important advertisers. However, contrary to what the EBU suggests, the attraction of sports programmes and hence the level of competition for the television rights varies according to the type of sport and the type of event. Mass sports like football, tennis or motor-racing generally attract large audiences, the preferences varying from country to country. By contrast, minority sports achieve very low ratings. International events tend to be more attractive for the audience in a given country than national ones, provided the national team or a national champion is involved, while international events in which no national champion or team is participating can often be of little interest. In the last 10 years, with increased competition in the television markets, the prices for television rights to sporting events have increased considerably ...; this is particularly true with regard to outstanding international events such as the Football World Cup or the Olympic Games. The preferences of viewers determine the value of a programme to advertisers and pay-TV broadcasters. ... However, if we observe that sports broadcasts achieve the same or similar sized audiences whether or not they are competing with simultaneously broadcast sporting events, there is strong evidence that those events could determine the subscribers' or advertisers' choice of a certain broadcaster. Indeed, data on viewer behaviour, among major sporting events, show that for at least some sporting events which have been analysed, such as the summer Olympics, the winter Olympics, the Wimbledon Finals and the Football World Cup, viewing behaviour does not appear to be influenced by the coincidence of other major sporting events being broadcast simultaneously, or nearly simultaneously. That is, viewing figures for the major sporting events appear to be largely independent of whatever other major sports are broadcast at a similar time. Therefore, the offer of such sporting events could influence the subscribers or advertisers to such an extent that the broadcaster would be inclined to pay much higher prices. In conclusion, the Commission's investigation shows that the market definition proposed by the EBU is too large and that there is a strong likelihood that there are separate markets for the acquisition of some major sporting events, most of them international. However, it is not necessary for the purposes of this case to exactly define the relevant product markets. Taking into account the present structure of the market and the sub-licensing ... rules granting access to non-EBU members to Eurovision sport programmes, these agreements do not raise competition concerns, even on the basis of markets for the acquisition of particular sporting events such as the summer Olympics. ... 4.2. Geographic market Some sporting events rights are acquired on an exclusive basis for the whole European territory and, regardless of the technical means of transmission, are to be resold thereafter per country, [while] others are acquired on a national basis. The kind of major sporting event rights for which the EBU bids, which have a pan-European


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interest from the viewers' perspective, such as the Olympic Games, will normally fall within the first category of European licences. Nevertheless, irrespective of the scope of the licences ... the preferences of viewers can significantly vary from country to country depending on the type of sport and the type of event and, therefore, the conditions of competition for the television rights can vary accordingly. With regard to the downstream markets affected by the present notification, the free-to-air and pay-TV broadcasting markets should be considered, largely for linguistic, cultural, licensing and copyright reasons, generally national or extending to single linguistic areas. However, for the purposes of this case it is not necessary to define the relevant geographic market exactly. Taking into account the present structure of the market and the sub-licensing rules granting non-EBU members access to the Eurovision sport programmes, these agreements do not raise competition concerns even on the basis of national markets for the acquisition of sports rights, nor for the downstream markets of free-to-air and pay-TV broadcasting. 52. It follows from the contested decision, and particularly those passages reproduced in the preceding paragraph, that the Commission's position with respect to defining the markets concerned may be summarised as follows: the Eurovision system gives rise to effects in two distinct markets, that of the acquisition of television rights, where the EBU is in competition with other large European multimedia groups (the upstream market), and that of the transmission of purchased sports rights, where EBU members are competing, for each country or linguistic area, with other television channels, for the most part national. 53. As regards the upstream market, the Commission admits that there is a strong likelihood (in English, which is the only authentic text) that there are separate markets for the acquisition of rights to some major international sporting events which are normally acquired for the whole European territory. Concerning the downstream market, even if the Commission does not make it clear as regards the definition of the product market, its analysis nevertheless shows that, with respect to the preference of television viewers and their influence on the value of programmes for announcers and pay-TV companies, a specific market for the transmission of major sporting events exists. That market, which according to the Commission is subdivided into a free-to-air TV market and a pay-TV market, is generally limited to the national territory or to a homogeneous linguistic area. 54. None the less, the Commission considered it unnecessary to define exactly either the product market or the geographic market affected by the Eurovision system, since even if the narrowest possible market is taken as a reference point - that is, the market for acquiring rights to certain sporting events such as the Olympic Games - the Commission takes the view that the Eurovision system, given the structure of the market and the third-party access scheme to the system, does not give rise to competition concerns. 55. Second, the Commission states, in paragraphs 100 to 103 of the contested decision, relating to the non-elimination of competition in respect of a substantial part of the products in question as regards the joint acquisition of rights, that despite the fact that the EBU is facing increasing competition from media groups and brokers, the Commission was concerned that some of the jointly acquired rights affect sporting events, for instance the Olympic Games, of particular economic and popular importance, which could constitute a ... market ... exclusively held by the Eurovision members. It goes on:


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To address these concerns the EBU has modified the notified agreements to include a set of sub-licensing rules which make sure that non-EBU members have extensive access to the Eurovision sports rights. This counterbalances the restrictive effects of the joint acquisition of the sports rights. The schemes will provide extensive live and deferred transmission access for non-members on reasonable terms. 56. Moreover, as regards the restriction arising from the sharing of Eurovision rights between EBU members competing for the same audience, the Commission concludes, in paragraph 104 of the contested decision, that there will be no elimination of competition given the current market structure and considering that non-EBU members will be able to participate in the broadcast of the sporting events in question following the EBU sub-licensing schemes. 57. It thus appears from the contested decision that, even if the Commission did not consider it necessary exactly to define the product market concerned, it nevertheless assumed the existence of a market consisting entirely of certain major international sporting events, such as the Olympic Games, in order to verify whether the Eurovision system complies with the conditions for exemption provided for in Article 81(3) EC. Therefore, the absence of such an exact definition has not, in the present case, affected the Commission's analysis of whether the Eurovision system satisfies the condition for exemption laid down in Article 81(3)(b) EC and, consequently, that part of the applicants' reasoning must be held to have no bearing on the issue. 58. Second, it should be determined whether and, if necessary, to what extent the defendant made a manifest error of assessment when applying the relevant condition for exemption in concluding that, even in a market made up of specific international sporting events, the third-party scheme for access to the Eurovision system made it possible to compensate for restrictions on competition in relation to third parties and thus to avoid competition being eliminated to their detriment. 59. Before analysing that scheme, it is necessary first to set out the structure of the markets at issue and the restrictions on competition to which the Eurovision system gives rise. 60. As far as the structure of the markets is concerned, the contested decision indicates, inter alia, that television rights to sporting events are granted for a given territory, normally on an exclusive basis. That exclusivity is considered necessary by broadcasters in order to guarantee the value of a given sports programme in terms of viewing figures and advertising revenues (paragraph 51 of the contested decision). 61. Television rights are normally held by the organiser of a sporting event, who controls access to the premises where the event is staged. In order to control the televising of the event and to guarantee exclusivity, the organiser admits only one broadcaster or a limited number of broadcasters to produce the television signal. Under their contract with the organiser, they are not allowed to make their signal available to any third party who has not acquired the relevant television rights (paragraph 52 of the contested decision). 62. The Commission observes that the EBU has lost significant market share in the relevant markets over the past 10 years. With regard to the acquisition of television rights to certain sporting events, the EBU has faced competition from the big European media groups as well as from international brokers. The EBU has also lost a large number of important sporting events during the past years as the result of higher competitive offers (paragraphs 54 and 55 of the contested decision). However, the EBU remains in a strong market position in the acquisition of rights to major international sporting events with a very strong appeal for European viewers, in respect of which the rights owners still insist that the events must not be broadcast on pay television. In


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addition, the EBU still has a unique one-stop-shop position, which guarantees the organisers the widest possible viewing audience in Europe. The fact that the European television rights for the Olympic Games have always been sold to the EBU is of particular importance (paragraphs 55 to 57 of the contested decision). 63. As regards the effects of the Eurovision system on competition, the contested decision shows (paragraphs 71 to 80) that there are two types of restrictions. First, the joint acquisition of television rights to sporting events, their sharing and the exchange of signal restricts or even eliminates competition among EBU members which are competitors on both the upstream market, for the acquisition of rights, and for the downstream market, for televised transmission of sporting events. In addition, that system gives rise to restrictions on competition as regards third parties since those rights, as set out in paragraph 75 of the contested decision, are generally sold on an exclusive basis, so that EBU non-members would not in principle have access to them. 64. While it is true that the purchase of televised transmission rights for an event is not in itself a restriction on competition likely to fall under Article 81(1) EC and may be justified by particular characteristics of the product and the market in question, the exercise of those rights in a specific legal and economic context may none the less lead to such a restriction (see, by analogy, Case 262/81 Coditel v Ciné-Vog Films [1982] ECR 3381, paragraphs 15 to 17). 65. In that vein, the Commission states, in paragraph 45 of the contested decision, that the acquisition of exclusive TV rights to certain major sporting events has a strong impact on the downstream television markets in which the sporting events are broadcast. 66. In addition, it appears from the analysis of the documents in the case and the arguments of the parties that the acquisition of transmission rights to a major international sporting event such as the Olympics or the football World Cup cannot fail to affect strongly the market in sponsorship and advertising, which is the main source of revenue for television channels which broadcast free-to-air, since those programmes attract a very wide audience. 67. Moreover, as pointed out by SIC, the effects which restrict competition for third parties as a result of the Eurovision system are accentuated, first, by the level of vertical integration of the EBU and its members, which are not merely purchasers of rights but also television operators which broadcast the rights purchased, and second, by the geographic extent of the EBU, whose members broadcast in all the countries of the European Union. As a result, when the EBU acquires transmission rights for an international sporting event, the access to that event is in principle automatically precluded for all non-member operators. By contrast, the situation appears to be different when the transmission rights for sporting events are acquired by an agency which buys those rights in order to resell them, or when they are bought by a media group which only has operators in certain Member States, since that group will tend to enter into negotiations with operators in other Member States in order to sell those rights. In that case, despite the exclusive purchase of the rights, other operators still have the opportunity to negotiate their acquisition for their respective markets. 68. In light of those facts - that is, the structure of the market, the position of the EBU in the market for certain international sporting events and the level of vertical integration of the EBU and its members - there is reason to determine whether the scheme for third-party access to the Eurovision system makes it possible to counterbalance the restrictions on competition affecting those third parties and thus to avoid their exclusion from competition.


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69. Before that analysis is made, it should be noted that the contested decision indicates (inter alia, in paragraphs 106 to 108) that, when the Commission concluded, in paragraphs 103 and 104 of the contested decision (see paragraphs 55 and 56 above) that restrictions on competition resulting from the Eurovision system are compensated for by a series of sub-licensing rules, it was referring to the full scheme for access by third parties to the Eurovision system, which includes the sub-licensing scheme and the sub-licensing rules (see paragraph 18 above). However, as the applicants are television channels which transmit free-to-air, only the sub-licensing scheme is likely to counterbalance the restrictions on competition of which they complain. Therefore, the Court's analysis will apply only to that scheme. 70. In paragraph 107 of the contested decision, the Commission states that, under the sub-licensing scheme, the EBU and its members undertake to grant non-member broadcasters extensive access to Eurovision sports programmes for which the rights have been acquired through collective negotiations .... According to the Commission, [t]he 1993 scheme grants live and deferred transmission rights to third parties of jointly acquired Eurovision sports rights. In addition, in paragraph 28 of the contested decision, it is suggested in that regard that the non-EBU members have significant access to the unused rights, i.e. for the transmission of sporting events which are not transmitted by, or of which only a minor part are transmitted by, an EBU member. 71. As is apparent from Annex I to the contested decision, the sub-licensing scheme, applicable to free-to-air television channels, provides that sub-licences may be granted for live and deferred transmissions. Live transmissions (Annex I, Part IV(1)) are stipulated only for residual transmissions, that is, for transmissions of those competitions or parts of competitions which are not reserved for live transmission by EBU members, since an event is considered to be transmitted live if the majority of the principal competitions constituting it are transmitted live (Annex I, Part IV(1.3)). Therefore, an EBU member need only reserve the live transmission of the majority of the competitions of an event for non-members competing for the same market to be refused sub-licences for live transmission of the entire event, including competitions in that event which no EBU member will transmit live. 72. The answers given by SIC to the questions posed by the Court of First Instance indicate that, in application of that rule, the Portuguese public operator (RTP-Radiotelevisão Portuguesa SA, hereinafter RTP), an EBU member, refused to sell SIC sub-licences for the live broadcast of 1994 World Cup matches, including for matches that RTP did not intend to broadcast, on the ground that RTP intended to broadcast live the majority of the matches in that competition, that is, 47 matches out of 52. 73. However, even if it proves necessary, for reasons linked to exclusive transmission rights for sporting events and the guarantee of their economic value (see paragraph 60 above), for EBU members to reserve for themselves live transmission of the programmes acquired by the EBU, none of these reasons justifies their being able to extend that right to all the competitions which are part of the same event, even when they do not intend to broadcast all those competitions live. 74. In addition, as a result of the joint application of the sub-licensing scheme (applicable to channels which transmit free-to-air) and the sub-licensing rules (applicable to pay-TV channels), even when an EBU member transmits less than the majority of the competitions of a sporting event but nevertheless broadcasts the remaining competitions of that event on its pay-TV channel, the non-member of EBU has access only to deferred transmission, unless it itself is a pay-TV channel - in which case, under the sub-licensing rules, it may purchase sub-licences for live transmissions of competitions identical or comparable to that being transmitted by the EBU member.


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75. As a result, as the documents in the case make clear, in particular the correspondence between M6 and the Groupement de radiodiffuseurs français de l'union européenne de radio-télévision (GRF) and the correspondence between SIC and the RTP, the opportunity for non-members of the EBU to transmit the main sporting events live is rendered inoperative to the extent that EBU members can themselves either transmit the events live or make use, under the sub-licensing scheme, of a right of reserve which also applies to events which they do not intend to transmit live. 76. Those restrictions are all the more severe in view of the fact that, as these proceedings show, generally only live transmission is of real interest to the applicants, which are general television channels transmitting free-to-air with national coverage, since televised broadcasts of sporting competitions - at least the most important of them - are able to attract a wide audience and thereby justify their economic cost only as long as the result of those competitions remains unknown and, therefore, only if the broadcast is live. The deferred broadcast of sporting events, by contrast, is of no real interest in economic terms for general television channels, such as the applicants, whose financing depends exclusively on broadcast publicity and sponsorship. 77. Added to those restrictions - at least in the case of France, where several television channels are EBU members - are questions of a practical nature which make it difficult for non-members to have access both to the direct purchase of sub-licences and to the purchase in auction of EBU rights which have not been used by its members (that was the case for the television transmission rights for the Sydney Olympic Games on French television). Those difficulties are in essence linked to the fact that television channels which are not members of the EBU do not have available to them sufficiently early the information they need in order to set up the technical facilities necessary, first, to televise transmissions of sporting events and, second, to adapt both their programming and their public information so as to attract large enough audiences to justify the investment. 78. Thus, following the request by M6 by letter of 18 January 1996 that it be notified of the events of the Atlanta Olympic Games (July 1996) which it could broadcast, it was not until a discussion on 7 June 1996 that the GRF informed it, in very vague terms, that the French members of the EBU were going to broadcast those games live for 15 hours a day and that, as a result, access by M6 to direct transmissions might possibly apply to a few football matches or events of little interest, such as softball. 79. In the light of all the preceding considerations, the first conclusion to be made is that, contrary to what the Commission contends, the sub-licensing scheme does not guarantee that live transmission rights which are not used by EBU members are made available to their competitors. 80. As regards the possibility of acquiring sub-licences to cover deferred events or to provide roundups of these, and keeping in mind the fact that those modes of transmission are of limited interest for general channels which transmit free-to-air with national coverage, it is clear that this possibility is also subject to several restrictions. First, competitions the rights for which have been purchased by the EBU may not be broadcast until, at the earliest, one hour after the end of the event (the one-hour embargo) or of the last competition of the day, but never before 22.30 local time. Second, as is clear from the documents included in the file by the applicants, in reality, the members of the EBU, in any case in the countries where the applicants operate, impose even stricter conditions on embargo times and the editing of programmes. 81. Lastly, the scheme under analysis enables non-members of the EBU to purchase the rights to transmit news commentaries (two per event or per day of competition, of 90 seconds each), called News Access. However, as pointed out by the applicants, that


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opportunity is always guaranteed them in the countries where they operate, independently of the sub-licensing scheme. In Spain and Portugal, the option to broadcast roundups of sporting events for public information is guaranteed under the constitutional right to information. In France, that opportunity exists under the code of good conduct which applies to French television channels. 82. In answer to the questions put by the Court of First Instance as to what information led the Commission to state that the scheme for third-party access to Eurovision rights, in force for channels transmitting free-to-air since 1993, gives extensive possibilities for live and deferred transmissions for non-members under reasonable conditions, the Commission placed on the file a list issued by the EBU which sets out the sub-licences granted up until 13 May 1997. Nevertheless, far from confirming the statements by the Commission and the EBU as regards the scheme for third-party access to the Eurovision system, the data in that list invalidate them. They show that while in certain States, such as The Netherlands, Sweden and Norway, EBU members appear to grant sub-licences to competing television channels, in other Member States the granting of sub-licences remains extremely restricted, limited to the sub-licences granted to regional television channels which operate in narrowly limited markets, as in Spain (that is, moreover, confirmed by the list of sub-licences which RTVE has provided in the context of its intervention), or to sub-licences which are for the most part limited to the transmission of news commentaries for public information (News Access), as in Italy or Germany. For the countries where two of the applicants operate, France and Portugal, no sub-licence is mentioned. 83. All the information provided to the Court of First Instance thus goes to show that, contrary to what the Commission concludes in the contested decision, the sub-licensing scheme does not guarantee competitors of EBU members sufficient access to rights to transmit sporting events held by the latter on the basis of their participation in that purchasing association. Apart from a few exceptions, nothing in the rules or mode of implementation of the scheme enables competitors of EBU members to obtain sub-licences for the live broadcast of unused Eurovision rights. In reality, the scheme merely permits the acquisition of sub-licences to transmit roundups of competitions under extremely restrictive conditions. 84. That conclusion is not invalidated by the argument put forward by the EBU to the effect that the proof of the proper functioning of the scheme for access by third parties to the Eurovision system is the absence of recourse to the arbitration procedures which it provides for. First, that argument proves incorrect, inasmuch as the correspondence between SIC and the RTP shows that those operators had recourse to arbitration, at least in relation to the purchase of sub-licences for the 1994 world football championships. In addition, recourse to arbitration is foreseen in the scheme analysed only for disputes concerning the price of sub-licences, which implies that the parties will resort to it only when they agree on all the other conditions of access (see Annex I, Part IV(5.1) and Annex II(iii) to the contested decision). Therefore, the failure to use that procedure cannot show that the sub-licensing scheme allows genuine access to the programmes acquired by the EBU. 85. It follows from all the preceding considerations that the Commission made a manifest error of assessment in the application of Article 81(3)(b) EC in determining that, even if a product market limited to certain major international sports events exists, the sub-licensing scheme guarantees access for third parties which are competitors of the EBU's members to Eurovision rights and consequently avoids the elimination of competition in that market.


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86. Since the Commission's decision to grant individual exemption assumes that the agreement or the decision of the association of undertakings satisfies all four conditions laid down in Article 81(3) EC and that an exemption must be refused if any of the four conditions is not met (see, inter alia, Joined Cases 56/64 and 58/64 Consten and Grundig v Commission [1966] ECR 299, 347 and Case T-17/93 Matra Hachette v Commission [1994] ECR II-595, paragraph 104), the contested decision must be annulled without there being any need to rule on the other pleas put forward or to deal with the requests for production of documents made by the applicants in Cases T-216/00 and T-300/00.

On those grounds,

THE COURT OF FIRST INSTANCE (Second Chamber, Extended Composition),

hereby:

Annuls Commission Decision 2000/400/EC of 10 May 2000 relating to a proceeding pursuant to Article 81 of the EC Treaty (IV/32.150 - Eurovision);


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12 Case C-318/00,

REFERENCE to the Court under Article 234 EC by the High Court of Justice of

England and Wales, Queen's Bench Division, for a preliminary ruling in the

proceedings pending before that court

between

Bacardi-Martini SAS,

Cellier des Dauphins

and

Newcastle United Football Company Ltd,

on the interpretation of Article 59 of the EC Treaty (now, after amendment, Article 49

EC),

THE COURT,

gives the following

Judgment

1. By order of 28 July 2000, received at the Court on 14 August 2000, the High Court of Justice of England and Wales, Queen's Bench Division, referred to the Court for a preliminary ruling under Article 234 EC two questions on the interpretation of Article 59 of the EC Treaty (now, after amendment, Article 49 EC). 2. The questions were raised in proceedings between Bacardi-Martini SAS and Cellier des Dauphins (the claimants) and Newcastle United Football Company Ltd (Newcastle) for compensation for the damage allegedly suffered as a result of Newcastle's interference in the performance of contracts they had concluded with Dorna Marketing (UK) Ltd (Dorna) for the display of advertisements. Legal background 3. The French Loi No 91/32 relative à la lutte contre le tabagisme et l'alcoholisme (Law No 91/32 on combating smoking and alcoholism) of 10 January 1991 (Journal officiel de la République française (JORF), 12 January 1991, p. 615, the Loi Évin) amended Article L.17 of the Code des débits de boissons (Code of licensed premises), subsequently Article L.3323-2 of the Code de la santé publique (Code of Public Health). 4. That provision authorises certain forms, listed exhaustively, of direct or indirect promotion or advertising for alcoholic drinks. 5. Under the Loi Évin, all advertising for alcoholic drinks, defined as drinks whose alcohol content exceeds 1.2 degrees, which is not expressly authorised is prohibited. Since the advertising of alcoholic drinks on television is not expressly authorised, it is prohibited. 6. That prohibition is confirmed by Article 8 of Decree No 92-280 of 27 March 1992 applying Article 27(1) of the Law of 30 September 1986 relating to freedom of communication and defining the general principles concerning the rules applicable to advertising and sponsorship (JORF, 28 March 1992, p. 4313), which provides:


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Advertising relating to products the advertising of which on television is prohibited by law and to the following products and economic sectors shall be prohibited: - drinks having an alcohol content greater than 1.2; ... 7. The Conseil supérieur de l'audiovisuel (CSA) is an independent administrative authority responsible for guaranteeing the exercise of freedom of communication. Among other things, it monitors advertisements broadcast by audiovisual communication services. The CSA can impose administrative penalties on broadcasters who fail to comply with their obligations under the Loi Évin. 8. In 1995 the CSA adopted a code of conduct containing principles relating to the television broadcasting on French stations of sporting events taking place in France or abroad at which advertisements for alcoholic drinks appear. The principles set out in the code, which has been amended on several occasions, have no legislative force but, as stated in the preamble to the code, are accepted as an interpretation voluntarily agreed in good faith. 9. According to the CSA's code of conduct, as worded at the material time, French producers and advertisers may not be treated differently from their foreign competitors, subject only to any limits imposed by the national law of the place of the event. 10. The code proceeds from the principle that the broadcaster must refrain from adopting an indulgent approach to advertisements for alcoholic drinks. 11. To that end, it distinguishes between multinational events and other events taking place abroad. 12. In the case of multinational events, pictures of which are transmitted in a large number of countries and thus cannot be regarded as aimed principally at a French audience, where French broadcasters broadcast pictures whose conditions of filming are not within their control, they cannot be accused of an indulgent approach to the advertisements concerned even if they appear on the screen. 13. In the case of other events, where the law of the host country allows the advertising of alcoholic drinks at sporting venues but the transmission is aimed specifically at a French audience, it is for all the parties negotiating contracts with the holder of the transmission rights to use all available means to prevent brand names relating to alcoholic drinks from appearing on the screen. 14. The British Code of Advertising does not prohibit the advertising of alcoholic drinks, nor does it restrict the means of advertising them. However, it limits the permitted content of the advertisements in several respects. The main proceedings and the questions referred for a preliminary ruling 15. The claimants are companies incorporated under French law which inter alia produce and market alcoholic drinks. Newcastle is a company incorporated under English law which owns and manages a football club and stadium. 16. In the context of an agreement concluded in 1994 between a football association and several football clubs, including Newcastle, of the one part and Dorna of the other part, Dorna was appointed to sell and display advertisements around the touchline of the clubs' pitches for each home match played by the clubs' first teams. 17. Under two contracts concluded in November 1996 between the claimants and Dorna, Dorna undertook to provide the claimants with advertising time on its electronic revolving display system during a match between Newcastle and Metz, a French football club, which was to be played in Newcastle on 3 December 1996 in the third round of the UEFA Cup (Union of European Football Associations).


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18. That match was to be televised in the United Kingdom and France. Newcastle had undertaken, by an agreement with CSI Ltd (CSI), a company incorporated under English law which inter alia sells television broadcasting rights for sporting events, to permit and/or procure the live broadcast of the match on French television. 19. The advertisements for alcoholic drinks which were to be shown during the match in accordance with the contracts between the claimants and Dorna complied with the requirements of English law. 20. Shortly before the start of the match, Newcastle became aware that Dorna had sold the claimants advertising space in order to display advertisements for alcoholic drinks during the match. Newcastle consequently informed Dorna that, since the match was to be broadcast by a French television station, the French legislation restricting the advertising of alcoholic drinks applied, and that Dorna should therefore remove the advertisements for the claimants from its display panels in order to comply with that legislation. 21. Since the advertisements in question could no longer be removed from the revolving displays so shortly before the start of the match, the display system was programmed in such a way that during the match they appeared for only one to two seconds on each occasion instead of the 30 seconds provided for in the contracts. The match was broadcast live on French television, as CSI had sold the transmission rights to the French television station Canal +. 22. On 23 July 1998 the claimants brought proceedings against Dorna and Newcastle in the High Court of Justice of England and Wales, Queen's Bench Division, seeking inter alia damages and injunctions. The proceedings against Dorna were subsequently withdrawn. 23. In support of the claims against Newcastle, the claimants argue that breach of the contracts concluded between themselves and Dorna is attributable to Newcastle, that Newcastle's interference with those contracts cannot be justified by the relevant provisions of the Loi Évin because those provisions are not compatible with Article 59 of the Treaty, and that Newcastle is therefore liable for the damage caused to the claimants on the ground of inducing breach of contract. 24. The claimants consider that the relevant provisions of the Loi Évin, in particular as interpreted and applied by the CSA, infringe Article 59 of the Treaty in that they constitute a restriction on the cross-border provision of services, since they restrict advertising for alcoholic drinks at sporting events taking place in Member States other than France where those events are televised in France, and/or prohibit or restrict the televising in France of sporting events taking place in other Member States where advertisements for alcoholic drinks are displayed at the venue of the event. 25. According to the claimants, the public interest which the provisions of the Loi Évin seek to safeguard is adequately protected by the rules on the advertising of alcoholic drinks applicable in the United Kingdom. 26. The claimants submit, moreover, that the restrictions imposed in accordance with the provisions of the Loi Évin are disproportionate for several reasons. 27. In its defence, Newcastle submits inter alia that instructing Dorna to remove the advertisements for the claimants on the basis of the provisions of the Loi Évin was justified because those provisions are compatible with Article 59 of the Treaty. 28. The High Court observes, first, that various French courts have given divergent decisions on the applicability of the Loi Évin to cross-border broadcasts of sporting events. Second, it refers to an expert report submitted to it on the effects in practice of the relevant provisions of the Loi Évin. It appears in particular that matches preceding


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the quarter-finals of the UEFA Cup are regarded as other events within the meaning of the CSA code of conduct. 29. Having satisfied itself that the issues raised before it did not have to be examined from the point of view of Council Directive 89/552/EEC of 3 October 1989 on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities (OJ 1989 L 298, p. 23), the High Court considered that the provision of Community law which applied was Article 59 of the Treaty. 30. However, it found it inappropriate, as an English court, to make a definitive ruling on the lawfulness of a French law with respect to Article 59 of the Treaty, particularly without the French Government having been able to submit observations on the point. 31. In those circumstances, the High Court decided to stay proceedings and refer the following questions to the Court for a preliminary ruling: 1. Are Articles L.17 to L.21 of the Code des débits de boissons (the so-called Loi Évin provisions), Article 8 of Decree No 92-280 of 27 March 1992 and the provisions of the code of conduct of 28 March 1995 contrary to Article 59 of the EC Treaty (now, after amendment, Article 49 EC) in so far as they prevent or restrict (a) the advertising of alcoholic drinks at sporting events taking place in Member States other than France when the events are to be televised in France and (b) the broadcasting in France of sporting events taking place in other Member States at which there is advertising of alcoholic beverages? 2. If not, is the manner in which these provisions are interpreted and applied in practice by the Conseil supérieur de l'audiovisuel contrary to Article 59 of the EC Treaty (now, after amendment, Article 49 EC) in so far as they prevent or restrict (a) the advertising of alcoholic drinks at sporting events taking place in Member States other than France when the events are to be televised in France and (b) the broadcasting in France of sporting events taking place in other Member States at which there is advertising of alcoholic beverages? 32. Since it considered that it was not clear on the basis of the documents submitted to the Court why an answer to the questions referred was necessary to enable the national court to give judgment in the main proceedings, the Court, pursuant to Article 104(5) of the Rules of Procedure, requested the national court to explain more fully the basis on which Newcastle could rely on the Loi Évin - assuming it to be compatible with Article 59 of the Treaty - as a defence to the claim against it. 33. In answer to that request, the High Court stated that the claims brought against Newcastle were based on the tort of inducing breach of contract. It was well established in English law that a party could submit that such an interference with a contract was justified. The question of what constitutes justification in this context was a matter for the national court to decide, taking account of all the circumstances. 34. In the present case, Newcastle had submitted that it was entitled to give instructions to remove the advertisements in the stadium, inter alia because such instructions were given in the reasonable anticipation that a failure to give them would result in a breach of French law. 35. The claimants for their part submitted that this defence was unacceptable as a matter of Community law, since the Loi Évin was in any event contrary to Article 59 of the Treaty. 36. The High Court therefore considered that it was appropriate to seek a preliminary ruling from the Court on the issue of Community law raised. Admissibility


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Observations submitted to the Court 37. The French Government and the Commission submit that the questions referred are inadmissible. According to the French Government, there is no extra-territorial application of French law. It is the French television station which bought the television rights which would have had to answer for a possible breach of French law when the match which was played in England was broadcast in France. In relying on the application of French law, Newcastle's sole motive was the fear of losing the payment for the television rights. 38. The Commission adds that the High Court has not explained whether and how such financial considerations could justify inducing a breach of contract. More generally, the High Court has given the Court no indication of how the answers to the questions referred could help it to decide the case before it. 39. According to the claimants, on the other hand, the admissibility of the reference for a preliminary ruling derives from the fact that the national court must examine all the justifications put forward. It is not disputed that Newcastle's decision was motivated by the existence and effects of the French law. The claimants submit that this attempt at justification is invalid in that the Loi Évin is incompatible with Article 59 of the Treaty. 40. The United Kingdom Government agrees with that argument and adds that, if it were an express or implied term of the contract between Newcastle and CSI that the broadcast of the match would comply with French law, the compatibility of the French law with Article 59 of the Treaty would indeed be of relevance for the main proceedings. In any event, the requirement imposed on the French broadcaster to negotiate compliance with the Loi Évin when matches taking place abroad are broadcast gives that law extraterritorial effect. Findings of the Court 41. It is settled case-law that it is solely for the national court before which the dispute has 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 submits to the Court. Consequently, where the questions submitted concern the interpretation of Community law, the Court of Justice is, in principle, bound to give a ruling (see, inter alia, Case C-415/93 Bosman [1995] ECR I-4921, paragraph 59; Case C-379/98 PreussenElektra [2001] ECR I-2099, paragraph 38; and Case C-153/00 Der Weduwe [2002] ECR I-11319, paragraph 31). 42. However, the Court has also held that, in exceptional circumstances, it can examine the conditions in which the case was referred to it by the national court (see, to that effect, PreussenElektra, paragraph 39). The spirit of cooperation which must prevail in preliminary ruling proceedings requires the national court for its part to have regard to the function entrusted to the Court of Justice, which is to contribute to the administration of justice in the Member States and not to give opinions on general or hypothetical questions (Bosman, paragraph 60, and Der Weduwe, paragraph 32). 43. Thus the Court has held that it has no jurisdiction to give a preliminary ruling on a question submitted by a national court where it is quite obvious that the interpretation or the assessment of the validity of a provision of Community law sought by that court bears no relation to the actual facts of the main action or its purpose, or where the problem is hypothetical, or where the Court does not have before it the factual or legal


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material necessary to give a useful answer to the questions submitted to it (see Bosman, paragraph 61; Case C-437/97 EKW and Wein & Co [2000] ECR I-1157, paragraph 52; and Case C-36/99 Idéal Tourisme [2000] ECR I-6049, paragraph 20). 44. In order that the Court may perform its task in accordance with the Treaty, it is essential for national courts to explain, when the reasons do not emerge beyond any doubt from the file, why they consider that a reply to their questions is necessary to enable them to give judgment (Case 244/80 Foglia [1981] ECR 3045, paragraph 17). Thus the Court has held that it is essential that the national court should give at the very least some explanation of the reasons for the choice of the Community provisions which it requires to be interpreted and of the link it establishes between those provisions and the national legislation applicable to the dispute (order in Case C-116/00 Laguillaumie [2000] ECR I-4979, paragraph 16). 45. Moreover, the Court must display special vigilance when, in the course of proceedings between individuals, a question is referred to it with a view to permitting the national court to decide whether the legislation of another Member State is in accordance with Community law (Foglia, paragraph 30). 46. In the present case, as the questions referred are intended to enable the national court to assess the compatibility with Community law of the legislation of another Member State, the Court must be informed in some detail of that court's reasons for considering that an answer to the questions is necessary to enable it to give judgment. 47. It appears from the High Court's account of the legal context that it has to apply English law in the main proceedings. It nevertheless considers that the issue of the legality of the Loi Évin provisions is central to resolution of the proceedings before [it]. It does not, however, state positively that an answer to that question is necessary to enable it to give judgment. 48. On being requested by the Court to explain more fully the basis on which Newcastle could rely on the Loi Évin, the High Court has essentially confined itself to repeating the defendant's argument that it could reasonably anticipate that a failure to give instructions to remove the advertisements in the stadium would result in a breach of French law. 49. On the other hand, the High Court has not said whether it itself considered that Newcastle could reasonably suppose that it was obliged to comply with the French legislation, and there is nothing else to that effect before the Court. 50. The United Kingdom Government has contended that the premiss for concluding that the questions referred are material could be the existence of an obligation on the part of Newcastle, in terms of its contract with CSI for the broadcast of the Newcastle-Metz match by a French television station, to comply with the French legislation. On this point, it suffices to state that the national court has not mentioned the existence of any such contractual obligation. 51. Furthermore, as the Advocate General rightly observes in point 34 of his Opinion, even if the national court were to consider that Newcastle could reasonably suppose that compliance with the French legislation required it to intervene in the contracts in question, it is not clear why that would no longer be the case if the provision with which Newcastle wished to ensure compliance turned out to be contrary to Article 59 of the Treaty. 52. The order for reference contains no information on this point either. 53. In those circumstances, the conclusion must be that the Court does not have the material before it to show that it is necessary to rule on the compatibility with the Treaty of legislation of a Member State other than that of the court making the reference.


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54. The questions referred to the Court for a preliminary ruling are therefore inadmissible.

On those grounds,

THE COURT,

in answer to the questions referred to it by the High Court of Justice of England

and Wales, Queen's Bench Division, by order of 28 July 2000, hereby rules:

The reference for a preliminary ruling made by the High Court of Justice of England and Wales, Queen's Bench Division, by order of 28 July 2000 is inadmissible.


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13. Case C-206/01,

REFERENCE to the Court under Article 234 EC by the High Court of Justice of

England and Wales, Chancery Division, for a preliminary ruling in the proceedings


Arsenal Football Club plc

and

Matthew Reed,

on the interpretation of Article 5(1)(a) of the First Council Directive 89/104/EEC of 21

December 1988 to approximate the laws of the Member States relating to trade marks

(OJ 1989 L 40, p. 1),

THE COURT,

gives the following

Judgment

1. By order of 4 May 2001, received at the Court on 18 May 2001, the High Court of Justice of England and Wales, Chancery Division, referred to the Court for a preliminary ruling under Article 234 EC two questions on the interpretation of Article 5(1)(a) of the First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks (OJ 1989 L 40, p. 1, the Directive). 2. Those questions were raised in proceedings between Arsenal Football Club plc (Arsenal FC) and Mr Reed concerning the selling and offering for sale by Mr Reed of scarves marked in large lettering with the word Arsenal, a sign which is registered as a trade mark by Arsenal FC for those and other goods. Legal background Community legislation 3. The Directive states, in the first recital in its preamble, that national trade mark laws contain disparities which may impede the free movement of goods and freedom to provide services and may distort competition within the common market. According to that recital, it is therefore necessary, in view of the establishment and functioning of the internal market, to approximate the laws of the Member States. The third recital in the preamble states that it is not necessary at present to undertake full-scale approximation of national laws on trade marks. 4. According to the 10th recital in the preamble to the Directive: ... the protection afforded by the registered trade mark, the function of which is in particular to guarantee the trade mark as an indication of origin, is absolute in the case of identity between the mark and the sign and goods or services .... 5. Article 5(1) of the Directive provides: The registered trade mark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade:


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(a) any sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered; (b) any sign where, because of its identity with, or similarity to, the trade mark and the identity or similarity of the goods or services covered by the trade mark and the sign, there exists a likelihood of confusion on the part of the public, which includes the likelihood of association between the sign and the trade mark. 6. Article 5(3)(a) and (b) of the Directive provides: The following, inter alia, may be prohibited under paragraphs 1 and 2: (a) affixing the sign to the goods or to the packaging thereof; (b) offering the goods, or putting them on the market or stocking them for these purposes ... 7. Under Article 5(5) of the Directive: Paragraphs 1 to 4 shall not affect provisions in any Member State relating to the protection against the use of a sign other than for the purposes of distinguishing goods or services, where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark. 8. Article 6(1) of the Directive reads as follows: The trade mark shall not entitle the proprietor to prohibit a third party from using, in the course of trade, (a) his own name or address; (b) indications concerning the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of the service, or other characteristics of goods or services; (c) the trade mark where it is necessary to indicate the intended purpose of a product or service, in particular as accessories or spare parts; provided he uses them in accordance with honest practices in industrial or commercial matters. National legislation 9. In the United Kingdom the law of trade marks is governed by the Trade Marks Act 1994, which replaced the Trade Marks Act 1938 in order to implement the Directive. 10. Section 10(1) of the Trade Marks Act 1994 provides: A person infringes a registered trade mark if he uses in the course of trade a sign which is identical with the trade mark in relation to goods or services which are identical with those for which it is registered. 11. Under Section 10(2)(b) of the Trade Marks Act 1994: A person infringes a registered trade mark if he uses in the course of trade a sign where because - ... (b) the sign is similar to the trade mark and is used in relation to goods or services identical with or similar to those for which the trade mark is registered, there exists a likelihood of confusion on the part of the public, which includes the likelihood of association with the trade mark. The main proceedings and the questions referred for a preliminary ruling 12. Arsenal FC is a well-known football club in the English Premier League. It is nicknamed the Gunners and has for a long time been associated with two emblems, a cannon device and a shield device.


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13. In 1989 Arsenal FC had inter alia the words Arsenal and Arsenal Gunners and the cannon and shield emblems registered as trade marks for a class of goods comprising articles of outer clothing, articles of sports clothing and footwear. Arsenal FC designs and supplies its own products or has them made and supplied by its network of approved resellers. 14. Since its commercial and promotional activities in the field of sales of souvenirs and memorabilia under those marks have expanded greatly in recent years and provide it with substantial income, Arsenal FC has sought to ensure that official products - that is, products manufactured by Arsenal FC or with its authorisation - can be identified clearly, and has endeavoured to persuade its supporters to buy official products only. The club has also brought legal proceedings, both civil and criminal, against traders selling unofficial products. 15. Since 1970 Mr Reed has sold football souvenirs and memorabilia, almost all marked with signs referring to Arsenal FC, from several stalls located outside the grounds of Arsenal FC's stadium. He was able to obtain from KT Sports, licensed by Arsenal FC to sell its products to vendors around the stadium, only very small quantities of official products. In 1991 and 1995 Arsenal FC had unofficial articles of Mr Reed's confiscated. 16. The High Court states that in the main proceedings it is not in dispute that Mr Reed sold and offered for sale from one of his stalls scarves marked in large lettering with signs referring to Arsenal FC and that these were unofficial products. 17. It also states that on that stall there was a large sign with the following text: The word or logo(s) on the goods offered for sale, are used solely to adorn the product and does not imply or indicate any affiliation or relationship with the manufacturers or distributors of any other product, only goods with official Arsenal merchandise tags are official Arsenal merchandise. 18. The High Court further states that when, exceptionally, he was able to obtain official articles Mr Reed, in his dealings with his customers, clearly distinguished the official products from the unofficial ones, in particular by using a label with the word official. The official products were also sold at higher prices. 19. Since it considered that by selling the unofficial scarves Mr Reed had both committed the tort of passing off - which, according to the High Court, is conduct on the part of a third party which is misleading in such a way that a large number of persons believe or are led to believe that articles sold by the third party are those of the claimant or are sold with his authorisation or have a commercial association with him - and infringed its trade marks, Arsenal FC brought proceedings against him in the High Court of Justice of England and Wales, Chancery Division. 20. In view of the circumstances in the main proceedings, the High Court dismissed Arsenal FC's action in tort (passing off), essentially on the ground that the club had not been able to show actual confusion on the part of the relevant public and, more particularly, had not been able to show that the unofficial products sold by Mr Reed were all regarded by the public as coming from or authorised by Arsenal FC. In this respect, the High Court observed that it seemed to it that the signs referring to Arsenal FC affixed to the articles sold by Mr Reed carried no indication of origin. 21. As to Arsenal FC's claim concerning infringement of its trade marks, based on section 10(1) and (2)(b) of the Trade Marks Act 1994, the High Court rejected their argument that the use by Mr Reed of the signs registered as trade marks was perceived by those to whom they were addressed as a badge of origin, so that the use was a trade mark use.


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22. According to the High Court, the signs affixed to Mr Reed's goods were in fact perceived by the public as badges of support, loyalty or affiliation. 23. The High Court accordingly considered that Arsenal FC's infringement claim could succeed only if the protection conferred on the trade mark proprietor by section 10 of the Trade Marks Act 1994 and the provisions of the Directive implemented by that statute prohibits use by a third party other than trade mark use, which would require a wide interpretation of those provisions. 24. On this point, the High Court considers that the argument that use other than trade mark use is prohibited to a third party gives rise to inconsistencies. However, the contrary argument, namely that only trade mark use is covered, comes up against a difficulty connected with the wording of the Directive and the Trade Marks Act 1994, which both define infringement as the use of a sign, not of a trade mark. 25. The High Court observes that it was in view of that wording in particular that the Court of Appeal of England and Wales, Civil Division, held in Philips Electronics Ltd v Remington Consumer Products ([1999] RPC 809) that the use other than trade mark use of a sign registered as a trade mark could constitute an infringement of a trade mark. The High Court observes that the state of the law on this point still remains uncertain. 26. The High Court also rejected Mr Reed's argument on the alleged invalidity of the Arsenal FC trade marks. 27. In those circumstances, the High Court of Justice of England and Wales, Chancery Division, decided to stay proceedings and refer the following questions to the Court for a preliminary ruling: 1. Where a trade mark is validly registered and (a) a third party uses in the course of trade a sign identical with that trade mark in relation to goods which are identical with those for [which] the trade mark is registered; and (b) the third party has no defence to infringement by virtue of Article 6(1) of [Directive 89/104/EEC]; does the third party have a defence to infringement on the ground that the use complained of does not indicate trade origin (i.e. a connection in the course of trade between the goods and the trade mark proprietor)? 2. If so, is the fact that the use in question would be perceived as a badge of support, loyalty or affiliation to the trade mark proprietor a sufficient connection? The questions referred for a preliminary ruling 28. The High Court's two questions should be examined together. Observations submitted to the Court 29. Arsenal FC submits that Article 5(1)(a) of the Directive allows the trade mark proprietor to prohibit the use of a sign identical to the mark and does not make exercise of that right conditional on the sign being used as a trade mark. The protection conferred by that provision therefore extends to the use of the sign by a third party even where that use does not suggest the existence of a connection between the goods and the trade mark proprietor. That interpretation is supported by Article 6(1) of the Directive, since the specific limitations on the exercise of trade mark rights there provided for show that such use falls in principle within the scope of Article 5(1)(a) of the Directive and is permitted only in the cases exhaustively listed in Article 6(1) of the Directive.


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30. Arsenal FC submits, in the alternative, that in the present case Mr Reed's use of the sign identical to the Arsenal trade mark must in any event be classified as trade mark use, on the ground that this use indicates the origin of the goods even though that origin does not necessarily have to designate the trade mark proprietor. 31. Mr Reed contends that the commercial activities at issue in the main proceedings do not fall within Article 5(1) of the Directive, since Arsenal FC has not shown that the sign was used as a trade mark, that is, to indicate the origin of the goods, as required by the Directive, in particular Article 5. If the public do not perceive the sign as a badge of origin, the use does not constitute trade mark use of the sign. As to Article 6 of the Directive, nothing in that provision shows that it contains an exhaustive list of activities which do not constitute infringements. 32. The Commission submits that the right which the trade mark proprietor derives from Article 5(1) of the Directive is independent of the fact that the third party does not use the sign as a trade mark, and in particular of the fact that the third party does not use it as a badge of origin and informs the public by other means that the goods do not come from the trade mark proprietor, or even that the use of the sign has not been authorised by that proprietor. The specific object of a trade mark is to guarantee that only its proprietor can give the product its identity of origin by affixing the mark. The Commission further submits that it follows from the 10th recital in the preamble to the Directive that the protection provided for in Article 5(1)(a) is absolute. 33. At the hearing, the Commission added that the concept of trade mark use of the mark, if found to be relevant at all, refers to use which serves to distinguish goods rather than to indicate their origin. The concept also covers use by third parties which affects the interests of the trade mark proprietor, such as the reputation of the goods. In any event, public perception of the word Arsenal, which is identical to a verbal trade mark, as a token of support for or loyalty or affiliation to the proprietor of the mark does not exclude the possibility that the goods concerned are in consequence also perceived as coming from the proprietor. Quite the contrary, such perception confirms the distinctive nature of the mark and increases the risk of the goods being perceived as coming from the proprietor. Even, therefore, if trade mark use of the mark is a relevant criterion, the proprietor should be entitled to prohibit the commercial activity at issue in the main proceedings. 34. The EFTA Surveillance Authority submits that, for the trade mark proprietor to be able to rely on Article 5(1) of the Directive, the third party must use the sign to distinguish - as is the primary traditional function of a trade mark - goods or services, that is, use the mark as a trade mark. If that condition is not satisfied, only the provisions of national law referred to in Article 5(5) of the Directive may be relied on by the proprietor. 35. However, the condition of use as a trade mark within the meaning of Article 5(1) of the Directive, which must be understood as a condition of use of a sign identical to the trade mark for the purpose of distinguishing goods or services, is a concept of Community law which should be interpreted broadly, so as to include in particular use as a badge of support for or loyalty or affiliation to the proprietor of the trade mark. 36. According to the EFTA Surveillance Authority, the fact that the third party who affixes the trade mark to goods indicates that they do not come from the trade mark proprietor does not exclude the risk of confusion for a wider circle of consumers. If the proprietor were not entitled to prevent third parties from acting in that way, that could result in a generalised use of the sign. In the end, this would deprive the mark of its distinctive character, thus jeopardising its primary traditional function.


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The Court's reply 37. Article 5 of the Directive defines the [r]ights conferred by a trade mark and Article 6 contains provisions on the [l]imitation of the effects of a trade mark. 38. Under the first sentence of Article 5(1) of the Directive, the registered trade mark confers exclusive rights on its proprietor. Under Article 5(1)(a), that exclusive right entitles the proprietor to prevent all third parties, acting without his consent, from using in the course of trade any sign which is identical to the trade mark in relation to goods or services which are identical to those for which the trade mark is registered. Article 5(3) gives a non-exhaustive list of the kinds of use which the proprietor may prohibit under Article 5(1). Other provisions of the Directive, such as Article 6, define certain limitations on the effects of a trade mark. 39. With respect to the situation in point in the main proceedings, it should be observed that, as is apparent in particular from point 19 of and Annex V to the order for reference, the word Arsenal appears in large letters on the scarves offered for sale by Mr Reed, together with other much less prominent markings including the words The Gunners, all referring to the trade mark proprietor, namely Arsenal FC. Those scarves are intended inter alia for supporters of Arsenal FC who wear them in particular at matches in which the club plays. 40. In those circumstances, as the national court stated, the use of the sign identical to the mark is indeed use in the course of trade, since it takes place in the context of commercial activity with a view to economic advantage and not as a private matter. It also falls within Article 5(1)(a) of the Directive, as use of a sign which is identical to the trade mark for goods which are identical to those for which the mark is registered. 41. In particular, the use at issue in the main proceedings is for goods within the meaning of Article 5(1)(a) of the Directive, since it concerns the affixing to goods of a sign identical to the trade mark and the offering of goods, putting them on the market or stocking them for those purposes within the meaning of Article 5(3)(a) and (b). 42. To answer the High Court's questions, it must be determined whether Article 5(1)(a) of the Directive entitles the trade mark proprietor to prohibit any use by a third party in the course of trade of a sign identical to the trade mark for goods identical to those for which the mark is registered, or whether that right of prohibition presupposes the existence of a specific interest of the proprietor as trade mark proprietor, in that use of the sign in question by a third party must affect or be liable to affect one of the functions of the mark. 43. It should be recalled, first, that Article 5(1) of the Directive carries out a complete harmonisation and defines the exclusive rights of trade mark proprietors in the Community (see, to that effect, Joined Cases C-414/99 to C-416/99 Zino Davidoff and Levi Strauss [2001] ECR I-8691, paragraph 39 and the case-law there cited). 44. The ninth recital of the preamble to the Directive sets out its objective of ensuring that the trade mark proprietor enjoys the same protection under the legal systems of all the Member States and describes that objective as fundamental. 45. In order to prevent the protection afforded to the proprietor varying from one State to another, the Court must therefore give a uniform interpretation to Article 5(1) of the Directive, in particular the term use which is the subject of the questions referred for a preliminary ruling in the present case (see, to that effect, Zino Davidoff and Levi Strauss, paragraphs 42 and 43). 46. Second, the Directive is intended, as the first recital of the preamble shows, to eliminate disparities between the trade mark laws of the Member States which may


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impede the free movement of goods and the freedom to provide services and distort competition within the common market. 47. Trade mark rights constitute an essential element in the system of undistorted competition which the Treaty is intended to establish and maintain. In such a system, undertakings must be able to attract and retain customers by the quality of their goods or services, which is made possible only by distinctive signs allowing them to be identified (see, inter alia, Case C-10/89 HAG GF [1990] ECR I-3711, paragraph 13, and Case C-517/99 Merz & Krell [2001] ECR I-6959, paragraph 21). 48. In that context, the essential function of a trade mark is to guarantee the identity of origin of the marked goods or services to the consumer or end user by enabling him, without any possibility of confusion, to distinguish the goods or services from others which have another origin. For the trade mark to be able to fulfil its essential role in the system of undistorted competition which the Treaty seeks to establish and maintain, it must offer a guarantee that all the goods or services bearing it have been manufactured or supplied under the control of a single undertaking which is responsible for their quality (see, inter alia, Case 102/77 Hoffman-La Roche [1978] ECR 1139, paragraph 7, and Case C-299/99 Philips [2002] ECR I-0000, paragraph 30). 49. The Community legislature confirmed that essential function of trade marks by providing, in Article 2 of the Directive, that signs which are capable of being represented graphically may constitute a trade mark only if they are capable of distinguishing the goods or services of one undertaking from those of other undertakings (see, inter alia, Merz & Krell, paragraph 23). 50. For that guarantee of origin, which constitutes the essential function of a trade mark, to be ensured, the proprietor must be protected against competitors wishing to take unfair advantage of the status and reputation of the trade mark by selling products illegally bearing it (see, inter alia, Hoffmann-La Roche, paragraph 7, and Case C-349/95 Loendersloot [1997] ECR I-6227, paragraph 22). In this respect, the 10th recital of the preamble to the Directive points out the absolute nature of the protection afforded by the trade mark in the case of identity between the mark and the sign and between the goods or services concerned and those for which the mark is registered. It states that the aim of that protection is in particular to guarantee the trade mark as an indication of origin. 51. It follows that the exclusive right under Article 5(1)(a) of the Directive was conferred in order to enable the trade mark proprietor to protect his specific interests as proprietor, that is, to ensure that the trade mark can fulfil its functions. The exercise of that right must therefore be reserved to cases in which a third party's use of the sign affects or is liable to affect the functions of the trade mark, in particular its essential function of guaranteeing to consumers the origin of the goods. 52. The exclusive nature of the right conferred by a registered trade mark on its proprietor under Article 5(1)(a) of the Directive can be justified only within the limits of the application of that article. 53. It should be noted that Article 5(5) of the Directive provides that Article 5(1) to (4) does not affect provisions in a Member State relating to protection against the use of a sign for purposes other than that of distinguishing goods or services. 54. The proprietor may not prohibit the use of a sign identical to the trade mark for goods identical to those for which the mark is registered if that use cannot affect his own interests as proprietor of the mark, having regard to its functions. Thus certain uses for purely descriptive purposes are excluded from the scope of Article 5(1) of the Directive because they do not affect any of the interests which that provision aims to protect, and do not therefore fall within the concept of use within the meaning of that


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provision (see, with respect to a use for purely descriptive purposes relating to the characteristics of the product offered, Case C-2/00 Hölterhoff [2002] ECR I-4187, paragraph 16). 55. In this respect, it is clear that the situation in question in the main proceedings is fundamentally different from that in Hölterhoff. In the present case, the use of the sign takes place in the context of sales to consumers and is obviously not intended for purely descriptive purposes. 56. Having regard to the presentation of the word Arsenal on the goods at issue in the main proceedings and the other secondary markings on them (see paragraph 39 above), the use of that sign is such as to create the impression that there is a material link in the course of trade between the goods concerned and the trade mark proprietor. 57. That conclusion is not affected by the presence on Mr Reed's stall of the notice stating that the goods at issue in the main proceedings are not official Arsenal FC products (see paragraph 17 above). Even on the assumption that such a notice may be relied on by a third party as a defence to an action for trade mark infringement, there is a clear possibility in the present case that some consumers, in particular if they come across the goods after they have been sold by Mr Reed and taken away from the stall where the notice appears, may interpret the sign as designating Arsenal FC as the undertaking of origin of the goods. 58. Moreover, in the present case, there is also no guarantee, as required by the Court's case-law cited in paragraph 48 above, that all the goods designated by the trade mark have been manufactured or supplied under the control of a single undertaking which is responsible for their quality. 59. The goods at issue are in fact supplied outside the control of Arsenal FC as trade mark proprietor, it being common ground that they do not come from Arsenal FC or from its approved resellers. 60. In those circumstances, the use of a sign which is identical to the trade mark at issue in the main proceedings is liable to jeopardise the guarantee of origin which constitutes the essential function of the mark, as is apparent from the Court's case-law cited in paragraph 48 above. It is consequently a use which the trade mark proprietor may prevent in accordance with Article 5(1) of the Directive. 61. Once it has been found that, in the present case, the use of the sign in question by the third party is liable to affect the guarantee of origin of the goods and that the trade mark proprietor must be able to prevent this, it is immaterial that in the context of that use the sign is perceived as a badge of support for or loyalty or affiliation to the proprietor of the mark. 62. In the light of the foregoing, the answer to the national court's questions must be that, in a situation which is not covered by Article 6(1) of the Directive, where a third party uses in the course of trade a sign which is identical to a validly registered trade mark on goods which are identical to those for which it is registered, the trade mark proprietor is entitled, in circumstances such as those in the present case, to rely on Article 5(1)(a) of the Directive to prevent that use. It is immaterial that, in the context of that use, the sign is perceived as a badge of support for or loyalty or affiliation to the trade mark proprietor.

On those grounds,

THE COURT,

in answer to the questions referred to it by the High Court of Justice of England

and Wales, Chancery Division, by order of 4 May 2001, hereby rules:


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In a situation which is not covered by Article 6(1) of the First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks, where a third party uses in the course of trade a sign which is identical to a validly registered trade mark on goods which are identical to those for which it is registered, the trade mark proprietor of the mark is entitled, in circumstances such as those in the present case, to rely on Article 5(1)(a) of that directive to prevent that use. It is immaterial that, in the context of that use, the sign is perceived as a badge of support for or loyalty or affiliation to the trade mark proprietor.


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14. Case C-243/01,

REFERENCE to the Court under Article 234 EC

by the Tribunale di Ascoli Piceno (Italy)

for a preliminary ruling in the criminal proceedings before that court

against

Piergiorgio Gambelli and Others,

on the interpretation of Articles 43 EC and 49 EC,

THE COURT,

gives the following

Judgment

1. By order of 30 March 2001, received at the Court on 22 June 2001, the Tribunale di Ascoli Peceno referred to the Court for a preliminary ruling under Article 234 EC a question on the interpretation of Articles 43 and 49 EC. 2. The question was raised in criminal proceedings brought against Mr Gambelli and 137 other defendants (hereinafter Gambelli and others), who are accused of having unlawfully organised clandestine bets and of being the proprietors of centres carrying on the activity of collecting and transmitting betting data, which constitutes an offence of fraud against the State. Legal background Community legislation 3. Article 43 EC provides as follows:- Within the framework of the provisions set out below, restrictions on the freedom of establishment of nationals of a Member State in the territory of another Member State shall be prohibited. Such prohibition shall also apply to restrictions on the setting-up of agencies, branches or subsidiaries by nationals of any Member State established in the territory of any Member State. Freedom of establishment shall include the right to take up and pursue activities as self-employed persons and to set up and manage undertakings, in particular companies or firms within the meaning of the second paragraph of Article 48, under the conditions laid down for its own nationals by the law of the country where such establishment is effected, subject to the provisions of the Chapter relating to capital. 4. The first paragraph of Article 48 EC provides that companies or firms formed in accordance with the law of a Member State and having their registered office, central administration or principal place of business within the Community shall ... be treated in the same way as natural persons who are nationals of Member States. 5. Article 46(1) EC provides that the provisions of this Chapter and measures taken in pursuance thereof shall not prejudice the applicability of provisions laid down by law, regulation or administrative action providing for special treatment for foreign nationals on grounds of public policy, public security or public health. 6. The first paragraph of Article 49 EC provides that within the framework of the provisions set out below, restrictions on freedom to provide services within the


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Community shall be prohibited in respect of nationals of Member States who are established in a State of the Community other than that of the person for whom the services are intended. National legislation 7. Under Article 88 of the Regio Decreto No 773, Testo Unico delle Leggi di Pubblica Sicurezza (Royal Decree No 773 approving a single text of the laws on public security), of 18 June 1931 (GURI No 146 of 26 June 1931, hereinafter the Royal Decree), no licence is to be granted for the taking of bets, with the exception of bets on races, regatta, ball games or similar contests where the taking of the bets is essential for the proper conduct of the competitive event. 8. Under Legge Finanziaria No 388 (Finance Law No 388) of 23 December 2000 (ordinary supplement to the GURI of 29 December 2000, hereinafter Law No 388/00), authorisation to organise betting is granted exclusively to licence holders or to those entitled to do so by a ministry or other entity to which the law reserves the right to organise or carry on betting. Bets can relate to the outcome of sporting events taking place under the supervision of the Comitato olimpico nazionale italiano (Italian National Olympic Committee, hereinafter the CONI), or its subsidiary organisations, or to the results of horse races organised through the Unione nazionale per l'incremento delle razze equine (National Union for the Betterment of Horse Breeds, hereinafter the UNIRE). 9. Articles 4, 4a and 4b of Law No 401 of 13 December 1989 on gaming, clandestine betting and ensuring the proper conduct of sporting contests (GURI No 294 of 18 December 1989 as amended by Law No 388/00, (hereinafter Law No 401/89), Article 37(5) of which inserted Articles 4a and 4b into Law No 410/89, provide as follows: Unlawful participation in the organisation of games or bets Article 4 1. Any person who unlawfully participates in the organisation of lotteries, betting or pools reserved by law to the State or to entities operating under licence from the State shall be liable to a term of imprisonment of 6 months to 3 years. Any person who organises betting or pools in respect of sporting events run by CONI, by organisations under the authority of CONI or by UNIRE shall be liable to the same penalty. Any person who unlawfully participates in the public organisation of betting on other contests between people or animals, as well as on games of skill, shall be liable to a term of imprisonment of 3 months to 1 year and a minimum fine of ITL 1 000 000. 2. Any person who advertises competitions, games or betting organised in the manner described in paragraph 1 without being an accomplice to an offence defined therein shall be liable to a term of imprisonment of up to 3 months and a fine of between ITL 100 000 and ITL 1 000 000. 3. Any person who participates in competitions, games or betting organised in the manner described in paragraph 1 without being an accomplice to an offence defined therein shall be liable to a term of imprisonment of up to 3 months or a fine of between ITL 100 000 and ITL 1 000 000. ... Article 4a The penalties laid down in this article shall be applicable to any person who without the concession, authorisation or licence required by Article 88 of [the Royal Decree] carries out activities in Italy for the purpose of accepting or collecting, or, in any case, assisting


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in the acceptance or collection in any way whatsoever, including by telephone or by data transfer, of bets of any kind placed by any person in Italy or abroad. Article 4b ... the penalties provided for by this article shall be applicable to any person who carries out the collection or registration of lottery tickets, pools or bets by telephone or data transfer without being authorised to use those means to effect such collection or registration. The main proceedings and the question referred for a preliminary ruling 10. The order for reference states that the Public Prosecutor and the investigating judge at the Tribunale di Fermo (Italy) established the existence of a widespread and complex organisation of Italian agencies linked by the internet to the English bookmaker Stanley International Betting Ltd (Stanley), established in Liverpool (United Kingdom), and to which Gambelli and others, the defendants in the main proceedings, belong. They are accused of having collaborated in Italy with a bookmaker abroad in the activity of collecting bets which is normally reserved by law to the State, thus infringing Law No 401/89. 11. Such activity, which is considered to be incompatible with the monopoly on sporting bets enjoyed by the CONI and which constitutes an offence under Article 4 of Law No 401/89, is performed as follows: the bettor notifies the person in charge of the Italian agency of the events on which he wishes to bet and how much he intends to bet; the agency sends the application for acceptance to the bookmaker by internet, indicating the national football games in question and the bet; the bookmaker confirms acceptance of the bet in real time by internet; the confirmation is transmitted by the Italian agency to the bettor and the bettor pays the sum due to the agency, which sum is then transferred to the bookmaker into a foreign account specially designated for this purpose. 12. Stanley is an English capital company registered in the United Kingdom which carries on business as a bookmaker under a licence granted pursuant to the Betting, Gaming and Lotteries Act by the City of Liverpool. It is authorised to carry on its activity in the United Kingdom and abroad. It organises and manages bets under a UK licence, identifying the events, setting the stakes and assuming the economic risk. Stanley pays the winnings and the various duties payable in the United Kingdom, as well as taxes on salaries and so on. It is subject to rigorous controls in relation to the legality of its activities, which are carried out by a private audit company and by the Inland Revenue and Customs and Excise. 13. Stanley offers an extensive range of fixed sports bets on national, European and world sporting events. Individuals may participate from their own home, using various methods such as the internet, fax or telephone, in the betting organised and marketed by it. 14. Stanley's presence as an undertaking in Italy is consolidated by commercial agreements with Italian operators or intermediaries relating to the creation of data transmission centres. Those centres make electronic means of communication available to users, collect and register the intentions to bet and forward them to Stanley. 15. The defendants in the main proceedings are registered at the Camera di Commercio (Chamber of Commerce) as proprietors of undertakings which run data transfer centres and have received due authorisation from the Ministero delle Poste e delle Comunicazioni (Minister for Post and Communications) to transmit data. 16. The judge in charge of the preliminary investigations at the Tribunale di Fermo made an order for provisional sequestration and the defendants were also subjected to


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personal checks and to searches of their agencies, homes and vehicles. Mr Garrisi, who is on the Board of Stanley, was taken into police custody. 17. The defendants in the main proceedings brought an action for review before the Tribunale di Ascoli Piceno against the orders for sequestration relating to the data transmission centres of which they are the proprietors. 18. The Tribunale di Ascoli Piceno makes reference to the case-law of the Court, in particular its judgment in Case C-67/98 Zenatti [1999] ECR I-7289. However, it considers that the questions raised in the case before it do not quite correspond to the facts already considered by the Court in Zenatti. Recent amendments to Law No 401/89 demand re-examination of the issue by the Court of Justice. 19. The Tribunale di Ascoli Piceno refers in this context to the parliamentary working papers relating to Law No 388/00 which show that the restrictions inserted by that law into Law No 401/89 were dictated chiefly by the need to protect sports Totoricevitori, a category of private sector undertakings. The court states that it cannot find in those restrictions any public policy concern able to justify a limitation of the rights guaranteed by Community or constitutional rules. 20. The court emphasises that the apparent legality of collecting and forwarding bets on foreign sporting events, on the initial wording of Article 4 of Law No 401/89, had led to the creation and development of a network of operators who have invested capital and created infrastructures in the gaming and betting sector. Those operators suddenly find the legitimacy of their position called in question following amendments to the rules in Law No 388/00 prohibiting on pain of criminal penalties the carrying on of activities by any person anywhere involving the collection, acceptance, registration and transmission of offers to bet, in particular on sporting events, without a licence or permit from the State. 21. The national court questions whether the principle of proportionality is being observed, having regard first to the severity of the prohibition, breach of which attracts criminal penalties which may make it impossible in practice for lawfully constituted undertakings or Community operators to carry on economic activities in the betting and gaming sector in Italy, and secondly to the importance of the national public interest protected and for which the Community freedoms are sacrificed. 22. The Tribunale di Ascoli Piceno also considers that it cannot ignore the extent of the apparent discrepancy between national legislation severely restricting the acceptance of bets on sporting events by foreign Community undertakings on the one hand, and the considerable expansion of betting and gaming which the Italian State is pursuing at national level for the purpose of collecting taxation revenues, on the other. 23. The court observes that the proceedings before it raise, first, questions of national law relating to the compatibility of the statutory amendments to Article 4 of Law No 401/89 with the Italian constitution, which protects private economic initiative for activities which are not subject to taxes levied by the State, and secondly questions relating to the incompatibility of the rule laid down in that article with the freedom of establishment and the freedom to provide cross-border services. The questions of national law raised have been referred by the Tribunale di Ascoli Piceno to the Corte costituzionale (the Italian Constitutional Court). 24. In those circumstances, the Tribunale di Ascoli Piceno has decided to stay proceedings and to refer the following question to the Court of Justice for a preliminary ruling: Is there incompatibility (with the repercussions that that has in Italian law) between Articles 43 et seq. and Article 49 et seq. of the EC Treaty regarding freedom of establishment and freedom to provide cross-border services, on the one hand, and on


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the other domestic legislation such as the provisions contained in Article 4(1) et seq., Article 4a and Article 4b of Italian Law No 401/89 (as most recently amended by Article 37(5) of Law No 388/00 of 23 December 2000) which prohibits on pain of criminal penalties the pursuit by any person anywhere of the activities of collecting, taking, booking and forwarding offers of bets, in particular bets on sporting events, unless the requirements concerning concessions and authorisations prescribed by domestic law have been complied with? The question Observations submitted to the Court 25. Gambelli and others consider that by prohibiting Italian citizens from linking up with foreign companies in order to place bets and thus to receive the services offered by those companies by internet, by prohibiting Italian intermediaries from offering the bets managed by Stanley, by preventing Stanley from establishing itself in Italy with the assistance of those intermediaries and thus offering its services in Italy from another Member State and, in sum, by creating and maintaining a monopoly in the betting and gaming sector, the legislation at issue in the main proceedings amounts to a restriction on both freedom of establishment and freedom to provide services. No justification for the restriction is to be found in the case-law of the Court of Justice stemming from Case C-275/92 Schindler [1994] ECR I-1039, Case C-124/97 Läärä and Others [1999] ECR I-6067 and Zenatti, cited above, because the Court has not had occasion to consider the amendments made to that legislation by Law No 388/00 and it has not examined the issue from the point of view of freedom of establishment. 26. The defendants in the main proceedings emphasise in that regard that the Italian State is not pursuing a consistent policy whose aim is to restrict, or indeed abolish, gaming activities within the meaning of the judgments in Läärä, paragraph 37, and Zenatti, paragraph 36. The concerns cited by the national authorities relating to the protection of bettors against the risk of fraud, the preservation of public order and reducing both opportunities for gaming in order to avoid the damaging consequences of betting at both individual and social level and the incitement to spend inherent therein are groundless because Italy is increasing the range of betting and gaming available, and even inciting people to engage in such activities by facilitating collection in order to increase tax revenue. The fact that the organising of bets is regulated by financial laws shows that the true motivation of the national authorities is economic. 27. The purpose of the Italian legislation is also to protect licensees under the national monopoly by making that monopoly impenetrable for operators from other Member States, since the invitations to tender contain criteria relating to ownership structures which cannot be met by a capital company quoted on the stock exchange but only by natural persons, and since they require applicants to own premises and to have been a licence holder over a substantial period. 28. The defendants in the main proceedings argue that it is difficult to accept that a company like Stanley, which operates entirely legally and is duly regulated in the United Kingdom, should be treated by the Italian legislation in the same way as an operator who organises clandestine gaming, when all the public-interest concerns are protected by the United Kingdom legislation and the Italian intermediaries in a contractual relationship with Stanley as secondary or subsidiary establishments are registered as official suppliers of services and with the Ministry of Post and


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Telecommunications with which they operate, and which subjects them to regular checks and inspections. 29. That situation, which falls within the scope of freedom of establishment, contravenes the principle of mutual recognition in sectors which have not yet been harmonised. It is also contrary to the principle of proportionality, a fortiori because criminal penalties ought to constitute a last resort for a Member State in cases where other measures and instruments are not able to provide adequate protection of the interests concerned. Under the Italian legislation, bettors in Italy are not only deprived of the possibility of using bookmakers established in another Member State, even through the intermediary of operators established in Italy, but are also subject to criminal penalties. 30. The Italian, Belgian, Greek, Spanish, French, Luxembourg, Portuguese, Finnish and Swedish Governments, as well as the Commission, cite the case-law of the Court of Justice, in particular the judgments in Schindler, Läärä and Zenatti. 31. The Italian Government relies on the judgment in Zenatti to show that Law No 401/89 is compatible with the Community legislation in the sphere of freedom to provide services, and even in that of freedom of establishment. Both the matter considered by the Court in that case, namely administrative authorisation to pursue the activity of collecting and managing bets in Italy, and the question raised in the main proceedings, namely the existence of a criminal penalty prohibiting that activity where it is carried on by operators who are not part of the State monopoly on betting, pursue the same aim, which is to prohibit such activities and to reduce gaming opportunities in practice, other than in situations which are expressly provided for by law. 32. The Belgian Government observes that a single market for gaming will only incite consumers to squander more and will have significant damaging effects for society. The level of protection introduced by Law No 401/89 and the restrictive authorisation scheme serve to ensure the attainment of objectives which are in the general interest, namely limiting and strictly controlling the supply of gaming and betting, is proportionate to those objectives and involves no discrimination on grounds of nationality. 33. The Greek Government considers that the organisation of games of chance and bets on sporting events must remain within the control of the State and be operated by means of a monopoly. If it is engaged in by private entities, that will have direct consequences such as disturbance of the social order and incitement to commit offences, as well as exploitation of bettors and consumers in general. 34. The Spanish Government submits that both the grant of special or exclusive rights under a strict authorisation or licensing regime and the prohibition on opening foreign branches to process bets in other Member States are compatible with the policy of limiting supply, provided that those measures are adopted with a view to reducing opportunities for gaming and stimulation of supply. 35. The French Government maintains that the fact that in the main proceedings the collection of bets is effected at a distance by electronic means and the sporting events to which the bets relate take place exclusively in Italy - which was not the case in Zenatti - does not affect the Court's case-law under which national laws which limit the pursuit of activities relating to gaming or lotteries and cash machines are compatible with the principle of the freedom to provide services where they pursue an objective that is in the general interest, such as the prevention of fraud or the protection of bettors against themselves. Member States are therefore justified in regulating the activities of operators in the area of betting in non-discriminatory ways, since the degree and scope of the restrictions are within the discretion enjoyed by the national authorities. It is thus


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for the courts of the Member States to determine whether the national authorities have acted proportionately in their choice of means, having regard to the principle of freedom to provide services. 36. As regards freedom of establishment, the French Government considers that the restrictions on the activities of the independent Italian companies in a contractual relationship with Stanley do not undermine Stanley's right to establish itself freely in Italy. 37. The Luxembourg Government considers that the Italian legislation constitutes an obstacle to the pursuit of the activity of organising bets in Italy because it prohibits Stanley from carrying on its activities in Italy either directly, under the freedom to provide cross-border services, or indirectly through the intermediary of Italian agencies linked by internet. It also constitutes a restriction on the freedom of establishment. However, those obstacles are justified in so far as they pursue objectives which are in the general interest, such as the need to channel and control the desire to engage in gaming, and are appropriate and proportionate for the attainment of those objectives inasmuch as they do not discriminate on grounds of nationality, because both Italian entities and those established abroad have to obtain the same permit from the Minister for Finance to be allowed to engage in the organisation, taking and collecting of bets in Italy. 38. The Portuguese Government notes that the main proceedings have serious implications as regards the maintenance not only in Italy but in all the Member States of a system for running lotteries by public monopoly and as regards the need to preserve a significant source of revenue for the States, which replaces the compulsory levying of taxes and serves to finance social, cultural and sporting policies. In the activity of gaming, the market economy and free competition operate a redistribution of sums levied in the context of that activity which is contrary to the social order, because they are likely to move from countries where overall involvement is low to countries where it is higher and the amount of winnings more attractive. Bettors in the small Member States would therefore be financing the social, cultural and sporting budgets of the large Member States and the reduction in revenue from gaming would force governments in the smaller Member States to finance public initiatives of a social nature and other State social, sporting and cultural activities by other means, which would mean an increase in taxes in those Member States and a reduction in taxes in the big States. Furthermore, dividing up the State betting, gaming and lotteries market between three or four large operators in the European Union would produce structural changes in distribution networks for gaming lawfully carried on by those States, destroying an enormous number of jobs and distorting unemployment levels in the various Member States. 39. The Finnish Government cites in particular the judgment in Läärä, in which the Court acknowledged that the need for and proportionality of provisions adopted by a Member State are to be assessed solely in the light of the objectives pursued by the national authorities in that State and the level of protection they seek to provide, so that it is for the national court to determine whether, in the light of the specific detailed rules for its application, national legislation enables the aims relied on to justify it to be attained and whether the restrictions are proportionate to those aims, having regard to the fact that the legislation must be applied to all operators alike, whether they are from Italy or another Member State. 40. The Swedish Government observes that the fact that restrictions on the free movement of services are introduced for tax purposes is not sufficient to support the conclusion that those restrictions are contrary to Community law, provided that they are


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proportionate and do not involve discrimination as between operators, a matter for the national court to determine. The amendments to the Italian legislation made by Law No 388/00 enable an entity which has been refused authorisation to collect bets in Italy to circumvent the legislation by carrying on its activity from another Member State and prohibit foreign entities which organise bets in their own country from pursuing their activities in Italy. As the Court held at paragraph 36 of the judgment in Läärä and at paragraph 34 of the judgment in Zenatti, the mere fact that a Member State has opted for a protection scheme which is not the same as that adopted in another Member State cannot influence the assessment of the need for and proportionality of the provisions adopted in that area. 41. The Commission of the European Communities takes the view that the legislative amendments effected by Law No 388/00 merely make explicit what was already contained in Law No 401/89 and do not introduce a genuinely new category of offences. The public-order grounds for limiting the damaging effects of betting activities relating to football matches which are relied on to justify the fact that the national legislation reserves the right to collect those bets to certain organisations are the same regardless of the Member State in which those activities take place. The fact that the sporting events to which the bets related in the case of Zenatti took place abroad whereas in the main proceedings here the football matches take place in Italy is irrelevant. The Commission adds that Directive No 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (Directive on electronic commerce) (OJ 2000 L 178, p. 1) does not apply to bets, so that the outcome should be no different to that in Zenatti. 42. The Commission considers that the issue is not to be examined from the point of view of freedom of establishment because the agencies run by the defendants in the main proceedings are independent and act as collection centres for bets and as intermediaries in relations between their Italian customers and Stanley, and are not in any way subordinate to the latter. However, even if the right of establishment were to apply, the restrictions in the Italian legislation are justified on the same grounds of social policy as those accepted by the Court in Schindler, Läärä and Zenatti with regard to the restriction on the freedom to provide services. 43. At the hearing the Commission informed the Court that it had initiated the procedure against the Italian Republic for failure to fulfil obligations in regard to the liberalisation of the horse-race betting sector managed by the UNIRE. As regards the lottery sector, which is liberalised, the Commission referred to the judgment in Case C-272/91 Commission v Italy [1994] ECR I-1409, in which the Court held that by restricting participation in an invitation to tender for the concession of a lottery computerisation system to bodies, companies, consortia and groupings the majority of whose capital, considered individually or in aggregate, was held by the public sector, the Italian Republic had failed to fulfil its obligations inter alia under the EC Treaty. The Court's reply 44. The first point to consider is whether legislation such as that at issue in the main proceedings (Law No 401/89) constitutes a restriction on the freedom of establishment. 45. It must be remembered that restrictions on freedom of establishment for nationals of a Member State in the territory of another Member State, including restrictions on the setting-up of agencies, branches or subsidiaries, are prohibited by Article 43 EC.


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46. Where a company established in a Member State (such as Stanley) pursues the activity of collecting bets through the intermediary of an organisation of agencies established in another Member State (such as the defendants in the main proceedings), any restrictions on the activities of those agencies constitute obstacles to the freedom of establishment. 47. Furthermore, in reply to the questions put to it by the Court at the hearing, the Italian Government acknowledged that the Italian legislation on invitations to tender for betting activities in Italy contains restrictions. According to that Government, the fact that no entity has been licensed for such activities apart from the monopoly-holder is explained by the fact that the way in which the Italian legislation is conceived means that the licence can only be awarded to certain persons. 48. In so far as the lack of foreign operators among licensees in the betting sector on sporting events in Italy is attributable to the fact that the Italian rules governing invitations to tender make it impossible in practice for capital companies quoted on the regulated markets of other Member States to obtain licences, those rules constitute prima facie a restriction on the freedom of establishment, even if that restriction is applicable to all capital companies which might be interested in such licences alike, regardless of whether they are established in Italy or in another Member State. 49. It is therefore possible that the conditions imposed by the legislation for submitting invitations to tender for the award of these licences also constitute an obstacle to the freedom of establishment. 50. The second point to consider is whether the Italian legislation in that respect constitutes a restriction on the freedom to provide services. 51. Article 49 EC prohibits restrictions on freedom to provide services within the Community for nationals of Member States who are established in a Member State other than that of the person for whom the services are intended. Article 50 EC defines services as services which are normally provided for remuneration, in so far as they are not governed by the provisions relating to freedom of movement of goods, capital and persons. 52. The Court has already held that the importation of lottery advertisements and tickets into a Member State with a view to the participation by residents of that State in a lottery operated in another Member State relates to a service (Schindler, paragraph 37). By analogy, the activity of enabling nationals of one Member State to engage in betting activities organised in another Member State, even if they concern sporting events taking place in the first Member State, relates to a service within the meaning of Article 50 EC. 53. The Court has also held that, on a proper construction, Article 49 EC covers services which the provider offers by telephone to potential recipients established in other Member States and provides without moving from the Member State in which he is established (Case C-384/93 Alpine Investments [1995] ECR I-1141, paragraph 22). 54. Transposing that interpretation to the issue in the main proceedings, it follows that Article 49 EC relates to the services which a provider such as Stanley established in a Member State, in this case the United Kingdom, offers via the internet - and so without moving - to recipients in another Member State, in this case Italy, with the result that any restriction of those activities constitutes a restriction on the freedom of such a provider to provide services. 55. In addition, the freedom to provide services involves not only the freedom of the provider to offer and supply services to recipients in a Member State other than that in which the supplier is located but also the freedom to receive or to benefit as recipient from the services offered by a supplier established in another Member State without


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being hampered by restrictions (see, to that effect, Joined Cases 286/82 and 26/83 Luisi and Carbone [1984] ECR 377, paragraph 16, and Case C-294/97 Eurowings Luftverkehr [1999] ECR I-7447, paragraphs 33 and 34). 56. In reply to the questions put by the Court at the hearing, the Italian Government confirmed that an individual in Italy who from his home connects by internet to a bookmaker established in another Member State using his credit card to pay is committing an offence under Article 4 of Law No 401/89. 57. Such a prohibition, enforced by criminal penalties, on participating in betting games organised in Member States other than in the country where the bettor is established constitutes a restriction on the freedom to provide services. 58. The same applies to a prohibition, also enforced by criminal penalties, for intermediaries such as the defendants in the main proceedings on facilitating the provision of betting services on sporting events organised by a supplier such as Stanley, established in a Member State other than that in which the intermediaries pursue their activity, since the prohibition constitutes a restriction on the right of the bookmaker freely to provide services, even if the intermediaries are established in the same Member State as the recipients of the services. 59. It must therefore be held that national rules such as the Italian legislation on betting, in particular Article 4 of Law No 401/89, constitute a restriction on the freedom of establishment and on the freedom to provide services. 60. In those circumstances it is necessary to consider whether such restrictions are acceptable as exceptional measures expressly provided for in Articles 45 and 46 EC, or justified, in accordance with the case-law of the Court, for reasons of overriding general interest. 61. With regard to the arguments raised in particular by the Greek and Portuguese Governments to justify restrictions on games of chance and betting, suffice it to note that it is settled case-law that the diminution or reduction of tax revenue is not one of the grounds listed in Article 46 EC and does not constitute a matter of overriding general interest which may be relied on to justify a restriction on the freedom of establishment or the freedom to provide services (see, to that effect, Case C-264/96 ICI [1998] ECR I-4695, paragraph 28, and Case C-136/00 Danner [2002] ECR I-8147, paragraph 56). 62. As stated in paragraph 36 of the judgment in Zenatti, the restrictions must in any event reflect a concern to bring about a genuine diminution of gambling opportunities, and the financing of social activities through a levy on the proceeds of authorised games must constitute only an incidental beneficial consequence and not the real justification for the restrictive policy adopted. 63. On the other hand, as the governments which submitted observations and the Commission pointed out, the Court stated in Schindler, Läärä and Zenatti that moral, religious and cultural factors, and the morally and financially harmful consequences for the individual and society associated with gaming and betting, could serve to justify the existence on the part of the national authorities of a margin of appreciation sufficient to enable them to determine what consumer protection and the preservation of public order require. 64. In any event, in order to be justified the restrictions on freedom of establishment and on freedom to provide services must satisfy the conditions laid down in the case-law of the Court (see, inter alia, Case C-19/92 Kraus [1993] ECR I-1663, paragraph 32, and Case C-55/94 Gebhard [1995] ECR I-4165, paragraph 37). 65. According to those decisions, the restrictions must be justified by imperative requirements in the general interest, be suitable for achieving the objective which they


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pursue and not go beyond what is necessary in order to attain it. They must in any event be applied without discrimination. 66. It is for the national court to decide whether in the main proceedings the restriction on the freedom of establishment and on the freedom to provide services instituted by Law No 401/89 satisfy those conditions. To that end, it will be for that court to take account of the issues set out in the following paragraphs. 67. First of all, whilst in Schindler, Läärä and Zenatti the Court accepted that restrictions on gaming activities may be justified by imperative requirements in the general interest, such as consumer protection and the prevention of both fraud and incitement to squander on gaming, restrictions based on such grounds and on the need to preserve public order must also be suitable for achieving those objectives, inasmuch as they must serve to limit betting activities in a consistent and systematic manner. 68. In that regard the national court, referring to the preparatory papers on Law No 388/00, has pointed out that the Italian State is pursuing a policy of substantially expanding betting and gaming at national level with a view to obtaining funds, while also protecting CONI licensees. 69. In so far as the authorities of a Member State incite and encourage consumers to participate in lotteries, games of chance and betting to the financial benefit of the public purse, the authorities of that State cannot invoke public order concerns relating to the need to reduce opportunities for betting in order to justify measures such as those at issue in the main proceedings. 70. Next, the restrictions imposed by the Italian rules in the field of invitations to tender must be applicable without distinction: they must apply in the same way and under the same conditions to operators established in Italy and to those from other Member States alike. 71. It is for the national court to consider whether the manner in which the conditions for submitting invitations to tender for licences to organise bets on sporting events are laid down enables them in practice to be met more easily by Italian operators than by foreign operators. If so, those conditions do not satisfy the requirement of non-discrimination. 72. Finally, the restrictions imposed by the Italian legislation must not go beyond what is necessary to attain the end in view. In that context the national court must consider whether the criminal penalty imposed on any person who from his home connects by internet to a bookmaker established in another Member State is not disproportionate in the light of the Court's case-law (see Case C-193/94 Skanavi and Chryssanthakopoulos [1996] ECR I-929, paragraphs 34 to 39, and Case C-459/99 MRAX [2002] ECR I-6591, paragraphs 89 to 91), especially where involvement in betting is encouraged in the context of games organised by licensed national bodies. 73. The national court will also need to determine whether the imposition of restrictions, accompanied by criminal penalties of up to a year's imprisonment, on intermediaries who facilitate the provision of services by a bookmaker in a Member State other than that in which those services are offered by making an internet connection to that bookmaker available to bettors at their premises is a restriction that goes beyond what is necessary to combat fraud, especially where the supplier of the service is subject in his Member State of establishment to a regulation entailing controls and penalties, where the intermediaries are lawfully constituted, and where, before the statutory amendments effected by Law No 388/00, those intermediaries considered that they were permitted to transmit bets on foreign sporting events. 74. As to the proportionality of the Italian legislation in regard to the freedom of establishment, even if the objective of the authorities of a Member State is to avoid the


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risk of gaming licensees being involved in criminal or fraudulent activities, to prevent capital companies quoted on regulated markets of other Member States from obtaining licences to organise sporting bets, especially where there are other means of checking the accounts and activities of such companies, may be considered to be a measure which goes beyond what is necessary to check fraud. 75. It is for the national court to determine whether the national legislation, taking account of the detailed rules for its application, actually serves the aims which might justify it, and whether the restrictions it imposes are disproportionate in the light of those aims. 76. In the light of all those considerations the reply to the question referred must be that national legislation which prohibits on pain of criminal penalties the pursuit of the activities of collecting, taking, booking and forwarding offers of bets, in particular bets on sporting events, without a licence or authorisation from the Member State concerned constitutes a restriction on the freedom of establishment and the freedom to provide services provided for in Articles 43 and 49 EC respectively. It is for the national court to determine whether such legislation, taking account of the detailed rules for its application, actually serves the aims which might justify it, and whether the restrictions it imposes are disproportionate in the light of those aims.

On those grounds, THE COURT,

in answer to the question referred to it by the Tribunale di Ascoli Piceno by an order of 30 March 2001, hereby rules:

National legislation which prohibits on pain of criminal penalties the pursuit of the activities of collecting, taking, booking and forwarding offers of bets, in particular bets on sporting events, without a licence or authorisation from the Member State concerned constitutes a restriction on the freedom of establishment and the freedom to provide services provided for in Articles 43 and 49 EC respectively. It is for the national court to determine whether such legislation, taking account of the detailed rules for its application, actually serves the aims which might justify it, and whether the restrictions it imposes are disproportionate in the light of those objectives.


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15. Case C-438/00,

REFERENCE to the Court under Article 234 EC by the Oberlandesgericht Hamm

(Germany) for a preliminary ruling in the proceedings pending before that court

between

Deutscher Handballbund eV

and

Maros Kolpak,

on the interpretation of Article 38(1) of the Europe Agreement establishing an

association between the European Communities and their Member States, of the one

part, and the Slovak Republic, of the other part, approved on behalf of the Communities

by Decision 94/909/ECSC, EEC, Euratom of the Council and the Commission of 19

December 1994 (OJ 1994 L 359, p. 1),


gives the following

Judgment

1. By order of 15 November 2000, received at the Court on 28 November 2000, the Oberlandesgericht (Higher Regional Court) Hamm referred for a preliminary ruling under Article 234 EC a question on the interpretation of Article 38(1) of the Europe Agreement establishing an association between the European Communities and their Member States, of the one part, and the Slovak Republic, of the other part, signed in Luxembourg on 4 October 1993 and approved on behalf of the Communities by Decision 94/909/ECSC, EEC, Euratom of the Council and the Commission of 19 December 1994 (OJ 1994 L 359, p. 1) (the Association Agreement with Slovakia). 2. That question has been raised in a dispute between Deutscher Handballbund eV (the German Handball Federation) (the DHB) and Mr Kolpak concerning the issue of a professional player's licence. The Association Agreement with Slovakia 3. Article 1(2) of the Association Agreement with Slovakia states that the aims of the Agreement are, inter alia, to provide an appropriate framework for political dialogue between the Parties, allowing the development of close political relations between them, to promote the expansion of trade and harmonious economic relations between the Parties in order to foster dynamic economic development and prosperity in the Slovak Republic, and to provide an appropriate framework for the Slovak Republic's gradual integration into the Communities, that country's ultimate objective being, according to the final recital in the preamble to that Agreement, accession to the Communities. 4. With regard to the case in the main proceedings, the relevant provisions of the Association Agreement are to be found in Title IV thereof, entitled Movement of workers, establishment, supply of services.


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5. Article 38(1) of the Association Agreement, which features in Title IV, Chapter I, entitled Movement of workers, provides: Subject to the conditions and modalities applicable in each Member State: - treatment accorded to workers of Slovak Republic nationality legally employed in the territory of a Member State shall be free from any discrimination based on nationality, as regards working conditions, remuneration or dismissal, as compared to its own nationals, - the legally resident spouse and children of a worker legally employed in the territory of a Member State, with the exception of seasonal workers and of workers coming under bilateral agreements within the meaning of Article 42, unless otherwise provided by such agreements, shall have access to the labour market of that Member State, during the period of that worker's authorised stay of employment. 6. Article 42 of the Association Agreement, which features in the same chapter, states: 1. Taking into account the labour market situation in the Member State, subject to its legislation and to the respect of rules in force in that Member State in the area of mobility of workers: - the existing facilities for access to employment for Slovak Republic workers accorded by Member States under bilateral agreements ought to be preserved and if possible improved, - the other Member States shall consider favourably the possibility of concluding similar agreements. 2. The Association Council shall examine granting other improvements including facilities of access for professional training, in conformity with rules and procedures in force in the Member States, and taking account of the labour market situation in the Member States and in the Community. 7. Article 59(1) of the Association Agreement, which appears in Title IV, Chapter IV, entitled General provisions, provides: For the purpose of Title IV of this Agreement, nothing in the Agreement shall prevent the Parties from applying their laws and regulations regarding entry and stay, work, labour conditions and establishment of natural persons, and supply of services, provided that, in so doing, they do not apply them in a manner as to nullify or impair the benefits accruing to any Party under the terms of a specific provision of this Agreement. ... The national rules 8. The DHB adopted the Spielordnung (federal regulations governing competitive games) (the SpO), Rule 15 of which, in the version in force on the date of the order for reference, provided as follows: (1) The letter A is to be inserted after the licence number of the licences of players (a) who do not possess the nationality of a State of the European Union (EU State), (b) who do not possess the nationality of a non-member country associated with the EU whose nationals have equal rights as regards freedom of movement under Article 48(1) of the EC Treaty, (c) ... (2) In teams in the federal and regional leagues, no more than two players whose licences are marked with the letter A may play in a league or cup match. ... (5) The marking of a licence with the letter A is to be cancelled from 1 July of the year if the player's country of origin becomes associated within the meaning of Paragraph


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1(b) by that date. The DHB shall publish and continually update the list of the States correspondingly associated. The dispute in the main proceedings and the question submitted for preliminary ruling 9. Mr Kolpak, who is a Slovak national, entered in March 1997 into a fixed-term employment contract expiring on 30 June 2000 and subsequently, in February 2000, entered into a new fixed-term contract expiring on 30 June 2003 for the post of goalkeeper in the German handball team TSV Östringen eV Handball, a club which plays in the German Second Division. Mr Kolpak receives a monthly salary. He is resident in Germany and holds a valid residence permit. 10. The DHB, which organises league and cup matches at federal level, issued to him, under Rule 15 of the SpO, a player's licence marked with the letter A on the ground of his Slovak nationality. 11. Mr Kolpak, who had requested that he be issued with a player's licence which did not feature the specific reference to nationals of non-member countries, brought an action before the Landgericht (Regional Court) Dortmund (Germany) challenging that decision of the DHB. He argued that the Slovak Republic is one of the non-member countries nationals of which are entitled to participate without restriction in competitions under the same conditions as German and Community players by reason of the prohibition of discrimination resulting from the combined provisions of the EC Treaty and the Association Agreement with Slovakia. 12. The Landgericht ordered the DHB to issue Mr Kolpak with a player's licence not marked with an A on the ground that, under Rule 15 of the SpO, Mr Kolpak was not to be treated in the same way as a player who was a national of a non-member country. The DHB appealed against that decision to the Oberlandesgericht Hamm. 13. The Oberlandesgericht takes the view that the reference to Article 48 of the EC Treaty (now, after amendment, Article 39 EC) by Rule 15(1)(b) of the SpO must be construed as meaning that this latter provision covers only players who enjoy complete equality of treatment vis-à-vis Community nationals in respect of free movement of workers. According to this interpretation, Mr Kolpak is not entitled to be issued with a licence which does not contain the limitations resulting from the addition of the letter A, as such general equality of treatment does not feature in the association agreements concluded with the countries of Eastern Europe and the Mediterranean Basin, which include the Association Agreement with Slovakia. 14. The Oberlandesgericht accordingly asks whether Rule 15(1)(b) of the SpO is contrary to Article 38 of the Association Agreement. If that were so, and if the latter provision were to have direct effect in regard to individuals, Mr Kolpak would be entitled to be issued with an unrestricted licence. 15. In the opinion of the Oberlandesgericht, the DHB breaches the prohibition in Article 38 of the Association Agreement with Slovakia through its refusal to issue Mr Kolpak with an unrestricted licence on the ground of his nationality. 16. In that regard, the Oberlandesgericht Hamm observes that Mr Kolpak's contract, which is governed by Rule 15 of the SpO, is an employment contract, as that player undertakes thereby, in return for a fixed monthly salary, to provide sporting services, as an employee, in connection with training and matches organised by his club and that this constitutes his main professional activity. 17. The Oberlandesgericht also takes the view that the provisions of Rule 15(1)(b) and 15(2) of the SpO, read together, give rise to inequality of treatment in regard to working conditions. Mr Kolpak is already lawfully employed within the territory of the Federal


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Republic of Germany, in which he is resident, he holds a valid residence permit, he is not, under German legislation, subject to any obligation to obtain a work permit, and he is no longer personally affected by any barrier to employment, even an indirect one; all that notwithstanding, he does not, by reason of the above provisions, enjoy the same opportunities as others to participate in official matches as part of his professional activity. 18. Thus, according to the Oberlandesgericht, the prohibition of discrimination set out in Article 38 of the Association Agreement with Slovakia applies on condition that the proviso contained therein relating to the conditions and modalities in force in each Member State does not preclude this. In that regard, the Oberlandesgericht considers that such conditions and modalities are constituted solely by legal rules of a general character and not by rules involving the application of working conditions that differ according to the nationality of the worker. It thus tends to the view that the rules drawn up by the DHB, within the framework of the autonomy which associations are recognised as having, do not form part of those conditions and modalities. If the contrary were true, the prohibition of discrimination contained in the Association Agreement would serve no purpose. 19. The Oberlandesgericht Hamm further takes the view that Article 38 of the Association Agreement with Slovakia, in the same way as Article 48 of the Treaty, is a directly applicable provision inasmuch as, regard being had to its wording and to the purpose and nature of the Agreement, it contains a clear and precise obligation which is not subject, in its implementation or its effects, to the operation of any further measure. According to the Oberlandesgericht, Article 38 of the Association Agreement also has effects vis-à-vis third parties inasmuch as it does not apply solely to measures taken by the authorities but also extends to rules applying to employees that are collective in nature. 20. The Oberlandesgericht concludes that it is faced with an infringement of the prohibition of discrimination arising under Article 38 of the Association Agreement with Slovakia which should have the effect of rendering Rule 15(1)(b) of the SpO inapplicable to Mr Kolpak. 21. In those circumstances, the Oberlandesgericht Hamm has decided to stay the proceedings and to refer the following question to the Court for a preliminary ruling: Is it contrary to Article 38(1) of the Europe Agreement establishing an association between the European Communities and their Member States, of the one part, and the Slovak Republic, of the other part - Final Act - if a sports federation applies to a professional sportsman of Slovak nationality a rule that it has adopted under which clubs may field in league and cup matches only a limited number of players who come from countries not belonging to the European Communities? The question submitted for preliminary ruling 22. By its question the Oberlandesgericht Hamm is asking, essentially, whether the first indent of Article 38(1) of the Association Agreement with Slovakia is to be construed as precluding the application to a professional sportsman who is a Slovak national and is lawfully employed by a club established in a Member State of a rule drawn up by a sports federation in that State under which clubs are authorised, during league or cup matches, to field only a limited number of players from non-member countries that are not parties to the Agreement on the European Economic Area (the EEA). 23. In order to reply to the question, as thus reformulated, it is necessary first of all to examine whether the first indent of Article 38(1) of the Association Agreement with Slovakia can be invoked by an individual before a national court and then, if the answer


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to that question is in the affirmative, whether that provision can be invoked in regard to a rule drawn up by a national sports federation such as the DHB. Finally, it will be necessary to establish the scope of the principle of non-discrimination which that provision lays down. The direct effect of the first indent of Article 38(1) of the Association Agreement with Slovakia 24. It should be noted at the outset that, in paragraph 30 of its judgment in Case C-162/00 Pokrzeptowicz-Meyer [2002] ECR I-1049, the Court has already recognised the first indent of Article 37(1) of the Europe Agreement establishing an association between the European Communities and their Member States, of the one part, and the Republic of Poland, of the other part, signed in Brussels on 16 December 1991 and approved on behalf of the Communities by Decision 93/743/Euratom, ECSC, EC of the Council and the Commission of 13 December 1993 (OJ 1993 L 348, p. 1) (the Association Agreement with Poland), as having direct effect. 25. It is to be observed, first, that the wording of the first indent of Article 38(1) of the Association Agreement with Slovakia and that of the first indent of Article 37(1) of the Association Agreement with Poland is identical. 26. Second, those two Association Agreements do not differ in regard to their objectives or the context in which they were adopted. Each has, according to the final recital in the preamble and Article 1(2), the aim, inter alia, of establishing an association to promote the expansion of trade and harmonious economic relations between the contracting parties so as to foster dynamic economic development and prosperity in the Slovak Republic and in the Republic of Poland respectively, in order to facilitate those countries' accession to the Communities. 27. That being so, just as Article 58(1) of the Association Agreement with Poland does not preclude the first indent of Article 37(1) of that Agreement from having direct effect (see Pokrzeptowicz-Meyer, cited above, paragraph 28), so Article 59(1) of the Association Agreement with Slovakia does not preclude the first indent of Article 38(1) of that Agreement from having direct effect, given the similarity of the provisions in question. 28. Furthermore, as with the first indent of Article 37(1) of the Association Agreement with Poland, implementation of the first indent of Article 38(1) of the Association Agreement with Slovakia is not subject to the adoption by the Association Council, set up by that Agreement, of additional measures to define the detailed rules governing its application (Pokrzeptowicz-Meyer, paragraph 29). 29. Finally, just as in the case of Article 37(1) of the Association Agreement with Poland, the words [s]ubject to the conditions and modalities applicable in each Member State in Article 38(1) of the Association Agreement with Slovakia cannot be interpreted in such a way as to allow Member States to make the application of the principle of non-discrimination set out in that provision subject to conditions or discretionary limitations inasmuch as such an interpretation would render that provision meaningless and deprive it of any practical effect (Pokrzeptowicz-Meyer, paragraphs 20 to 24). 30. In those circumstances, the first indent of Article 38(1) of the Association Agreement with Slovakia must be recognised as having direct effect, with the result that Slovak nationals who invoke it are entitled to rely on it before national courts of the host Member State.


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The question whether the first indent of Article 38(1) of the Association Agreement with Slovakia applies to a rule laid down by a sports federation 31. As a preliminary point, it should be observed that, in regard to Article 48(2) of the Treaty, it follows from paragraph 87 of the Court's judgment in Case C-415/93 Bosman [1995] ECR I-4921 that the prohibition of discrimination laid down in that provision applies to rules laid down by sporting associations which determine the conditions under which professional sportsmen can engage in gainful employment. 32. In that connection, the Court pointed out, in paragraph 84 of Bosman, cited above, that working conditions in the different Member States are governed sometimes by provisions laid down by law or regulation and sometimes by agreements and other acts concluded or adopted by private persons, and that, if the scope of Article 48 of the Treaty were to be confined to acts of a public authority, there would therefore be a risk of creating inequality in its application. 33. With regard to the first indent of Article 38(1) of the Association Agreement with Slovakia, in order to determine whether that provision applies to a rule drawn up by a sports federation such as the DHB, it is necessary to examine whether the Court's interpretation of Article 48(2) of the Treaty may be transposed in this case to the above provision of the Association Agreement with Slovakia. 34. The Court has stated in this regard, in paragraphs 39 and 40 of Pokrzeptowicz-Meyer, that, although the first indent of Article 37(1) of the Association Agreement with Poland does not lay down a principle of free movement for Polish workers within the Community, whereas Article 48 of the Treaty establishes for the benefit of Member State nationals the principle of free movement for workers, it follows from a comparison of the aims and context of the Association Agreement with Poland, on the one hand, with those of the EC Treaty, on the other hand, that there is no ground for giving to the first indent of Article 37(1) of that Association Agreement a scope different from that which the Court has recognised Article 48(2) of the Treaty as having. 35. In that context, the Court stated in paragraph 41 of Pokrzeptowicz-Meyer that the first indent of Article 37(1) of the Association Agreement with Poland establishes, in favour of workers of Polish nationality, once they are lawfully employed within the territory of a Member State, a right to equal treatment as regards conditions of employment of the same extent as that conferred in similar terms by Article 48(2) of the Treaty on Member State nationals. 36. It follows from the foregoing and from the reasoning set out in paragraphs 25 to 30 of this judgment that the interpretation of Article 48(2) of the Treaty adopted by the Court in Bosman and referred to in paragraphs 31 and 32 of the present judgment may be transposed to the first indent of Article 38(1) of the Association Agreement with Slovakia. 37. That being so, it must be concluded that the first indent of Article 38(1) of the Association Agreement with Slovakia applies to a rule drawn up by a sports federation such as the DHB which determines the conditions under which professional sportsmen engage in gainful employment. The scope of the principle of non-discrimination set out in the first indent of Article 38(1) of the Association Agreement with Slovakia 38. According to the DHB and the Greek, Spanish and Italian Governments, the scope of the non-discrimination clause contained in Article 38 of the Association Agreement


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with Slovakia is not intended to place on an entirely equal footing workers who are nationals of the Slovak Republic and workers who are nationals of the Member States of the European Union. The free movement of workers provided for in Article 48 of the Treaty, as applied within the area of sport by the Bosman judgment, can, they argue, benefit only Community nationals or nationals of an EEA Member State. 39. Furthermore, all the parties which submitted observations to the Court agree that the prohibition of discrimination on grounds of nationality, set out in the first indent of Article 38(1) of the Association Agreement with Slovakia, applies only to workers of Slovak nationality who are already lawfully employed in the territory of a Member State and solely with regard to conditions of work, remuneration or dismissal. 40. On this point, the DHB and the Greek, Spanish and Italian Governments argue that the rule contained in Rule 15(1)(b) and 15(2) of the SpO relates to access of Slovak nationals to employment. Article 38(1) of the Association Agreement with Slovakia, they submit, cannot therefore preclude the application of such a rule. 41. Against this, Mr Kolpak, the German Government and the Commission submit that the facts in point in the main proceedings come within the first indent of Article 38(1) of the Association Agreement with Slovakia inasmuch as Mr Kolpak is not seeking access to the German labour market but is already lawfully working in Germany pursuant to domestic law and is suffering, in that connection, discrimination in working conditions by reason of the SpO. 42. In that regard, it must be observed, first, that, according to the wording of the first indent of Article 38(1) of the Association Agreement with Slovakia, the prohibition of discrimination on grounds of nationality laid down in that provision applies only to workers of Slovak nationality who are already lawfully employed in the territory of a Member State and solely with regard to conditions of work, remuneration or dismissal. In contrast to Article 48 of the Treaty, that provision does not therefore extend to national rules concerning access to the labour market. 43. According to the order for reference, Mr Kolpak is lawfully employed as a goalkeeper under a contract of employment signed with a second-division German club, has a valid residence permit and does not, under national law, require a work permit in order to exercise his profession. It thus appears that he has already had lawful access to the labour market in Germany. 44. In that context, with more particular regard to the question whether a rule such as that laid down in Rule 15(1)(b) and 15(2) of the SpO constitutes a working condition, it is necessary to point out that, in Bosman, the dispute in the main proceedings related to, inter alia, similar nationality rules or clauses drawn up by the Union of European Football Associations (UEFA). 45. It follows from paragraph 120 of the judgment in Bosman that clauses of that kind concern not the employment of professional players, on which there is no restriction, but the extent to which their clubs may field them in official matches, and that participation in such matches is the essential purpose of their activity. 46. It follows that a sports rule such as that in issue in the main proceedings relates to working conditions within the meaning of the first indent of Article 38(1) of the Association Agreement with Slovakia inasmuch as it directly affects participation in league and cup matches of a Slovak professional player who is already lawfully employed under the national provisions of the host Member State. 47. That being so, in order to establish whether the first indent of Article 38(1) of the Association Agreement with Slovakia precludes the application of a rule such as that laid down in Rule 15(1)(b) and 15(2) of the SpO, it remains to determine whether that rule involves discrimination prohibited by that provision of the Association Agreement.


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48. In that regard, it must be observed, first, that, so far as Article 48(2) of the Treaty is concerned, it follows from paragraph 137 of Bosman that that provision precludes the application of rules laid down by sporting associations under which, in competition matches which they organise, football clubs may field only a limited number of professional players who are nationals of other Member States. 49. With regard to the interpretation of the first indent of Article 38(1) of the Association Agreement with Slovakia, it follows from paragraphs 25 to 30, 34, 35 and 44 of the present judgment that that provision introduces for the benefit of workers of Slovak nationality, on condition that they are lawfully employed in the territory of a Member State, a right to equal treatment as regards working conditions having the same scope as that which, in similar terms, nationals of the Member States are recognised as having by virtue of Article 48(2) of the Treaty, and that the rule in issue in the case in the main proceedings is similar to the nationality clauses in point in Bosman. 50. That being so, the interpretation of Article 48(2) of the Treaty applied by the Court in Bosman and set out in paragraph 48 of the present judgment can be transposed to the first indent of Article 38(1) of the Association Agreement with Slovakia. 51. Thus, the first indent of Article 38(1) of the Association Agreement with Slovakia precludes any application to Mr Kolpak of a rule such as that laid down in Rule 15(1)(b) and 15(2) of the SpO in so far as that rule gives rise to a situation in which Mr Kolpak, in his capacity as a Slovak national, although lawfully employed in a Member State, has, in principle, merely a limited opportunity, in comparison with players who are nationals of Member States or of EEA Member States, to participate in certain matches, that is to say, league and cup matches of the German federal or regional leagues, which constitute, moreover, the essential purpose of his activity as a professional player. 52. That interpretation cannot be called in question by the DHB's argument that the rule laid down in Rule 15(1)(b) and 15(2) of the SpO is justified on exclusively sporting grounds, as its purpose is to safeguard training organised for the benefit of young players of German nationality and to promote the German national team. 53. Admittedly, in paragraph 127 of Bosman, the Court pointed out that, in paragraphs 14 and 15 of its judgment in Case 13/76 Donà v Mantero [1976] ECR 1333, it had recognised that the Treaty provisions on the free movement of persons do not preclude rules or practices excluding foreign players from certain matches for reasons which are not economic in nature, which relate to the particular nature and context of such matches and are thus of sporting interest only, such as matches between national teams from different countries. 54. In paragraph 128 of Bosman, however, the Court stated that nationality clauses do not concern specific matches between teams representing their countries but apply to all official matches between clubs and thus to the essence of the activity of professional players. 55. In that context, the Court pointed out that a football club's links with the Member State in which it is established cannot be regarded as any more inherent in its sporting activity than are its links with its locality, town or region. Even though national championships are played between clubs from different regions, towns or localities, there is no rule restricting the right of clubs to field players from other regions, towns or localities in such matches. Moreover, in international competitions participation is limited to clubs which have achieved certain sporting results in their respective countries, without any particular significance being attached to the nationalities of their players (Bosman, paragraphs 131 and 132).


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56. Regard being had to that case-law, the discrimination arising in the present case from Rule 15(1)(b) and 15(2) of the SpO cannot be regarded as justified on exclusively sporting grounds inasmuch as it follows from those rules that, during matches organised by the DHB, clubs are free to field an unlimited number of nationals of EEA Member States. 57. Furthermore, no other argument capable of providing objective justification for the difference in treatment between, on the one hand, professional players who are nationals of a Member State or of an EEA Member State and, on the other, professional players who are Slovak nationals, resulting from Rule 15(1)(b) and 15(2) of the SpO and affecting the working conditions of the latter, has been put forward in the observations submitted to the Court. 58. It follows that the answer to the question submitted for preliminary ruling must be that the first indent of Article 38(1) of the Association Agreement with Slovakia must be construed as precluding the application to a professional sportsman of Slovak nationality, who is lawfully employed by a club established in a Member State, of a rule drawn up by a sports federation in that State under which clubs are authorised to field, during league or cup matches, only a limited number of players from non-member countries that are not parties to the EEA Agreement.

On those grounds,


in answer to the question referred to it by the Oberlandesgericht Hamm

(Germany) by order of 15 November 2000, hereby rules:

The first indent of Article 38(1) of the Europe Agreement establishing an association between the European Communities and their Member States, of the one part, and the Slovak Republic, of the other part, signed in Luxembourg on 4 October 1993 and approved on behalf of the Communities by Decision 94/909/ECSC, EEC, Euratom of the Council and the Commission of 19 December 1994, must be construed as precluding the application to a professional sportsman of Slovak nationality, who is lawfully employed by a club established in a Member State, of a rule drawn up by a sports federation in that State under which clubs are authorised to field, during league or cup matches, only a limited number of players from non-member countries that are not parties to the Agreement on the European Economic Area.


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16 Joined Cases T-346/02 and T-347/02,

Cableuropa SA, established in Madrid (Spain),

Región de Murcia de Cable SA, established in Murcia (Spain),

Valencia de Cable SA, established in Madrid,

Mediterránea Sur Sistemas de Cable SA, established in Alicante (Spain),

Mediterránea Norte Sistemas de Cable SA, established in Castellón (Spain),

applicants in Case T-346/02,

Aunacable SA, established in Madrid (Spain),

Sociedad Operadora de Telecomunicaciones de Castilla y León (Retecal) SA,

established in Boecilli (Spain),

Euskaltel SA, established in Zamudio-Bizkaia (Spain),

Telecable de Avilés SA, established in Avilés (Spain),

Telecable de Oviedo SA, established in Oviedo (Spain),

Telecable de Gijón SA, established in Gijón (Spain),

R Cable y Telecomunicaciones Galicia SA, established in La Coruña (Spain),

Tenaria SA, established in Cordovilla (Spain),

applicants in Case T-347/02,

v


defendant,

supported by

Kingdom of Spain, by

Sogecable SA, established in Madrid,

by

DTS Distribuidora de Televisión Digital SA (Vía Digital), established in Madrid,

and by

Telefónica de Contenidos SAU, established in Madrid,

APPLICATION for annulment of the Commission decision of 14 August 2002

referring the examination of the concentration aiming at the merger of DTS

Distribuidora de Televisión Digital SA (Vía Digital) and Sogecable SA, to the Spanish

competition authorities, pursuant to Article 9 of Council Regulation (EEC) No 4064/89

of 21 December 1989 on the control of concentrations between undertakings (Case

COMP/M.2845 - Sogecable/Canalsatélite Digital/Vía Digital),


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OF THE EUROPEAN COMMUNITIES (Third Chamber),

gives the following

Judgment

Legal context 1. Council Regulation (EEC) No 4064/89 of 21 December 1989 on the control of concentrations between undertakings (OJ 1989 L 395, p. 1), corrected version in OJ 1990 L 257, p. 13, as amended by Council Regulation (EC) No 1310/97 of 30 June 1997 (OJ 1997 L 180, p. 1), hereinafter Regulation 4064/89) provides for a system of control by the Commission of concentrations having a Community dimension as defined by Article 1(2) and (3) of Regulation No 4064/89. 2. Article 9 of Regulation No 4064/89 allows the Commission to refer the examination of a concentration to the Member States. In particular, it provides as follows: 1. The Commission may, by means of a decision notified without delay to the undertakings concerned and the competent authorities of the other Member States, refer a notified concentration to the competent authorities of the Member State concerned in the following circumstances. 2. Within three weeks of the date of receipt of the copy of the notification a Member State may inform the Commission, which shall inform the undertakings concerned, that: (a) a concentration threatens to create or to strengthen a dominant position as a result of which effective competition would be significantly impeded on a market within that Member State, which presents all the characteristics of a distinct market, or (b) a concentration affects competition on a market within that Member State, which presents all the characteristics of a distinct market and which does not constitute a substantial part of the common market. 3. If the Commission considers that, having regard to the market for the products or services in question and the geographical reference market within the meaning of paragraph 7, there is such a distinct market and that such a threat exists, either: (a) it shall itself deal with the case in order to maintain or restore effective competition on the market concerned, or (b) it shall refer the whole or part of the case to the competent authorities of the Member State concerned with a view to the application of that State's national competition law. If, however, the Commission considers that such a distinct market or threat does not exist it shall adopt a decision to that effect which it shall address to the Member State concerned. In cases where a Member State informs the Commission that a concentration affects competition in a distinct market within its territory that does not form a substantial part of the common market, the Commission shall refer the whole or part of the case relating to the distinct market concerned, if it considers that such a distinct market is affected. ... 7. The geographical reference market shall consist of the area in which the undertakings concerned are involved in the supply and demand of products or services, in which the conditions of competition are sufficiently homogeneous and which can be distinguished from neighbouring areas because, in particular, conditions of competition are appreciably different in those areas. This assessment should take account in particular


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of the nature and characteristics of the products or services concerned, of the existence of entry barriers or of consumer preferences, of appreciable differences of the undertakings' market share between the area concerned and neighbouring areas or of substantial price differences. 8. In applying the provisions of this Article, the Member State concerned may take only the measures strictly necessary to safeguard or restore effective competition on the market concerned. ... The undertakings concerned 3. Cableuropa SA (Cableuropa), the first applicant in Case T-346/02, is a cable telecommunications operator (cable operator) active in particular on the pay-TV markets in Spain. It has majority shareholdings in the other applicants in this case, namely Región de Murcia de Cable SA, Valencia de Cable SA, Mediterránea Sur Sistemas de Cable SA, and Mediterránea Norte Sistemas de Cable SA, which are also cable operators active in Spain. 4. Aunacable SAU (Aunacable), the first applicant in Case T-347/02, is a company grouping together five cable operators active in Spain, namely Able in Aragon, Canarias Telecom in the Canary Islands, Madritel in Madrid, Menta in Catalonia and Supercable in the greater part of Andalusia. The other applicants in this case are regional cable operators (regional cable operators) also active in Spain. 5. Sogecable SA (Sogecable) is a commercial limited company whose main activities are essentially the management and operation of an analog pay-TV channel (Canal+) on the Spanish market. Sogecable also operates a platform for digital satellite television, Canalsatélite Digital, of which it controls 83.25%. Its activities also include the provision of technical services and the management of the subscription service, the production and sale of special-interest television channels, the production, distribution and showing of films, the acquisition and sale of sporting rights. Sogecable is, through Canal+ and Canalsatélite Digital, the biggest pay-TV operator in Spain. 6. By virtue of an agreement concluded on 28 June 1999 between the shareholders of Promotora de Informaciones SA (Prisa) and of the Canal+ SA group (Canal+ group) and renewed in 2002, Sogecable is jointly controlled by those two companies, each of which holds 21.27% of the shares, the remainder being held by several minority shareholders and allotted through stock exchanges. Prisa is a Spanish media group with interests in the press, publishing, radio and pay-TV sectors. The Canal+ group heads the European cinema and television division of the Vivendi Universal group (Vivendi). Vivendi works in the sectors of music, television, cinema, telecommunications, internet, publishing and the environment. 7. DTS Distribuidora de Televisión Digital SA (Vía Digital) manages and operates a digital television platform on the Spanish market. It is also active in the production, purchase, sale, reproduction, distribution and showing of all types of audiovisual works. It is the second biggest multi-channel pay-TV operator in Spain. 8. Vía Digital is controlled by Telefónica de Contenidos SAU (Telefónica de Contenidos), a company which, up to 23 October 2002, was called Grupo Admira Media SA (Admira). As a wholly-owned subsidiary of Telefónica SA (Telefónica), the biggest telecommunications operator in the Spanish-speaking world, Telefónica de Contenidos brings together and manages the latter's holdings in the Spanish and Latin American audiovisual services markets.


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Background of the case 9. On 3 July 2002 the Commission received notification pursuant to Regulation No 4064/89 of an agreement concluded between Sogecable and Admira on 8 May 2002 concerning the merger of Vía Digital with Sogecable by means of an exchange of shares. The agreement also provides for the acquisition by Sogecable of Admira's indirect holding in Audiovisual Sport SL (AVS), an undertaking through which Sogecable and Telefónica control the broadcasting rights in football matches of the first and second divisions of the Spanish Football League, other competitions, such as the UEFA Champions League and the FIFA World Championship, and other sporting events. 10. According to the agreement notified to the Commission, Sogecable will remain under the joint control of Prisa and the Canal+ group. 11. On 12 July 2002 the Commission published in the Official Journal of the European Communities, pursuant to Article 4(3) of Regulation No 4064/89, the fact of notification in Case COMP/M.2845 - Sogecable/Canalsatélite Digital/Vía Digital and invited interested third parties to submit any observations they may have on the proposed concentration. 12. On the same day the Spanish Government requested the Commission, pursuant to Article 9(2)(a) of Regulation No 4064/89, to refer the matter to its own competition authorities on the ground that the concentration threatened to create a dominant position affecting competition in several Spanish markets. 13. On 18 July 2002 the Commission sent requests for information to ONO (see paragraph 72 below), Aunacable and the regional cable operators pursuant to Article 11 of Regulation No 4064/89. The undertakings concerned replied by letters of 23 July 2002 (ONO), 26 July 2002 (the regional cable operators) and 31 July 2002 (Aunacable). 14. On 23 July 2002 the Spanish Government amplified the request for referral by sending the Commission a revised document. The contested decision 15. By decision of 14 August 2002 the Commission referred Case COMP/M.2845 - Sogecable/Canalsatélite Digital/Vía Digital to the competent authorities of the Kingdom of Spain pursuant to Article 9 of Regulation No 4064/89 (the contested decision). 16. The contested decision distinguishes different markets for products and services affected by the concentration. They are the pay-TV market and markets upstream, namely those for film broadcasting rights, sporting rights and other programme contents, as well as telecommunications markets. 17. According to the contested decision, each relevant product market has a national dimension. 18. Regarding the pay-TV market, the contested decision states as follows (paragraph 17): The Commission has always maintained that the pay-TV market is delimited by linguistic or national frontiers. Even though certain market segments, such as the Eurosport sports channel, broadcast throughout the Community, television broadcasting takes place essentially on national markets, mainly because of differing national legislation, language barriers, cultural factors and competition conditions which differ from one country to another (for example, the structure of the cable television market). Accordingly, in the particular case of Spain, the geographical dimension is found to be national for language and administrative reasons. The Spanish market is therefore the


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geographical reference market. It presents all the characteristics of a distinct market within the meaning of Article 9(2)(a) of Regulation No 4064/89. 19. With regard to the markets upstream of the pay-TV market, the contested decision explains first that the main programme contents which induce viewers to opt for pay-TV services in Spain are the first transmission of feature films with the biggest box office receipts (which are usually films produced by Hollywood studios, or American “majors“) and football matches involving Spanish teams, particularly the League (paragraph 21). 20. The national dimension of markets in film broadcasting rights is explained as follows: The rights in the coded broadcasting of films are generally assigned on an exclusive basis for variable periods, on a specific language basis and for a specific transmission area. In the case of Spain, the transmission rights are limited to Spanish territory; the geographical markets, which correspond to the film rights, are national. The Spanish market is therefore the geographical reference market, a market which presents all the characteristics of a distinct market within the meaning of Article 9(2)(a) and (7) of Regulation No 4064/89 (contested decision, paragraph 26). 21. Regarding the broadcasting rights for sports events, the contested decision (paragraphs 40 to 42) distinguishes first the market in broadcasting rights for football matches involving Spanish teams and states as follows: 40. With regard to the sale of broadcasting rights for League and Cup matches as well as rights for the Champions League and UEFA Cup matches, those were granted to Spanish television operators. So far as the League and the Spanish Cup are concerned, the Spanish football clubs sold their rights individually to Telefónica, Sogecable, TV3 and AVS until the year ..., with the exception of the final of the King's Cup. For the Champions League and the UEFA Cup, licences are granted to operators in each country, as the demand for matches varies from one country to another for cultural reasons. The UEFA sold the Champions League rights to Televisión Española (TVE) until the year ... 41. With regard to purchasing, the wholesale and retail markets are also national because the rights are utilised essentially in Spain. So far as the Spanish League and the Spanish Cup are concerned, the operators sold the match rights to AVS, which subsequently granted licences to various pay-TV companies and free-access television operators for broadcasting matches. TVE, which, as already mentioned, acquired the broadcasting rights for the Champions League and UEFA matches until ..., granted licences to Vía Digital for the rights to be utilised on pay-TV until ... Vía Digital subsequently granted Sogecable a non-exclusive licence to use those rights. 42. Therefore the Spanish market is the geographical reference market, a market which presents all the characteristics of a distinct market within the meaning of Article 9(2)(a) of Regulation No 4064/89. 22. Regarding the broadcasting rights for other sports events and other entertainments giving rise to exclusive rights, the Commission stresses the national character of the market for language and cultural reasons (contested decision, paragraph 57). 23. With regard to the last market upstream of the pay-TV market, namely the market for the broadcasting rights of other programme contents, the contested decision explains as follows (paragraph 63): In previous decisions the Commission stated that special-interest channels are a distinct product market, with a national dimension. In general, special-interest channels are marketed. Their national geographical dimension is confirmed in the case of Spain because distribution takes place in Spain. Therefore the Spanish market is the


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geographical reference market, a market which presents all the characteristics of a distinct market within the meaning of Article 9(2)(a) and (7) of Regulation No 4064/89. 24. So far as the geographical dimension of telecommunications markets is concerned, the contested decision explains as follows (paragraph 80 and 82): (a) Markets for internet access 80. ... In previous decisions, the Commission has taken the view ... that the retail supply of internet access services to end users, whether broad band or narrow band, constitutes a market with an essentially national dimension for reasons which are both technological (for example, the need for access to a local loop and local/free telephone numbers for the nearest point of presence or POP) and administrative (existence of different national regulatory frameworks). Therefore the Spanish market is the geographical reference market, a market which presents all the characteristics of a distinct market within the meaning of Article 9(2)(a) and (7) of Regulation No 4064/89. (b) Fixed telephony markets and other telecommunications markets ... 82. The Commission's normal practice in earlier decisions confirms that the telecommunications markets listed in the previous section are essentially national (national infrastructures, exclusively national offers of services, conditions for licensing operators, availability of mobile telephony frequencies, roaming tariffs, etc.). Therefore the Spanish market is the geographical reference market, a market which presents all the characteristics of a distinct market within the meaning of Articles 9(2)(a) and 7 of Regulation No 4064/89. 25. The Commission finds that, on each market, the concentration threatens to create or to strengthen a dominant position as a result of which effective competition would be significantly impeded on the Spanish market (contested decision, paragraphs 20, 29, 51, 55, 61, 68 and 109). 26. The Commission goes on to set out the following general conclusions in the contested decision (paragraphs 118 to 121): Conclusions 118. As the Kingdom of Spain is a substantial part of the common market, the Commission has, under Article 9(3) of Regulation No 4064/89, a broad discretion to decide whether to refer the concentration case to the Spanish national authorities with a view to the application of national law. 119. The concentration threatens to create or strengthen a dominant position only in markets with a national dimension, within the Kingdom of Spain. 120. The Spanish national authorities have sufficient means and are in a position to carry out a detailed investigation into the concentration, taking account of the national character of the markets in which the concentration threatens to create or strengthen a dominant position. 121. The Commission has verified that the conditions laid down in Article 9 of the Regulation on concentrations for a referral to the national authorities are fulfilled in the present case and therefore considers, exercising its discretion under the Regulation, that it is appropriate to give a favourable reply to the request from the Spanish authorities and to refer the case to them with a view to applying the Spanish competition legislation. 27. On 18 September 2002 the Commission gave notice of the contested decision to the applicants in Case T-347/02. The decision was notified to ONO the next day. 28. By two decisions of the Council of Ministers of 29 November 2002, the Spanish Government authorised the concentration in question, subject to various conditions.


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Procedure 29. The applicants brought the present action by applications received by the Court Registry on 22 November 2002, registered under numbers T-346/02 and T-347/02. 30. In both cases, by separate documents lodged on the same day, the applicants applied for an expedited procedure under Article 76a of the Rules of Procedure of the Court of First Instance. On 16 December 2002 the Third Chamber of the Court, to which both cases were assigned, decided to grant the application. 31. The Commission lodged its statement in defence in both cases on 22 January 2003. 32. By documents lodged at the Court Registry on 19 February and 4 March 2003 respectively, the Kingdom of Spain, on the one hand, and Sogecable, Vía Digital and Telefónica de Contenidos, on the other, sought leave to intervene in both cases in support of the form of order sought by the Commission. The requests were granted by orders of the President of the Third Chamber of the Court of First Instance of 19 March and 10 April 2003. The interveners were asked to make their submissions at the hearing. 33. Upon hearing the report of the Judge-Rapporteur, the Court (Third Chamber) decided to open the oral procedure and, by way of measures of organisation of procedure under Article 64 of the Rules of Procedure, requested the parties to reply to written questions and to lodge certain documents. The parties did so within the time-limits allowed. 34. The parties presented oral argument and replied to questions put by the Court at the hearing on 11 June 2003. At the hearing a document was placed in the file of Case T-346/02 at the applicants' request. 35. After the parties had submitted their observations on this point at the hearing, the Court (Third Chamber) decided to join the two cases for the purpose of the judgment. Forms of order sought by the parties 36. In Case T-346/02, the applicants claim that the Court should: - annul the contested decision; - order each party to bear its own costs. 37. In Case T-347/02, the applicants claim that the Court should: - declare the action admissible and well founded; - annul the contested decision; - order the Commission to pay the costs. 38. In both cases, the Commission, supported by the interveners, contends that the Court should: - declare the actions inadmissible; - in the alternative, dismiss them as unfounded; - order the applicants to bear the costs. Admissibility Arguments of the parties 39. The Commission, supported by the interveners, observes that the contested decision is addressed only to the Kingdom of Spain so that the applicants, as they are not the addressees of the decision, must prove that it is of direct and individual concern to them in accordance with the fourth paragraph of Article 230 EC. However, the Commission adds that it is not of direct and individual concern to them.


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40. First of all, a decision such as the contested decision in no way prejudices the final decision which the national authorities will adopt on the concentration. Therefore the existence of a later independent decision of the State rules out the possibility of the applicants being regarded as directly concerned by the contested decision. On this point the Commission refers to the judgments of the Court in Case T-3/93 Air France v Commission [1994] ECR II-121, and Case T-96/92 CCE de la Société Générale des grandes sources and Others v Commission [1995] ECR II-1213, paragraph 40, and to the case-law relating to the right of private individuals to challenge decisions concerning State aid (Case T-114/00 Aktionsgemeinschaft Recht und Eigentum v Commission [2002] ECR II-5121, paragraph 73) and directives (Joined Cases T-172/98, T-175/98 to T-177/98 Salamander and Others v Parliament and Council [2000] ECR II-2487, paragraph 70). 41. In this context the Commission observes that, in the case of Air France v Commission, cited in paragraph 40 above, the contested decision did not ensure that there would be a decision on the merits of the concentration under national competition law. On the contrary, in that case the contested decision authorised the immediate implementation of the proposed operation and deprived third parties of their procedural rights. In the present case, the contested decision in no way authorised the concentration. The decision merely effected a transfer of competence without prejudicing the procedural safeguards for the third parties concerned. Referring to the judgments of the Court of Justice in Case C-198/91 Cook v Commission [1993] ECR I-2487, Case C-225/91 Matra v Commission [1993] ECR I-3203 and Case C-70/97 P Kruidvat v Commission [1998] ECR I-7183, the Commission adds that the important point with regard to the admissibility of the action is respect for the right to be heard and not observance of specific procedural rules. Unless it is to be presumed that the Member States, and in particular the Kingdom of Spain, do not respect that fundamental safeguard, it must be found that the contested decision is not of direct concern to the applicants. In any case, there is no variable-geometry capacity to bring proceedings, depending on the procedural rules of the State to which the competence to examine a concentration is transferred (see, to that effect, Case C-50/00 P Unión de Pequeños Agricultores v Council [2002] ECR I-6677, paragraph 43). If the applicants considered that their right to be heard was not adequately safeguarded before the Spanish competition authorities, they could present their arguments in an action against the final decision adopted by those authorities. Regarding the applicants' argument that the third parties concerned had no right to make their views known at a formal hearing before the Spanish authorities, the Commission observes that, under Article 16 of Commission Regulation (EC) No 447/98 of 1 March 1998 on the notifications, time-limits and hearings provided for by Regulation No 4064/89 (OJ 1998 L 61, p. 1), a third party likewise has no such right in the administrative procedure before the Commission. A third party could make his point of view known only if the Commission deemed it appropriate. 42. The present cases are also very different from Case T-87/96 Assicurazioni Generali and Unicredito v Commission [1999] ECR II-203, where the Commission, in the contested decision, took the view that the formation of a joint venture was not a concentration within the meaning of Regulation No 4064/89. The applicants in that case were parties to the transaction and, consequently, the contested decision was addressed to them. The Commission adds that, although the parties have an individual right to see the formation of a joint venture assessed under Regulation No 4064/89, where the conditions for applying the Regulation are fulfilled, there is no such right to have the


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operation dealt with by a particular authority where the conditions for referral to a Member State are fulfilled. 43. In Case T-347/02 the Commission also observes that, pursuant to Article 9(8) of Regulation No 4064/89, a Member State can take only the measures strictly necessary to safeguard or restore effective competition on the market concerned. The Commission adds that, if the national authorities' final decision does not conform with that provision, the applicants may plead such breach in an action against the decision. 44. Secondly, the Commission contends that the contested decision is not of individual concern to the applicants either. The mere fact that a person participates in one way or another in the process leading to the adoption of a decision does not distinguish him individually for the purpose of the fourth paragraph of Article 230 EC, unless the relevant Community legislation has laid down specific procedural guarantees for such a person (orders in Case T-60/96 Merck and Others v Commission [1997] ECR II-849, paragraph 73, and Case T-109/97 Molkerei Großbraunshain and Bene Nahrungsmittel v Commission [1998] ECR II-3533, paragraph 68). Formally, however, individuals play no part in the procedure under Article 9 of Regulation No 4064/89, as it is an entirely bilateral procedure between the Commission and the Member State making the request. The fact that the applicants submitted observations concerning the request for referral in the course of the administrative procedure is not therefore such as to distinguish them individually for the purpose of the fourth paragraph of Article 230 EC. 45. In Case T-346/02 the Commission also observes that the documents produced by ONO do not indicate the nature of the connection which is said to exist between the applicants and ONO. Nor was it possible to establish the extent to which the observations submitted by ONO concerning the effect of the concentration on it reflected its impact on the applicants. 46. The applicants in both cases claim that the contested decision is of direct and individual concern to them. Findings of the Court 47. According to the fourth paragraph of Article 230 EC, any natural or legal person may ... 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, is of direct and individual concern to the former. 48. The applicants are not the addressees of the contested decision, which the Commission addressed to the Member State which had requested a referral under Article 9(2) of Regulation No 4064/89, namely the Kingdom of Spain. Accordingly it is necessary to ascertain whether the decision is of direct and individual concern to the applicants. The question whether the contested decision is of direct concern to the applicants 49. It has consistently been held that, for a contested Community measure to be of direct concern to a natural or legal person, it must directly affect the applicant's legal situation and its implementation must be purely automatic and result from Community rules alone without the application of other intermediate rules (see Case C-386/96 P Dreyfus v Commission [1998] ECR I-2309, paragraph 43, and Case T-9/98 Mitteldeutsche Erdöl Raffinerie v Commission [2001] ECR II-3367, paragraph 47). 50. That is the case, in particular, where the possibility that addressees will not give effect to the Community measure is purely theoretical and their intention to act in


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conformity with it is not in doubt (Case 11/82 Piraiki-Patraiki and Others v Commission [1985] ECR 207, paragraphs 8 to 10; Dreyfus v Commission, cited in paragraph 49 above, paragraph 44, and Aktionsgemeinschaft Recht und Eigentum v Commission, cited in paragraph 40 above, paragraph 73). 51. In the present case, it must therefore be ascertained whether the contested decision is capable of having direct and automatic effects on the applicants' legal position or whether, on the contrary, those effects will arise from the decision adopted by the Spanish competition authorities on referral. 52. The Commission did not, in the contested decision, rule on the compatibility of the concentration with the common market, but referred the examination of the concentration to the Spanish competition authorities who requested the referral on 12 July 2002. In accordance with point (b) of the first subparagraph of Article 9(3) of Regulation No 4064/89, those authorities are responsible for examining the effects of the concentration with regard to their national competition law. The only obligations imposed by Regulation No 4064/89 on the Spanish competition authorities in that regard are, first, in accordance with Article 9(6), that they must adopt their decision within a period of not more than four months after the Commission's referral and, second, in accordance with Article 9(8), that they must take only the measures strictly necessary to safeguard or restore effective competition on the market concerned. However, since those obligations cannot determine precisely and with certainty the result of the examination of the merits carried out by the Spanish competition authorities, it must be held that the contested decision is not capable of directly affecting the competitive situation of the applicants, as only the final decision adopted by the Spanish competition authorities can have that effect. 53. However, that does not show that the contested decision is not of direct concern to the applicants. The question whether a third party is directly concerned by a Community measure which is not addressed to it must be examined in the light of the purpose of that measure. The purpose of the contested decision is not to rule on the effects of the concentration on the relevant markets which are the subject of the referral, but to transfer responsibility for that examination to the national authorities which have requested the referral in order that they may give a ruling in accordance with their national competition law. In view of that purpose, it is irrelevant in the present case that the contested decision does not directly affect the competitive position of the applicants on the relevant markets in Spain (see, to that effect, Case T-119/02 Royal Philips Electronics v Commission [2003] ECR II-1433, paragraph 276). 54. In order to assess whether the applicants are directly concerned by the contested decision, it need only be determined whether that decision has direct and automatic legal effects for the applicants. 55. In that regard, it should be observed that, pursuant to Article 1(1) and Article 22(1) thereof, Regulation No 4064/89 is, in principle, applicable only to concentrations with a Community dimension as defined in Article 1(2) and (3) of that regulation. Thus, according to the first subparagraph of Article 21(2) of Regulation No 4064/89, concentrations with a Community dimension are not, in principle, subject to the application of the Member States' laws on competition. 56. In the present case, by referring the examination of the concentration in question to the Spanish competition authorities, the Commission terminated the procedure applying Regulation No 4064/89, initiated by the notification of the agreement on the merger of Vía Digital with Sogecable. According to point (b) of the first subparagraph of Article 9(3), after a referral the competent authorities of the Member State concerned are to apply their national competition law.


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57. It follows that the effect of the contested decision which is the subject of the present action is to subject the concentration to exclusive review by the Spanish competition authorities ruling under their national competition law. 58. It must be held that the contested decision thus affects the applicants' legal situation (see, to that effect, Royal Philips Electronics v Commission, cited in paragraph 53 above, paragraphs 281 to 287). 59. By determining, through the referral to national competition law, the criteria for the assessment of the lawfulness of the concentration in question and the procedure and possible sanctions applicable to it, the contested decision alters the applicants' legal situation by depriving them of the opportunity to have the Commission review the lawfulness of the concentration from the point of view of Regulation No 4064/89 (see, by analogy, Assicurazioni Generali and Unicredito v Commission, cited in paragraph 42 above, paragraphs 37 to 44). 60. The review of a concentration carried out under the laws of a Member State cannot be considered, as regards its scope and effects, to be comparable to that carried out by the Commission under Regulation No 4064/89 (Air France v Commission, cited in paragraph 40 above, paragraph 69). 61. Contrary to the Commission's argument, every decision entailing a change in the legal system applying to the examination of a concentration is capable of affecting not only the legal situation of the parties to the operation in question, as occurred in the case of Assicurazioni Generali and Unicredito v Commission, cited in paragraph 42 above, but also that of third parties. 62. It must be observed that, irrespective of whether Spanish competition law confers upon third parties procedural rights similar to those safeguarded by Regulation No 4064/89, the contested decision, by terminating the procedure laid down by Regulation No 4064/89, has the effect of depriving third parties of the procedural rights which they derive from Article 18(4) of Regulation No 4064/89. 63. Finally, by the contested decision, the Commission precludes third parties from relying on the judicial protection which they enjoy under the Treaty. By referring the examination of the concentration to the Spanish competition authorities, which rule on the basis of their national competition law, the Commission deprives third parties of the opportunity to bring a subsequent action before the Court of First Instance under Article 230 EC to challenge the national authorities' assessments in that regard, when, had a referral not been made, the Commission's assessments could have been so challenged. 64. Consequently, since the effect of the contested decision is to deprive the applicants of a review of the concentration by the Commission on the basis of Regulation No 4064/89 and of the procedural rights under it for third parties and also of the judicial protection provided for by the Treaty, it must be held that the contested decision is capable of affecting the applicants' legal situation. 65. That effect is direct because the contested decision requires no additional implementing measure in order to render the referral effective. As soon as the contested decision is adopted by the Commission, the referral is immediate for the Member State concerned, which thus becomes competent to assess the concentration referred in the light of its national competition law. 66. In addition, it must be observed that, in accordance with Article 9(2) of Regulation No 4064/89, it was the Spanish authorities which requested the Commission to refer to them the examination of the effects of the concentration on the relevant markets in Spain. Accordingly, the possibility that the Spanish authorities would not act on the contested decision could be excluded and that is confirmed in the present case by the


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fact that, on 29 November 2002, the Spanish competition authorities adopted a decision on the concentration in question. 67. Consequently, it must be held that the contested decision is of direct concern to the applicants. 68. That finding cannot be called into question by the fact, pointed out by the Commission, that the applicants may bring an action against the national authority's decision in accordance with national remedies and, where appropriate, seek, within that framework, a preliminary ruling under Article 234 EC. The possible existence of remedies before the national courts cannot preclude the possibility of contesting the legality of a decision adopted by a Community institution directly before the Community judicature under Article 230 EC (Air France v Commission, cited in paragraph 40 above, paragraph 69, and Royal Philips Electronics v Commission, cited in paragraph 53 above, paragraph 290). The question whether the contested decision is of individual concern to the applicants 69. Persons other than the addressees of a decision can claim to be individually concerned only if that decision affects them by reason of certain attributes peculiar to them, or by reason of a factual situation which differentiates them from all other persons and distinguishes them individually in the same way as the addressee (Case 25/62 Plaumann v Commission [1963] ECR 197, 223, and Unión de Pequeños Agricultores v Council, cited in paragraph 41 above, paragraph 36). 70. In the present case, the Commission does not dispute that the applicants' competitive position is affected by the concentration which was referred to the Spanish authorities. It is common ground that the applicants are the current principal competitors of the parties to the concentration on most of the markets in question. In paragraph 84 of the contested decision it is stated that the anti-competitive effects which the notified concentration could have ... threaten in particular the cable operators in Spain who are the main source (and almost the only source, taking account of the situation regarding terrestrial digital television in Spain) of competition for the satellite television platform resulting from the merger and that those cable operators ... are also the principal alternative source of competition (effective in some cases, potential in others) for Telefónica on various telecommunications markets where the long-standing Spanish operator is already dominant. 71. Furthermore, the applicants participated in the administrative procedure leading to the adoption of the contested decision. 72. Regarding the applicants in Case T-346/02, it must be observed that on 27 June 2002 ONO contacted the Commission, which on 18 July 2002 sent it a request for information under Article 11 of Regulation No 4064/89, to which ONO replied by letter of 23 July 2002. The participation of ONO in the administrative procedure may be deemed equivalent to the applicants' intervention in Case T-346/02. In reply to a question from the Court, they explained that, as indicated in the abovementioned letter of 23 July 2002, ONO is the name under which they all operate on the Spanish market. In the letter and in their reply to the Court, the applicants stated, without being contradicted by the Commission, that ONO was the name under which the group of cable operators constituted by the Grupo ONO company operates. Grupo ONO holds all the shares in Cableuropa, which itself holds the majority of the shares of the other cable operators acting as applicants in Case T-346/02. 73. Likewise Aunacable, on the one hand, and the other applicants in Case T-347/02, on the other hand, sent the Commission letters dated 9 and 22 July 2002 respectively, in


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which they stated that the requirements of Article 9 of Regulation No 4064/89 were not fulfilled. On 18 July 2002 the Commission sent the applicants a request for information under Article 11 of Regulation No 4064/89, to which they replied on 26 July 2002 (applicants other than Aunacable) and 31 July 2002 (Aunacable). 74. In those circumstances it must be found, first, that the applicants would have had a right to be heard by the Commission if it had decided not to refer the matter to the Spanish authorities and had, on the contrary, initiated the so-called phase II procedure of Article 6(1)(c) of Regulation No 4064/89. 75. Under Article 18(4) of Regulation No 4064/89, third parties have a right to be heard by the Commission, in particular before the adoption of a decision on the completion of phase II, provided that they have so requested and have shown that they have a sufficient interest for that purpose (Case T-290/94 Kaysersberg v Commission [1997] ECR II-2137, paragraph 105). As the applicants' competitive position is affected by the concentration referred to the Spanish authorities, the applicants had a sufficient interest in being heard (see Kaysersberg v Commission, cited above, paragraph 109). 76. The applicants, who are intended to benefit from the procedural guarantees under Article 18(4) of Regulation No 4064/89, may secure compliance therewith only if they are able to challenge the contested decision before the Community courts (see, to that effect, Cook v Commission, cited in paragraph 41 above, paragraph 23). 77. Secondly, had the referral not been made, a final decision of approval by the Commission on the basis of Article 6(1)(b) of Regulation No 4064/89 would also have been of individual concern to the applicants as competing undertakings. 78. It must therefore be held that, had the referral not been made, it would have been open to the applicants, by way of an action for annulment under the fourth paragraph of Article 230 EC, to challenge the Commission's assessment of the effects of the concentration on the relevant markets in Spain (see, to that effect, Royal Philips Electronics v Commission, cited in paragraph 53 above, paragraph 295). 79. Since the contested decision deprives the applicants of the opportunity to challenge before the Court of First Instance assessments which it would have been entitled to challenge had the referral not been made, it must be held that the contested decision individually affects the applicants in the same way as they would have been affected by the approval decision had the referral not been made (see, to that effect, Royal Philips Electronics v Commission, cited in paragraph 53 above, paragraph 297). 80. Consequently, the applicants must be regarded as individually concerned by the contested decision. 81. It follows from the above considerations that the contested decision is of direct and individual concern to the applicants. 82. Consequently the actions are admissible. The substance of the case 83. The applicants rely on three common pleas in support of their applications. The first plea alleges a breach of Article 9 of Regulation No 4064/89 in that the concentration had effects beyond Spanish territory. The second plea also claims a breach of Article 9 and of the principle of sound administration in that the Commission has a right only exceptionally to refer a concentration to the national authorities where the markets affected by the concentration constitute a substantial part of the common market. The third plea alleges a breach of Article 253 EC. The applicants in Case T-346/02 add a fourth plea alleging a breach of Article 9 of Regulation No 4064/89 in that the contested decision contains a blank referral to the Spanish authorities. The first, second and fourth pleas should be examined before taking up the third.


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First plea in law: breach of Article 9 of Regulation No 4064/89 in that the concentration has effects beyond Spain Arguments of the parties 84. The applicants in both cases claim that, in the present case, Article 9 of Regulation No 4064/89 did not permit the Commission to refer the concentration in question to the national authorities. 85. In Case T-346/02, the applicants contend that it is clear from Article 9(2) of the regulation that the Commission has no right to refer a concentration to the national authorities where the markets in question extend beyond the boundaries of one Member State. As the concentration has a manifestly international dimension or, at least, an international dimension could not have automatically been ruled out by the Commission, it was in breach of Article 9(2) of the Regulation. 86. To prove the international dimension of the concentration in question, the applicants in Case T-346/02 explain, first, that the Telefónica, Canal+, Vivendi and Prisa groups have a strong European presence in telecommunications and also pay-TV. Secondly, the telecommunications markets extend beyond national frontiers, the internet networks are not national and many services cross borders, for example signals transmitted by satellite. Third, markets in audiovisual rights also have a cross-border dimension. The Commission itself had acknowledged in the decision of 21 March 2000, BSkyB/KirchPayTV (COMP/JV.37), that, on the audiovisual rights market, rights were acquired and utilised on a European or even worldwide basis. 87. At the hearing the same applicants pointed out that the parties to the concentration themselves admitted, in the notification of their concentration, that some of the markets concerned went beyond the frontiers of Spain, in particular the satellite services market, the technical services market, audiovisual markets (such as film production, which was said to be a world market), and the market in broadcasting rights for sports events, where the television operators were competing with channels operating at the European level. The applicants observe that language barriers are gradually disappearing and that the transmission of films and sports programmes by the internet makes those programmes accessible from countries other than Spain and enables users to choose their preferred language. According to the applicants, in the contested decision the Commission merely asserted that certain markets mentioned by the national authorities in their request for referral should not be examined because they did not present problems in relation to competition, but the Commission did not ascertain whether those markets were national markets. 88. In support of their submissions, at the hearing the applicants in question lodged a copy of the non-confidential version of the notification of the concentration in question. 89. In the course of the hearing, they also observed that the Commission could refer the matter to the national authorities only if the latter had, in the request for referral, categorised the markets concerned as national markets. The amended version of the request had not been disclosed to the applicants during the administrative procedure before the Commission nor, furthermore, in the course of the procedures before the Spanish authorities. As the document in question was placed on the file following a request by the Court, it was incumbent on the Court to ascertain whether the request for referral fulfilled the conditions laid down by Article 9 of Regulation No 4064/89. 90. In Case T-347/02, the applicants claim that there was a manifest error of assessment on the part of the Commission in finding, in paragraph 119 of the contested decision, that the concentration threaten[ed] to create or strengthen a dominant position only in


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markets with a national dimension within the Kingdom of Spain, without considering the cross-border effects, if any, of the notified concentration. If there were any such effects, a referral of the case to the Spanish authorities would have been ruled out on the ground of non-compliance with the conditions laid down by Article 9 of Regulation No 4064/89. 91. The applicants in that case maintain that the concentration was capable of having cross-border effects. They point out, first, that the undertakings potentially affected by the concentration are not only competitors in the Spanish market for multi-channel pay-TV, but also other operators in related markets (mainly the market for programme content) who are not necessarily established in the Spanish market. Accordingly, as Canal+ is one of the companies with joint control of the platform resulting from the concentration, and as it is an operator with interests in the European television market, it is possible that the concentration might have the effect of strengthening its position in international programme markets situated upstream of the pay-TV market. Like the other applicants, the applicants in Case T-347/02 note that the Commission itself acknowledged, in the BSkyB/KirchPayTV decision cited above, that, in the audiovisual rights market, the acquisition and utilisation of rights are activities which affect more than one Member State. Finally, the applicants contend that, with regard to the notified concentration, the Commission ought to have examined the so-called output deals signed by the companies operating in the pay-TV market with the major American studios. 92. At the hearing the applicants in Case T-347/02 observed that, to show the existence of one or more distinct markets within the meaning of Article 9(2)(a) of Regulation No 4064/89, it was not sufficient that the relevant geographical markets were national. A Member State could not be regarded as constituting a distinct market unless the competition structure in that State differed from that in other Member States. 93. First of all, in that context, the applicants note that the language criterion is not sufficient to categorise a market as distinct, particularly as the same programme content can be offered in more than one language, as is the case with films on digital video disc (DVD). Secondly, the national audiovisual regulations created no specific barriers to entry for Spain, having regard to the level of the Community harmonisation of the relevant rules, as shown by the judgment in Case C-390/99 Canal Satélite Digital [2002] ECR I-607. Third, the fact that rights in programme content were distributed on a territorial basis did not make the Spanish market a distinct market as the same programmes were distributed elsewhere with the same formats for utilisation and on the basis of the same royalty arrangements. 94. According to the applicants, there were several factors indicating that the Spanish market was not a distinct market. First of all, the fact that Sogecable belonged to the Canal+ group reflected a process of consolidation taking place in all European markets in view of the financial difficulties in the audiovisual sector. Secondly, it had to be accepted that the nature of the products and services offered in all European markets was identical. Finally, the barriers to entry were the same and related in particular to access to programme content and access to the dominant distribution platform. 95. The applicants deny that they raised new submissions at the hearing. They explain that they adapted their arguments as a result of the judgment in the case of Royal Philips Electronics v Commission, cited in paragraph 53 above, which was given after they had lodged their applications. They state that they merely amplified the submissions they had already made in their applications. The applicants in Case T-347/02 add that the argument that the national dimension of a market is not sufficient to


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make it distinct within the meaning of Article 9 of Regulation No 4064/89 had been raised in their letter of 22 July 2002 to the Commission. 96. The Commission, supported by the interveners, replies that the decisive criterion for determining the cases in which it has the option of referring a matter to the national authorities is the risk of anti-competitive effects in markets within a Member State which present the characteristics of distinct markets. In accordance with Article 9(2)(a), the contested decision identified the geographical reference markets and analysed the effects of the concentration on competition in those markets and had concluded that the concentration threatened to create or strengthen a dominant position only in markets having a national dimension within the Kingdom of Spain. 97. The European presence of the Telefónica, Canal+ and Vivendi groups and the international activity of the groups concerned could not, as such, determine the geographical dimension of the different product markets in which those operators were active. Likewise the cross-border effects of a concentration did not decide whether a proposed concentration should be referred to the national authorities. 98. The Commission adds that the applicants made certain submissions for the first time at the hearing which did not appear in the application. Accordingly there was a new argument that certain other markets existed which were mentioned either by the parties to the concentration in their notification or by the Spanish authorities in their request for referral, and which were not examined by the Commission in the contested decision. Furthermore, the application did not include the submission that a distinction should be made between distinct market within the meaning of Article 9(2)(a) of Regulation No 4064/89 and the concept of relevant geographical market. Therefore the Court should dismiss those pleas as inadmissible pursuant to Article 48(2) of the Rules of Procedure. According to the Commission, the applicants cannot rely on the judgment in Royal Philips Electronics v Commission, which is cited in paragraph 53 above and was delivered between the lodging of the application and the hearing because it has consistently been held that a judgment given after the lodging of an application is not a new matter within the meaning of Article 48(1) of the Rules of Procedure. In so far as the applicants assert that certain submissions had already been made in the documents annexed to their application, the Commission observes that it is not incumbent on the Court to identify in the annexes pleas which are not raised as such in the application. 99. In any case, the applicants' arguments are unfounded. Findings of the Court 100. It must be observed that the Spanish authorities requested the referral of the concentration on the basis of Article 9(2)(a) of Regulation No 4064/89. In the words of the contested decision, the Commission found that the concentration threatens to create or strengthen a dominant position only in markets with a national dimension within the Kingdom of Spain (paragraph 119). The Commission decided, pursuant to the first subparagraph of Article 9(3), to refer the case to the Spanish national competition authorities for a ruling on the basis of their national competition law. 101. It is clear from Article 9(2)(a) that, for a concentration to be the subject of referral on the basis of Article 9 of the Regulation, two cumulative conditions must be fulfilled. First, the concentration must threaten to create or strengthen a dominant position as a result of which effective competition would be significantly impeded on a market within the Member State in question. Secondly, that market must present all the characteristics of a distinct market.


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102. With regard to the fulfilment of the conditions set out by Article 9(2)(a) of Regulation No 4064/89, it must be noted that the conditions for referral laid down by that provision are matters of law and must be interpreted on the basis of objective factors. For that reason, the Community judicature must, having regard to both to the specific features of the case before it and the technical or complex nature of the Commission's assessments, carry out a comprehensive review as to whether a concentration falls within the scope of Article 9(2)(a) of that regulation (Royal Philips Electronics v Commission, cited in paragraph 53 above, paragraph 326). 103. Regarding the first condition, the applicants do not dispute that the concentration threatens to create or strengthen a dominant position in Spain on the various product markets identified in the contested decision. 104. However, the applicants claim that the second condition is not fulfilled because the product markets identified in the contested decision are not markets within a Member State which present the characteristics of a distinct market. 105. On this point it should be noted, first, that, according to the first subparagraph of Article 9(3) of Regulation No 4064/89, the Commission is to establish whether there is a distinct market having regard to the market for the products or services in question and the geographical reference market within the meaning of paragraph 7. 106. A reading of the first subparagraph of Article 9(3), in conjunction with Article 9(7) of Regulation No 4064/89, indicates that, in order to establish whether a Member State constitutes a distinct market for the purpose of Article 9(2) of that regulation, the Commission must take account of the criteria laid down in Article 9(7), which relate, in particular, to the nature and characteristics of the products or services concerned, the existence of entry barriers, consumer preferences and the existence of appreciable differences in market shares or prices between territories (Royal Philips Electronics v Commission, cited in paragraph 53 above, paragraph 333). 107. At the hearing, the applicants in Case T-347/02 argued that, for a national market to be deemed a distinct market within the meaning of Article 9(2) of Regulation No 4064/89, the market in question must be distinguished from other markets not only because it is a separate geographical market, but also because its competition structure differs from that of other Member States. 108. It is necessary, first of all, to consider the admissibility of this argument, which was raised for the first time at the hearing. 109. In this connection the Court observes that, although Article 76a(3) of the Rules of Procedure provides that, in the framework of an expedited procedure, the parties may supplement their arguments and offer further evidence in the course of the oral procedure, while giving reasons for the delay in offering such further evidence, it is clear from the actual wording of this provision that it applies without prejudice to Article 48 of the Rules of Procedure, paragraph 2 of which states that no new plea in law may be introduced in the course of the proceedings unless it is based on matters of law or of fact which come to light in the course of the procedure. 110. The judgment in Royal Philips Electronics v Commission, cited in paragraph 53 above, which was given after the actions were brought and to which the applicants refer to justify the argument set out in paragraph 107 above, cannot be regarded as a factor allowing a new plea in law to be introduced. That judgment merely confirms the law as known to the applicants at the time when they brought their action (see Case 11/81 Dürbeck v Commission [1982] ECR 1251, paragraph 17, and Case T-521/93 Atlanta and Others v Council and Commission [1996] ECR II-1707, paragraph 39).


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111. However, a plea which may be regarded as amplifying a plea put forward previously, whether directly or by implication, in the original application, and which is closely connected therewith, will be declared admissible (Case T-252/97 Dürbeck v Commission [2000] ECR II-3031, paragraph 39). 112. In the present case it must be noted that the argument set out in paragraph 107 above does not go beyond the context of the dispute as defined in the application. 113. In this connection, the applicants in Case T-347/02 allege in their application that the Commission erred in its assessment in referring a concentration to the national authorities in spite of the fact that the conditions laid down in Article 9 of Regulation No 4064/89 were not fulfilled. While it is unnecessary to establish whether, at the stage of the application, the applicants pleaded a distinction between distinct market and geographical reference market, the application shows that the applicants complained that the contested decision was illegal on the ground of the Commission's erroneous application of the conditions set out in Article 9, in particular, the condition relating to the existence of distinct markets. In that context, it must be found that the submissions concerning the distinction to be made between distinct market and geographical reference market merely develop the applicants' arguments in the application to the effect that the Commission was in breach of Article 9 of Regulation No 4064/89 in taking the view that the product markets in question were markets within a Member State presenting all the characteristics of a distinct market. The submission reproduced in paragraph 107 above is closely connected with the first plea in law in the application and must therefore be deemed admissible. 114. Regarding the merits of that submission, it must be stated that Article 9 does not lend itself to the interpretation advocated by the applicants. It is clear from the actual wording of Article 9(3) of the regulation that the Commission is required to determine whether there is a distinct market on the basis of, first, a definition of the market for the relevant products or services and, secondly, a definition of the geographical reference market within the meaning of paragraph 7. 115. As appears from Article 9(7) of Regulation No 4064/89 and from paragraph 8 of the Commission Notice on the definition of the relevant market for the purposes of Community competition law (OJ 1997 C 372, p. 5), the geographical market to be taken into account consists of the area in which the undertakings concerned are involved in the supply and demand of products or services, in which the conditions of competition are sufficiently homogeneous and which can be distinguished from neighbouring areas because, in particular, conditions of competition are appreciably different in those areas. As mentioned in paragraph 106 above, it is necessary, in that assessment, to take particular account of the nature and characteristics of the products or services concerned, the existence of entry barriers, consumer preferences, the existence of appreciable differences in the undertakings' market shares, or price differences. 116. Where the assessment of all these factors leads to the conclusion that the conditions of competition in the markets for the products or services in question in a Member State are appreciably different and are therefore different geographical markets, those markets must be regarded as distinct markets within the meaning of Article 9(2) of Regulation No 4064/89 (see, to that effect, Royal Philips Electronics v Commission, cited in paragraph 53 above, paragraphs 335 to 337). 117. Contrary to the applicants' submission, it is not relevant, in that connection, to ascertain whether certain structural elements of the relevant markets are present in other geographical markets. If it is shown that the competition conditions are not sufficiently homogeneous and that, in particular, consumer preferences and certain entry barriers confine a certain market to the national territory of a Member State, it is not sufficient,


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for the purpose of showing that that market is not a distinct market, that comparable products or services or similar selling methods exist in certain other territories. As for the presence of similar barriers to entry, they certainly do not refute the argument that the geographical markets in question are distinct markets. On the contrary, they corroborate it. 118. At this stage it is appropriate to examine the applicants' arguments that the Commission was not justified in concluding that there are distinct geographical markets within the meaning of Article 9(2) of Regulation No 4064/89. 119. On this point it must be recalled that the Court reviews assessments by the Commission concerning the definition of relevant markets by reference to a test of whether there was a manifest error of assessment (see, to that effect, Case T-342/99 Airtours v Commission [2002] ECR II-2585, paragraphs 26 and 32). 120. The contested decision gives the following reasons for the Commission's conclusion that the Spanish market is the relevant geographical reference market for each product market. 121. So far as the pay-TV market is concerned, the contested decision explains that, even though certain market segments, such as the Eurosport sports channel, broadcast throughout the Community, television broadcasting takes place essentially on national markets, mainly because of differing national legislation, language barriers, cultural factors and competition conditions which differ from one country to another (for example, the structure of the cable television market) and that, in the particular case of Spain, the geographical dimension is found to be national for language and administrative reasons (paragraph 17). 122. Regarding the markets upstream of the pay-TV market, the Commission begins by explaining, with regard to film broadcasting rights, that such rights are generally assigned on an exclusive basis for variable periods, on a language basis and for a specific transmission area and that, in the case of Spain, the transmission rights are limited to Spanish territory; the geographical markets, which correspond to the film rights, are national (contested decision, paragraph 26). With regard to the market for broadcasting rights in football matches involving Spanish teams, that market is also said to be Spanish. According to the Commission, football broadcasting rights have been granted to Spanish television operators (contested decision, paragraph 40), and those rights are utilised essentially in Spain (contested decision, paragraph 41). Regarding broadcasting rights for other sporting events and entertainments which give rise to exclusive rights, the Commission points out that spectator preferences vary from country to country and therefore competition conditions for the purchase of such rights also vary (paragraph 57). So far as Spain is concerned, the market in broadcasting rights for such events has a national dimension for language and cultural reasons (paragraph 57). Finally, with regard to special-interest channels, the national geographical dimension of the market is said to be confirmed in the case of Spain because distribution takes place in Spanish territory (contested decision, paragraph 63). 123. Regarding the geographic dimension of telecommunications markets, the contested decision states that the retail supply of internet access services to end users, whether broad band or narrow band, constitutes a market with an essentially national dimension for reasons which are both technological (for example, the need for access to a local loop and local/free telephone numbers for the nearest point of presence or POP) and administrative (existence of different national regulatory frameworks) (paragraph 80). According to the Commission, the fixed telephony markets and other telecommunications markets are national for the following reasons: national infrastructures, exclusively national offers of services, conditions for licensing


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operators, availability of mobile telephony frequencies, roaming tariffs, etc. (paragraph 82). 124. In support of its argument that the markets in question have a Spanish dimension, the Commission also refers in the contested decision to its past decisions (paragraphs 17, 63, 80 and 82). 125. It must be held that the evidence produced by the applicants in both cases does not show there was a manifest error of assessment by the Commission in defining the relevant geographical markets. 126. First, in so far as the applicants refer to the European presence of the parties to the concentration and of their parent companies, it is sufficient to note that the fact that an undertaking operates in different Member States does not automatically imply that the markets in which it operates have a dimension exceeding the territory of the Member States concerned. An undertaking may operate in more than one distinct market with a national dimension. 127. In addition, the undertakings which are parties to the concentration covered by Regulation No 4064/89 generally have an international dimension as the thresholds laid down in Article 1 of the regulation require those undertakings to have a certain minimum turnover in different Member States, thus ensuring that the concentrations covered by the regulation, that is to say, also concentrations which may be referred to the national authorities under Article 9, all have a Community dimension. 128. Secondly, regarding the geographical dimension of the audiovisual rights markets as defined in the Commission's BSkyB/KirchPayTV decision of 21 March 2002 (cited in paragraph 86 above), there is no contradiction between the definition of the geographical market used in that decision and the definition used in the contested decision. 129. In the BSkyB/KirchPayTV decision, the Commission states as follows (paragraph 45): with regard to the geographic market for the acquisition of broadcasting rights, although rights can be sourced from anywhere in the world and some operators acquire rights for more than one territory at a time, it has to be borne in mind that broadcasting rights are still acquired mainly on a national basis or, at the most, by language area. Thus the Commission has noted that film broadcasting rights are usually granted for a given language version and broadcasting area. In the abovementioned decision, therefore, as in the contested decision, the Commission found support in the fact that television rights are generally acquired for a specific language area and for a specific territory, in particular a national area. 130. Although the Commission acknowledges, in paragraph 46 of the BSkyB/KirchPayTV decision, that for certain sporting events such as the Olympic Games there is consumer interest throughout Europe, in that decision the Commission did not settle the question whether the market in question was a distinct geographical market. On the other hand, it pointed out that, even if the television rights for such sporting events were acquired exclusively for the whole of Europe, they were nevertheless resold subsequently for each country. 131. Therefore the Commission's observations in the said decision are not such as to show that there was a manifest error of assessment by the Commission in finding, in the contested decision, that the Spanish market is a distinct market with regard to the broadcasting rights for different programme contents. 132. Third, regarding the applicant's statement, in Case T-347/02, that Canal+, the company with joint control of the platform resulting from the concentration, has interests in the European television market so that the concentration is likely to strengthen its position in the international markets for programme content, it should be


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observed that neither the international nature of that company's activities nor its strength in the programme markets contradict the Commission's finding, which was confirmed at the hearing by Sogecable, that the broadcasting rights are acquired on a national or at least a language basis. 133. The Commission's conclusion that the markets in question have a national dimension is likewise not contradicted by the applicants' assertion that, in relation to certain sports events, the television operators are in competition with channels operating at a European level. The presence in a certain market of operators whose activities are international does not mean that the geographical dimension of that market goes beyond the national context. Furthermore, in paragraph 17 of the contested decision, the Commission observed that the fact that certain operators, such as the Eurosport sports channel, broadcast throughout the Community does not prevent television broadcasting from taking place essentially on national markets because of differing national legislation, language barriers, cultural factors and competition conditions which differ from one country to another. Consequently the applicants cannot argue that the Commission failed to take proper account of the presence, in Spanish markets for sports events, of a channel operating throughout Europe. 134. Fourth, regarding the submissions concerning the limited importance of language barriers and the fact that certain programmes are offered in several languages, the applicants observed that it is becoming increasingly possible for users to choose their preferred language version for DVDs, music, films and sports programmes distributed via the internet. However, it must be observed that the applicants have not produced the slightest evidence to refute the Commission's findings that language is a relevant factor in assessing the geographical extent of the pay-TV market and the audiovisual rights and telecommunications markets. In addition, the concentration in question does not involve the markets for films on DVD support or the markets for broadcasting musical works. With regard to the distribution of films and sports programmes over the internet, the applicants in Case T-346/02 themselves stated at the hearing that those were emerging markets. 135. Likewise with regard to the possibility, referred to by the applicants, that certain programmes are accessible via the internet or the third-generation mobile communication system (universal mobile telecommunication system) from countries other than Spain, it must be observed that the applicants have not shown how this possibility contradicts the definition in the contested decision of the markets for acquiring programme content and for pay-TV. The possibility of accessing from outside the products and services offered on the Spanish market does not mean that it is not a distinct market as identified by the Commission in the contested decision. 136. Fifth, the applicants in Case T-347/02 contend that, in connection with the notified concentration, the Commission ought also to have examined the output deals concluded by the companies in the pay-TV market with the major American studios. 137. On this point, it appears from paragraphs 27 to 29 of the contested decision that the Commission did take the said contracts into account when assessing competition in the Spanish market for the acquisition of rights to the first and second transmissions of films which are the biggest box-office successes. 138. However, the applicants do not explain how a more detailed examination of the output deals could have called into question the geographical definition of the relevant markets. The existence of similar contracts in other Member States does not automatically lead to a finding that there is a European market because such a finding depends on an assessment of all the competition conditions present in the territories concerned. On this point also, therefore, the applicants' reasoning does not show that


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there was a manifest error of assessment by the Commission in the contested decision in finding that the markets for audiovisual rights affected by the concentration constitute distinct markets with a Spanish dimension. 139. Sixth, the applicants in Case T-364/02 claim that telecommunications markets extend beyond national borders, that internet networks are not national and that many services, such as the transmission of signals by satellite, cross borders. 140. With regard to telecommunications markets, including the market for access to the internet, it must be observed, however, that the applicants have adduced no argument to cast doubt on the findings in paragraphs 80 and 82 of the contested decision (see paragraph 123 above) relating to the geographical delimitation of telecommunications markets. 141. Regarding the transmission of signals by satellite, this market, like the markets for technical services and film production, mentioned at the hearing by the applicants in Case T-346/02, is not among the markets identified by the Commission as markets in which the concentration threatens to create or strengthen a dominant position. 142. On this point the applicants asserted at the hearing that the Commission had no right to refer the concentration in question to the national authorities without examining all the markets mentioned as being affected by the concentration, either by the parties to the concentration in their notification or by the Spanish authorities in their request for referral. 143. With regard to the admissibility of this argument, the applicants contend in substance that it is possible that certain other markets, identified by the parties to the concentration or by the Spanish authorities, have a dimension exceeding the national limits of Spain. This argument must be regarded as a further development of the applicants' first plea in their application, to the effect that the Commission had no power to refer a concentration to the national authorities because the markets in question affect trade within the Community and more than one Member State. As this submission is closely connected with the first plea in the application, it must be deemed admissible. 144. However, the applicants cannot base an argument on the fact that the Commission did not examine certain markets identified in the notification or the request for referral. 145. First of all, the Commission, when examining a concentration of which it has been notified, identifies the markets affected by the concentration on the basis of its own assessment and it cannot be bound by the appraisal of those markets by the parties to the concentration or indeed by the State requesting referral. Consequently the Commission cannot be criticised in any way for not accepting the conclusions of the parties to the concentration in relation to the identification of the markets affected and their geographical dimension. 146. Regarding the geographical delimitation which the parties to the concentration gave to the markets identified in the notification, it must also be observed that, whereas the first subparagraph of Article 9(3) of Regulation No 4064/89, read in conjunction with subparagraph 2(a), requires the Commission to examine the markets in which the concentration threatens to create or strengthen a dominant position as a result of which effective competition would be significantly impeded on a market within that Member State which presents all the characteristics of a distinct market, it is clear from the measures adopted by the Commission concerning the notification of a concentration covered by the said regulation, in particular section 6 of Form CO relating to the notification of a concentration pursuant to Regulation No 4064/89, annexed to Regulation No 447/98, that the parties to a concentration must indicate in their notification not only the markets affected by the concentration, including all product


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markets where there is some overlapping in the parties' activities, either in the same product market or in markets upstream or downstream of a product market in which any other party to the concentration is engaged, but also markets related to affected markets where any of the parties to the concentration are active and which are not themselves affected markets and, where there are no affected markets, the non-affected markets on which the notified concentration would have an impact. 147. As the interveners observe, the mere fact that certain markets are identified by the parties to the concentration in their notification does not mean that those markets are affected by the concentration. Accordingly, at the hearing Sogecable stated, without being contradicted by the applicants, that the parties to the concentration are not present in the market for services by satellite or the market for signal-carrier services whereas Telefónica, which is present in the latter market and has a minority holding in a company present in the former market, is not a party to the concentration. 148. Regarding the geographical delimitation which the national authorities gave to the markets identified in their request for referral, it is incumbent on the Commission to ascertain, before referring the case to the national authorities, whether the conditions set out in Article 9(2)(a) of Regulation No 4064/89, in particular the condition relating to the existence of distinct markets, are fulfilled. The Court only has to examine the legality of the referral decision. Therefore it is not relevant, when reviewing the legality of the contested decision, to establish whether, in their request for referral, the Spanish authorities described certain markets as extending beyond the national limits of Spain. 149. In any case, the applicants, who, during the proceedings before the Court, were in possession of a non-confidential version of the revised request for referral of 23 July 2002, have not put forward any specific arguments on the basis of that document which are such as to cast doubt on the Commission's assessments in relation to the markets affected by the concentration. 150. It must also be observed that, in paragraph 14 of the contested decision, the Commission states that it made the following findings as a result of its examination of the market: In relation to some of the markets identified by the national authorities as markets for which it was necessary to examine the extent to which the concentration could impede effective competition as a result of the creation or strengthening of a dominant position, such a threat could be dismissed. Hereafter, mention is made of the markets in which the concentration gives rise to a threat of the creation or strengthening of a dominant position. This passage of the contested decision shows that, although the Commission did not examine some of the markets identified in the request for referral made by the national authorities, this is explained by the fact that the Commission considered that, in those markets, the concentration in question did not threaten to create or strengthen a dominant position. 151. It must be observed that the applicants have not put forward any argument capable of refuting the Commission's conclusion that there was no threat of the creation or strengthening of a dominant position in markets other than those examined in the contested decision. The applicants merely point out that certain other markets not examined in the contested decision are international in nature. 152. It follows that the applicants have not shown that the Commission ought to have examined certain other markets identified by the parties to the concentration in their notification or by the Spanish authorities in their request for referral. 153. Thus the applicants have not proved that there was a manifest error of assessment on the part of the Commission in finding that the markets affected by the concentration are distinct markets with a Spanish dimension.


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154. Finally, it must be found that throughout their arguments in the framework of their first plea in law, the applicants have merely criticised the geographical delimitation of the relevant markets without specifying the geographical dimension which, according to them, the Commission ought to have adopted in the contested decision. 155. Therefore the Commission was entitled to take the view that the relevant product markets were distinct markets with a Spanish dimension. 156. It follows from the foregoing that the Commission correctly concluded that the second condition of Article 9(2)(a) of Regulation No 4064/89 for referring the case to the Spanish authorities was fulfilled. 157. Consequently the first plea in law must be dismissed. Second plea in law: breach of Article 9 of Regulation No 4064/89 and of the principle of sound administration in that the Commission has a right only exceptionally to refer a concentration to the national authorities where the markets affected by the concentration constitute a substantial part of the common market The parties' submissions 158. The applicants in both cases contend that, even assuming that the notified concentration affects only national markets, the Commission has a right only exceptionally, where the distinct markets affected by the concentration form a substantial part of the common market, to refer the case to the national authorities. According to the applicants, where the distinct markets affected by the concentration form a substantial part of the common market, Article 9 of Regulation No 4064/89 can be applied only in cases where the interests, in terms of competition, of the Member State in question can be effectively protected in no other way. 159. For this purpose the applicants in Case T-346/02 refer to the explanatory notes relating to Regulation No 4064/89 (Bulletin of the European Communities Supplement No 2/90), and to the Commission's past decisions. The applicants state that, in the past, the Commission has dealt with 180 concentration cases in the field of telecommunications, radio and television. In particular, the applicants cite MSG Media Service (Case IV/M.469, BSkyB/KirchPayTV (cited in paragraph 86 above), Bertelsmann/Kirch/Premiere (Case IV/M.993) and Newscorp/Telepiù (Case COMP/M.2876), which were not referred to the national authorities. 160. The applicants in Case T-347/02 refer to recital 27 of the preamble to Regulation No 4064/89, the explanatory notes relating to that regulation, recitals 10 and 11 of the preamble to Regulation No 1310/97 and to the Commission practice of referring cases to the national authorities, with regard to concentrations affecting the entire territory of a Member State, only in exceptional cases (Commission decisions of 12 December 1992 (Case IV/M.180 - Steetley/Tarmac IP/92/104), 29 October 1993 (Case IV/M.330 - McCormick/CPC/ Rabobank/Ostmann), 22 March 1996 (Case IV/M.716 - GEHE/Lloyds Chemist IP/96/254), 24 April 1997 (Case IV/M.894 - Rheinmetall/British Aerospace /STN Atlas), 10 November 1997 (Cases IV/M.1001 - Preussag/Hapag-Lloyd and IV/M.1019 - Preussag/TUI), 19 June 1998 (Case IV/M.1153 - Krauss-Maffei/Wegmann) and 22 August 2000 (Case IV/M.2044 - Interbrew/Bass)). The applicants note that, with regard to the pay-TV market, in the past the Commission has refused to grant requests for referral submitted by the national competition authorities. In that connection the applicants refer in particular the Commission decision of 27 May 1998 (Case IV/M.993 Bertelsmann/Kirch/Premiere). 161. The same applicants allege that, since the concentration in the present case involves the whole of the national market and since the territory of a Member State,


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considered in its entirety, is a substantial part of the common market, the Commission breached the spirit of Article 9 of Regulation No 4064/89 and its own past practice in adopting the contested decision. According to the applicants, the Commission's established practice had been to examine transactions concerning the concentration of programme suppliers in a dominant position, on the one hand, and of dominant undertakings in the sector of infrastructures and/or broadcasting, on the other. The Commission had systematically prohibited such concentrations with a Community dimension where they had the effect of excluding competitors from the market, a situation which could arise in the present case. In this connection the applicants refer to MSG Media Service (Case IV/M.469, OJ 1994 L 364, p. 1), Nordic Satellite Distribution (Case IV/M.490, OJ 1996 L 53, p. 20), RTL/Verónica/Endemol (Case IV/M.553, OJ 1996 L 134, p. 32) and Telefónica/Sogecable/Cablevisión (Case IV/M.709). In the last mentioned case, a prohibition decision was not adopted. The parties concerned decided to abandon the operation and to withdraw the notification after being informed of the Commission's intention to adopt a prohibition decision. 162. As in the cases mentioned in the previous paragraph, according to the applicants, it was necessary for the Commission to examine the present concentration to ensure that the pay-TV market in Spain remained accessible to competitors. In that way the Commission could have ensured that similar concentrations were treated in the same way in all the Member States. Furthermore, the applicants observe that the Commission aims to liberalise the telecommunications sector. According to them, the Commission is best placed to ensure that concentrations do not jeopardise the achievement of the aims of the Community telecommunications policy in a substantial part of the common market such as Spain. 163. The applicants also refer to the merger of digital pay-TV platforms in Italy, which was notified to the Commission on 16 October 2002 (Case COMP/M.2876 - Newscorp/Telepiù) but which, at the date of the contested decision, had already been referred to the Commission at the pre-notification stage, as appears from the numbering of concentration cases notified to the Commission. That is said to be a further attempt to merge the Telepiù and the Stream platforms following a first proposed merger examined by the Italian competition authorities (provvedimento de l'Autorità Garante de la Concorrenza e del Mercato of 13 May 2002 (C5109 - Groupe Canal+/Stream)). In spite of the conditional authorisation by the Italian authorities, the parties finally abandoned the operation. In spite of their experience in that field, the said authorities did not request a referral following the notification of the Newscorp/Telepiù concentration to the Commission. In those circumstances the Commission ought also to have examined the present concentration and profited from the simultaneous existence of two similar cases in order to formulate its policy on the subject. 164. t the hearing the applicants, after seeing the public version of the Commission's decision of 2 April 2003 approving the Newscorp/Telepiù concentration, pointed out the differences between the conditions for the cable operators' access to the exclusive rights arising from the Spanish authorities' decision approving the concentration referred to them by the contested decision, on the one hand, and the more advantageous access conditions imposed by the Commission for the Italian market in the Newscorp/Telepiù decision, on the other. 165. The applicants add that the only problem arising from the present concentration, which the Spanish authorities raised in support of their request for referral, was the fact that if the Commission had given consent to the concentration, it would have been necessary to amend the Spanish legislation. However, according to the applicants, such a reason is not sufficient to justify the referral of the case.


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166. The applicants in both cases go on to observe that, through AVS, Sogecable and Telefónica control the broadcasting rights for first and second division matches of the Spanish Football League, as well as the broadcasting rights for other competitions such as the UEFA Champions League, the FIFA world championship and other sporting events. To gain access to the broadcasting rights for those matches, the cable operators would have had to sign contracts for obtaining such rights with Canalsatélite Digital and AVS, which are the legal owner and the beneficiary respectively. According to the applicants, a new version of the contracts (AVS II contracts) was notified to the Commission on 30 September 1999 in order to obtain exemption under Article 81(3) EC. As the Commission was investigating a case closely connected with the concentration and which involved the same parties, the applicants consider that the Commission was better placed than the Spanish authorities to assess the compatibility of the concentration in question with the common market. 167. At the hearing the applicants in Case T-346/02 also referred to the Commission's current examination of the output deals. 168. The applicants in Case T-347/02 contend that, in those circumstances, the Commission also breached the principle of sound administration in adopting the contested decision. They rely on a number of other factors in seeking to show that the Commission was better placed to examine the concentration, which raised important questions of Community interest, such as relations between the media and the telecommunications industry and their consolidation under way. The Commission had previous contact with the parties and with the third parties affected by the concentration, which enabled it to be further ahead with the investigation relating to the concentration. It had received complaints from other operators in the Spanish market in question and was well aware of the problems in the sector. The Commission already knew of the concentration in relation to the Italian television platforms Telepiù and Stream. 169. On the other hand, the Spanish authorities are said to have limited experience of investigating operations in the pay-TV and telecommunications markets. Furthermore, the Spanish legislation (sections 14 to 18 of Ley 16/89 de defensa de la competencia (Act 16/89 on the protection of competition)) permitted the Spanish authorities to approve concentrations on the basis of criteria unrelated to those of Article 2 of the regulation, in particular, criteria connected with industrial and social policy. The application of national law would therefore create a risk to the uniformity of the policy currently implemented by the Commission in the markets concerned. 170. In both cases the applicants stated at the hearing that the fact that the Commission considered it necessary to indicate, in the contested decision, that the conditions for applying the so-called failing firm theory were not fulfilled confirms that the Commission itself fears that the application by the Spanish authorities of their national law might call into question the Commission's competition policy. 171. The Commission, supported by the interveners, contends that the plea should be dismissed. Findings of the Court 172. With this second plea, the applicants submit that the Commission breached Article 9 of Regulation No 4064/89 and the principle of sound administration in exercising the discretion which it has where both conditions of Article 9(2)(a) of the regulation are fulfilled.


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173. In this connection, it follows from the first subparagraph of Article 9(3) of Regulation No 4064/89 that, if the distinct markets affected by the concentration constitute a substantial part of the common market, the Commission is not obliged to refer the concentration to the competent authorities of the Member State concerned. The Commission has the choice of dealing with the case itself or referring it to the national authorities for examination. 174. The wording of the first subparagraph of Article 9(3) shows that the Commission has a broad discretion as regards that decision. However, that discretion is not unlimited. Point (a) of the first subparagraph of Article 9(3) states that the Commission may decide to deal with the case itself in order to maintain or restore effective competition on the market concerned. Furthermore, Article 9(8) provides that the Member State concerned may take only the measures strictly necessary to safeguard or restore effective competition on the market concerned. 175. It follows from those provisions that, although the first subparagraph of Article 9(3) of Regulation No 4064/89 confers on the Commission a broad discretion as to whether or not to refer a concentration, it cannot decide to make such a referral if, when the Member State's request for a referral is examined, it is clear, on the basis of a body of precise and coherent evidence, that such a referral cannot safeguard or restore effective competition on the relevant markets (Royal Philips Electronics v Commission, cited in paragraph 53 above, paragraphs 342 and 343). 176. Review by the Community judicature of the question whether the Commission has properly exercised its discretion in deciding whether or not to refer a concentration is therefore a limited review which, in the light of Article 9(3) and (8) of Regulation No 4064/89, must be restricted to establishing whether the Commission was entitled, without committing a manifest error of assessment, to consider that the referral to the national competition authorities would enable them to safeguard or restore effective competition on the relevant markets so that it was unnecessary to deal with the case itself (Royal Philips Electronics v Commission, cited in paragraph 53 above, paragraph 344). 177. In the present case, it should be pointed out that the Member State concerned has specific laws on the control of concentrations and specialised bodies to ensure that those laws are implemented under the supervision of the national courts. 178. As the Commission maintains, it must be accepted that the national competition authorities are normally at least as well equipped as the Commission to examine concentrations with an exclusively national dimension, by virtue of their direct knowledge of the markets in question, the parties to the concentration and third parties, as well as their knowledge of the relevant national law. 179. As, in their request for referral, the Spanish authorities had specified the competition problems caused by the concentration in the markets concerned and as the Commission had satisfied itself that the conditions of Article 9(2)(a) of the Regulation were fulfilled, it was justified in taking the view, in the referral decision, that the Spanish national authorities have sufficient resources and are in a position to carry out a thorough investigation of the concentration, taking account, in particular, of the national nature of the markets in which the concentration threaten[ed] to create or strengthen a dominant position (paragraph 120). 180. Accordingly, the Commission was reasonably entitled to take the view that the Spanish competition authorities would, in their decision on the referral, adopt measures to safeguard or restore effective competition on the relevant markets. 181. Regarding the applicants' assertion that the Spanish authorities referred to the need for an amendment of national law to justify the referral, which was denied by the


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Kingdom of Spain at the hearing, it is sufficient to note that the contested decision did not mention any such justification. 182. With regard to the exceptional nature of referrals to the national authorities of concentrations with a Community dimension, it is true that, as the applicants claim, the Community legislature anticipated, when adopting Regulation No 4064/89, that such referrals would be bound, in principle, to be exceptional if the reference markets covered a substantial part of the common market. The legislature's intention is clear from a joint declaration of the Council and the Commission in relation to Article 9 of Regulation No 4064/89 (Bulletin of the European Communities - Supplement No 2/90): When a specific market represents a substantial part of the common market, the referral procedure provided for in Article 9 should only be applied in exceptional cases. There are indeed grounds for taking as a basis the principle that a concentration which creates or reinforces a dominant position in a substantial part of the common market must be declared incompatible with the common market. The Council and the Commission consider that such an application of Article 9 should be confined to cases in which the interests in respect of competition of the Member State concerned could not be adequately protected in any other way. 183. As the Court observed at paragraphs 351 to 353 of the judgment in Royal Philips Electronics v Commission, cited in paragraph 53 above, that statement is still relevant after Regulation No 1310/97 amended Regulation No 4064/89. The amendments made by Regulation No 1310/97 for the most part do not concern the referral conditions laid down in Article 9(2)(a), which have remained essentially unchanged since the adoption of Regulation No 4064/89, but concern the referral conditions laid down by Article 9(2)(b), which is not at issue in the present case. Thus, in the green paper preceding the adoption of Regulation No 1310/97 (Green paper of the Commission on the review of the merger regulation, COM(96) 19 final, of 31 January 1996), the Commission described the aim of the referral procedure as follows (paragraph 94): [It] considers that, especially if there were not to be a threshold reduction, any amendments to Article 9 should be limited so as not to undermine the delicate balance struck by the current referral provisions or to negate the advantages of the “one-stop shop“ principle. Too frequent use of Article 9 could reduce the legal certainty afforded to companies and should probably be linked to a harmonisation of the main features of national merger systems. 184. Likewise, in the 10th recital of the preamble to Regulation No 1310/97, the Council states that [the rules governing referrals] protect the competition interests of the Member States in an adequate manner and take due account of legal security and the “one-stop shop“ principle. 185. However, it is clear from the foregoing statements that the exceptional nature of a referral is largely bound up with the one-stop shop principle on which Regulation No 4064/89 is based (see, to that effect, Royal Philips Electronics v Commission, cited in paragraph 53 above, paragraph 350) and which ensures that undertakings may, in principle, expect a concentration with a Community dimension to be examined by a single competition authority. 186. That principle is not affected by a situation such as that in the present case, where all the affected markets have a national dimension and where, as a result of the referral of the case to the authorities of a Member State, they alone are called upon to examine the concentration from the viewpoint of national competition law. 187. The applicants also claim that, in referring the concentration to the Spanish authorities, the Commission failed to follow its past decisions. According to the applicants, the Commission normally refuses requests for referral from the national


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authorities, particularly in the pay-TV sector. In this connection the applicants refer to the Commission's decision of 27 May 1998 (Case IV/M.993 - Bertelsmann/Kirch/Premiere) and the other decisions cited in paragraph 161 above. 188. However, the fact that, in the contested decision, the Commission did not follow its previous practice in such matters is irrelevant because the approach taken in the contested decision conforms with the legal framework laid down by Article 9 of Regulation No 4064/89, in particular paragraphs 2(a) and (b) and the first subparagraph of paragraph 3 (Royal Philips Electronics v Commission, cited in paragraph 53 above, paragraph 357). 189. Furthermore, the applicants have not succeeded in showing how the Commission, in adopting the contested decision, allegedly failed to follow the decisions cited by the applicants, which relate both to cases where the Commission refused to refer the matter to the national authorities and to cases where there was a partial or complete referral to the national authorities. The mere fact that, in the past, the Commission may have refused to refer a particular case to the national authorities cannot prevent it from referring a case which has been notified to it at a later date in a different market or competition situation. 190. The applicants go on to refer to a wide range of factors which show, in their opinion, that the Commission itself ought to have examined the concentration which the Spanish authorities asked to be referred to them. For this purpose the applicants cite past decisions of the Commission in the audiovisual sector and refer to the risk of prejudicing the uniformity of the Commission's policy on concentrations with an inconsistent national decision. The applicants also mention certain factors peculiar to the present case, such as the Commission's simultaneous examination of the Newscorp/Telepiù case, the AVS II contracts and the output deals, and the Commission's contacts with several undertakings in the market in question. 191. In this connection, it must be observed, first, that the fact that, in a given sector, the Commission has decided itself to examine the concentration and has prohibited certain concentrations in the past can in no way prejudge the referral and/or examination of a later concentration because the Commission is required to carry out an individual appraisal of each notified concentration according to the circumstances of each case, without being bound by previous decisions concerning other undertakings, other product and service markets or other geographical markets at different times. For the same reasons, previous decisions of the Commission relating to concentrations in a specific sector cannot prejudge the decision to be taken by the Commission on a request for referral to the national authorities of a concentration taking place in the same sector. 192. As for the fact that the Commission, by the contested decision, referred a concentration to the Spanish authorities although it decided itself to deal with the concentration in the same sector in the Italian market, which led to the adoption of the Newscorp/Telepiù decision of 2 April 2003, it is sufficient to note that, in the present case, the Spanish authorities requested the referral of the concentration pursuant to Article 9(2) of the regulation, whereas in the Newscorp/Telepiù case, the Italian authorities made no such request. 193. Regarding the alleged contradiction between the commitments accepted by the Commission in the Newscorp/Telepiù case, on the one hand, and the conditions imposed, on referral, by the Spanish authorities in their decision approving the concentration in the present case, on the other, it must be observed that the question whether the approval decision taken at national level is compatible with Community law, including previous decisions of the Commission, falls outside the scope of the present action, which contests the legality of the Commission's referral decision. In so


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far as the applicants base on that alleged contradiction arguments seeking to show the illegality of the contested decision, it is sufficient to observe that both the Newscorp/Telepiù decision and the Spanish authorities' decision are subsequent to the contested decision and therefore could not have affected its validity (see, to that effect, Joined Cases 96/82 to 102/82, 104/82, 105/82, 108/82 and 110/82 IAZ and Others v Commission [1983] ECR 3369, paragraphs 15 and 16, and Royal Philip Electronics v Commission, cited in paragraph 53 above, paragraph 346). 194. In so far as the applicants contend that the Commission was no longer entitled to refer the case to the Spanish authorities once it became aware that it was to be notified of a concentration in the same sector with regard to Italy, it must be observed that, on the date of adoption of the contested decision, 14 August 2002, the Commission had not yet received notification, under Regulation No 4064/89, of the Italian case in question as notification was not made until 16 October 2002. 195. Although it is true that, at the date of adoption of the contested decision, the Commission, as it admitted at the hearing, was aware of the proposed concentration with regard to Italian pay-TV platforms, the Commission could not have foreseen, at that date, whether it would receive a request for referral from the Italian authorities in the matter of Newscorp/Telepiù. In any case, the mere possibility that, in the near future, another concentration agreement might be concluded in a sector which, although similar, was in a different geographical market, and that that agreement might be notified to the Commission, does not affect the Commission's power of appraisal when it is required to give a decision, in connection with a notified concentration, on a request for referral received from the national authorities under Article 9 of Regulation No 4064/89. 196. Likewise the applicants cannot contend that the contested decision is illegal on the ground that, by referring the case to the Spanish authorities, the Commission impaired the uniformity of its competition policy in the markets concerned, in particular because Spanish law permits the approval of a concentration on the basis of criteria other than those of Regulation No 4064/89. 197. The risk that the national authorities may, on referral, take a decision relating to a concentration in a certain sector which will not be entirely in accordance with the principles applied by the Commission itself in its previous decisions is inherent in the referral machinery established by Article 9 of Regulation No 4064/89. As appears from Articles 9(3), 21(2) and 22(1) of Regulation No 4064/89, concentrations with a Community dimension which are referred to the national authorities are assessed in a legal framework different from that which applies to the other operations covered by that regulation, given that the Commission is required to examine concentrations on the basis of Regulation No 4064/89 only, whereas concentrations which are referred to the national authorities are examined from the viewpoint of national competition law. 198. In addition, if the national authorities concerned should fail to comply with their obligations under Article 10 EC and Article 9(6) and (8) of Regulation No 4064/89 (see above, paragraph 52), the Commission could, if necessary, decide to bring an action under Article 226 EC against the Member State concerned. Individuals may challenge the national authorities' decision on the referral in accordance with the domestic remedies provided for by national law (Royal Philip Electronics v Commission, cited in paragraph 53 above, paragraph 383). 199. Secondly, the Commission's examination of the AVS case does not show a manifest error of assessment by the Commission in deciding to refer to the national authorities the concentration arising from the merger of Vía Digital with Sogecable. It is common ground between the parties that the examination of the AVS case relates to


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the applicability of Article 81 EC to the AVS II contracts, in particular the exercise of the broadcasting rights held by AVS. Even if it is true that, following the concentration, AVS will be controlled by Sogecable, whereas previously it was jointly controlled by Telefónica/Admira and Sogecable, this does not rule out examination of that structural change by an authority other than that which examines the legality, from the viewpoint of Article 81 EC, of the utilisation of broadcasting rights by AVS. Furthermore, the fact that, regarding the treatment of a concentration, point (b) of the first subparagraph of Article 9(3) of Regulation No 4064/89 provides for the possibility of a partial referral means a fortiori that different authorities must be able to deal with a case relating to the application of Article 81 EC and a case concerning the application of Regulation No 4064/89, even if those cases involve in part the same undertakings. 200. For the same reasons, the fact that certain output deals were the subject of investigation by the Commission did not prevent the latter from referring to the Spanish authorities a concentration case affecting, among others, the markets in film broadcasting rights. 201. Finally, the mere fact that the Commission has contacts with certain operators active in the markets affected by the concentration and that certain third parties lodged a complaint with the Commission cannot affect the latter's power to refer a case to the national authorities. 202. Although the Commission has expertise in the sectors concerned after having itself dealt with numerous concentration cases and other competition cases concerning the markets affected by the concentration and in having maintained contacts for that purpose with the operators in question, it must be observed that the Commission's decisions in those cases can still serve as guidance for the national authorities in exercising their own powers. The fact that the Commission has such expertise certainly does not prove that there was a manifest error of assessment by it or that it breached the principle of sound administration by referring the case to the Spanish authorities. 203. It follows from the foregoing that the Commission could reasonably take the view that the referral of the case to the Spanish competition authorities would make it possible to maintain or restore effective competition on the markets in question, so that it was not necessary for it to deal with the case itself. 204. Consequently the second plea must be dismissed. Fourth plea: breach of Article 9 of Regulation No 4064/89 in that the contested decision contains a blank referral to the Spanish authorities The parties' submissions 205. The applicants in Case T-346/02 observe that the operative part of the contested decision is worded in such a way that the decision entails a blank referral of the case to the Spanish authorities in breach of Article 9 of Regulation No 4064/89. 206. According to the applicants, the Commission ought to have listed in Article 1 of the operative part of the contested decision the markets affected by the concentration in which there was a threat that the concentration would create or strengthen a dominant position as a result of which effective competition would be significantly impeded on a market within Spain. In addition, the applicants consider that Article 1 of the contested decision ought also to have ordered the Spanish authorities to take the necessary measures to maintain competition in those markets. 207. The applicants add that, in the present case, the Spanish authorities effectively acted as if a power in blank had been delegated to them. They treated the case as if the


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concentration were to be examined from the beginning, disregarding the contested decision and the existing Community competition law. 208. The Commission, supported by the interveners, contends that this plea should be dismissed. Findings of the Court 209. It must be observed that Article 1 of the operative part of the contested decision provides that, in accordance with Article 9 of Council Regulation No 4064/89 on the control of concentrations between undertakings, the notified concentration aiming at the merger of DTS Distribuidora de Televisión Digital, SA (Vía Digital) and Sogecable, SA, is hereby referred to the competent Spanish authorities. 210. It follows that the Commission merely referred to the said authorities the concentration as notified to it, without indicating in the operative part of the contested decision the markets in which it considered that the concentration threatened to create or strengthen a dominant position as a result of which effective competition would be significantly impeded on a market within Spain which presents all the characteristics of a distinct market. 211. However, it must be borne in mind that the operative part of an act is indissociably linked to the statement of reasons for it, so that, when it has to be interpreted, account must be taken of the reasons which led to its adoption (see Case C- 355/95 P TWD v Commission [1997] ECR I-2549, paragraph 21, and Joined Cases T-204/97 and T-270/97 EPAC v Commission [2000] ECR II-2267, paragraph 39). 212. In the statement of reasons preceding the operative part, the contested decision describes each of the relevant product markets (contested decision, paragraphs 15, 16, 21 to 25, 30 to 38, 56, 62 to 64 and 71 to 79), identifies the geographical reference markets (contested decision, paragraphs 17, 26, 39 to 42, 57, 62 to 64 and 80 to 82) and examines the effects of the concentration on competition in those markets (contested decision, paragraphs 18 to 20, 27 to 29, 43 to 55, 58 to 61, 65 to 68 and 83 to 109). The decision concludes that, in each of the identified product markets, namely, the pay-TV market and markets upstream (markets in film broadcasting rights, sporting rights and other programme contents) as well as telecommunications markets, the concentration threatens to create or strengthen a dominant position as a result of which effective competition would be significantly impeded on the Spanish market (contested decision, paragraphs 20, 29, 51, 55, 61, 68 and 109). 213. Having regard to the case-law cited in paragraph 211 above, the Commission was under no obligation to repeat, in the operative part, the markets affected by the concentration in which there was a threat that the concentration would create or strengthen a dominant position. 214. Moreover, it must be noted that the referral in the present case is a total referral. Accordingly it is not a partial referral which might have required, in the operative part, specification of the exact markets referred to the national authorities for examination. 215. Regarding the alleged lack of any instruction to the Spanish authorities to adopt the measures necessary to maintain competition on the markets concerned, Article 1 of the operative part refers to Article 9 of Regulation No 4064/89, paragraph 8 of which provides that the Member State concerned may take only the measures strictly necessary to safeguard or restore effective competition on the market concerned. It was superfluous to repeat word for word in the operative part of the decision an obligation which follows directly from the legislative context to which the same operative part refers.


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216. So far as the examination carried out by the Spanish authorities after the adoption of the contested decision is concerned, it must be pointed out that the legality of a decision must be assessed in the light of the information available when it was adopted (see, by analogy, the judgment in Case C-394/01 France v Commission [2002] ECR I-8245, paragraph 34 and the cases cited). The conduct of the Spanish authorities cannot therefore affect the legality of the contested decision. 217. Finally, it must be observed that, when examining the conditions for referral under Article 9(2)(a) of Regulation No 4064/89, the Commission cannot, without depriving point (b) of the first subparagraph of Article 9(3) of its substance, conduct an examination of the compatibility of the concentration in such a way as to bind the national authorities in regard to their substantive findings but must merely establish whether, prima facie, on the basis of the evidence available to it at the time when it assesses the merits of the request for referral, the concentration whose referral is requested threatens to create or strengthen a dominant position on the relevant markets (Royal Philips Electronics v Commission, cited in paragraph 53 above, paragraph 377). Provided the national competition authorities comply with the obligations arising from Article 9(6) and (8) of Regulation No 4064/89 and from Article 10 EC, they are free to rule on the substance of the concentration referred to them on the basis of a proper examination conducted in accordance with national competition law (see, to that effect, Royal Philips Electronics v Commission, cited in paragraph 53 above, paragraphs 369 to 371). Consequently the competent Spanish authorities cannot be deemed to be bound by the provisional assessments of the competition situation in the markets concerned, carried out by the Commission, on a prima facie basis, in its referral decision and for that purpose alone. 218. It follows that the fourth plea in law must also be dismissed. Third plea in law: breach of Article 253 EC Arguments of the parties 219. The applicants contend that the Commission breached Article 253 EC in so far as it did not state the reasons which led it to grant the Spanish authorities' request for referral. 220. The applicants in Case T-346/02 assert that the Commission ought, in the contested decision, to have given not only the reasons why it agreed, exceptionally, to the referral in the present case, but also the reasons justifying a departure from its established practice. 221. According to the same applicants, the Commission ought also to have replied to ONO's arguments in the administrative procedure concerning the European dimension of the concentration and the impossibility of referring such a concentration to the national authorities. 222. The applicants in Case T-347/02 claim that the contested decision seems inconsistent. It gives a detailed description of the competition problems which would be caused by the concentration in the markets concerned, while devoting only two paragraphs to the reasons which led the Commission to grant the Spanish authorities request for referral. 223. The reasons given in the contested decision to justify the referral are as follows: the concentration threatened to create or strengthen a dominant position in certain markets with a national dimension; the Commission had a discretion to decide whether to refer the case and the Spanish national authorities were in a position to carry out a


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thorough investigation of the concentration. Those reasons are insufficient in an exceptional case such as the present, where the concentration affects a substantial part of the common market. The Commission had not even considered, in the contested decision, the cross-border consequences which the concentration could have. Finally, the fact that the Commission has a certain discretion does not mean that it has no obligation to state reasons. 224. The Commission, supported by the interveners, contends that the contested decision gives sufficient reasons because it considers in detail whether the conditions laid down by Article 9 of Regulation No 4064/89 for a referral to the national authorities are fulfilled. Findings of the Court 225. The Community institutions' obligation under Article 253 EC to state the reasons on which a decision is based is intended to enable the Community judicature to exercise its power to review the legality of the decision and the persons concerned to know the reasons for the measure adopted so that they can defend their rights and ascertain whether or not the decision is well founded (Joined Cases T-126/96 and T-127/96 BFM and EFIM v Commission [1998] ECR II-3437, paragraph 57). 226. In that regard, it should be observed that the contested decision was adopted on the basis of the first subparagraph of Article 9(3) of Regulation No 4064/89. It has already been found above, in connection with the first plea, that, for a concentration to be the subject of a referral under that provision, the two conditions of Article 9(2)(a) must be satisfied. First, the concentration must threaten to create or to strengthen a dominant position as a result of which effective competition will be significantly impeded on a market within that Member State. Second, that market must present all the characteristics of a distinct market. 227. It must therefore be held that, in order to comply with the obligation to state reasons laid down in Article 253 EC, a referral decision adopted under the first subparagraph of Article 9(3) of Regulation No 4064/89 must contain a sufficient and relevant indication of the factors taken into consideration in establishing that there is a threat of the creation or strengthening of a dominant position as a result of which effective competition would be significantly impeded on a market within the Member State concerned, and that there is a distinct market (Royal Philips Electronics v Commission, cited in paragraph 53 above, paragraph 395). 228. With regard to the first condition, it must be observed that the contested decision clearly states the reasons why the Commission considers that the concentration in question threatens to create a dominant position as a result of which effective competition would be significantly impeded on the relevant product markets in Spain. Those reasons relate, in particular, to the market shares held by the parties on the markets concerned in Spain, the consequences of the concentration between the dominant operator and the second biggest operator on the pay-TV market, which is characterised by strong barriers to entry, and the exclusive rights held by the parties to the concentration (contested decision, paragraphs 18 to 20, 27 to 29, 43 to 55, 58 to 61, 65 to 68 and 83 to 109). 229. Regarding the second condition, it must also be noted that the contested decision clearly states the reasons why the Commission considers that the relevant markets in Spain are distinct national markets (contested decision, paragraphs 17, 26, 39 to 42, 57, 62 to 64 and 80 to 82).


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230. With regard to exercising its discretion where the distinct markets are a substantial part of the common market, the Commission explains in the contested decision that the concentration threatens to create or strengthen a dominant position only in markets with a national dimension, within the Kingdom of Spain and that the Spanish national authorities have sufficient means and are in a position to carry out a detailed investigation of the concentration, taking account of the national character of the markets in which the concentration threatens to create or strengthen a dominant position. The Commission states that, having verified that the conditions laid down in Article 9 of Regulation No 4064/89 are fulfilled, it considers, exercising its discretion under the Regulation, that it is appropriate to give a favourable reply to the request from the Spanish authorities and to refer the case to them with a view to applying the Spanish competition legislation (contested decision, paragraphs 119 to 121). 231. This explanation is sufficient because it shows that the Commission considered that the Spanish authorities were able to maintain or restore effective competition in the markets concerned (see paragraphs 176 and 177 above). 232. As for the submissions put forward by ONO in the course of the administrative procedure, it must be observed that, although the Commission is obliged to state the reasons on which its decisions are based, mentioning the factual and legal elements which provide the legal basis for the measure in question and the considerations which have led it to adopt its decision, it is not required to discuss all the issues of fact and of law raised by every party during the administrative procedure (Kaysersberg v Commission, cited in paragraph 75 above, paragraph 150). In describing the relevant product markets as distinct markets with a national dimension and in setting out the reasons on which that finding is based, the Commission replied to ONO's arguments relating to the alleged European dimension of the concentration. 233. Therefore it must be concluded that the contested decision gives a sufficient statement of reasons. 234. It follows from the foregoing reasoning as a whole that the actions must be dismissed in their entirety.

On those grounds,

THE COURT OF FIRST INSTANCE (Third Chamber),

hereby:

1. Joins Cases T-346/02 and T-347/02 for the purposes of the judgment; 2. Dismisses the applications;


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17. Case C-42/02,

REFERENCE to the Court under Article 234 EC by the Ålands

förvaltningsdomstolen (Finland) for a preliminary ruling in the proceedings brought

before that court by

Diana Elisabeth Lindman,

on the interpretation of Article 49 EC,


gives the following

Judgment

1. By order of 5 February 2002, received at the Court on 15 February 2002, the Ålands förvaltningsdomstolen (Administrative Court, Åland) referred to the Court for a preliminary ruling under Article 234 EC a question on the interpretation of Article 49 EC. 2. That question was raised in the course of a dispute between Ms Lindman and the skatterättelsenämnden (Taxation Verification Committee) concerning its rejection of her appeal against her assessment to tax on an amount of money which she had won in a lottery held in Sweden. Legal background A - Community legislation 3. Under the first paragraph of Article 49 EC: Within the framework of the provisions set out below, restrictions on freedom to provide services within the Community shall be prohibited in respect of nationals of Member States who are established in a State of the Community other than that of the person for whom the services are intended. B - National legislation 4. Under Article 1 of the lotteriskattelagen (552/1992) (Law on tax on games of chance), tax on games of chance is payable to the State in respect of games conducted in Finland. Under Article 2 of that law lotteries are games of chance. Article 3 provides that it is the lottery's organiser who is chargeable to the tax. 5. By virtue of Article 85 of the inkomstskattelagen (1535/1992) (Income Tax Law), winnings from games of chance covered by Article 2 of the lotteriskattelagen shall not constitute income chargeable to tax .... It is clear from the file that the exemption applies only to games of chance covered by Article 2 of the lotteriskattelagen, which include only those organised in Finland. C - The special regime in the Åland Islands


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6. By virtue of the Självstyrelselagen för Åland (1144/1991) (Åland Self-Government Law), the regulation of lotteries and other gambling falls within the legislative competence of the region of Åland. The holding of lotteries is subject to licence from the regional government the detailed rules of which are prescribed by the landskapslagen om lotterier (Regional law on games of chance, Ålands författningssamling 10/1966). The organisation of games of chance is governed by that law. Licences to organise lotteries and gambling covered by Article 3 of the landskapslagen om lotterier may be granted by a public law association established by regional legislation. The receipts from the association's activities must be entered in the budget of the Åland region and used to promote and support projects of public utility or in the public interest, as well as those which can be regarded as benefiting the association's activities and objectives. The dispute in the main proceedings and the question referred 7. Ms Lindman, a Finnish national, resides in the commune of Saltvik, in the Åland Islands (Finland). On 7 January 1998, she won SEK 1 000 000 as a result of a lottery draw by the company AB Svenska Spel, which took place in Stockholm (Sweden). She had bought her winning ticket during a stay in Sweden. 8. That lottery win was regarded as earned income chargeable to income tax for the year 1998 and was assessed to national tax payable to the Finnish State, to local tax payable to the municipality of Saltvik, to church tax for the benefit of the parish and to an additional sickness insurance premium levied under the sjukförsäkringslagen (Sickness insurance law). 9. Ms Lindman appealed to the skatterättelsenämnden of Åland, to obtain rectification of the assessment against her. That appeal was rejected on 22 May 2000 on the ground that Article 85 of the inkomstskattelagen does not preclude the taxation in Finland of winnings from foreign lotteries. 10. Ms Lindman then appealed to the Ålands förvaltningsdomstolen seeking reversal of the rejection by the skatterättelsenämnden, arguing that the assessment on the winnings in Sweden should be quashed, or, in the alternative, that the winnings should be taxed not as earned income, but as income from capital, which entails a lower tax rate. 11. The Ålands förvaltningsdomstolen considers that the taxation, either as earned income or as income from capital, of winnings from games organised abroad may possibly be regarded as a special rule based on the place where the services were provided. 12. Since it considered that an interpretation of Community law was needed before a decision could be given in the dispute before it, the Ålands förvaltningsdomstolen decided to stay proceedings and to refer to the Court for a preliminary ruling the following question: Does Article 49 EC preclude a Member State from applying rules under which winnings from lotteries held in other Member States are regarded as taxable income of the winner chargeable to income tax, whereas winnings from lotteries held in the Member State in question are exempt from tax? Substance Observations submitted to the Court


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13. Ms Lindman asserts that the Finnish legislation is discriminatory, since, if she had resided in Sweden or if the amount at issue in the main proceedings had been won in a Finnish lottery, she would not have been charged income tax. 14. The Finnish, Belgian, Danish and Norwegian Governments submit that the Finnish legislation is compatible with Article 49 EC. In that regard, they rely on the Court's case-law (Case C-275/92 Schindler [1994] ECR I-1039; Case C-124/97 Läärä and Others [1999] ECR I-6067, and Case C-67/98 Zenatti [1999] ECR I-7289) to argue that the taxation of games of chance is only a specific aspect of the general regime governing games of chance, a field in which the Member States have a wide discretion. According to those governments, any restrictions are justified by overriding reasons in the public interest relating to combating the pernicious consequences of games of chance, since if winnings from foreign lotteries were exempt, the public would be encouraged to participate in them. 15. More particularly, the Finnish Government contends that the reason for the taxation of winnings from games of chance organised outside Finland is the impossibility of taxing, in that Member State, foreign undertakings who offer gambling activities from abroad. Were it otherwise, taxpayers in Finland and the organisers of games of chance would share a tax advantage, regardless of whether the receipts were intended to fulfil objectives in the public interest in the State of origin or whether that State's legislation sought to take account of the objectives of consumer protection and prevention of social damage. 16. The Commission and the EFTA Surveillance Authority submit that the taxation in a Member State of winnings from lotteries solely where they are organised in other Member States is contrary to Article 49 EC and cannot be justified on grounds of public interest. 17. The Commission relies on the judgment in Case C-283/95 Fischer [1998] ECR I-3369 to argue that, in accordance with the principle of fiscal neutrality, a Member State may not treat a winner of a game of chance lawfully organised in another Member State less favourably than a winner who participated in a game organised in the first State. The Court's reply 18. As a preliminary point, it must be noted that, although direct taxation falls within the competence of the Member States, they must none the less exercise that competence consistently with Community law (Case C-80/94 Wielockx [1995] ECR I-2493, paragraph 16; Case C-264/96 ICI [1998] ECR I-4695, paragraph 19; Case C-311/97 Royal Bank of Scotland [1999] ECR I-2651, paragraph 19; Case C-35/98 Verkooijen [2000] ECR I-4071, paragraph 32, and Case C-136/00 Danner [2002] ECR I-8147, paragraph 28). 19. With regard to the provisions of the EC Treaty relating to freedom to provide services, they apply, as the Court has already held concerning the organisation of lotteries, to an activity which consists in enabling users to participate, for a payment, in gambling (see Schindler, cited above, paragraph 19). Therefore, such an activity falls within the scope of Article 49 EC, provided that at least one of the providers is established in a Member State other than that in which the service is offered. It is therefore necessary to examine the case from the viewpoint of freedom to provide services. 20. According to settled case-law, Article 49 EC prohibits not only any discrimination, on grounds of nationality, against a provider of services established in


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another Member State, but also any restriction on or obstacle to freedom to provide services, even if they apply to national providers of services and to those established in other Member States alike (see Case C-131/01 Commission v Italy [2003] ECR I-1659, paragraph 26). 21. It is clear, in the main proceedings, that foreign lotteries are treated differently for tax purposes from, and are in a disadvantageous position compared to, Finnish lotteries. Under the lotteriskattelagen, only winnings from games of chance which are not licensed in Finland are regarded as taxable income, whereas winnings from games of chance organised in that Member State are not taxable income. The Finnish Government has also admitted that the existence of such legislation means that Finnish taxpayers prefer to participate in a lottery organised in Finland rather than a lottery taking place in another Member State. 22. Contrary to that Government's submission, the fact that gaming providers established in Finland are subject to tax as organisers of gambling does not rid the Finnish legislation of its manifestly discriminatory character, since that tax is not analogous to the income tax charged on winnings from taxpayers' participation in lotteries held in other Member States. 23. The Finnish Government, whilst admitting that the national legislation is discriminatory, contends that it is justified by overriding reasons in the public interest such as the prevention of wrongdoing and fraud, the reduction of social damage caused by gaming, the financing of activities in the public interest and ensuring legal certainty. 24. The Norwegian Government cites also as justification the need to combat the damaging consequences of gambling addiction, which is a matter of public health. Thus, there are rehabilitation centres and other infrastructures for treating gamblers; gambling creates social problems, such as depriving of resources the families of gambling addicts, divorce, and suicide. 25. In that regard, the reasons which may be invoked by a Member State by way of justification must be accompanied by an analysis of the appropriateness and proportionality of the restrictive measure adopted by that State (see, to that effect, Case C-55/94 Gebhard [1995] ECR I-4165, and Case C-100/01 Oteiza Olazabal [2002] ECR I-10981). 26. In the main proceedings, the file transmitted to the Court by the referring court discloses no statistical or other evidence which enables any conclusion as to the gravity of the risks connected to playing games of chance or, a fortiori, the existence of a particular causal relationship between such risks and participation by nationals of the Member State concerned in lotteries organised in other Member States. 27. The reply, therefore, to the question referred must be that Article 49 EC prohibits a Member State's legislation under which winnings from games of chance organised in other Member States are treated as income of the winner chargeable to income tax, whereas winnings from games of chance conducted in the Member State in question are not taxable.

On those grounds,


in answer to the question referred to it by the Ålands förvaltningsdomstolen by

order of 5 February 2002, hereby rules:


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Article 49 EC prohibits a Member State's legislation under which winnings from games of chance organised in other Member States are treated as income of the winner chargeable to income tax, whereas winnings from games of chance conducted in the Member State in question are not taxable.


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18. Case C-270/02,


applicant,

v

Italian Republic,

defendant,

APPLICATION for a declaration that, by maintaining in force legislation which

subjects the marketing of food products for sportsmen and women lawfully

manufactured and marketed in other Member States to a requirement of applying for

prior authorisation and of initiating a procedure for that purpose without having

shown that it is necessary and proportionate, the Italian Republic has failed to fulfil its

obligations under Articles 28 EC and 30 EC,

THE COURT (Third Chamber),

gives the following

Judgment

1. By application lodged at the Court Registry on 24 July 2002, the Commission of the European Communities brought an action under Article 226 EC for a declaration that, by maintaining in force legislation which subjects the marketing of food products for sportsmen and women lawfully manufactured and marketed in other Member States to a requirement of applying for prior authorisation and of initiating a procedure for that purpose without having shown that it is necessary and proportionate, the Italian Republic has failed to fulfil its obligations under Articles 28 EC and 30 EC. Legal background Community law 2. Under Article 28 EC, quantitative restrictions on imports and all measures having equivalent effect are to be prohibited between Member States. However, according to Article 30 EC, restrictions on imports which are justified, in particular, on grounds of the protection of health and life of humans, animals or plants are authorised in so far as they do not constitute either a means of arbitrary discrimination or a disguised restriction on trade between Member States. 3. Although Article 4(1) of and Annex I to Council Directive 89/398/EEC of 3 May 1989 on the approximation of the laws of the Member States relating to foodstuffs intended for particular nutritional uses (OJ 1989 L 186, p. 27), as amended by Directive 1999/41/EC of the European Parliament and of the Council of 7 June 1999 (OJ 1999 L 172, p. 38) provides that specific provisions applicable to groups of foods, including foods intended to meet the expenditure of intense muscular effort,


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especially for sportsmen and women, are to be laid down by means of specific directives, to date no such directive has yet been adopted for that kind of foodstuff. Italian law 4. In Italy, Article 8 of Legislative Decree No 111 of 27 January 1992 concerning the manufacture and importation for sale of certain products (GURI No 39, of 17 February 1992, Ordinary Supplement, hereinafter Legislative Decree No 111/92), including foods intended to meet the expenditure of intense muscular effort, aimed especially at sportsmen and women, provides that the manufacture and the importation, for sale, of products intended for particular nutritional uses, belonging to the groups referred to in Annex I to the abovementioned legislative decree, are subject to the authorisation of the Ministry of Health and to the payment of the costs entailed by the administrative handling of the application. The detailed rules for that procedure are laid down in a regulation adopted subsequently, Presidential Decree No 131 of 19 January 1998. Pre-litigation procedure 5. The Commission was alerted by a complaint lodged by a British manufacturer of foods for sportsmen and women, namely energy bars and rehydrating drinks, in response to alleged difficulties met by its Italian distributor when marketing those products in Italy. The products were subject to prior authorisation by the Italian ministry of health and to the payment of administrative costs entailed by the application for authorisation, pursuant to Article 8 of Legislative Decree No 111/92. 6. The abovementioned manufacturer also informed the Commission of the fact that the Italian authorities had indicated that, were the word sport to be deleted from the packaging, the mere submission of a model of the labelling would obviate the need to apply for authorisation. 7. On 11 June 1998, taking the view that the prior authorisation procedure constitutes a measure having an effect equivalent to a quantitative restriction on imports, which is contrary to Article 28 EC, that that procedure was not justified by any of the reasons set out in Article 30 EC and that it was neither necessary nor proportionate to the pursuit of a lawful objective, the Commission sent a letter of formal notice to the Italian Republic. 8. As it received no response from it, on 18 December 1998 the Commission sent a reasoned opinion to the Italian Republic, calling on it to take the necessary measures to comply with that opinion within two months of its notification. 9. The Italian Republic replied to the reasoned opinion, first, by letter of 4 February 1999, stating that the purpose of the legislation in issue was to protect the health of the consumer and that the guidelines relating to the issuing of an authorisation had been drawn up to that effect and, next, by letter of 26 April 1999, with which were enclosed copies of the abovementioned guidelines. 10. On 25 July 2001, the Commission not being satisfied with the reply which the Italian authorities sent to it on 4 February 1999 nor with the explanations provided by them during a packaging meeting of 2 July 1999, it issued an additional reasoned opinion. 11. In the absence of a reply within the prescribed period, the Commission therefore brought the present action. The action


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Arguments of the parties 12. Given the case-law of the Court in relation to Articles 28 EC and 30 EC, the Commission considers that the fact that there has been a failure to fulfil obligations appears to be beyond dispute. 13. First of all, legislation such as that in issue constitutes an obstacle to the free movement of the products in question. However, the Italian Republic has not shown that there is a risk to public health as well as a link between the objective of preventing such a risk and the legislation which was adopted nor that there is no other solution enabling that objective to be achieved by less restrictive means. 14. Next, the Commission submits that, as the guidelines on which the Italian Government relied during the pre-litigation procedure merely point out the nutritional and informative aspect of the product and do not make any mention of a health risk entailed by its use nor indicate the conditions for its use, it therefore does not understand the grounds of the protection of public health put forward by the Italian authorities to justify the prior authorisation procedure. 15. Finally, according to the Commission, assuming that the objective of the abovementioned procedure is to ensure that the consumer is accurately informed, it appears that such an objective could be attained just as effectively by notifying the competent authority of the product, together with transmission of a model of the labelling. 16. In its defence, the Italian Republic merely states that it is in the course of amending Article 8 of Legislative Decree No 111/92 to provide that the marketing of the foodstuffs in question will no longer be subject to a prior authorisation procedure but only to a notification procedure. Findings of the Court 17. The free movement of goods between Member States is a fundamental principle of the EC Treaty which finds its expression in the prohibition, set out in Article 28 EC, of quantitative restrictions on imports between Member States and all measures having equivalent effect. 18. The prohibition on measures having an effect equivalent to restrictions set out in Article 28 EC covers all commercial rules enacted by the Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade (see, in particular, Case 8/74 Dassonville [1974] ECR 837, paragraph 5; Case 178/84 Commission v Germany [1987) ECR 1227 (Beer purity law), paragraph 27; and Case C-12/00 Commission v Spain [2003] ECR I-459, paragraph 71). 19. So far as concerns the marketing in a Member State of goods lawfully manufactured and marketed in another Member State and, in the absence of any harmonisation at Community level, a requirement such as that imposed in this case by Article 8 of Legislative Decree No 111/92, which requires foods intended to meet the expenditure of intense muscular effort, aimed especially at sportsmen and women, to be subjected to a prior authorisation procedure and to payment of the relevant administrative costs, renders the marketing of such foods more difficult and expensive (see, to that effect, Case C-33/97 Colim [1999] ECR I-3175, paragraph 36, and Case C-217/99 Commission v Belgium [2000] ECR I-10251, paragraph 17). Consequently, it constitutes a barrier to intra-Community trade and constitutes a measure having an


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effect equivalent to a quantitative restriction on imports within the meaning of Article 28 EC. 20. It is true that, according to the case-law of the Court, national legislation making the use of a nutritional substance in a foodstuff lawfully manufactured and/or marketed in other Member States subject to prior authorisation is not, in principle, contrary to Community law if certain conditions are satisfied (see, to that effect Case C-344/90 Commission v France [1992] ECR I-4719, paragraph 8, and Case C-24/00 Commission v France [2004] ECR I-0000, paragraphs 25 to 27). 21. However, a requirement such as that in issue can only be justified on one of the public-interest grounds set out in Article 30 EC, such as the protection of health and life of humans, or by an imperative requirement relating, inter alia, to consumer protection (see, among others, Case 120/78 REWE-Zentral [1979] ECR 649 (Cassis de Dijon), paragraph 8, and Case C-420/01 Commission v Italy [2003] ECR I-6445, paragraph 29). 22. According to settled case-law, it is for the competent national authorities to show that their rules are necessary in order to attain one or more objectives mentioned in Article 30 EC or meet imperative requirements and, where appropriate, that the marketing of the products in question poses a serious risk to public health and that those rules are in conformity with the principle of proportionality (Case 227/82 Van Bennekom [1983] ECR 3883, paragraph 40; Case C-358/95 Morellato [1997] ECR I-1431, paragraph 14; Case C-14/02 ATRAL [2003] ECR I-4431, paragraph 67; and Commission v Italy, cited above, paragraph 30). 23. In the present case, the Italian Government has not shown that the prior authorisation procedure for the marketing of sports foods is justified by and proportionate to one of the public-interest grounds set out in Article 30 EC, namely protection of public health. 24. Despite the requests of the Commission, the Italian Government has not shown any alleged risk to public health which the products in question are likely to pose. It failed to explain on what scientific data or medical reports the guidelines which it enclosed were based and has not given general information on those alleged risks. Furthermore, it has not made clear the link between the procedure in question and the alleged risk to public health nor explained the reasons why such protection is more effective than other forms of control and thus proportionate to the objective pursued. 25. Moreover, as the Commission contends, if the procedure in question is, in fact, intended mostly to protect consumers, the Italian Government has also failed to show in what way that procedure is necessary and proportionate to that objective. Less restrictive measures exist for the prevention of such residual risks as misleading consumers, such as notification of the marketing of the product in question of the competent authority by the manufacturer or distributor of that product together with transmission of a model of the labelling and the obligation requiring the manufacturer or the distributor of that product to furnish, if necessary, evidence of the accuracy of the factual data appearing on the label (see, to that effect, Case C-77/97 Unilever [1999] ECR I-431, paragraph 35, and Case C-221/00 Commission v Austria [2003] ECR I-1007, paragraphs 49 and 52). 26. In view of all the foregoing, it must be held that, by maintaining in force legislation which subjects the marketing of food products for sportsmen and women lawfully manufactured and marketed in other Member States to a requirement of applying for prior authorisation and of initiating a procedure for that purpose without having shown that it is necessary and proportionate, the Italian Republic has failed to fulfil its obligations under Articles 28 EC and 30 EC.


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On those grounds,


hereby:

Declares that, by maintaining in force legislation which subjects the marketing of food products for sportsmen and women lawfully manufactured and marketed in other Member States to a requirement of applying for prior authorisation and of initiating a procedure for that purpose without having shown that it is necessary and proportionate, the Italian Republic has failed to fulfil its obligations under Articles 28 EC and 30 EC;


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19. Case T-216/02,

Fieldturf Inc., established in Montreal (Canada),

applicant,

v

Office for Harmonisation in the Internal Market (Trade Marks and Designs)

(OHIM),

defendant,

ACTION against the decision of the First Board of Appeal of OHIM of 15 May 2002

(Case R 462/2001-1) concerning registration of the word mark LOOKS LIKE

GRASS... FEELS LIKE GRASS... PLAYS LIKE GRASS... as a Community trade

mark,


OF THE EUROPEAN COMMUNITIES (Fourth Chamber),

gives the following

Judgment

Facts 1 On 19 June 2000, the applicant filed an application for a Community trade mark with the Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM), pursuant to Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark (OJ 1994 L 11, p. 1), as amended. 2 The word mark in respect of which registration was sought is LOOKS LIKE GRASS... FEELS LIKE GRASS... PLAYS LIKE GRASS. 3 The goods and services in respect of which registration of the trade mark was sought are in Classes 27 and 37 within the meaning of the Nice Agreement concerning the international classification of goods and services for the purposes of the registration of marks of 15 June 1957, as revised and amended, and correspond in respect of each of those classes to the following description: – Class 27: ‘Synthetic surfacing consisting of ribbons of synthetic fibres standing upright on a backing and partially covered with an infill of mixed sand and resilient particles for the playing of soccer, football, lacrosse, field hockey, golf and other athletic activities;’ – Class 37: ‘Installation of synthetic surfacing consisting of ribbons of synthetic fibres standing upright on a backing and partially covered with an infill of mixed sand and resilient particles for the playing of soccer, football, lacrosse, field hockey, golf and other athletic activities.’ 4 By decision of 13 March 2001, the Examiner found that the trade mark applied for was not capable of registration pursuant to Article 7(1)(b) of Regulation No 40/94 in respect of the goods and services referred to in the application. The Examiner found that the trade mark applied for was exclusively composed of a very simple slogan devoid of any distinctive character in respect of the goods and services referred to.


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According to the Examiner, the wording of the trade mark applied for could easily be perceived by the relevant public as directly and immediately referring to a desirable aspect of synthetic surfaces. The rhetorical flourish, emphatic sound and symmetrical form which were claimed were not sufficient to confer any distinctiveness on the trade mark applied for. The fact that that trade mark was registered in the United States was not a sufficient reason to conclude that that mark was distinctive. 5 On 3 May 2001, the applicant filed notice of appeal with OHIM against the Examiner’s decision, pursuant to Article 59 of Regulation No 40/94. The written statement setting out the grounds of appeal was filed on 12 July 2001. Since the Examiner had not rectified the decision, the appeal was remitted to the First Board of Appeal on 20 July 2001 pursuant to Article 60(2) of Regulation No 40/94. 6 By decision of 15 May 2002 (‘the contested decision’), notified to the applicant on 17 May 2002, the First Board of Appeal dismissed the appeal. 7 The Board of Appeal held, essentially, that the mark applied for delivers a clear and direct message informing the relevant consumer that the applicant’s synthetic surfaces have properties very similar to those of grass and that the applicant installs synthetic surfaces having those properties. The Board of Appeal added that the relevant consumer would be unable to distinguish the applicant’s goods and services from those of competitors who also wish to communicate, in plain language, the fact that their own synthetic surfaces resemble grass. The Board of Appeal considered that the inherent lack of distinctiveness of the trade mark applied for was borne out by the results of an internet search which showed that other suppliers of similar products routinely use terms such as ‘looks like grass’, ‘feels like grass’ and ‘plays like grass’, either alone, or in combinations similar or identical to the trade mark applied for. Finally, having regard to the slogans which have been registered as trade marks by OHIM, the Board of Appeal pointed out that there is no particular line to be taken in assessing slogans, since each case must be assessed on its own merits in relation to the goods and services in question. Procedure and forms of order sought 8 By application lodged at the Registry of the Court of First Instance on 17 July 2002, the applicant brought the present action. 9 Upon hearing the report of the Judge-Rapporteur, the Court of First Instance (Fourth Chamber) decided to open the oral procedure. 10 Informed that the applicant would not appear at the hearing on 17 December 2003, OHIM did not appear at that hearing either. The Court formally noted the absence of the parties in the minutes of the hearing. 11 The applicant claims that the Court should: – annul the contested decision; – order OHIM to register the trade mark applied for in respect of all the goods and services specified in the trade mark application; – order OHIM to pay the costs. 12 OHIM contends that the Court should: – dismiss the application as inadmissible in so far as it seeks an order to register the trade mark applied for; – dismiss the remainder of the application as unfounded; – order the applicant to pay the costs. Admissibility of the claim for directions to be issued


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Arguments of the parties 13 The applicant claims that OHIM should be directed to register the trade mark applied for in respect of all the goods and services specified in the trade mark application. 14 OHIM submits that the Court is not entitled to issue such directions to it. Findings of the Court 15 According to settled case-law, in an action brought before the Community courts against the decision of a Board of Appeal of OHIM, under Article 63(6) of Regulation No 40/94 OHIM is to be required to take the measures necessary to comply with the judgments of those courts. Accordingly, the Court of First Instance is not entitled to issue directions to OHIM (Case T-331/99 Mitsubishi HiTec Paper Bielefeld v OHIM (Giroform) [2001] ECR II-433, paragraph 33, and Case T-388/00 Institut für Lernsysteme v OHIM – Educational Services (ELS) [2002] ECR II-4301, paragraph 19). 16 The applicant’s second head of claim that the Court should direct OHIM to register the trade mark applied for must therefore be rejected as inadmissible. Substance 17 The applicant essentially advances two pleas in law alleging infringement of Article 7(1)(b) of Regulation No 40/94 and infringement of Article 73 of that regulation. First plea in law: infringement of Article 7(1)(b) of Regulation No 40/94 Arguments of the parties 18 The applicant submits that the trade mark applied for possesses the minimum of distinctiveness required to justify its registration and adds that, at least in respect of the services referred to in the trade mark application, that mark is not descriptive. 19 The trade mark applied for has an unusual grammatical and rhythmical structure. The multiple use of the words ‘like grass’ gives the mark applied for a poetic character and a rhetorical flourish and its symmetrical three-part form creates an emphatic sound. Those effects enable the consumer to recognise and memorise the mark as an indication of the origin of the applicant’s goods and services. The trade mark applied for is imaginative and visual because of the repetition of one and the same sequence made up of a monosyllabic verb, ‘like’, ‘grass’ and ‘...’. The mark applied for has a vague, multiple meaning since the words ‘look’, ‘feel’ and ‘play’ may be understood both transitively and intransitively. ‘Plays like grass’, in particular, is not a common construction and suggests the following unusual meaning: something plays in the same way that grass plays. 20 Moreover, the contested decision is contrary to the judgment in Case T-138/00 Erpo Möbelwerk v OHIM (DAS PRINZIP DER BEQUEMLICHKEIT) [2001] ECR II-3739, in which the Court held that refusal to register on the basis of Article 7(1)(b) of Regulation No 40/94 is justified only if it is demonstrated that the combination of words in question is commonly used in business communications and, in particular, in advertising for the goods and services specified. In that regard, the advertisements quoted by the Board of Appeal in a footnote to paragraph 12 of the contested decision are irrelevant because they relate exclusively to the American market. Indeed, one of those advertisements results from authorised use of the United States trade mark


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LOOKS LIKE GRASS... FEELS LIKE GRASS... PLAYS LIKE GRASS of which the applicant is the proprietor. 21 OHIM maintains that the Board of Appeal was justified in finding that the trade mark applied for is not distinctive for the goods and services specified in respect of the relevant public. Findings of the Court 22 Under Article 7(1)(b) of Regulation No 40/94 ‘trade marks which are devoid of any distinctive character’ are not to be registered. 23 The signs devoid of any distinctive character within the meaning of that provision are those which are incapable of performing the essential function of a trade mark, namely that of identifying the origin of the goods or services, thus enabling the consumer who acquired them to repeat the experience, if it proves to be positive, or to avoid it, if it proves to be negative, on the occasion of a subsequent acquisition (Case T-79/00 Rewe-Zentral v OHIM (LITE) [2002] ECR II-705, paragraph 26; Joined Cases T-79/01 and T-86/01 Bosch v OHIM(Kit Pro and Kit Super Pro) [2002] ECR II-4881, paragraph 19; Case T-130/01 Sykes Enterprises v OHIM (REAL PEOPLE, REAL SOLUTIONS) [2002] ECR II-5179, paragraph 18, and Joined Cases T-324/01 and T-110/02 Axions and Belce v OHIM (Brown cigar shape and gold ingot shape) [2003] ECR II-0000, paragraph 29). 24 The trade marks referred to in Article 7(1)(b) of Regulation No 40/94 are in particular those which, from the point of view of the relevant public, are commonly used, in trade, for the presentation of the goods or services concerned or in connection with which there exists, at the very least, concrete evidence justifying the conclusion that they are capable of being used in that manner (Kit Pro and Kit Super Pro, cited above, paragraph 19, and Brown cigar shape and gold ingot shape, cited above, paragraphs 44 and 45). 25 Registration of a trade mark which consists of signs or indications which are also used as advertising slogans, indications of quality or incitements to purchase the goods or services covered by that mark is not excluded as such by virtue of such use. However, a sign which, like an advertising slogan, fulfils functions other than that of a trade mark is distinctive for the purposes of Article 7(1)(b) of Regulation No 40/94 only if it may be perceived immediately as an indication of the commercial origin of the goods or services in question, so as to enable the relevant public to distinguish, without any possibility of confusion, the goods or services of the owner of the mark from those of a different commercial origin (REAL PEOPLE, REAL SOLUTIONS, cited above, paragraphs 19 and 20). 26 Finally, the distinctiveness of a mark may be assessed only, first, in relation to the goods or services for which registration of the sign has been requested and, second, in relation to the perception which the relevant public has of it (LITE, cited above, paragraph 27; Kit Pro and Kit Super Pro, cited above, paragraph 20, and Brown cigar shape and gold ingot shape, cited above, paragraph 30). 27 The goods and services covered are synthetic surfacing and installation services for that product. 28 As regards the relevant public, this consists not only of sports clubs, sports federations and organisers of sporting events but, more generally, of reasonably well-informed and circumspect final consumers who may be induced to use the applicants’ goods and services for their personal needs. Moreover, since the mark applied for is in


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English, the relevant public is an English-speaking one (see, to that effect, Kit Pro and Kit Super Pro, cited above, paragraph 21). 29 In respect of the mark applied for, the applicant’s main argument is that, having regard to its allegedly unusual grammatical and rhythmical structure, the mark LOOKS LIKE GRASS... FEELS LIKE GRASS... PLAYS LIKE GRASS possesses the minimum of distinctiveness required to justify its registration. The applicant points to the symmetrical structure of that mark and claims that it has a poetic character, rhythm and rhetorical ‘flourish’. 30 As regards the goods specified in the trade mark application, there is no reason to challenge the finding of the Board of Appeal to the effect that the mark applied for does not of itself contain any element which would endow it with distinctive character. As OHIM rightly pointed out, the mark applied for is merely the concatenation, which is commonplace, of three unambiguous statements concerning the properties of the goods. Contrary to the applicant’s assertion, the expression ‘plays like grass’ does not in the slightest suggest the unusual meaning of ‘something plays in the same way that grass plays’. On the contrary, the mark LOOKS LIKE GRASS... FEELS LIKE GRASS... PLAYS LIKE GRASS suggests the following clear and direct meaning: ‘Has the same appearance as grass… Produces the same sensation as grass… Is as suitable for playing on as grass’. That mark therefore directly informs the relevant public that the goods covered by the trade mark application (synthetic grass surfaces) have qualities similar to those of natural grass. 31 The Court further finds, like OHIM, that the mark applied for has no particular rhetorical ‘flourish’, poetic character or rhythm such as to confer distinctiveness upon it. Even if it were admitted that the mark produces such effects, they would in any event be very diffuse and would not induce the relevant consumer to see in the mark anything other than a promotional formula applicable to synthetic surfaces in general, and not therefore capable of designating the origin of those goods. 32 As regards the services specified in the trade mark application, the Board of Appeal and OHIM applied the same reasoning to them as to the goods. Thus, in paragraph 11 of the contested decision, after finding that the mark applied for is clearly intended to inform consumers that the goods specified in the trade mark application have qualities similar to those of natural grass, the Board of Appeal adds that, ‘[b]y the same token, [that mark] informs consumers that the [applicant] installs (Class 37 services) synthetic surfaces with those properties’. 33 It cannot be ruled out that, with regard to services for the installation of synthetic surfaces, the mark applied for may be distinctive. However, it must be stated that the applicant applied for registration of that mark in respect of both synthetic surfaces and the installation services for that product, without distinction and, in particular, without applying to restrict its trade mark application to the services alone should that application be rejected in respect of the goods. That situation is comparable to cases in which the trade mark application applies to a whole class within the meaning of the Nice Agreement, without restriction on the part of the trade mark applicant (Case T-106/00 Streamserve v OHIM (STREAMSERVE) [2002] ECR II-723, paragraph 46; Case T-355/00 DaimlerChrysler v OHIM (TELE AID) [2002] ECR II-1939, paragraph 40, and Case T-222/02 HERON Robotunits v OHIM (ROBOTUNITS) [2003] ECR II-0000, paragraph 46). That situation also, and above all, takes account of the fact that the services and goods specified in the applicant’s trade mark application are inseparably linked since the purpose of those services can only be the installation of those goods (for an example in which the connection between the goods and services was taken into account, see the judgment in TELE AID, cited above, paragraph 35). In that context, the


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Board of Appeal correctly applied a solution which was common to the goods and services specified in the trade mark application by finding that, in respect of both, the mark applied for was not capable of being perceived immediately as an indication of origin, but merely as a promotional slogan informing the consumer that the surface marketed and installed by the applicant has properties similar to those of natural grass. 34 As regards the applicant’s claim that, in not citing evidence that the trade mark applied for is commonly used, the contested decision is contrary to the judgment in DAS PRINZIP DER BEQUEMLICHKEIT, cited above, it is sufficient to state that, according to the case-law subsequent to that judgment, the trade marks covered by Article 7(1)(b) of Regulation No 40/94 are not only those commonly used in trade for the presentation of the goods or services concerned but also those which are merely capable of being used in that manner (see, to that effect, Kit Pro and Kit Super Pro, cited above, paragraph 19, and the case-law cited therein). In finding essentially that the trade mark applied for informs consumers in plain language of the nature and advantages or qualities of the goods and services concerned, the Board of Appeal showed to the requisite standard of proof, in paragraph 11 of the contested decision, that that mark is capable of being commonly used in trade for the presentation of those goods and services. 35 It is apparent from all the circumstances that the trade mark applied for is not such as to be perceived immediately as an indication of the commercial origin of the goods or services in question, but as a mere promotional slogan (see, to that effect, REAL PEOPLE, REAL SOLUTIONS, cited above, paragraphs 20 and 28). 36 In those circumstances, the present plea in law must be rejected as unfounded. The second plea in law: infringement of Article 73 of Regulation No 40/94 Arguments of the parties 37 The applicant alleges that OHIM infringed Article 73 of Regulation No 40/94, in that it was not given any opportunity to submit observations on the results of an internet search made by the Board of Appeal and referred to by it in a footnote to paragraph 12 of the contested decision. 38 OHIM denies that the Board of Appeal infringed Article 73 of Regulation No 40/94. Findings of the Court 39 According to Article 73 of Regulation No 40/94, decisions of OHIM are to be based only on reasons or evidence on which the parties concerned have had an opportunity to present their comments. 40 It is not in dispute that the internet search referred to in the contested decision was not communicated to the applicant. 41 However, that fact is not such as to lead to the annulment of the contested decision. It was as a result of reasoning independent of that reference to an internet search, reasoning which was, moreover, already known to the applicant since it had been adopted by the Examiner, that the Board of Appeal arrived at the conclusion, in the contested decision, that the mark applied for is intrinsically devoid of distinctive character. The reference in question to the internet search was made only to confirm the accuracy of that finding. 42 In those circumstances, the plea in law alleging infringement of Article 73 of Regulation No 40/94 must be rejected.


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43 In the light of all the foregoing considerations, the present action must be dismissed as unfounded.

On those grounds,


hereby:

Dismisses the action.


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20. Case C-429/02,

REFERENCE to the Court under Article 234 EC by the Cour de Cassation (France) for

a preliminary ruling in the proceedings pending before that court

between

Bacardi France SAS,

formerly Bacardi-Martini SAS,

and

Télévision française 1 SA (TF1),

Groupe Jean-Claude Darmon SA,

Girosport SARL,

on the interpretation of Council Directive 89/552/CEE of 3 October 1989 on the

coordination of certain provisions laid down by law, regulation or administrative action

in Member States concerning the pursuit of television broadcasting activities (OJ 1989

L 298, p. 23) and Article 59 of the EC Treaty (now, after amendment, Article 49 EC),

THE COURT (Grand Chamber),

gives the following

Judgment

1 By decision of 19 November 2002, received at the Court on 27 November 2002, the French Cour de Cassation (Court of Cassation) referred to the Court for a preliminary ruling under Article 234 EC two questions on the interpretation of Council Directive 89/552/EEC of 3 October 1989 on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities (OJ 1989 L 298, p. 23) and Article 59 of the EC Treaty (now, after amendment, Article 49 EC). 2 Those questions were raised in proceedings between Bacardi France SAS, formerly Bacardi-Martini SAS (‘Bacardi’), and Télévision française 1 SA (‘TF1’), Groupe Jean-Claude Darmon SA (‘Darmon’) and Girosport SARL (‘Girosport’), seeking an order that the latter three undertakings cease to put pressure on foreign clubs to refuse advertising for alcoholic beverages produced by Bacardi on advertising hoardings placed in venues hosting bi-national sporting events taking place in other Member States. Legal background Community legislation 3 Directive 89/552 aims to abolish restrictions on the free movement of services in the broadcasting of television programmes. To that end, it lays down the principle of freedom to receive and transmit programmes across borders and coordinates the laws


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applicable thereto in the different Member States in fields such as television advertising. According to the system put in place by that directive, it is for the originating Member State to regulate and monitor broadcasts transmitted across borders while observing the minimum rules laid down by the directive. By contrast, in the fields coordinated by the directive the receiving Member States are, generally, no longer competent. Definitions 4 ‘Television advertising’ is defined in Article 1(b) of Directive 89/552 as ‘any form of announcement broadcast in return for payment or for similar consideration by a public or private undertaking in connection with a trade, business, craft or profession in order to promote the supply of goods or services, including immovable property, or rights and obligations, in return for payment’. Substantive rules 5 The first sentence of Article 2(2) of Directive 89/552 provides: ‘Member States shall ensure freedom of reception and shall not restrict retransmission on their territory of television broadcasts from other Member States for reasons which fall within the fields coordinated by this directive.’ 6 Article 10(1) of the directive states: ‘Television advertising shall be readily recognisable as such and kept quite separate from other parts of the programme service by optical and/or acoustic means.’ 7 The first sentence of Article 11(1) of the directive provides that ‘advertisements shall be inserted between programmes’. 8 According to Article 11(2) of Directive 89/552: ‘In programmes consisting of autonomous parts, or in sports programmes and similarly structured events and performances comprising intervals, advertisements shall only be inserted between the parts or in the intervals.’ National legislation Substantive rules 9 Law No 91-32 of 10 January 1991 on the campaign against smoking and alcoholism (‘Loi Evin’) (JORF of 12 January 1991, p. 6615) amended, inter alia, Articles L.17 to L.21 of the Code des débits de boissons et des measures contre l’alcoolisme (Code of licensed premises and measures against alcoholism), which restrict advertising for certain alcoholic beverages, namely beverages whose alcoholic content exceeds 1.2. 10 According to those provisions television advertising for alcoholic beverages, whether direct or indirect, is prohibited and that prohibition is repeated in Article 8 of Decree No 92-280 of 27 March 1992, which was adopted to implement Article 27 of the Law of 30 September 1986 on freedom of communication and laying down the general principles concerning the rules applicable to advertising and sponsorship (JORF of 28 March 1992, p. 4313). 11 Other forms of advertising are, however, permitted by French legislation. Thus it is permissible, for example, to advertise alcoholic beverages in the press, on the radio (except at certain times) or in the form of posters and signboards, including on advertising hoardings placed in sports stadia, etc.


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12 An infringement of the Loi Evin is classified as a ‘délit’ (misdemeanour) by French criminal law. Procedural rules 13 According to the first paragraph of Article 42 of Law No 86-1067 of 30 September 1986 on the freedom of communication, the ‘Loi Léotard’ (JORF of 1 October 1986, p. 11755), it is for the Conseil supérieur audiovisuel (the Audiovisual Authority, ‘CSA’) to ensure the application of the Loi Evin. In that context, the CSA may call on the distributors of television services to comply with their obligations and, where they do not comply with the requirements imposed on them, it may order administrative penalties against them. Furthermore, the CSA may refer any infringements committed by distributors to the Procureur de la République (Public Prosecutor). Implementing measures 14 In 1995 the French authorities, that is to say the CSA and the Ministry for Youth and Sports, and the French television channels drew up a Code of Conduct, published in the Bulletin Official du Ministère de la Jeunesse et des Sports, on the interpretation of the rules of the Loi Evin so far as concerns their application to television broadcasting of sporting events taking place abroad (that is, live broadcasts or retransmissions) in which advertising for alcoholic beverages is visible, for example on advertising hoardings or on sports shirts, and which are, accordingly, likely to contain indirect television advertising for alcoholic beverages within the meaning of that law. 15 Although it is not legally binding, the Code of Conduct states that in the case of bi-national events taking place abroad, which are described in the Code as ‘other events’, French broadcasters and any other party subject to French law (referred to collectively as ‘French broadcasters’), who do not control filming conditions, must use all available means to prevent the appearance on their channels of brand names of alcoholic beverages. Thus, a French broadcaster must, at the time when it acquires the retransmission rights, inform its foreign partners of the requirements of French law and the rules laid down by the Code of Conduct. Likewise, it must make inquiries, so far as is materially possible and before the sporting event is broadcast, of the holder of the retransmission rights about the advertisements which will be displayed at the venue where that event is to take place. Finally, the French broadcaster must use all the technical means available to avoid showing hoardings advertising alcoholic beverages. 16 However, in the case of multinational events taking place abroad French broadcasters are not to be suspected of complicity with respect to advertising appearing on the screen where they have no control over the filming conditions of the pictures broadcast. 17 In the version applicable to the dispute in the main proceedings, the Code of Conduct defined multinational events as those ‘in respect of which the images being retransmitted in a large number of countries cannot be regarded as being aimed principally at the French public’. Bi-national events were defined as ‘events taking place abroad other than those mentioned in the previous category, where the transmission is specifically aimed at a French audience’. 18 Besides drawing up the Code of Conduct, the CSA approached French broadcasters to persuade them to insist on the removal of such hoardings advertising alcoholic beverages or not to retransmit the event at all. In at least one case the CSA referred a case to the State Prosecutor for proceedings to be brought against a French broadcaster.


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The main proceedings and the questions referred 19 Bacardi is a French company belonging to the international group Bacardi-Martini, which produces and markets numerous alcoholic beverages in most countries of the world, including Bacardi rum, Martini and Duval pastis. 20 Darmon and Girosport are companies which negotiate on behalf of TF1 for television retransmission rights for football matches. 21 Relying on the alleged fact that Darmon and Girosport put pressure on foreign clubs to refuse to allow Bacardi’s brand names to appear on advertising hoardings around sports stadia, Bacardi sought an order that Darmon, Girosport and TF1 should cease that conduct as being incompatible with Article 59 of the Treaty. 22 After that application was rejected both at first instance and on appeal, Bacardi appealed on a point of law. 23 As it was in doubt as to the compatibility with Community law of the French rules prohibiting television advertising for alcoholic beverages marketed in France, in the case of indirect television advertising resulting from the appearance on screen of hoardings visible during the retransmission of bi-national sporting events taking place in other Member States (‘the television advertising rules at issue in the main proceedings’), the Court of Cassation decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling: ‘1. [Does] Directive 89/552/EEC of 3 October 1989 (“Television without frontiers”), in the version prior to that of Directive 97/36/EC of 30 June 1997, [preclude] national legislation, such as Articles L.17 to L.21 of the French Code des débits de boissons and Article 8 of Decree No 92-280 of 27 March 1992, which prohibits, for reasons relating to the protection of public health and on pain of criminal penalties, advertising for alcoholic drinks, whether of national origin or from other Member States of the Union, on television, whether in the form of advertising spots within the meaning of Article 10 of the directive [direct advertising] or of indirect advertising as a result of hoardings advertising alcoholic drinks appearing on television without constituting surreptitious advertising within the meaning of Article 1(c) of the directive [?] 2. [Are] Article 49 EC and the principle of the free movement of television broadcasts within the Union to be interpreted as precluding a national provision such as that in Articles L.17 to L.21 of the French Code des débits de boissons and Article 8 of Decree No 92-280 of 27 March 1992 which prohibits, for reasons relating to the protection of public health and on pain of criminal penalties, advertising for alcoholic drinks, whether of national origin or from other Member States of the Union, on television, whether in the form of advertising spots within the meaning of Article 10 of the directive [direct advertising] or of indirect advertising as a result of hoardings advertising alcoholic drinks appearing on television without constituting surreptitious advertising within the meaning of Article 1(c) of the directive, from having the effect that operators responsible for the broadcasting and distribution of television programmes: (a) refrain from broadcasting television programmes, such as in particular retransmissions of sporting events, whether held in France or in other countries of the Union, where they show prohibited advertisements within the meaning of the French Code des débits de boissons, or (b) broadcast them on condition that prohibited advertisements within the meaning of the French Code des débits de boissons do not appear, thereby preventing the


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conclusion of advertising contracts concerning alcoholic drinks whether of national origin or from other Member States of the Union [?]’ The questions referred The first question: the obligation to ensure freedom of reception and retransmission 24 By its first question the national court asks, essentially, whether the first sentence of Article 2(2) of Directive 89/552 precludes a Member State from prohibiting television advertising for alcoholic beverages marketed in that State, in the case of indirect television advertising resulting from the appearance on screen of hoardings visible during the retransmission of bi-national sporting events taking place in other Member States. In that context, the national court wishes to know whether such indirect television advertising must be classified as ‘television advertising’ within the meaning of Articles 1(b), 10 and 11 of the directive. 25 The first sentence of Article 2(2) of Directive 89/552 requires Member States to ensure freedom of reception and not to restrict retransmission on their territory of television broadcasts from other Member States for reasons which fall within the fields coordinated by the directive. Articles 10 to 21 harmonise the rules on television advertising. 26 By the definition given in Article 1(b) of Directive 89/552, ‘television advertising’ comprises ‘any form of announcement broadcast in return for payment or for similar consideration by a public or private undertaking in connection with a trade, business, craft or profession in order to promote the supply of goods or services, including immovable property, or rights and obligations, in return for payment.’ Under Article 10(1) ‘television advertising shall be readily recognisable as such and kept quite separate from other parts of the programme service by optical and/or acoustic means.’ The first sentence of Article 11(1) provides that ‘advertisements shall be inserted between programmes’ and Article 11(2) states that ‘in programmes consisting of autonomous parts, or in sports programmes and similarly structured events and performances comprising intervals, advertisements shall only be inserted between the parts or in the intervals.’ 27 In this case, for the reasons set out by the Advocate General in paragraphs 48 to 52 of his Opinion, the indirect television advertising for alcoholic beverages resulting from hoardings visible on screen during the retransmission of sporting events does not constitute a separate announcement broadcast in order to promote goods or services. For obvious reasons, it is impossible to show such advertising only during the intervals between the different parts of the television broadcast concerned. The images on the advertising hoardings which appear in the background of the pictures broadcast, in a random and unpredictable fashion according to the requirements of the retransmission, do not have any distinct character in that context. 28 Such indirect television advertising cannot, therefore, be regarded as ‘television advertising’ within the meaning of Directive 89/552, and accordingly the directive is not applicable to it. 29 Consequently, the answer to the first question must be that the first sentence of Article 2(2) of Directive 89/552 does not preclude a Member State from prohibiting television advertising for alcoholic beverages marketed in that State, in the case of indirect television advertising resulting from the appearance on screen of hoardings


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visible during the retransmission of bi-national sporting events taking place in other Member States. That kind of indirect television advertising is not to be classed as ‘television advertising’ within the meaning of Articles 1(b), 10 and 11 of the directive. Second question: freedom to provide services 30 By its second question, the national court asks, essentially, whether Article 59 of the Treaty (now, after amendment, Article 49 EC) precludes a Member State from prohibiting television advertising for alcoholic beverages marketed in that State, in the case of indirect television advertising resulting from the appearance on screen of hoardings visible during the retransmission of bi-national sporting events taking place in other Member States. 31 Article 59 of the Treaty requires the elimination of any restriction on the freedom to provide services, even if it applies to national providers of services and to those of other Member States alike, when it is liable to prohibit or otherwise impede the activities of a provider of services established in another Member State where he lawfully provides similar services (see to that effect Case C-76/90 Säger [1991] ECR I-4221, paragraph 12, and Case C-58/98 Corsten [2000] ECR I-7919, paragraph 33). Moreover, freedom to provide services is enjoyed by both providers and recipients of services (see to that effect Joined Cases 286/82 and 26/83 Luisi and Carbone [1984] ECR 377, paragraph 16). 32 The freedom to provide services may, however, in the absence of Community harmonisation measures, be limited by national rules justified by the reasons mentioned in Article 56(1) of the EC Treaty (now, after amendment Article 46(1) EC) read together with Article 66 of the EC Treaty (now Article 55 EC), or for overriding requirements of the general interest (see, to that effect, Case C-243/01 Gambelliand Others [2003] ECR I-0000). 33 In that context, it is for the Member States to decide on the degree of protection which they wish to afford to public health and on the way in which that protection is to be achieved. They may do so, however, only within the limits set by the Treaty and must, in particular, observe the principle of proportionality (see Joined Cases C-1/90 and C-176/90 Aragonesa de Publicidad Exterior and Publivía [1991] ECR I-4151, paragraph 16), which requires that the measures adopted be appropriate to secure the attainment of the objective which they pursue and not go beyond what is necessary in order to attain it (see, in particular, Säger, paragraph 15; Joined Cases C-369/96 and C-376/96 Arblade and Others [1999] ECR I-8453, paragraph 35; Corsten, paragraph 39; and Case C-390/99 Canal Satélite Digital [2002] ECR I-607, paragraph 33). 34 In the main proceedings, since there are no Community harmonisation measures on the matter, three points must be examined in turn, namely, whether there is a restriction within the meaning of Article 59 of the Treaty, whether there may be justification for rules on television advertising such as those at issue in the main proceedings under Article 56(1) of the Treaty, read together with Article 66, and whether those rules are proportionate. 35 In the first place, it must be observed that rules on television advertising such as those at issue in the main proceedings constitute a restriction on freedom to provide services within the meaning of Article 59 of the Treaty. They entail a restriction on freedom to provide advertising services in so far as the owners of the advertising hoardings must refuse, as a preventive measure, any advertising for alcoholic beverages if the sporting event is likely to be retransmitted in France. They also impede the


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provision of broadcasting services for television programmes. French broadcasters must refuse all retransmission of sporting events in which hoardings bearing advertising for alcoholic beverages marketed in France may be visible. Furthermore, the organisers of sporting events taking place outside France cannot sell the retransmission rights to French broadcasters if the transmission of the television programmes of such events is likely to contain indirect television advertising for those alcoholic beverages. 36 In that context, as is clear from paragraphs 28 and 29 of today’s judgment in Case C-262/02 Commission v France [2004] ECR I-0000, the arguments of the French Government concerning, first, the technical possibility of masking images in order selectively to conceal the hoardings showing advertising for alcoholic beverages and, second, the non-discriminatory application of the rules on television advertising to all alcoholic beverages, whether they are produced in France or abroad, cannot be accepted. Although it is true that such technical means exist, they involve substantial additional costs for the French broadcasters. Furthermore, in the context of the freedom to provide services, it is only the origin of the service at issue which may be relevant in the case in these proceedings. 37 Second, rules on television advertising such as those at issue in the main proceedings pursue an objective relating to the protection of public health within the meaning of Article 56(1) of the Treaty, as the Advocate General stated in paragraph 69 of his Opinion. Measures restricting the advertising of alcoholic beverages in order to combat alcohol abuse reflect public health concerns (see Case 152/78 Commission v France [1980] ECR 2299, paragraph 17; Aragonesa de Publicidad Exterior and Publivía, paragraph 15; and Case C-405/98 Gourmet International Products [2001] ECR I-1795, paragraph 27). 38 Third, rules on television advertising such as those at issue in the main proceedings are appropriate to ensure their aim of protecting public health. Furthermore, they do not go beyond what is necessary to achieve such an objective. They limit the situations in which hoardings advertising alcoholic beverages may be seen on television and are therefore likely to restrict the broadcasting of such advertising, thus reducing the occasions on which television viewers might be encouraged to consume alcoholic beverages. 39 In that regard, as is clear from paragraphs 33 to 39 of today’s judgment in Commission v France, the arguments set out by the Commission and the United Kingdom Government to establish the disproportionate nature of that regime must be rejected. 40 As far as concerns the one argument raised by Bacardi which was not considered in today’s judgment in Commission v France, namely the argument that the rules on television advertising at issue in the main proceedings are not consistent because they do not cover advertising for alcoholic beverages visible in the background on film sets, that option lies within the discretion of the Member States to decide on the degree of protection which they wish to afford to public health and on the way in which that protection is to be achieved (see Aragonesa de Publicidad Exterior and Publivía, paragraph 16). 41 Accordingly, the answer to the second question is that Article 59 of the Treaty does not preclude a Member State from prohibiting television advertising for alcoholic beverages marketed in that State, in the case of indirect television advertising resulting from the appearance on screen of hoardings visible during the retransmission of bi-national sporting events taking place in other Member States.


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On those grounds,


in answer to the questions referred to it

by the Cour de cassation by judgment of 19 November 2002,

hereby rules:

1. The first sentence of Article 2(2) of Council Directive 89/552/EEC of 3 October 1989 on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities does not preclude a Member State from prohibiting television advertising for alcoholic beverages marketed in that State, in the case of indirect television advertising resulting from the appearance on screen of hoardings visible during the retransmission of bi-national sporting events taking place in the territory of other Member States. That kind of indirect television advertising is not to be classed as ‘television advertising’ within the meaning of Articles 1(b), 10 and 11 of the directive. 2. Article 59 of the EC Treaty (now, after amendment, Article 49 EC) does not preclude a Member State from prohibiting television advertising for alcoholic beverages marketed in that State, in the case of indirect television advertising resulting from the appearance on screen of hoardings visible during the retransmission of bi-national sporting events taking place in other Member States.


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21. Case C-338/02,

REFERENCE for a preliminary ruling under Article 234 EC, from the Högsta

domstolen (Sweden), by decision of 10 September 2002, received at the Court on 23

September 2002, in the proceedings

Fixtures Marketing Ltd

v

Svenska Spel AB,


gives the following

Judgment

1 This reference for a preliminary ruling concerns the interpretation of the provisions of Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases (OJ 1996 L 77, p. 20, ‘the directive’). 2 The reference was made in the course of proceedings brought by Fixtures Marketing Limited (‘Fixtures’) against Svenska Spel AB (‘Svenska Spel’). The litigation arose over the use by Svenska Spel, for the purpose of organising betting games, of information taken from the fixture lists for the English and Scottish football leagues. Legal background The Community legislation 3 The directive, according to Article 1(1) thereof, concerns the legal protection of databases in any form. A database is defined, in Article 1(2) of the directive, as ‘a collection of independent works, data or other materials arranged in a systematic or methodical way and individually accessible by electronic or other means’. 4 Article 3 of the directive provides for copyright protection for databases which, ‘by reason of the selection or arrangement of their contents, constitute the author’s own intellectual creation’. 5 Article 7 of the directive provides for a sui generis right in the following terms: ‘Object of protection 1. Member States shall provide for a right for the maker of a database which shows that there has been qualitatively and/or quantitatively a substantial investment in either the obtaining, verification or presentation of the contents to prevent extraction and/or re-utilisation of the whole or of a substantial part, evaluated qualitatively and/or quantitatively, of the contents of that database. 2. For the purposes of this Chapter: (a) “extraction” shall mean the permanent or temporary transfer of all or a substantial part of the contents of a database to another medium by any means or in any form; (b) “re-utilisation” shall mean any form of making available to the public all or a substantial part of the contents of a database by the distribution of copies, by renting, by on-line or other forms of transmission. The first sale of a copy of a database within


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the Community by the rightholder or with his consent shall exhaust the right to control resale of that copy within the Community. Public lending is not an act of extraction or re-utilisation. 3. The right referred to in paragraph 1 may be transferred, assigned or granted under contractual licence. 4. The right provided for in paragraph 1 shall apply irrespective of the eligibility of that database for protection by copyright or by other rights. Moreover, it shall apply irrespective of eligibility of the contents of that database for protection by copyright or by other rights. Protection of databases under the right provided for in paragraph 1 shall be without prejudice to rights existing in respect of their content. 5. The repeated and systematic extraction and/or re-utilisation of insubstantial parts of the contents of the database implying acts which conflict with a normal exploitation of that database or which unreasonably prejudice the legitimate interests of the maker of the database shall not be permitted.’ The national legislation 6 The protection of databases is governed, in Swedish law, by the lagen (1960:729) om upphovsrätt till litterära och konstnärliga verk (law on copyright over literary and artistic works, ‘the 1960 law’). 7 Under Paragraph 49(1) of the 1960 law, as amended by law 1997:790, implementing the directive in Swedish law (the 1997 law), the maker of a catalogue, a table or similar work in which a large quantity of data has been collected or which is the result of substantial investment has an exclusive right to produce copies of the work and provide public access to it. 8 The 1960 law contains no provision equivalent to Article 7(5) of the directive. However, according to the travaux préparatoires for the 1997 law, Paragraph 49 of the 1960 law protects the work itself or a substantial part of it, and, accordingly, the exclusive right does not cover copies of specific data which form part of the work nor does it cover insubstantial parts of that work. However, according to those travaux préparatoires, a repeated use of insubstantial parts of a work may be regarded as amounting to use of a substantial part of the work. The main proceedings and the questions referred for a preliminary ruling 9 In England professional football is organised by the Football Association Premier League Ltd and the Football League Ltd and in Scotland by the Scottish Football League. Fixture lists have to be drawn up for the matches to be played in the various divisions during the season, that is to say, about 2 000 matches per season in England and 700 matches per season in Scotland. The data are stored electronically and published inter alia in printed booklets, both chronologically and by reference to each team participating. 10 Work on the preparation of the fixture lists begins a year before the start of the season concerned. 11 The organisers of English and Scottish football retained Football Fixtures Limited to handle the exploitation of the fixture lists through licensing. FFFixtures was assigned the right to represent the holders of the intellectual property rights in those fixture lists. 12 In Sweden Svenska Spel operates pools games in which bets can be placed on the results of football matches in inter alia the English and Scottish football leagues. For


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the purposes of those games it reproduces data concerning those matches on pools coupons. 13 In February 1999 Fixtures, having first unsuccessfully offered Svenska Spel a licence to use the data in return for payment of a fee, brought an action against Svenska Spel before Gotlands tingsrätt (District Court, Gotland, Sweden), claiming reasonable compensation for the use of data from the fixture lists for the English and Scottish football leagues during the period from 1 January 1998 to 16 May 1999. In support of its action, Fixtures submitted that the databases containing data concerning the fixture lists were protected under Paragraph 49 of the 1960 law and that the use by Svenska Spel of data from those fixture lists constituted a breach of the intellectual property rights of the football leagues. 14 By its judgment of 11 April 2000 the Tingsrätt dismissed Fixture’s case, ruling that although the fixture lists were covered by catalogue protection since they constituted the result of a substantial investment, Svenska Spel’s use of the data from the fixture lists did not entail any infringement of the rights of Fixtures. 15 On appeal, the Svea hovrätt (Svea Court of Appeal, Sweden), by judgment of 3 May 2001, upheld the judgment at first instance. The Hovrätt did not expressly rule on the question whether fixture lists are protected under Paragraph 49 of the1960 law, but held that it was not proven that the data on Svenska Spel’s pools coupons had been extracted from the databases of the football leagues. 16 Fixtures appealed before the Högsta domstolen, seeking to have the judgment on appeal set aside. 17 Pointing out that Paragraph 49 of the 1960 law, as amended by the 1997 law, must, as an implementing measure, be interpreted in the light of the directive, the Högsta domstolen observes that the directive does not make clear whether, and if so, to what extent, the purpose of the database should be ascribed importance in determining whether it is protected under a sui generis right. It also raises the question of what sort of human or financial investment can be taken into account in assessing whether investment is substantial. In addition, it raises the question of the interpretation of the expressions ‘extraction and/or re-utilisation of the whole or a substantial part’ of the database and ‘normal exploitation’ and ‘unreasonable prejudice’ in the case of extraction and/or re-utilisation of insubstantial parts of the database. 18 Against that background, the Högsta domstolen decided to stay proceedings and to refer the following questions to the Court for a preliminary ruling: ‘1. In assessing whether a database is the result of a “substantial investment” within the meaning of Article 7(1) of the directive can the maker of a database be credited with an investment primarily intended to create something which is independent of the database and which thus does not merely concern the “obtaining, verification or presentation” of the contents of the database? If so, does it make any difference if the investment or part of it nevertheless constitutes a prerequisite for the database? 2. Does a database enjoy protection under the database directive only in respect of activities covered by the objective of the database maker in creating the database? 3. What do the terms “a substantial part, evaluated qualitatively and/or quantitatively, of the contents of that database” in Article 7(1) mean? 4. Is the directive’s protection under Article 7(1) and Article 7(5) against “extraction and/or re-utilisation” of the contents of a database limited to such use as entails a direct exploitation of the base or does the protection also cover use in cases where the contents are available from another source (second-hand) or are generally accessible? 5. How should the terms “normal exploitation” and “unreasonably prejudice” in Article 7(5) be interpreted?’


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The questions referred 19 As a preliminary point, it must be borne in mind that the protection provided for by Paragraph 49(1) of the 1960 law, as amended by the 1997 law, requires the existence of a catalogue, a table or similar work ‘in which a large quantity of data has been collected or which is the result of substantial investment’. 20 According to the order for reference, the Högsta domstolen does not consider that the football fixture lists at issue constitute a catalogue of ‘a large quantity of data’ within the meaning of the above provision, which explains why it seeks clarification, by its first question, of the term ‘substantial investment’ as it must be interpreted under Article 7(1) of the directive. 21 By that question, the referring court asks, inter alia, whether investment by the maker of a database in the creation as such of data must be taken into account in assessing whether there was substantial investment in the obtaining, verification or presentation of the contents of a database. It also seeks to know whether the directive is intended to protect a database which is derived from a principal activity which necessarily entails the creation of data. 22 Article 7(1) of the directive reserves the protection of the sui generis right to databases which meet a specific criterion, namely to those which show that there has been qualitatively and/or quantitatively a substantial investment in the obtaining, verification or presentation of their contents. 23 Under the 9th, 10th and 12th recitals of the preamble to the directive, its purpose is to promote and protect investment in data ‘storage’ and ‘processing’ systems which contribute to the development of an information market against a background of exponential growth in the amount of information generated and processed annually in all sectors of activity. It follows that the expression ‘investment in … the obtaining, verification or presentation of the contents’ of a database must be understood, generally, to refer to investment in the creation of that database as such. 24 Against that background, the expression ‘investment in … the obtaining … of the contents’ of a database must, as Svenska Spel and the German, Netherlands and Portuguese Governments point out, be understood to refer to the resources used to seek out existing independent materials and collect them in the database, and not to the resources used for the creation as such of independent materials. As Svenska Spel and the German Government point out, the purpose of the protection by the sui generis right provided for by the directive is to promote the establishment of storage and processing systems for existing information and not the creation of materials capable of being collected subsequently in a database. 25 That interpretation is backed up by the 39th recital of the preamble to the directive, according to which the aim of the sui generis right is to safeguard the results of the financial and professional investment made in ‘obtaining and collection of the contents’ of a database. As the Advocate General points out in points 51 to 56 of her Opinion, despite slight variations in wording, all the language versions of the 39th recital support an interpretation which excludes the creation of the materials contained in a database from the definition of obtaining. 26 The 19th recital of the preamble to the directive, according to which the compilation of several recordings of musical performances on a CD does not represent a substantial enough investment to be eligible under the sui generis right, provides an additional argument in support of that interpretation. Indeed, it appears from that recital that the resources used for the creation as such of works or materials included in the database, in this case on a CD, cannot be deemed equivalent to


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investment in the obtaining of the contents of that database and cannot, therefore, be taken into account in assessing whether the investment in the creation of the database was substantial. 27 The expression ‘investment in … the … verification … of the contents’ of a database must be understood to refer to the resources used, with a view to ensuring the reliability of the information contained in that database, to monitor the accuracy of the materials collected when the database was created and during its operation. The expression ‘investment in … the … presentation of the contents’ of the database concerns, for its part, the resources used for the purpose of giving the database its function of processing information, that is to say those used for the systematic or methodical arrangement of the materials contained in that database and the organisation of their individual accessibility. 28 Investment in the creation of a database may consist in the deployment of human, financial or technical resources but it must be substantial in quantitative or qualitative terms. The quantitative assessment refers to quantifiable resources and the qualitative assessment to efforts which cannot be quantified, such as intellectual effort or energy, according to the 7th, 39th and 40th recitals of the preamble to the directive. 29 In that light, the fact that the creation of a database is linked to the exercise of a principal activity in which the person creating the database is also the creator of the materials contained in the database does not, as such, preclude that person from claiming the protection of the sui generis right, provided that he establishes that the obtaining of those materials, their verification or their presentation, in the sense described in paragraphs 24 to 27 of this judgment, required substantial investment in quantitative or qualitative terms, which was independent of the resources used to create those materials. 30 In those circumstances, although the search for data and the verification of their accuracy at the time a database is created do not require the maker of that database to use particular resources because the data are those he created and are available to him, the fact remains that the collection of those data, their systematic or methodical arrangement in the database, the organisation of their individual accessibility and the verification of their accuracy throughout the operation of the database may require substantial investment in quantitative and/or qualitative terms within the meaning of Article 7(1) of the directive. 31 In the case in the main proceedings, the resources deployed for the purpose of determining, in the course of arranging the football league fixtures, the dates and times of and home and away teams playing in the various matches represent, as Svenska Spel and the Belgian, German and Portuguese Governments submit, an investment in the creation of the fixture list. Such an investment, which relates to the organisation as such of the leagues is linked to the creation of the data contained in the database at issue, in other words those relating to each match in the various leagues. It cannot, therefore, be taken into account under Article 7(1) of the directive. 32 Accordingly, it must be ascertained, leaving aside the investment referred to in the previous paragraph, whether the obtaining, verification or presentation of the contents of a list of football fixtures constitutes a substantial investment in qualitative or quantitative terms. 33 Finding and collecting the data which make up a football fixture list do not require any particular effort on the part of the professional leagues. As Fixtures itself points out in its observations, those activities are indivisibly linked to the creation of those data, in which the leagues participate directly as those responsible for the organisation of football league fixtures. Obtaining the contents of a football fixture list thus does


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not require any investment independent of that required for the creation of the data contained in that list. 34 The professional football leagues do not need to put any particular effort into monitoring the accuracy of the data on league matches when the list is made up because those leagues are directly involved in the creation of those data. The verification of the accuracy of the contents of fixture lists during the season simply involves, according to the observations made by Fixtures, adapting certain data in those lists to take account of any postponement of a match or fixture date decided on by or in collaboration with the leagues. Such verification cannot, therefore, be regarded as requiring substantial investment. 35 The presentation of a football fixture list, too, is closely linked to the creation as such of the data which make up the list, as is confirmed by the absence of any mention in the order for reference of work or resources specifically invested in such presentation. It cannot therefore be considered to require investment independent of the investment in the creation of its constituent data. 36 It follows that neither the obtaining, nor the verification nor yet the presentation of the contents of a football fixture list attests to substantial investment which could justify protection by the sui generis right provided for by Article 7 of the directive. 37 In the light of the foregoing, the answer to the first question referred should be that the expression ‘investment in … the obtaining … of the contents’ of a database as defined in Article 7(1) of the directive must be understood to refer to the resources used to seek out existing independent materials and collect them in the database. It does not cover the resources used for the creation of materials which make up the contents of a database. In the context of drawing up a fixture list for the purpose of organising football league fixtures, therefore, it does not cover the resources used to establish the dates, times and the team pairings for the various matches in the league. 38 In the light of the foregoing, there is no need to reply to the other questions referred.

On those grounds,

the Court (Grand Chamber)

rules as follows:

The expression ‘investment in … the obtaining … of the contents’ of a database in Article 7(1) of Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases must be understood to refer to the resources used to seek out existing independent materials and collect them in the database. It does not cover the resources used for the creation of materials which make up the contents of a database. In the context of drawing up a fixture list for the purpose of organising football league fixtures, therefore, it does not cover the resources used to establish the dates, times and the team pairings for the various matches in the league.


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22. Case C-444/02,

REFERENCE for a preliminary ruling under Article 234 EC, from the Monomeles

Protodikio Athinon (Greece), made by decision of 11 July 2002, received at the Court

on 9 December 2002, in the proceedings

Fixtures Marketing Ltd

v

Organismos prognostikon agonon podosfairou AE (OPAP),


gives the following

Judgment

1 This reference for a preliminary ruling concerns the interpretation of the provisions of Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases (OJ 1996 L 77, p. 20, ‘the directive’). 2 The reference was made in the course of proceedings brought by Fixtures Marketing Limited (‘Fixtures’) against Organismos Prognostikon Agonon Pododfairou AE (‘OPAP’). The litigation arose over the use by OPAP, for the purpose of organising betting games, of information taken from the fixture lists for the English and Scottish football leagues. Legal background 3 The directive, according to Article 1(1) thereof, concerns the legal protection of databases in any form. A database is defined, in Article 1(2) of the directive, as ‘a collection of independent works, data or other materials arranged in a systematic or methodical way and individually accessible by electronic or other means’. 4 Article 3 of the directive provides for copyright protection for databases which, ‘by reason of the selection or arrangement of their contents, constitute the author’s own intellectual creation’. 5 Article 7 of the directive provides for a sui generis right in the following terms: ‘Object of protection 1. Member States shall provide for a right for the maker of a database which shows that there has been qualitatively and/or quantitatively a substantial investment in either the obtaining, verification or presentation of the contents to prevent extraction and/or re-utilisation of the whole or of a substantial part, evaluated qualitatively and/or quantitatively, of the contents of that database. 2. For the purposes of this Chapter: (a) “extraction” shall mean the permanent or temporary transfer of all or a substantial part of the contents of a database to another medium by any means or in any form; (b) “re-utilisation” shall mean any form of making available to the public all or a substantial part of the contents of a database by the distribution of copies, by renting, by on-line or other forms of transmission. The first sale of a copy of a database within


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the Community by the rightholder or with his consent shall exhaust the right to control resale of that copy within the Community. Public lending is not an act of extraction or re-utilisation. 3. The right referred to in paragraph 1 may be transferred, assigned or granted under contractual licence. 4. The right provided for in paragraph 1 shall apply irrespective of the eligibility of that database for protection by copyright or by other rights. Moreover, it shall apply irrespective of eligibility of the contents of that database for protection by copyright or by other rights. Protection of databases under the right provided for in paragraph 1 shall be without prejudice to rights existing in respect of their content. 5. The repeated and systematic extraction and/or re-utilisation of insubstantial parts of the contents of the database implying acts which conflict with a normal exploitation of that database or which unreasonably prejudice the legitimate interests of the maker of the database shall not be permitted.’ 6 The directive was implemented in Greek law by Law No 2819/2000 (FEK A’ 84/15-3-2000). The main proceedings and the questions referred for a preliminary ruling 7 According to the order for reference, the organisers of English and Scottish league football retained a company, Football Fixtures Limited, to handle the exploitation of the fixture lists outside the United Kingdom through licensing. Fixtures was assigned the right to represent the holders of the intellectual property rights in those fixture lists. 8 In Greece, OPAP has a monopoly on the organisation of gambling. In its activities it uses information from the fixture lists for the English and Scotttish football leagues. 9 Fixtures brought an action against OPAP before the Monomeles Protodikio Athinon on the ground that OPAP’s practices were precluded by the sui generis right it held under Article 7 of the directive. 10 In the light of the problems of interpretation of the directive, the Monomeles Protodikio Athinon decided to stay proceedings and refer the following questions to the Court for a preliminary ruling: ‘1. What is the definition of database and what is the scope of Directive 96/9/EC and in particular Article 7 thereof which concerns the sui generis right? 2. In the light of the definition of the scope of the directive, do lists of football fixtures enjoy protection as databases over which there is a sui generis right in favour of the maker and under what conditions? 3. How exactly is the database right infringed and is it protected in the event of rearrangement of the contents of the database?’ The questions referred Admissibility 11 The Finnish Government disputes the admissibility of the request for a preliminary ruling. It maintains that the order for reference is marred by insufficient detail of the legal and factual background to the main proceedings, which is liable to prevent the Court from giving a proper answer to the questions asked and the Member States from submitting relevant observations on those questions. 12 It must be recalled that according to settled case-law, the need to provide an interpretation of Community law which will be of use to the national court makes it


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necessary that the national court define the factual and legal context of the questions it is asking or, at the very least, explain the factual circumstances on which those questions are based (Case C-67/96 Albany [1999] ECR I-5751, paragraph 39). 13 The information provided in orders for reference must not only be such as to enable the Court to reply usefully but must also enable the governments of the Member States and other interested parties to submit observations pursuant to Article 23 of the Statute of the Court of Justice. It is the Court’s duty to ensure that that possibility is safeguarded, bearing in mind that, by virtue of the abovementioned provision, only the orders for reference are notified to the interested parties (Albany, cited above, paragraph 40). 14 In the present case, it appears from the observations submitted by the parties to the main proceedings and by the governments of the Member States pursuant to Article 23 of the Statute of the Court of Justice, that the information given in the order for reference enabled them to understand that the dispute arose over the use by OPAP, for the purpose of organising sporting bets, of information from the fixture lists prepared by the professional football leagues and that, against that background, the referring court has raised questions about the term database as defined in Article 1(2) of the directive and of the scope and extent of the sui generis right provided for by Article 7 of the directive. 15 Moreover, the order for reference gives details of the relationship between the football leagues concerned, Football Fixtures Limited and Fixtures, which shed light on the basis on which the latter claims the protection of the sui generis right in the litigation in the main proceedings. 16 Furthermore, the information provided by the national court gives the Court of Justice sufficient knowledge of the factual and legislative context of the main proceedings to enable it to interpret the Community rules which are relevant to the situation which forms the subject-matter of the dispute. 17 It follows that the request for a preliminary ruling is admissible. The merits The term database as defined in Article 1(2) of the directive 18 The referring court asks, first, in its first two questions, what the term database as defined in Article 1(2) of the directive covers and whether football fixture lists fall within that definition. 19 A database in the terms of the directive is defined in Article 1(2) as ‘a collection of independent works, data or other materials arranged in a systematic or methodical way and individually accessible by electronic or other means’. 20 As both Fixtures and the Commission submit, there are several indications of the intention of the Community legislature to give the term database as defined in the directive, a wide scope, unencumbered by considerations of a formal, technical or material nature. 21 For instance, according to Article 1(1) of the directive, it concerns the legal protection of databases ‘in any form’. 22 Although the proposal for a Council Directive on the legal protection of databases (OJ 1992 C 156, p. 4), presented by the Commission on 15 April 1992 concerned exclusively electronic databases according to the definition of database contained in Article 1(1) of that proposal for a Directive, it was agreed in the course of the legislative process, that ‘protection under this Directive should be extended to cover


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non-electronic databases’, according to the 14th recital of the preamble to the directive. 23 According to the 17th recital of the preamble to the directive, ‘the term “database” should be understood to include literary, artistic, musical or other collections of works or collections of other material such as texts, sound, images, numbers, facts, and data’. The fact that the data or information at issue relate to a sporting activity thus does not preclude the database from being recognised as such in the terms of the directive. 24 Whereas, in its opinion of 23 June 1993 on the Commission proposal for a Council directive on the legal protection of databases (OJ 1993 C 194, p. 144), the European Parliament had suggested defining a database as a collection of a ‘large number’ of data, works or other materials, that condition no longer appears in the definition in Article 1(2) of the directive. 25 For the purposes of determining whether there is a database within the meaning of the directive, it is irrelevant whether the collection is made up of materials from a source or sources other than the person who constitutes that collection, materials created by that person himself or materials falling within both those categories. 26 Contrary to the contentions of the Greek and Portuguese Governments, nothing in the directive points to the conclusion that a database must be its maker’s own intellectual creation to be classified as such. As the Commission points out, the criterion of originality is only relevant to the assessment whether a database qualifies for the copyright protection provided for by Chapter II of the directive, as is clear from Article 3(1) and from the 15th and 16th recitals of the preamble to the directive. 27 Against the background of a wide interpretation various aspects of the directive demonstrate that the term database within the meaning thereof is more specifically defined in terms of its function. 28 A reading of the recitals of the preamble to the directive reveals that, given the ‘exponential growth, in the Community and worldwide, in the amount of information generated and processed annually in all sectors of commerce and industry’ as the 10th recital states, the legal protection provided by the directive is intended to encourage the development of systems performing a function of ‘storage’ and ‘processing’ of information, according to the 10th and 12th recitals. 29 Thus, classification as a database is dependent, first of all, on the existence of a collection of ‘independent’ materials, that is to say, materials which are separable from one another without their informative, literary, artistic, musical or other value being affected. On that basis, a recording of an audiovisual, cinematographic, literary or musical work as such does not fall within the scope of the directive, according to the 17th recital of the preamble to the directive. 30 Classification of a collection as a database then requires that the independent materials making up that collection be systematically or methodically arranged and individually accessible in one way or another. While it is not necessary for the systematic or methodical arrangement to be physically apparent, according to the 21st recital, that condition implies that the collection should be contained in a fixed base, of some sort, and include technical means such as electronic, electromagnetic or electro-optical processes, in the terms of the 13th recital of the preamble to the directive, or other means, such as an index, a table of contents, or a particular plan or method of classification, to allow the retrieval of any independent material contained within it. 31 That second condition makes it possible to distinguish a database within the meaning of the directive, characterised by a means of retrieving each of its constituent


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materials, from a collection of materials providing information without any means of processing the individual materials which make it up. 32 It follows from the above analysis that the term database as defined in Article 1(2) of the directive refers to any collection of works, data or other materials, separable from one another without the value of their contents being affected, including a method or system of some sort for the retrieval of each of its constituent materials. 33 In the case in the main proceedings, the date and the time of and the identity of the two teams playing in both home and away matches are covered by the concept of independent materials within the meaning of Article 1(2) of the directive in that they have autonomous informative value. 34 Although it is true that the interest of a football league lies in the overall result of the various matches in that league, the fact remains that the data concerning the date, the time and the identity of the teams in a particular match have an independent value in that they provide interested third parties with relevant information. 35 The compilation of dates, times and names of teams relating to the various fixtures in a football league is, accordingly, a collection of independent materials. The arrangement, in the form of a fixture list, of the dates, times and names of teams in those various football matches meets the conditions as to systematic or methodical arrangement and individual accessibility of the constituent materials of that collection. The fact, raised by the Greek and Austrian Governments, that lots are drawn to decide the pairing of the teams is not such as to call into question the above analysis. 36 It follows that a fixture list for a football league such as that at issue in the case in the main proceedings constitutes a database within the meaning of Article 1(2) of the directive. The scope of the sui generis right 37 The referring court goes on, in its first two questions, to seek the Court’s view of the scope of the protection afforded by the sui generis right in circumstances such as those of the case in the main proceedings. 38 Article 7(1) of the directive reserves the protection of the sui generis right to databases which meet a specific criterion, namely to those which show that there has been qualitatively and/or quantitatively a substantial investment in the obtaining, verification or presentation of their contents. 39 Under the 9th, 10th and 12th recitals of the preamble to the directive, its purpose, as OPAP and the Greek Government point out, is to promote and protect investment in data ‘storage’ and ‘processing’ systems which contribute to the development of an information market against a background of exponential growth in the amount of information generated and processed annually in all sectors of activity. It follows that the expression ‘investment in … the obtaining, verification or presentation of the contents’ of a database must be understood, generally, to refer to investment in the creation of that database as such. 40 Against that background, the expression ‘investment in … the obtaining … of the contents’ of a database must, as OPAP and the Belgian, Austrian and Portuguese Governments point out, be understood to refer to the resources used to seek out existing independent materials and collect them in the database, and not to the resources used for the creation as such of independent materials. The purpose of the protection by the sui generis right provided for by the directive is to promote the establishment of storage and processing systems for existing information and not the creation of materials capable of being collected subsequently in a database.


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41 That interpretation is backed up by the 39th recital of the preamble to the directive, according to which the aim of the sui generis right is to safeguard the results of the financial and professional investment made in ‘obtaining and collection of the contents’ of a database. As the Advocate General points out in points 67 to 72 of her Opinion, despite slight variations in wording, all the language versions of the 39th recital support an interpretation which excludes the creation of the materials contained in a database from the definition of obtaining. 42 The 19th recital of the preamble to the directive, according to which the compilation of several recordings of musical performances on a CD does not represent a substantial enough investment to be eligible under the sui generis right, provides an additional argument in support of that interpretation. Indeed, it appears from that recital that the resources used for the creation as such of works or materials included in the database, in this case on a CD, cannot be deemed equivalent to investment in the obtaining of the contents of that database and cannot, therefore, be taken into account in assessing whether the investment in the creation of the database was substantial. 43 The expression ‘investment in … the … verification … of the contents’ of a database must be understood to refer to the resources used, with a view to ensuring the reliability of the information contained in that database, to monitor the accuracy of the materials collected when the database was created and during its operation. The expression ‘investment in … the … presentation of the contents’ of the database concerns, for its part, the resources used for the purpose of giving the database its function of processing information, that is to say those used for the systematic or methodical arrangement of the materials contained in that database and the organisation of their individual accessibility. 44 Investment in the creation of a database may consist in the deployment of human, financial or technical resources but it must be substantial in quantitative or qualitative terms. The quantitative assessment refers to quantifiable resources and the qualitative assessment to efforts which cannot be quantified, such as intellectual effort or energy, according to the 7th, 39th and 40th recitals of the preamble to the directive. 45 In that light, the fact that the creation of a database is linked to the exercise of a principal activity in which the person creating the database is also the creator of the materials contained in the database does not, as such, preclude that person from claiming the protection of the sui generis right, provided that he establishes that the obtaining of those materials, their verification or their presentation, in the sense described in paragraphs 40 to 43 of this judgment, required substantial investment in quantitative or qualitative terms, which was independent of the resources used to create those materials. 46 In those circumstances, although the search for data and the verification of their accuracy at the time a database is created do not require the maker of that database to use particular resources because the data are those he created and are available to him, the fact remains that the collection of those data, their systematic or methodical arrangement in the database, the organisation of their individual accessibility and the verification of their accuracy throughout the operation of the database may require substantial investment in quantitative and/or qualitative terms within the meaning of Article 7(1) of the directive. 47 In the case in the main proceedings, the resources deployed for the purpose of determining, in the course of arranging the football league fixtures, the dates and times of and home and away teams playing in the various matches represent, as OPAP and the Belgian, Austrian and Portuguese Governments submit, an investment in the


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creation of the fixture list. Such an investment, which relates to the organisation as such of the leagues is linked to the creation of the data contained in the database at issue, in other words those relating to each match in the various leagues. It cannot, therefore, be taken into account under Article 7(1) of the directive. 48 Accordingly, it must be ascertained, leaving aside the investment referred to in the previous paragraph, whether the obtaining, verification or presentation of the contents of a list of football fixtures constitutes a substantial investment in qualitative or quantitative terms. 49 Finding and collecting the data which make up a football fixture list do not require any particular effort on the part of the professional leagues. Those activities are indivisibly linked to the creation of those data, in which the leagues participate directly as those responsible for the organisation of football league fixtures. Obtaining the contents of a football fixture list thus does not require any investment independent of that required for the creation of the data contained in that list. 50 The professional football leagues do not need to put any particular effort into monitoring the accuracy of the data on league matches when the list is made up because those leagues are directly involved in the creation of those data. The verification of the accuracy of the contents of fixture lists during the season simply involves, according to the observations made by Fixtures, adapting certain data in those lists to take account of any postponement of a match or fixture date decided on by or in collaboration with the leagues. Such verification cannot be regarded as requiring substantial investment. 51 The presentation of a football fixture list, too, is closely linked to the creation as such of the data which make up the list. It cannot therefore be considered to require investment independent of the investment in the creation of its constituent data. 52 It follows that neither the obtaining, nor the verification nor yet the presentation of the contents of a football fixture list attests to substantial investment which could justify protection by the sui generis right provided for by Article 7 of the directive. 53 In the light of the foregoing, the first two questions referred should be answered as follows: – The term database as defined in Article 1(2) of the directive refers to any collection of works, data or other materials, separable from one another without the value of their contents being affected, including a method or system of some sort for the retrieval of each of its constituent materials. – fixture list for a football league such as that at issue in the case in the main proceedings constitutes a database within the meaning of Article 1(2) of the directive. – The expression ‘investment in … the obtaining … of the contents’ of a database as defined in Article 7(1) of the directive must be understood to refer to the resources used to seek out existing independent materials and collect them in the database. It does not cover the resources used for the creation of materials which make up the contents of a database. In the context of drawing up a fixture list for the purpose of organising football league fixtures, therefore, it does not cover the resources used to establish the dates, times and the team pairings for the various matches in the league. 54 In the light of the foregoing, there is no need to reply to the third question referred.

On those grounds,


rules as follows:


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The term ‘database’ as defined in Article 1(2) of Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases refers to any collection of works, data or other materials, separable from one another without the value of their contents being affected, including a method or system of some sort for the retrieval of each of its constituent materials. A fixture list for a football league such as that at issue in the case in the main proceedings constitutes a database within the meaning of Article 1(2) of Directive 96/9. The expression ‘investment in … the obtaining … of the contents’ of a database in Article 7(1) of Directive 96/9 must be understood to refer to the resources used to seek out existing independent materials and collect them in the database. It does not cover the resources used for the creation of materials which make up the contents of a database. In the context of drawing up a fixture list for the purpose of organising football league fixtures, therefore, it does not cover the resources used to establish the dates, times and the team pairings for the various matches in the league.


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23. Case T-193/02,

Laurent Piau,

residing in Nantes (France),

applicant,

v

Commission of the European Communities

defendant,

supported by

Fédération internationale de football association (FIFA),

established in Zurich (Switzerland),

intervener,

APPLICATION for annulment of the Commission’s decision of 15 April 2002

rejecting the complaint lodged by the applicant concerning the Fédération

internationale de football association (FIFA) Players’ Agents Regulations,

THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES

(Fourth Chamber),

gives the following

Judgment

Background to the dispute 1 The Fédération internationale de football association (FIFA) is an association governed by Swiss law founded on 21 May 1904. Under its statutes, in the version which entered into force on 7 October 2001, its members are national associations (Article 1), which are groupings of football clubs classified as amateur or professional, the latter having specific associations known as ‘professional leagues’. National associations may also form confederations (Article 9). Players in national associations affiliated to FIFA are either amateur or non-amateur (Article 61). 2 Under its statutes, FIFA’s objects are to promote football, to foster friendly relations among national associations, confederations, clubs and players, and to draw up and monitor regulations and methods concerning the laws of the game and the practice of football (Article 2). 3 FIFA’s statutes, regulations and decisions are binding on its members (Article 4). FIFA has legislative, executive and administrative bodies, namely the Congress, the Executive Committee and the general secretariat, as well as standing and ad hoc committees (Article 10). FIFA’s ‘judicial’ bodies are the Disciplinary Committee and the Appeal Committee (Article 43). The Arbitration Tribunal for Football, initially envisaged as the sole mandatory body for the settlement of disputes exceeding a value fixed by the Congress (Article 63), has not been set up. Under an agreement between FIFA and the International Council of Arbitration for Sport, the


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jurisdiction of the Arbitration Tribunal for Football is exercised by the Court of Arbitration for Sport, a body set up by the International Olympic Committee with its seat in Lausanne (Switzerland), which rules on the basis of FIFA rules, the Code of Sports-related Arbitration and, additionally, Swiss law. Actions for annulment may be lodged against its decisions before the Swiss Federal Court. 4 The regulations governing the application of the statutes provide that players’ agents must possess an agent’s licence issued by FIFA (Article 16) and authorise the Executive Committee to draw up binding rules for agents (Article 17). 5 On 20 May 1994 FIFA adopted the Players’ Agents Regulations, which were amended on 11 December 1995 and entered into force on 1 January 1996 (‘the original regulations’). 6 The original regulations made the exercise of this occupation subject to the possession of a licence issued by the competent national association and reserved the occupation for natural persons (Articles 1 and 2). The procedure prior to obtaining the licence provided for an interview to ascertain the candidate’s knowledge (in particular of law and sport) (Articles 6, 7 and 8). The candidate also had to have regard to certain incompatibilities and moral conditions, such as having no criminal record (Articles 2, 3 and 4). They also had to deposit a bank guarantee of 200 000 Swiss francs (CHF) (Article 9). Relations between the agent and the player had to be governed by a contract for maximum period of two years, which was renewable (Article 12). 7 A sanctions mechanism was laid down for agents, players and clubs in the event of infringement of the regulations. Agents could face a caution, censure or warning, a fine of an unspecified amount, or withdrawal of their licence (Article 14). Players and clubs could be fined up to CHF 50 000 and CHF 100 000 respectively. Players could also be liable to disciplinary suspensions (of up to 12 months). Suspension measures or bans on transfers could also be applied to clubs (Articles 16 and 18). A ‘Players’ Status Committee’ was designated as FIFA’s supervisory and decision-making body (Article 20). 8 On 23 March 1998 Mr Piau lodged a complaint with the Commission in which he challenged the original regulations. He alleged, first of all, that the regulations were contrary to ‘Article [49] et seq. of the [EC] Treaty concerning free competition with regard to services’, because of the restrictions on access to the occupation imposed by opaque examination procedures and by the requirement of a guarantee and because of the controls and sanctions provided for. Secondly, he considered that the regulations were likely to give rise to discrimination between citizens of the Member States. Thirdly, he complained that the regulations did not include any legal remedies against decisions or applicable sanctions. 9 Previously, on 20 February 1996, Multiplayers International Denmark had lodged a complaint with the Commission challenging the compatibility of the regulations with Articles 81 EC and 82 EC. The Commission had also been notified of petitions lodged with the European Parliament by German and French nationals, which were declared admissible by the European Parliament on 29 October 1996 and 9 March 1998 respectively and which also concerned these rules. 10 The Commission initiated a procedure under Regulation No 17 of the Council of 6 February 1962, First Regulation implementing Articles [81] and [82] of the Treaty (OJ, English Special Edition 1959-1962, p. 87) and sent FIFA a statement of objections on 19 October 1999. The statement of objections stated that the [original] regulations constituted a decision by an association of undertakings within the meaning of Article 81 EC and called into question the compatibility with that article


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of the restrictions contained in the regulations relating to the licence requirement, the exclusion of legal persons from the award of a licence, the prohibition on clubs and players using unlicensed agents, the requirement of a bank guarantee and the sanctions. 11 In its reply to the statement of objections, dated 4 January 2000, FIFA disputed that the regulations could be classified as a decision by an association of undertakings. It justified the restrictions contained in the regulations in the interests of raising ethical standards and levels of professional qualification and claimed that they could be exempted under Article 81(3) EC. 12 A hearing was held at the Commission on 24 February 2000 and was attended by the representatives of Mr Piau and of FIFA, as well as representatives of the international professional players’ trade union, FIFPro, which expressed the interest of players in the regulation of agents. 13 Following the administrative procedure initiated by the Commission, on 10 December 2000 FIFA adopted new Players’ Agents Regulations, which entered into force on 1 March 2001 and were amended again on 3 April 2002. 14 The new FIFA regulations (‘the amended regulations’) maintain the obligation, in order to exercise the occupation of players’ agent, which is still reserved for natural persons, to hold a licence issued by the competent national association for an unlimited period (Articles 1, 2 and 10). The candidate, who must satisfy the requirement of having an ‘impeccable reputation’ (Article 2), must take a written examination (Articles 4 and 5). The examination consists in a multiple-choice test to verify the candidate’s knowledge of the law and sport (Annex A). The agent must also take out a professional liability insurance policy or, failing that, deposit a bank guarantee to the amount of CHF 100 000 (Articles 6 and 7). 15 The relations between the agent and the player must be the subject of a written contract for a maximum period of two years, which may be renewed. The contract must stipulate the agent’s remuneration, which is calculated on the basis of the player’s basic gross salary and, if the parties cannot reach agreement, is fixed at 5% of the salary. A copy of the contract must be sent to the national association, whose register of contracts must be made available to FIFA (Article 12). Licensed players’ agents are required, inter alia, to adhere to FIFA’s statutes and regulations and to refrain from approaching a player who is under contract with a club (Article 14). 16 A system of sanctions against clubs, players and agents is set up. They may all be punished, in the event of failure to comply with the above rules, by a caution, censure, or warning, or by a fine (Articles 15, 17 and 19). Players’ agents may have their licence suspended or withdrawn (Article 15). Players may be suspended for up to 12 months (Article 17). Clubs may also be punished by suspension measures and bans on transfers of at least three months (Article 19). Fines may also be imposed on players’ agents, players and clubs. For players’ agents, the amount of the fine is not specified, as in the original regulations, while in the case of players and clubs minimum amounts of CHF 10 000 and CHF 20 000 respectively are now provided for (Articles 15, 17 and 19). All these sanctions are cumulative (Articles 15, 17 and 19). Disputes are dealt with by the competent national association or the ‘Players’ Status Committee’ (Article 22). Transitional measures allow licences granted under the former provisions to be validated (Article 23). A code of professional conduct and a standard representation contract are also annexed to the amended regulations (Annexes B and C). 17 The amendments made on 3 April 2002 state that nationals of the European Union or the European Economic Area (EEA) must make their application for a


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licence to the national association of their home country or the country of domicile without any condition relating to length of residence and that they may take out the required insurance policy in any country of the European Union or the EEA. 18 On 9 and 10 July 2001 the European Parliament declared that the files opened following the petitions mentioned in paragraph 9 above were closed. 19 On 3 August 2001 the Commission sent Mr Piau a letter under Article 6 of Commission Regulation (EC) No 2842/98 of 22 December 1998 on the hearing of parties in certain proceedings under Articles [81] and [82] of the EC Treaty (OJ 1998 L 354, p. 18). In that letter, the Commission pointed out that its representation to FIFA had resulted in the elimination of the main restrictive aspects of the Players’ Agents Regulations and that there was no longer any Community interest in continuing with the procedure. 20 The Commission sent a similar letter to Multiplayers International Denmark on 12 November 2001, to which that complainant did not reply. 21 In response to the letter of 3 August 2001 mentioned in paragraph 19 above, on 28 September 2001 Mr Piau informed the Commission that he was maintaining his complaint. He claimed that the infringements of Article 81(1) EC still remained in the amended regulations with respect to the examination and professional liability insurance and that new restrictions had been introduced in the form of rules relating to professional conduct, the standard contract and the determination of remuneration. In the view of the complainant, these restrictions could not be covered by an exemption on the basis of Article 81(3) EC. In addition, Mr Piau stated that the Commission had not examined the rules in question having regard to Article 82 EC. 22 By a decision of 15 April 2002 (‘the contested decision’), the Commission rejected Mr Piau’s complaint. The Commission stated that there was no Community interest in continuing with the procedure in so far as the most important restrictive provisions at issue in the complaint had been repealed, whilst the licence requirement could be justified, the remaining restrictions could enjoy an exemption under Article 81(3) EC, and Article 82 EC was not applicable in the present case. Procedure and forms of order sought by the parties 23 By an application lodged on 14 June 2002, Mr Piau brought the present action. 24 On 5 November 2002 FIFA applied to intervene in support of the form of order sought by the Commission. By order of the President of the First Chamber of the Court of First Instance of 5 December 2002, that intervention was allowed. 25 By decision of the Court of First Instance of 2 July 2003, the Judge-Rapporteur was assigned, from 1 October 2003, to the Fourth Chamber, to which the case was therefore reassigned. 26 By a measure of organisation of procedure notified on 11 March 2004, the Court of First Instance asked the Commission and FIFA questions about professional liability insurance, remuneration of players’ agents and legal remedies provided for under the amended regulations, and asked Mr Piau questions regarding the steps he had taken with a view to carrying on the occupation of players’ agent. 27 FIFA, the Commission and Mr Piau answered the questions asked by the Court by letters received on 1, 2 and 5 April 2004 respectively. 28 The parties presented oral argument and replied to the Court’s questions at the hearing on 22 April 2004. 29 The applicant claims that the Court should: – annul the contested decision; – order the Commission to pay the costs.


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30 The Commission contends that the Court should: – dismiss the action; – order the applicant to pay the costs. 31 FIFA claims that the Court should: – declare the action inadmissible and, in any event, unfounded; – order the applicant to pay the costs. Admissibility Arguments of the parties 32 FIFA questions the admissibility of the action. It claims that the applicant does not have a legal interest in bringing proceedings since he has never taken any official steps with a view to carrying on the occupation of players’ agent and the French law applicable to his situation is stricter than the FIFA regulations. 33 The Commission states that it did not raise a plea of inadmissibility with regard to the application because it considered that Mr Piau had links with the football world and that he had wished to carry on the occupation of players’ agent. 34 Mr Piau contends that his action, which was brought against the Commission’s decision rejecting his complaint, is admissible. He asserts that he has wished to carry on the occupation of players’ agent since 1997 and that there are inconsistencies between the FIFA rules and the French legislation. Findings of the Court 35 The Commission has not raised a plea of inadmissibility. An application to intervene must be limited to supporting the form of order sought by one of the parties (Article 40, last paragraph, of the Statute of the Court of Justice, applicable to the Court of First Instance under Article 53 of that Statute). 36 FIFA is not therefore entitled to raise a plea of inadmissibility that is not relied on by the party in support of whose form of order it was granted leave to intervene. The Court is not therefore bound to consider the pleas on which it relies in this regard (Case C-313/90 CIRFS and Others v Commission [1993] ECR I-1125, paragraph 22). 37 However, under Article 113 of the Rules of Procedure, the Court may at any time, of its own motion, consider whether there exists any absolute bar to proceeding with a case, including any raised by the interveners (Case T-239/94 EISA v Commission [1997] ECR II-1839, paragraph 26). 38 It is common ground that Mr Piau is the person to whom a Commission decision that definitively closes a procedure initiated on the basis of Regulation No 17 was addressed and that he duly brought an action against that decision. The refusal to continue with such a procedure and the rejection of a complaint adversely affect its originator who, according to settled case-law, should be able to institute proceedings in order to protect his legitimate interests (Case 26/76 Metro v Commission [1977] ECR 1875, paragraph 13, and Case T-37/92 BEUCandNCC v Commission [1994] ECR II-285, paragraph 36). The Court has also ruled that another undertaking which the Commission has recognised as having a legitimate interest in submitting comments in a procedure pursuant to Regulation No 17 is entitled to bring proceedings (Metro v Commission, paragraphs 6, 7 and 11 to 13). Substance


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1. The treatment of the complaint Arguments of the parties 39 Mr Piau claims, first, that the Commission has failed to comply with its obligations in dealing with a complaint lodged under Article 3 of Regulation No 17. Although FIFA had not notified the original regulations, the Commission had refrained from taking a position on the alleged infringement and presumed that the regulations were possibly exempt. Its actions are contrary to the principle of good faith which must govern relations between citizens and the Community and the principle of legal certainty. 40 He submits, second, that the Commission did not conduct an inquiry or state reasons for the contested decision with reference to Article 82 EC, although his complaint also concerned that article, as can be seen inter alia from the letters of 31 January and 30 March 2001 exchanged between the applicant and the Commission. The investigation did not relate to Article 82 EC, which was not mentioned in the statement of objections. The Commission therefore harmed Mr Piau’s legitimate expectations by failing to examine his complaint in this regard. 41 The Commission claims, first, that the failure to notify does not mean that the unnotified measure is illegal under Community law. 42 Second, the defendant contends that it was not required to conduct an inquiry or to state reasons for its decision with reference to Article 82 EC, which was not mentioned in the complaint but was relied on belatedly (on 28 September 2001) by the applicant, as there was nothing to suggest that that provision had been infringed. 43 FIFA maintains that the contested decision did not require a statement of reasons with reference to Article 82 EC, which was not mentioned in the complaint and was relied on belatedly by the applicant. In any case, the Commission, which could reject the complaint solely on the ground that there was no Community interest, gave an adequate statement of reasons in the contested decision with reference to Article 82 EC. Findings of the Court 44 First, as regards the treatment of the complaint under Regulation No 17, it should be pointed out that the Commission has broad discretion in this area (see, to that effect, Case C-119/97 P Ufex and Others v Commission [1999] ECR I-1341, paragraphs 88 and 89). 45 In the present case, Mr Piau lodged a complaint on 23 March 1998 concerning the FIFA Players’ Agents Regulations, drafted as a summary outline, which referred to ‘Article [49] et seq. of the [EC] Treaty concerning free competition with regard to services’, but did not mention Regulation No 17. The Commission, which had received another complaint concerning the same regulations (see paragraph 9 above), considered that the facts adduced raised certain questions of competition law and considered Mr Piau’s complaint to have been lodged under Article 3 of Regulation No 17. 46 The Commission then conducted the administrative procedure laid down for infringements in competition matters, conducting an inquiry, sending a statement of objections to FIFA on 19 October 1999 and holding a hearing of the interested parties on 24 February 2000. It is common ground that this procedure eventually resulted in


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FIFA adopting amended Players’ Agents Regulations on 10 December 2000. Since it was satisfied with the amendments made by FIFA to the rules in question, the Commission then considered that no further steps should be taken in the procedure, and notified Mr Piau of this by sending him a letter on 3 August 2001 under Article 6 of Regulation No 2842/98 and then rejecting his complaint on 15 April 2002. 47 It is apparent that the Commission properly applied, from a procedural point of view, the powers conferred on it by Regulation No 17, which was applicable at that time, to conduct an inquiry into a complaint in a competition matter, having regard to its discretion in this area. The Commission did not therefore fail to comply with its obligations in this regard. The fact that the original regulations had not been notified to the Commission does not affect the lawfulness of the procedure, since the sole effect of the failure to give notification was to deprive the Commission of the opportunity to take a decision concerning, in particular, a possible exemption for the regulations under Article 81(3) EC, in the absence of an application by FIFA to that effect. Lastly, the applicant has not adduced any evidence to show that, in dealing with his complaint, the Commission failed to act in good faith or breached the principle of legal certainty. 48 Second, as regards the inquiry into the complaint and statement of reasons for the contested decision with reference to Article 82 EC, it can be seen from the documents before the Court that the complaint lodged on 23 March 1998 did not mention Article 82 EC. However, Mr Piau did rely on that provision in his letter of 28 September 2001 which stated, in response to the Commission’s communication under Article 6 of Regulation No 2842/98, that he was maintaining his complaint (see paragraph 21 above). In that letter, the complainant argued that, in his view, the case had not been investigated with reference to Article 82 EC, even though FIFA was abusing a dominant position, and that, in a letter of 30 March 2001, the Commission had stated that his complaint related primarily to Articles 81 EC and 82 EC. 49 The applicant cannot rely on the principle of protection of legitimate expectations with respect to information contained in the requests for information sent by the Commission to FIFA on 11 November 1998 and 19 July 1999, which envisaged the possibility of infringements of Articles 81 EC and 82 EC. Such information cannot be equated with precise assurances that may give rise to reasonable expectations (see, for example, Joined Cases T-485/93, T-491/93, T-494/93 and T-61/98 Dreyfus and Others v Commission [2000] ECR II-3659, paragraph 85). Furthermore, subsequently, in the statement of objections of 19 October 1999, the Commission did not identify any infringements with reference to Article 82 EC, but only with reference to Article 81 EC. 50 The Commission cannot, for its part, claim that the belated mention by the applicant of Article 82 EC in the course of the administrative procedure relieved it of the obligation to conduct an inquiry and state reasons for the contested decision in this regard. As long as the administrative procedure had not been concluded and a decision had not been taken on Mr Piau’s complaint, the Commission could still conduct fresh investigations if new objections, whose relevance it had to assess, were raised. 51 On the other hand, in so far as, after examining the points of fact and of law relating to the application of Article 82 EC, the Commission decided that an investigation of the complaint was unwarranted or unnecessary in this regard, it was not required to pursue the investigation on this point (Case T-74/92 Ladbroke v Commission [1995] ECR II-115, paragraph 60).


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52 With regard to its statement of reasons having regard to Article 82 EC, the contested decision states that Mr Piau’s comments on that provision ‘are vague with regard to the market on which FIFA is said to have a dominant position and the alleged abuse’. It explains that FIFA is not active on the market for provision of advice [to players] in which players’ agents operate and concludes that ‘Article 82 EC does not apply in the present case as described by the complainant’. In the circumstances of the present case, such information satisfies the Commission’s obligation to give a statement of reasons (Case T-74/92 Ladbroke v Commission, cited above, paragraph 60). 53 It follows from the above considerations that Mr Piau is not justified in claiming that the Commission failed to comply with its obligations in dealing with the complaint referred to it. The applicant’s pleas pertaining to that claim must therefore be rejected. 2. Community interest Arguments of the parties 54 Mr Piau claims that his complaint was of Community interest. The market is ‘cross-border in nature’, the most important restrictive provisions of the original regulations have not been repealed and the amended regulations cannot be the subject of an exemption under Article 81(3) EC. The anti-competitive effects will remain, since agents licensed under the original regulations will retain the market shares that they have acquired. In addition, Article 82 EC is applicable. Lastly, Mr Piau cannot obtain adequate protection before the national courts. 55 He submits, first, that the Commission made an error of assessment with regard to the FIFA Players’ Agents Regulations. The obligation, on pain of sanctions, to comply with the FIFA regulations constitutes an obstacle to ‘free competition with regard to services’ and freedom of establishment and prevents any unlicensed players’ agents from gaining market access. The provision contained in the amended regulations relating to remuneration of players’ agents amounts to fixing of an imposed price, which restricts competition. The requirement of a standard contract infringes the principle of freedom of contract and the obligation imposed on the national association to send a copy to FIFA does not guarantee the protection of personal data. The code of professional conduct annexed to the regulations leaves scope for arbitrary action. The amended regulations are not compatible with the French legislation governing the occupation; however, the French football federation had given preference to the regulations and awarded licences in contravention of national legislation. The amended regulations also prohibit recourse to the ordinary courts. 56 Second, Mr Piau claims that the amended regulations cannot enjoy an exemption on the basis of Article 81(3) EC, since none of the conditions set out in that provision is satisfied. The restrictions are neither essential, appropriate nor proportionate. On the contrary, those regulations eliminate any competition, since FIFA alone is authorised to grant a licence. He submits that, behind the declared objective of protecting players and raising ethical standards in the occupation of players’ agent, FIFA’s real intention is to take complete control of the occupation of players’ agent in breach of the freedom to carry on a business and the principle of non-discrimination. Mr Piau also argues that the ‘specific nature of sport’, which


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makes it possible to derogate from Community competition law, cannot be relied on in the present case, since the activity in question is not linked directly to sport. 57 Third, Mr Piau submits that FIFA holds a dominant position on the ‘football market’ and is abusing its dominant position on the related market of services provided by players’ agents. FIFA is an association of undertakings and the amended regulations constitute a decision by an association of undertakings. Representing the interests of all buyers, FIFA is acting as a monopsony, a single buyer imposing its conditions on sellers. The abuses of the dominant position are the result of the binding provisions of the regulations. Licensed players’ agents also hold, jointly, a collective dominant position which they are abusing through the FIFA rules. The market in the services provided by players’ agents is reserved for members of the association of undertakings and unlicensed agents are prohibited from having access. 58 Fourth, Mr Piau submits that, by making access to the occupation of players’ agent subject to the possession of a licence, the amended regulations are an obstacle to freedom to provide services and freedom to carry on a business. He argues that FIFA does not have any legitimacy to lay down rules governing an economic activity and that the Commission thus implicitly delegated it a power to regulate an activity of providing services in contravention of the competences conferred on the Member States. 59 The Commission submits, principally, that there was no Community interest to justify continuing with the procedure, that the complaint was rightly rejected on that ground, and that Mr Piau’s action is consequently unfounded. The ‘cross-border nature’ of the market does not necessarily mean that there is a Community interest. The most important restrictions had been removed in the amended regulations. Any persistent effects of the original regulations can be regarded as transitional measures guaranteeing the acquired rights of agents licensed under the old system. The fact that a complaint challenges alleged abuses of a dominant position does not in itself allow the conclusion that there is a Community interest. Contrary to his assertions, the applicant is not prevented from referring the matter to an ordinary law court. 60 In the alternative, the Commission submits, first, that the applicant’s arguments, based on provisions not falling within the scope of competition law, are inadmissible or unfounded, since it does not derive from Regulation No 17, or from any other legal basis, the power to act with regard to an association of undertakings on bases other than compliance with rules of Community competition law. The Commission also submits that Community law accepts the recognition of acquired rights and that the applicant’s fears over protection of personal data are unfounded. It argues that, while the organisation of the occupation of players’ agent has not been harmonised at Community level, the FIFA regulations, which lay down uniform conditions for access at world level, are not liable to restrict the free movement of players’ agents. 61 Second, the Commission submits that it did not make an error of assessment with regard to the rules in question, which seek to protect players and to ensure that agents are qualified. In the absence of an internal organisation of the occupation, the licence system imposes justified, essential and proportionate qualitative restrictions. In addition, the main restrictions have been removed, in particular concerning conditions of access to the occupation and examination procedures. The amended regulations are proportionate to the objectives set out and take into account the specific nature of sport. The provision relating to agents’ remuneration merely lays down a subsidiary rule, allowing the parties a large degree of freedom. The standard contract does not hamper the parties’ freedom and the limitation of its duration to two years promotes competition. The alleged prohibition on having recourse to ordinary


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law courts is not proven to exist. The rules of professional conduct, which can be justified by the general interest, are proportionate and compatible with Community competition law. Lastly, the binding nature of the regulations and the sanctions provided for therein are inherent in the existence of rules. 62 Third, the Commission submits that the amended regulations satisfy the conditions for an exemption laid down by Article 81(3) EC. The restrictions entailed, which are intended to raise ethical and professional standards, are proportionate. Competition is not eliminated. The very existence of regulations promotes a better operation of the market and therefore contributes to economic progress. 63 Fourth, the Commission submits that Article 82 EC, which concerns only economic activities, is not applicable to the present case, which relates to a purely regulatory activity. FIFA cannot be described as an ‘economic power’ or a monopsony and no abuse has been shown to exist on a market related to the ‘football market’. FIFA does not represent the economic interests of clubs and players. Licensed players’ agents are a fairly scattered occupation, without any structural links, and do not therefore abuse a collective dominant position. On the other hand, the Commission submits that FIFA is an association of undertakings and that the regulations at issue constitute a decision by an association of undertakings. 64 FIFA submits, first, that the Commission was right to reject Mr Piau’s complaint on grounds of lack of Community interest. The restrictive provisions retained in the amended regulations have a qualitative purpose. They do not include any restrictions prohibited by Article 81(1) EC and are justified under Article 81(3) EC. The anti-competitive effects that allegedly persist do not result from the rules in question, but from the activity of agents. The ‘cross-border nature’ of the market has no bearing on the likely Community interest of a case. 65 Second, FIFA submits that the amended regulations cannot be classified as a decision by an association of undertakings, since professional clubs, which may be regarded as undertakings, form only a minority of the members of the national associations, which are the members of the international organisation. The regulations adopted by FIFA are not therefore the expression of the will of professional clubs. The amended regulations do not contain any considerable restrictions of competition. The procedures for obtaining a licence are now satisfactory. Professional liability insurance, whose amount is determined objectively, is an appropriate means to settle disputes. The provisions relating to agents’ remuneration are not comparable with a price-fixing mechanism. The standard contract contains conventional stipulations and does not in any way violate privacy. The rules of professional conduct, the sanctions mechanism and the dispute settlement system are not contrary to Article 81 EC. 66 Third, FIFA submits that the amended regulations could have been the subject of an exemption under Article 81(3) EC. Those rules are necessary in the absence of organisation of the occupation and of national legislation and because of the global dimension of football. They raise professional and ethical standards for the occupation of players’ agent, the increasing number of whom shows that the rules in question are not restrictive. 67 Fourth, FIFA submits that Article 82 EC is not applicable and that it has not abused a dominant position. It states that it is not an association of undertakings and argues that, in exercising its regulatory power, which is at issue in this case, it does not carry on economic activities. It argues that the applicant never mentioned the ‘football market’ in the course of the administrative procedure and that the fact that it exercises a regulatory power over economic actors in a certain market does not mean that it is active on that market or, a fortiori, that it holds a dominant position.


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Furthermore, the market for the provision of advice at issue in the present case is not connected with any market where FIFA is active. Its situation cannot be classified as a monopsony either, since FIFA does not represent either clubs or players in their relations with agents. Similarly, licensed agents do not exercise a collective dominant position which they abuse through the FIFA rules. Findings of the Court The nature of the FIFA Players’ Agents Regulations 68 Without classifying on the basis of Community law either the nature of the Players’ Agents Regulations or FIFA as the author of those regulations, in the contested decision the Commission examined Mr Piau’s complaint with reference to the Community rules on competition, in particular Article 81 EC. That provision and the powers conferred on the Commission to ensure compliance concern decisions, agreements or practices on the part of undertakings or associations of undertakings, since Community law applies only in so far as the acts or conduct in question and the authors of such acts or conduct fall within the scope of that provision. In the present proceedings, the Commission has pointed out that, in its opinion, FIFA constituted an association of undertakings and the regulations at issue were a decision by an association of undertakings, thereby confirming the view it took in the statement of objections, a view shared by Mr Piau, but contested by FIFA. 69 As regards, first, the concept of an association of undertakings, and without it being necessary to rule on the admissibility of the arguments put forward by an intervener which go against the claims made by the party in support of which it is intervening, it is common ground that FIFA’s members are national associations, which are groupings of football clubs for which the practice of football is an economic activity. These football clubs are therefore undertakings within the meaning of Article 81 EC and the national associations grouping them together are associations of undertakings within the meaning of that provision. 70 The fact that the national associations are groupings of ‘amateur’ clubs, alongside ‘professional’ clubs, is not capable of calling that assessment into question. In this regard, it should be noted that the mere fact that a sports association or federation unilaterally classifies sportsmen or clubs as ‘amateur’ does not in itself mean that they do not engage in economic activities within the meaning of Article 2 EC (see, to that effect, Joined Cases C-51/96 and C-191/97 Deliège [2000] ECR I-2549, paragraph 46). 71 Furthermore, the national associations, which are required, under FIFA’s statutes, to participate in competitions organised by it, must pay back to it a percentage of the gross receipts for each international match and are recognised, by those statutes, with FIFA, as being holders of exclusive broadcasting and transmission rights for the sporting events in question, also carry on an economic activity in this regard (see Case T-46/92 Scottish Football v Commission [1994] ECR II-1039). They therefore also constitute undertakings within the meaning of Article 81 EC. 72 Since the national associations constitute associations of undertakings and also, by virtue of the economic activities that they pursue, undertakings, FIFA, an association grouping together national associations, also constitutes an association of undertakings within the meaning of Article 81 EC. That provision applies to associations in so far as their own activities or those of the undertakings belonging to them are calculated to produce the results to which it refers (Case 71/74 Frubo v


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Commission [1975] ECR 563, paragraph 30). The legal framework within which decisions are taken by undertakings and the classification given to that framework by the various national legal systems are irrelevant as far as the applicability of the Community rules on competition is concerned (Case 123/83 BNIC [1985] ECR 391, paragraph 17). 73 As regards, second, the concept of a decision by an association of undertakings, it is apparent from the documents before the Court that the purpose of the occupation of players’ agent, under the very wording of the amended regulations, is ‘for a fee, on a regular basis [to introduce] a player to a club with a view to employment or [to introduce] two clubs to one another with a view to concluding a transfer contract’. This is therefore an economic activity involving the provision of services, which does not fall within the scope of the specific nature of sport, as defined by the case-law (Case 13/76 Donà [1976] ECR 1333, paragraphs 14 and 15, Case C-415/93 Bosman [1995] ECR I-4921, paragraph 127, Deliège, paragraphs 64 and 69, and Case C-176/96 LehtonenandCastors Braine [2000] ECR I-2681, paragraphs 53 to 60). 74 On the one hand, the Players’ Agents Regulations were adopted by FIFA of its own authority and not on the basis of rule-making powers conferred on it by public authorities in connection with a recognised task in the general interest concerning sporting activity (see, by analogy, Case C-309/99 Wouters and Others [2002] ECR I-1577, paragraphs 68 and 69). Those regulations do not fall within the scope of the freedom of internal organisation enjoyed by sports associations either (Bosman, paragraph 81, and Deliège, paragraph 47). 75 On the other hand, since they are binding on national associations that are members of FIFA, which are required to draw up similar rules that are subsequently approved by FIFA, and on clubs, players and players’ agents, those regulations are the reflection of FIFA’s resolve to coordinate the conduct of its members with regard to the activity of players’ agents. They therefore constitute a decision by an association of undertakings within the meaning of Article 81(1) EC (Case 45/85 Verband der Sachversicherer v Commission [1987] ECR 405, paragraphs 29 to 32, and Wouters and Others, paragraph 71), which must comply with the Community rules on competition, where such a decision has effects in the Community. 76 With regard to FIFA’s legitimacy, contested by the applicant, to enact such rules, which do not have a sport-related object, but regulate an economic activity that is peripheral to the sporting activity in question and touch on fundamental freedoms, the rule-making power claimed by a private organisation like FIFA, whose main statutory purpose is to promote football (see paragraph 2 above), is indeed open to question, in the light of the principles common to the Member States on which the European Union is founded. 77 The very principle of regulation of an economic activity concerning neither the specific nature of sport nor the freedom of internal organisation of sports associations by a private-law body, like FIFA, which has not been delegated any such power by a public authority, cannot from the outset be regarded as compatible with Community law, in particular with regard to respect for civil and economic liberties. 78 In principle, such regulation, which constitutes policing of an economic activity and touches on fundamental freedoms, falls within the competence of the public authorities. Nevertheless, in the present dispute, the rule-making power exercised by FIFA, in the almost complete absence of national rules, can be examined only in so far as it affects the rules on competition, in the light of which the lawfulness of the contested decision must be assessed, while considerations relating to the legal basis


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that allows FIFA to carry on regulatory activity, however important they may be, are not the subject of judicial review in this case. 79 The present action concerns the lawfulness of a decision taken by the Commission following a procedure carried out on the basis of a complaint lodged under Regulation No 17, for the treatment of which the Commission could not apply any powers other than those it holds in this context. Judicial review is necessarily limited to the rules on competition and the assessment made by the Commission of the alleged infringements of those rules by the FIFA regulations. This review can therefore extend to compliance with other provisions of the Treaty only in so far as any infringement of them reveals a concomitant breach of the rules on competition. Moreover, it can relate to a possible breach of fundamental principles only in the event that that breach resulted in an infringement of the rules on competition. Assessment of the Community interest of the complaint 80 The contested decision rejects Mr Piau’s complaint on grounds of lack of Community interest in continuing with the procedure. It should be pointed out, first, that the assessment of the Community interest raised by a complaint in competition matters depends on the factual and legal circumstances of each case, which may differ considerably from case to case, and not on predetermined criteria which must be applied (see, to that effect, Ufex and Others v Commission, paragraphs 79 and 80). Second, the Commission, entrusted by Article 85(1) EC with the task of ensuring application of Articles 81 EC and 82 EC, is responsible for defining and implementing Community competition policy and for that purpose has a discretion as to how it deals with complaints. That discretion is not unlimited, however, and the Commission must assess in each case the seriousness and duration of the interferences with competition and the persistence of their consequences (see, to that effect, Ufex and Others v Commission, paragraphs 88, 89, 93 and 95). 81 Furthermore, review by the Community judicature of the exercise, by the Commission, of the discretion conferred on it in this regard must not lead it to substitute its assessment of the Community interest for that of the Commission but focuses on whether or not the contested decision is based on materially incorrect facts, or is vitiated by an error of law, a manifest error of appraisal or misuse of powers (Case T-115/99 SEP v Commission [2001] ECR II-691, paragraph 34). 82 In the present case, three kinds of considerations form the basis for the Commission’s assessment regarding lack of Community interest, namely the repeal of the most restrictive provisions contained in the original regulations, the eligibility of the amended regulations for an exemption under Article 81(3) EC, and the inapplicability of Article 82 EC. – Repeal of the most restrictive provisions contained in the original regulations 83 The contested decision starts by noting that the most important restrictive provisions that were part of the regulations adopted on 20 May 1994 were deleted in the regulations adopted on 20 December 2000. It examines the provisions of the FIFA regulations under five headings, relating to the examination, insurance, the code of professional conduct, the setting of remuneration for players’ agents and the standard contract. 84 First, as regards the examination, the Commission states in the contested decision that candidates must now take a written examination, consisting in a multiple-choice test, the procedures and dates for which, as set out in the annex to the amended regulations, are uniform throughout the world. It notes that a two-stage


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appeal system is now envisaged and that the two-year residence requirement for European Union nationals was removed by an amendment to the regulations on 3 April 2002. The contested decision states that the requirement of an ‘impeccable reputation’ for obtaining the licence, which must be interpreted in accordance with national laws, would be construed in France, where Mr Piau is resident, as having no criminal conviction. In the final analysis, the Commission did not consider the applicant’s claims of arbitrariness to be well founded. 85 Second, in the contested decision, the Commission notes that a professional liability insurance policy, required of everyone, whose base relates to the objective criterion of the turnover of the players’ agent, replaced the requirement of lodging a guarantee and that it can be taken out with various insurance companies in all the countries of the Union. On this point, in response to the Court’s questions mentioned in paragraph 26 above, FIFA produced examples of professional liability insurance contracts offered to players’ agents by 12 insurance companies within the European Union or the EEA. The contested decision also points out that the required guarantee, which must cover all risks liable to result from the representation activity, does not appear to be disproportionate to the risks covered, for example, by professional insurance in the liberal professions. 86 Third, as far as the code of professional conduct is concerned, in the contested decision the Commission considers that the elementary principles of good professional conduct set out in that code, annexed to the amended regulations, which refer in particular to rules relating to professional conscientiousness, truthfulness, fairness, objectivity, transparency, sincerity, justice and equity, do not impose a disproportionate obligation on players’ agents. 87 Fourth, as regards setting the remuneration of players’ agents, in the contested decision the Commission examined Article 12 of the regulations, which provides that the agent’s salary is calculated on the basis of the player’s basic gross salary and will be 5% of the salary if the parties cannot reach agreement. It considers that this provision refers to an objective, transparent criterion (the player’s basic gross salary) and is merely a (subsidiary) mechanism for the settlement of disputes. 88 Fifth, the contested decision states that Mr Piau’s complaint concerning the breach of privacy stemming from the fact that a copy of the contract signed between a player and an agent is sent to the relevant national association for registration is not a problem capable of being caught by the Community rules on competition. 89 The contested decision does not therefore show that the principles stemming from the case-law referred to in paragraphs 80 and 81 above regarding the extent of its obligations were breached by the Commission, which closely examined the evidence put forward by the applicant. 90 The Commission did not make a manifest error of assessment with regard to the provisions of the amended regulations examined in paragraphs 84 to 88 above by considering that the examination offered satisfactory guarantees of objectivity and transparency, that the professional liability insurance obligation did not constitute a disproportionate requirement and, with regard to the provisions of the regulations relating to remuneration for players’ agents, by implicitly excluding a classification as the fixing of imposed prices from the point of view of competition law (Joined Cases T-213/95 and T-18/96 SCK and FNK v Commission [1997] ECR II-1739, paragraphs 158, 159 and 161 to 164). 91 The arguments outlined by Mr Piau in this case relating to the content of the amended regulations, which concern the obligation under the regulations to comply


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with FIFA rules, the content of the standard contract, the sanctions system and legal remedies, do not call that assessment into question. 92 First, the obligation imposed on players’ agents to comply with the FIFA rules concerning, among other things, transfers of players does not appear in itself to be contrary to the rules on competition, as the FIFA rules on transfers of players, which were not the object of Mr Piau’s complaint, cannot be examined in the present dispute, since they fall outside its scope. When asked about this point at the hearing, the applicant did not explain, any more than he did in his written pleadings, how the obligation to comply with FIFA rules might affect competition. 93 Second, the provisions on the content of the contract between the agent and the player, under which the contract, in writing, must set out the criteria and details of the agent’s remuneration and cannot have a term of longer than two years, although that term is renewable, do not reveal any interference with competition. The limitation of the duration of contracts to two years, which does not preclude the renewal of the commitment, seems likely to encourage the fluidity of the market and, as a result, competition. In fact, this relatively limited framing of contractual relations seems likely to help to make the parties’ financial and legal relations more secure, without jeopardising competition. 94 Third, the sanctions system, summarised in paragraph 16 above, in so far as it can affect the rules on competition, does not appear to be open to criticism. The amended regulations provide that the sanctions applicable to agents, players and clubs are caution, censure, warning, suspension or withdrawal of licence for agents, suspension of up to 12 months for players and suspension measures or bans on transfers for at least three months for clubs, which cannot be regarded as manifestly excessive for a system of professional sanctions. Furthermore, the amounts of the fines for players and clubs were reduced from those in the original regulations. In addition, Mr Piau has not produced any evidence to show that this mechanism is applied in an arbitrary and discriminatory manner, thereby interfering with competition. 95 Fourth, with respect to legal remedies available in the ordinary courts, and assuming that the provisions of the amended regulations may have an effect on the rules on competition in this regard, it is apparent from the answers given by FIFA and by the Commission to the questions asked by the Court (see paragraph 26 above) that, irrespective of the system of remedies against decisions by national associations or by the Players’ Status Committee, which is competent in matters involving players’ agents, before the Court of Arbitration for Sport, interested parties can always have recourse to the ordinary courts, in particular in order to assert their rights under national law or under Community law, and actions for annulment can also be brought before the Swiss Federal Court against decisions by the Court of Arbitration for Sport. The applicant, who, at the hearing, reported difficulties and slow progress affecting national court proceedings, has not however established that he was deprived of all remedies before the ordinary courts or, a fortiori, that competition was thereby affected. 96 It follows from the above considerations that the pleas in law and arguments put forward by Mr Piau based on competition law do not call into question the conclusion that the Commission was entitled to consider that the most restrictive provisions of the regulations in question had been repealed. The applicant’s arguments in this regard must therefore be rejected. 97 The pleas in law and arguments put forward by the applicant which are not related to competition law should also be rejected, since they do not indicate any


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infringements in this regard. Mr Piau has not shown that his pleas in law and arguments regarding the breach of contractual freedom, the incompatibility of the FIFA regulations with the French legislation and the interference with the protection of personal data disclose an infringement of the rules on competition. His pleas in law and arguments, which are not, moreover, accompanied by corroborative evidence, must therefore be rejected as irrelevant in a competition matter. 98 In addition, the argument put forward by Mr Piau that, since agents licensed under the original regulations retained their licences, anti-competitive effects persisted cannot be accepted. On the one hand, the applicant does not establish that this fact would in itself give rise to anti-competitive effects. On the other hand, it is contrary to the principle of legal certainty to call into question legal positions which are not shown to have been unlawfully acquired (see, by analogy, Case T-498/93 Dornonville de la Cour v Commission [1994] ECR-SC I-A-257 and II-813, paragraphs 46 to 49 and 58). Moreover, as the Court has held with regard to transitional measures relating to recognition of diplomas – this case-law being applicable to the present case – it is permitted to preserve acquired rights in similar cases (Case C-447/93 Dreessen [1994] ECR I-4087, paragraph 10, and Joined Cases C-69/96 to C-79/96 Garofalo and Others [1997] ECR I-5603, paragraphs 29 to 33). 99 In the light of all the foregoing considerations, the Commission did not commit a manifest error in its assessment of the rules in question or with regard to the alleged persistence of the anti-competitive effects of the original regulations, the reason for Mr Piau’s complaint. The applicant is not therefore justified in claiming that the most restrictive provisions of the original regulations were not abolished and that anti-competitive effects persisted because those provisions were retained in the amended regulations. – Eligibility of the provisions of the amended regulations for an exemption under Article 81(3) EC 100 In the contested decision, the Commission considers that the compulsory nature of the licence might be justified and that the amended regulations could be eligible for an exemption under Article 81(3) EC. It explains that the licence system, which imposes restrictions that are more qualitative than quantitative, seeks to protect players and clubs and takes into consideration, in particular, the risks incurred by players, who have short careers, in the event of poorly negotiated transfers. It considers that, since there is at present no organisation of the occupation of players’ agent and no generalised national rules, the restriction inherent in the licence system is proportionate and essential. 101 The actual principle of the licence, which is required by FIFA and is a condition for carrying on the occupation of players’ agent, constitutes a barrier to access to that economic activity and therefore necessarily affects competition. It can therefore be accepted only in so far as the conditions set out in Article 81(3) EC are satisfied, with the result that the amended regulations might enjoy an exemption on the basis of this provision if it were established that they contribute to promoting economic progress, allow consumers a fair share of the resulting benefit, do not impose restrictions which are not indispensable to the attainment of these objectives, and do not eliminate competition. 102 Various legal and factual circumstances have been relied on to justify the adoption of the regulations and the actual principle of the compulsory licence, which lies at the heart of the mechanism in question. It seems that, first of all, within the


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Community, France alone has adopted rules governing the occupation of sports agent. Furthermore, it is not contested that, collectively, players’ agents do not, at present, constitute a profession with its own internal organisation. It is not contested either that certain practices on the part of players’ agents could, in the past, have harmed players and clubs, financially and professionally. FIFA explained that, in laying down the rules in question, it was pursuing a dual objective of raising professional and ethical standards for the occupation of players’ agent in order to protect players, who have a short career. 103 Contrary to the claims made by the applicant, competition is not eliminated by the licence system. That system appears to result in a qualitative selection, appropriate for the attainment of the objective of raising professional standards for the occupation of players’ agent, rather than a quantitative restriction on access to that occupation. On the contrary, the quantitative opening up of this occupation is corroborated by statistics communicated by FIFA at the hearing. FIFA stated, without being contradicted, that while it recorded 214 players’ agents in 1996, when the original regulations entered into force, it estimated that there were 1 500 at the beginning of 2003 and that 300 candidates had passed the examination at sessions held in March and September of that year. 104 In view of the circumstances set out in paragraphs 102 and 103 above and the current conditions governing the exercise of the occupation of players’ agent, where there are virtually no national rules and no collective organisation for players’ agents, the Commission did not commit a manifest error of assessment by considering that the restrictions stemming from the compulsory nature of the licence might benefit from an exemption on the basis of Article 81(3) EC, and, moreover, by rightly reserving the right to review the rules in question. The arguments put forward by Mr Piau in this regard must therefore be rejected. 105 Similarly, the applicant’s argument that the ‘specific nature of sport’ may not be relied on to justify a derogation from the rules on competition must be rejected as irrelevant. The contested decision is not based on such an exception and envisages the exercise of the occupation of players’ agent as an economic activity, without claiming that it should be accepted as falling within the scope of the specific nature of sport, which in fact it does not. 106 Mr Piau’s arguments relating to the breaches of freedom to conduct business and freedom to provide services should also be rejected, since the applicant has not shown that they disclose a concomitant infringement of the rules on competition that precludes an exemption for the amended regulations on the basis of Article 81(3) EC. – Inapplicability of Article 82 EC 107 The contested decision states that Article 82 EC does not apply in the present case, as described by the applicant, since FIFA is not active on the market for the provision of advice to players. 108 Article 82 EC prohibits any abuse by one or more undertakings of a dominant position within the common market or in a substantial part of it. 109 That provision deals with the conduct of one or more economic operators abusing a position of economic strength and thus hindering the maintenance of effective competition on the relevant market by allowing that operator to behave to an appreciable extent independently of its competitors, its customers and, ultimately, consumers (Joined Cases C-395/96 P and C-396/96 P Compagnie maritime belge transports and Others v Commission [2000] ECR I-1365, paragraph 34).


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110 The expression ‘one or more undertakings’ in Article 82 EC implies that a dominant position may be held by two or more economic entities legally independent of each other, provided that from an economic point of view they present themselves or act together on a particular market as a collective entity (Compagnie maritime belge transports and Others v Commission, paragraph 36). 111 Three cumulative conditions must be met for a finding of collective dominance: first, each member of the dominant oligopoly must have the ability to know how the other members are behaving in order to monitor whether or not they are adopting the common policy; second, the situation of tacit coordination must be sustainable over time, that is to say, there must be an incentive not to depart from the common policy on the market; thirdly, the foreseeable reaction of current and future competitors, as well as of consumers, must not jeopardise the results expected from the common policy (Case T-342/99 Airtours v Commission [2002] ECR II-2585, paragraph 62, and Case T-374/00 Verband der freien Rohrwerke and Others v Commission [2003] ECR II-0000, paragraph 121). 112 In the present case, the market affected by the rules in question is a market for the provision of services where the buyers are players and clubs and the sellers are agents. In this market FIFA can be regarded as acting on behalf of football clubs since, as has already been stated (see paragraphs 69 to 72 above), it constitutes an emanation of those clubs as a second-level association of undertakings formed by the clubs. 113 A decision like the FIFA Players’ Agents Regulations may, where it is implemented, result in the undertakings operating on the market in question, namely the clubs, being so linked as to their conduct on a particular market that they present themselves on that market as a collective entity vis-à-vis their competitors, their trading partners and consumers (Compagnie maritime belge transports and Others v Commission, paragraph 44). 114 Because the regulations are binding for national associations that are members of FIFA and the clubs forming them, these bodies appear to be linked in the long term as to their conduct by rules that they accept and that other actors (players and players’ agents) cannot break on pain of sanctions that may lead to their exclusion from the market, in particular in the case of players’ agents. Within the meaning of the case-law cited in paragraphs 110 and 111 above, such a situation therefore characterises a collective dominant position for clubs on the market for the provision of players’ agents’ services, since, through the rules to which they adhere, the clubs lay down the conditions under which the services in question are provided. 115 It seems unrealistic to claim that FIFA, which is recognised as holding supervisory powers over the sport-related activity of football and connected economic activities, such as the activity of players’ agents in the present case, does not hold a collective dominant position on the market for players’ agents’ services on the ground that is not an actor on that market. 116 The fact that FIFA is not itself an economic operator that buys players’ agents’ services on the market in question and that its involvement stems from rule-making activity, which it has assumed the power to exercise in respect of the economic activity of players’ agents, is irrelevant as regards the application of Article 82 EC, since FIFA is the emanation of the national associations and the clubs, the actual buyers of the services of players’ agents, and it therefore operates on this market through its members. 117 As regards abuse of the alleged dominant position, however, it follows from the above considerations regarding the amended regulations and the possible exemption


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under Article 81(3) EC that such an abuse has not been established. It has been found that those regulations did not impose quantitative restrictions on access to the occupation of players’ agent that could be detrimental to competition, but qualitative restrictions that may be justified in the present circumstances. The abuses of the dominant position that, according to the applicant, stem from the regulations are not therefore established and his arguments in this regard must be rejected. 118 Lastly, Mr Piau’s argument that licensed players’ agents are abusing their collective dominant position within the meaning of Article 82 EC must also be rejected in the absence of structural links between these agents, the existence of which Mr Piau has failed to establish. The holding of the same licence, the use of the same standard contract and the fact that agents’ remuneration is determined on the basis of the same criteria do not prove the existence of a dominant position for licensed players’ agents, and the applicant does not show that the parties concerned adopt an identical approach or that they implicitly divide up the market. 119 Consequently, although the Commission wrongly considered that FIFA did not hold a dominant position on the market for players’ agents’ services, the other findings contained in the contested decision, namely that the most restrictive provisions of the regulations had been deleted and that the licence system could enjoy an exemption decision under Article 81(3) EC, would accordingly lead to the conclusion that there was no infringement under Article 82 EC and to the rejection of the applicant’s arguments in this regard. Therefore, despite the error in law made by the Commission in taking the view that Article 82 EC was not applicable, its application could not, in any event, have resulted in a finding of an abuse of a dominant position based on the other findings that had rightly been made from the examination of the regulations. Thus, the lawfulness of the rejection of the complaint on the ground of lack of Community interest in continuing with the procedure is not affected. 120 In the light of the foregoing considerations, the Commission did not commit a manifest error of assessment in deciding to reject Mr Piau’s complaint on the ground of lack of Community interest in continuing with the procedure. The ‘cross-border nature’ of the market, which is not disputed, is irrelevant in this regard, since this fact alone does not confer a Community interest on a complaint. In view of the fact that the assessment of the Community interest raised by a complaint depends on the circumstances of each case, the number of criteria of assessment the Commission may refer to should not be limited, nor conversely should it be required to have recourse exclusively to certain criteria (Ufex and Others v Commission, paragraphs 79 and 80). 121 The action brought by Mr Piau must therefore be dismissed.

On those grounds,


hereby:

Dismisses the application.


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24. Case C-246/04,

REFERENCE for a preliminary ruling under Article 234 EC from the

Verwaltungsgerichtshof (Austria), made by decision of 26 May 2004, received at the

Court on 10 June 2004, in the proceedings

Turn- und Sportunion Waldburg

v

Finanzlandesdirektion für Oberösterreich,


gives the following

Judgment

1 This reference for a preliminary ruling concerns the interpretation of the provisions of Article 13(B)(b) and (C) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1, ‘the Sixth Directive’). 2 The reference was made in the course of proceedings between Turn- und Sportunion Waldburg and the Finanzlandesdirektion für Oberösterreich with regard to whether it is possible for non-profit-making sports clubs leasing or letting immovable property to exercise the option for taxation granted to taxable persons by the national legislature pursuant to Article 13(C)(a) of the Sixth Directive. Legal context Community legislation 3 Article 13(A)(1) of the Sixth Directive provides: ‘Without prejudice to other Community provisions, Member States shall exempt the following under conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of such exemptions and of preventing any possible evasion, avoidance or abuse: ... (m) certain services closely linked to sport or physical education supplied by non-profit-making organisations to persons taking part in sport or physical education; …’ 4 Under Article 13(B)(b) of the Sixth Directive, the leasing and letting of immovable property are exempt, with the exception of certain transactions which are not relevant to the present case. 5 Article 13(C) of that directive provides: ‘Member States may allow taxpayers a right of option for taxation in cases of: (a) letting and leasing of immovable property; …


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Member States may restrict the scope of this right of option and shall fix the details of its use.’ National legislation 6 Pursuant to Paragraph 6(1)(14) of the 1994 Law on turnover tax (Umsatzsteuergesetz, ‘the UStG 1994’), transactions of non-profit-making associations whose purpose under their statutes is the practice or furthering of physical sporting activities are exempt from value added tax (VAT) and input tax may not be deducted. That exemption does not apply to services supplied as part of an agricultural or forestry undertaking, an artisanal, business or commercial activity within the meaning of Paragraph 45(3) of the Federal Tax Code (Bundesabgabenordnung). 7 Paragraph 6(1)(16) of the UStG 1994 exempts the leasing and letting of immovable property from tax. Making commercial and other premises available is to be regarded as leasing or letting of immovable property. 8 According to Paragraph 6(2) of the UStG 1994, a business may treat a transaction which is exempt under Paragraph 6(1)(16) of the UStG 1994 as subject to VAT. 9 Under Paragraph 6(1)(27) of the UStG 1994, the transactions of small businesses are exempt from tax. Under Paragraph 6(3) of the UStG 1994, a business whose transactions are exempt under Paragraph 6(1)(27) may inform the Finanzamt (Tax Office) in writing that it wishes to waive application of Paragraph 6(1)(27) of the UStG 1994. The main proceedings and the questions referred for a preliminary ruling 10 The claimant in the main proceedings is a sports club classed as a non-profit-making association. In 1997 it commenced construction of an annexe to its clubhouse, part of which was intended to be used for the practice of sport, whilst the other part, having a surface area equal to approximately a quarter of the total area of the annexe, was to be used as a refreshment bar and leased to a lessee. In the 1997 VAT declaration, the club deducted a total amount of ATS 39 285 in respect of the input VAT paid exclusively for that part of the annexe intended to be used for the bar. It opted to waive application of Paragraph 6(1)(27) of the UStG 1994 relating to small businesses. 11 By decision of 27 August 1999, the Finanzamt refused those deductions on the ground that a sports club exempt from tax under Paragraph 6(1)(14) of the UStG 1994 without having the right to make deductions could not, making use of the right of option, choose to waive exemption in respect of turnover resulting from the leasing and letting of immovable property. The individual exemption available to non-profit-making sports club under Paragraph 6(1)(14) of the UStG 1994 took precedence over the exemption of leasing and letting of immovable property under Paragraph 6(1)(16) of the UStG 1994. 12 The complaint brought against that decision was dismissed as unfounded on the ground that Paragraph 6(1)(14) of the UStG 1994, being a special law, prevails over point 16 of that paragraph. The tax authorities considered that the legal situation in question was not altered at all by the sports club’s waiver of the rules relating to small businesses. 13 The claimant brought an action against that decision before the Verwaltungsgerichtshof (Higher Administrative Court). In its decision making the reference, that court took the view that the tax exemption of services supplied to persons not taking part in sport or physical education, such as the leasing or letting of a


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refreshment bar, is not covered by Article 13(A)(1)(m) of the Sixth Directive and cannot therefore be based on that provision. It was in doubt, however, whether the exemption of leasing or letting carried out by non-profit-making sports clubs could be based on Article 13(B)(b) of that directive. 14 Having held that, according to the UStG 1994, sports clubs cannot opt for taxation of their leasing and letting transactions, the national court was also in doubt with regard to the interpretation of Article 13(C) of the Sixth Directive and to the possibility of excluding certain taxable persons from the possibility offered to other taxable persons to opt for taxation. 15 In those circumstances, the Verwaltungsgerichtshof decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling: ‘(1) May a Member State exercise its option under Article 13(C) of the Sixth … Directive … to give taxable persons the right, despite the tax exemption for the letting of immovable property provided for in Article 13(B)(b) of the directive, to opt for taxation only in a uniform manner or may the Member State distinguish by reference to types of transactions or groups of taxable persons? (2) Does Article 13(B)(b) in conjunction with (C)(a) of the [Sixth] Directive permit Member States’ legislation, such as Paragraph 6(1)(14) of the UStG 1994 in conjunction with Paragraph 6(1)(16) of the UStG 1994, under which the possibility of opting for taxation of leasing and letting transactions is limited in such a way that non-profit-making sports clubs do not have that option?’ 16 The decision making the reference also related to a case between Edith Barris and the Finanzlandesdirektion für Tirol and, in that context, the Verwaltungsgerichtshof referred a third question for a preliminary ruling. However, by order of 16 March 2005, received by the Court on 21 March 2005, it withdrew that third question. The questions Preliminary observations 17 The Austrian Government takes the view that the leasing of the immovable property in question constitutes an act of administration of assets within the meaning of Paragraph 32 of the Federal Tax Code which is indisputably covered by the exemption relating to sports clubs laid down by Paragraph 6(1)(14) of the UStG 1994. It considers that the questions, in this case, must be reformulated in order to assess whether Paragraph 6(1)(14) of the UStG 1994 correctly transposes Article 13(A)(1)(m) of the Sixth Directive into Austrian law. 18 In its view, the question therefore arises whether acts of administration of immovable property, also exempt under Austrian law, carried out by a non-profit-making sports club, are closely linked to the supply of services by that club to persons who practise sport or physical education. 19 According to the Austrian Government, either that link exists, in other words the leasing of property with a view to the operation of a refreshment bar in a clubhouse for sporting activities may be considered as linked to the services supplied by a sports club, or those services are in principle ancillary and therefore negligible. 20 In that regard, it is sufficient to point out that it is not for the Court, in the context of a reference for a preliminary ruling, to assess whether questions referred to it by a national court are relevant or to rule on the interpretation of national laws or regulations and to decide whether the referring court’s interpretation of them is correct (see, to that effect, Case 52/77 Cayrol [1977] ECR 2261, paragraph 32; Case C-347/89 Eurim-


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Pharm [1991] ECR I-1747, paragraph 16; and Case C-58/98 Corsten [2000] ECR I-7919, paragraph 24). 21 The Court must take account, under the division of jurisdiction between the Community judicature and the national courts, of the factual and legislative context, as described in the order for reference, in which the questions put to it are set (see Case C-153/02 Neri [2003] ECR I-13555, paragraphs 34 and 35, and Joined Cases C-482/01 and C-493/01 Orfanopoulos and Oliveri [2004] ECR I-5257, paragraph 42). 22 It is therefore appropriate to examine the questions referred for a preliminary ruling against the legislative framework as defined by the Verwaltungsgerichtshof in its order for reference. The first question 23 By the first question, the national court essentially asks the Court whether the Member States, when giving taxable persons the right to opt for taxation under Article 13(C) of the Sixth Directive, may make a distinction by reference to the types of transactions or the group of taxable persons. 24 The Commission submits that the Member States have a wide discretion under the provisions of Article 13(B)(b) and (C) of the Sixth Directive with regard to exemption or taxation of leasing or letting. It cites case-law according to which certain transactions and categories of taxable persons may be excluded from the right to opt for taxation in accordance with Article 13(C) of the directive. That is the case, inter alia, where a Member State has found that that right is being used to evade taxation. Nevertheless, in exercising their discretion, the Member States must uphold the aims and principles of the Sixth Directive, in particular the principle of neutrality of VAT and that of proportionality. 25 As an initial point, it should be noted that the exemptions referred to in Article 13 of the Sixth Directive constitute independent concepts of Community law whose purpose is to avoid divergences in the application of the VAT system as between one Member State and another (see, inter alia, Case C-349/96 CPP [1999] ECR I-973, paragraph 15, and Case C-269/00 Seeling [2003] ECR I-4101, paragraph 46). 26 According to established case-law, the taxation of leasing and letting transactions is a power which the Community legislature has conferred on the Member States in derogation from the general rule established in Article 13(B)(b) of the Sixth Directive, according to which leasing and letting transactions are exempt from VAT. The right to deduct attached to that taxation does not therefore operate automatically in that context, but only if the Member States have made use of the power under Article 13(C) of the Sixth Directive and subject to the taxable persons exercising the right of option allowed to them (see Case C-269/03 Vermietungsgesellschaft Objekt Kirchberg [2004] ECR I-8067, paragraph 20). 27 As the Court has previously held, it is clear from the wording of Article 13(C) of the Sixth Directive that Member States may, by virtue of this power, allow persons benefiting from the exemptions provided for by that directive to waive the exemption in all cases or within certain limits or subject to certain detailed rules (see Case 8/81 Becker [1982] ECR 53, paragraph 38). 28 Article 13(C) of the Sixth Directive thus allows the Member States to grant taxable persons the right to opt for taxation of lettings of immovable property, but also allows them to restrict the scope of that right or withdraw it (see Joined Cases C-487/01 and C-7/02 Gemeente Leusden and Holin Groep [2004] ECR I-5337, paragraph 66).


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29 It follows that the Member States have a wide discretion under Article 13(C) of the Sixth Directive. It is for them to assess whether they should or should not introduce the right of option, depending on what they consider to be expedient in the situation existing in their country at a given time (see Case C-381/97 Belgocodex [1998] ECR I-8153, paragraphs 16 and 17; Case C-12/98 Amengual Far [2000] ECR I-527, paragraph 13; and Case C-326/99 ‘Goed Wonen’ [2001] ECR I-6831, paragraph 45). 30 Thus, in exercising their discretion with regard to the right of option, the Member States may also exclude certain transactions or certain categories of taxable persons from the scope of application of that right. 31 Nevertheless, as the Commission correctly points out, when the Member States use their ability to restrict the scope of the right of option and to determine the arrangements for its exercise, they are to observe the general objectives and principles of the Sixth Directive, in particular the principle of fiscal neutrality and the requirement for correct, straightforward and uniform application of the exemptions provided for (see, to that effect, Case C-283/95 Fischer [1998] ECR I-3369, paragraph 27, and ‘Goed Wonen’, paragraph 56). 32 The principle of fiscal neutrality, which is laid down in Article 2 of First Council Directive 67/227/EEC of 11 April 1967 on the harmonisation of legislation of Member States concerning turnover taxes (OJ, English Special Edition 1967(I), p. 14) and which is inherent in the common system of VAT, as the fourth and fifth recitals in the preamble to the Sixth Directive state, requires that all economic activities should be treated in the same way (Case C-155/94 Wellcome Trust [1996] ECR I-3013, paragraph 38, and Belgocodex, paragraph 18). The same is true of economic operators carrying out the same activities (Case C-216/97 Gregg [1999] ECR I-4947, paragraph 20). 33 In that regard, the Court has held that the principle of fiscal neutrality precludes, in particular, treating similar supplies of services, which are thus in competition with each other, differently for VAT purposes (see, inter alia, Case C-267/99 Adam [2001] ECR I-7467, paragraph 36; Case C-109/02 Commission v Germany [2003] ECR I-12691, paragraph 20; and Case C-498/03 Kingscrest Associates and Montecello [2005] ECR I-4427, paragraph 41). 34 It is clear from that case-law that the identity of the providers of services and the legal form by means of which they exercise their activities are, as a rule, irrelevant in assessing whether supplies of services are comparable (see Joined Cases C-453/02 and C-462/02 Linneweber and Akritidis [2005] ECR I-1131, paragraphs 24 and 25). 35 The answer to the first question must therefore be that Member States, when giving their taxable persons the right to opt for taxation under Article 13(C) of the Sixth Directive, may make a distinction by reference to types of transactions or groups of taxable persons provided that they observe the general objectives and principles of the Sixth Directive, in particular the principle of fiscal neutrality and the requirement of correct, straightforward and uniform application of the exemptions provided for. The second question 36 By the second question, the national court essentially asks whether the provisions of Article 13(B)(b) and (C) of the Sixth Directive preclude national legislation which, by exempting generally the transactions of non-profit-making sports clubs, restricts their right to opt for taxation of leasing and letting transactions. 37 The Commission points out in that regard that Paragraph 6(1)(14) of the UStG 1994 relating to sports clubs, which sets out the derogation, is drafted in more general terms than the corresponding provision of the Sixth Directive, namely Article


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13(A)(1)(m). Consequently, the rule put in place by Austrian law on VAT lacks the requirements which are the precondition for an exemption under Article 13(A)(1)(m) of the Sixth Directive. Under the terms of that provision, the exemption must be for certain supplies of services closely linked to sport and with a link between the supplier of the services and the beneficiary. 38 Noting the obligation to interpret in a coherent manner parts A, B and C of Article 13 of the Sixth Directive, the Commission submits that it is perfectly possible for a sports club which does not fulfil the conditions laid down in Article 13(A)(1)(m) of that directive, having regard to the scheme of the directive, to opt for taxation of leasing or letting transactions. 39 As a preliminary point, it should be noted that the Sixth Directive does not contain a rule generally exempting all services linked to the practice of sport and physical education (see, to that effect, Case C-150/99 Stockholm Lindöpark [2001] ECR I-493, paragraph 22). 40 The transactions of non-profit-making sports clubs are exempt, as activities in the public interest, pursuant to Article 13(A)(1)(m) of the Sixth Directive, provided that they are closely linked to the practice of sport or physical education and that the supplies are made to persons practising sport or physical education (see, to that effect, Case C-124/96 Commission v Spain [1998] ECR I-2501, paragraph 15; Stockholm Lindöpark, paragraph 19; and Case C-174/00 Kennemer Golf [2002] ECR I-3293, paragraph 19). 41 In the context of the present reference, the national court takes the view that the leasing of immovable property with a view to its use as a refreshment bar constitutes neither a supply closely linked to the practice of sport nor a service supplied to persons practising sport or physical education. On that view, exemption of the leasing of a refreshment bar cannot be based on Article 13(A)(1)(m) of the Sixth Directive but may, in principle, be based on Article 13(B)(b) of that directive. 42 With regard to the question whether the Member States may exclude non-profit-making sports clubs from the right of option by way of a general exemption of all their transactions, it must be noted that Article 13(C) of the Sixth Directive does not specify on what conditions and by what means the scope of this right of option may be restricted. It is therefore for each Member State to specify, in its national law, the scope of this right of option and to lay down the rules pursuant to which certain taxable persons may benefit from the right to opt for taxation of the leasing and letting of immovable property. 43 Nevertheless, as the Court has already held, Article 13(C) of the Sixth Directive does not confer upon the Member States the right to place conditions on or to restrict in any manner whatsoever the exemptions provided for by part B of that article. It merely reserves the right to the Member States to allow, to a greater or lesser degree, persons entitled to those exemptions to opt for taxation themselves, if they consider that it is in their interest to do so (see Becker, paragraph 39). 44 In accordance with Article 13(B) of the Sixth Directive, the Member States exempt the leasing or letting of immovable property under conditions which they lay down for the purpose of ensuring the correct and straightforward application of the exemptions and of preventing any possible evasion, avoidance or abuse. The decision of a Member State, pursuant to Article 13(C) of that directive, to restrict the scope of the right to opt for taxation of leasing of immovable property may be justified, inter alia, by the same aims. 45 Such a decision must, however, observe the principle of neutrality reiterated in paragraphs 32 to 34 above.


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46 It is for the national court to determine, having regard to the specific circumstances of the case in the main proceedings and to the case-law cited above, whether or not the application of a general exemption to all transactions, including the leasing of immovable property, effected by non-profit-making sports clubs entails a breach of the principle of fiscal neutrality. 47 Thus, there may be a breach of the principle of fiscal neutrality if a sports club having as its purpose under its statute the exercise or furthering of physical education could not opt for taxation where that is possible for other taxable persons carrying out comparable activities which are therefore in competition with those of that club. 48 In order to determine whether the limits of that discretion were exceeded in the main proceedings, the national court must also check whether there was a breach of the requirement for a correct, straightforward and uniform application of the exemptions provided for. To that end, it must take account, in particular, of the fact that the exemption system instituted by the Sixth Directive provides for differentiated treatment of the transactions of non-profit-making associations only to the extent that they are connected to the practice of sport and the services are supplied to persons practising sport. In such a case, those transactions are exempt from VAT for reasons of the public interest. 49 The answer to the second question must therefore be that it is for the national court to determine whether national legislation which, by exempting generally the transactions of non-profit-making sports clubs, restricts their right to opt for taxation of leasing and letting transactions exceeds the discretion conferred on the Member States, having regard in particular to the principle of fiscal neutrality and the requirement of correct, straightforward and uniform application of the exemptions provided for.

On those grounds,

the Court (Third Chamber)

hereby rules:

1. Member States, when giving their taxable persons the right to opt for taxation under Article 13(C) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment, may make a distinction by reference to types of transactions or groups of taxable persons provided that they observe the general objectives and principles of the Sixth Directive, in particular the principle of fiscal neutrality and the requirement of correct, straightforward and uniform application of the exemptions provided for. 2. It is for the national court to determine whether national legislation which, by exempting generally the transactions of non-profit-making sports clubs, restricts their right to opt for taxation of leasing and letting transactions exceeds the discretion conferred on the Member States, having regard in particular to the principle of fiscal neutrality and the requirement of correct, straightforward and uniform application of the exemptions provided for.


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25. Case C-265/03,

REFERENCE under Article 234 EC for a preliminary ruling, made by the Audiencia

Nacional (Spain), by decision of 9 May 2003, received at the Court on 17 June 2003, in

the proceedings

Igor Simutenkov

v

Ministerio de Educación y Cultura,

Real Federación Española de Fútbol,


gives the following

Judgment

1 The reference for a preliminary ruling concerns the interpretation of Article 23(1) of the Agreement on partnership and cooperation establishing a partnership between the European Communities and their Member States, of one part, and the Russian Federation, of the other part, signed in Corfu on 24 June 1994 and approved on behalf of the Communities by Decision 97/800/ECSC, EC, Euratom: Council and Commission Decision of 30 October 1997 (OJ 1997 L 327, p. 1) (‘the Communities-Russia Partnership Agreement’). 2 That reference has been submitted in the context of a dispute between Mr Simutenkov, on the one hand, and the Ministerio de Educación y Cultura (Ministry of Education and Culture) and the Real Federación Española de Fútbol (Royal Spanish Football Federation) (‘the RFEF’), on the other, concerning sporting rules which limit the number of players from non-member countries who may be fielded in national competitions. The legal framework 3 The Communities-Russia Partnership Agreement entered into force on 1 December 1997. Article 23(1), which features in Title IV of that agreement (‘Provisions on business and investment’), under Chapter I, which is itself entitled ‘Labour conditions’, provides as follows: ‘Subject to the laws, conditions and procedures applicable in each Member State, the Community and its Member States shall ensure that the treatment accorded to Russian nationals legally employed in the territory of a Member State shall be free from any discrimination based on nationality, as regards working conditions, remuneration or dismissal, as compared to its own nationals.’ 4 Article 27 of the Communities-Russia Partnership Agreement is worded as follows: ‘The Cooperation Council shall make recommendations for the implementation of Articles 23 and 26 of this Agreement.’ 5 Article 48 of the Communities-Russia Partnership Agreement, which also features in Title IV, provides:


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‘For the purpose of this Title, nothing in the Agreement shall prevent the Parties from applying their laws and regulations regarding entry and stay, work, labour conditions and establishment of natural persons and supply of services, provided that, in so doing, they do not apply them in a manner as to nullify or impair the benefits accruing to any Party under the terms of a specific provision of the Agreement. …’ The dispute in the main proceedings and the question referred for preliminary ruling 6 Mr Simutenkov is a Russian national who, at the time of the facts in the dispute in the main proceedings, was living in Spain, where he had a residence permit and a work permit. Employed as a professional football player under an employment contract entered into with Club Deportivo Tenerife, he held a federation licence as a non-Community player. 7 In January 2001, Mr Simutenkov submitted, through that club, an application to the RFEF for it to replace the federation licence which he held with a licence that was identical to that held by Community players. In support of that application, he relied on the Communities-Russia Partnership Agreement. 8 By decision of 19 January 2001, the RFEF turned down that application on the basis of its General Regulations and the agreement which it had concluded on 28 May 1999 with the national professional football league (‘the agreement of 28 May 1999’). 9 Under Article 129 of the General Regulations of the RFEF, a professional football player’s licence is a document issued by the RFEF which entitles a player to practise that sport as a member of that federation and to be fielded in matches and official competitions as a player belonging to a specific club. 10 Article 173 of the General Regulations provides: ‘Without prejudice to the exceptions laid down herein, in order to register as a professional and obtain a professional licence, a footballer must meet the general requirement of holding Spanish nationality or the nationality of one of the countries of the European Union or the European Economic Area.’ 11 Article 176(1) of the General Regulations provides: ‘1. Clubs entered for official professional competitions at national level shall be entitled to register foreign non-Community players in the number stipulated in the relevant agreements concluded between the RFEF, the Liga Nacional de Fútbol Profesional (National Professional Football League) and the Asociación de Futbolistas Españoles (Association of Spanish Footballers). Those agreements also govern the number of such footballers who may take part simultaneously in a game …’ 12 Under the agreement of 28 March 1999, the number of players not having the nationality of a Member State who were allowed to participate at any time in the Spanish First Division was limited to three for the 2000/01 to 2004/05 seasons and, in the case of the Second Division, to three for the 2000/01 and 2001/02 seasons and to two for the following three seasons. 13 As he took the view that the distinction which those Regulations draw between nationals of a Member State of the European Union or of the European Economic Area (‘the EEA’), on the one hand, and nationals of non-member countries, on the other, is incompatible, so far as Russian players are concerned, with Article 23(1) of the Communities-Russia Partnership Agreement and limits the exercise of his profession, Mr Simutenkov brought an action before the Juzgado Central de lo Contencioso Administrativo (Central Court for Contentious Administrative Proceedings) against the decision of 19 January 2001 turning down his application for a new licence.


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14 Following the dismissal of that application by a judgment of 22 October 2002, Mr Simutenkov appealed to the Audiencia Nacional (National High Court), which decided to stay the proceedings and to refer the following question to the Court for a preliminary ruling: ‘Is it contrary to Article 23 of the [Communities-Russia Partnership Agreement] … for a sports federation to apply to a professional sportsman of Russian nationality who is lawfully employed by a Spanish football club, as in the main proceedings, a rule which provides that clubs may use in competitions at national level only a limited number of players from countries outside the European Economic Area?’ The question referred for preliminary ruling 15 By its question the national court asks whether Article 23(1) of the Communities-Russia Partnership Agreement is to be construed as precluding the application to a professional sportsman of Russian nationality, who is lawfully employed by a club established in a Member State, of a rule drawn up by a sports federation of that State which provides that clubs may field in competitions at national level only a limited number of players from countries which are not parties to the EEA Agreement. 16 Mr Simutenkov and the Commission of the European Communities take the view that Article 23(1) of the Communities-Russia Partnership Agreement precludes a rule such as that laid down by the agreement of 28 May 1999. 17 The RFEF, by contrast, invokes in support of its position the words ‘[s]ubject to the laws, conditions and procedures applicable in each Member State’, which feature at the beginning of Article 23(1). It infers from this proviso that the competence which legislation confers on it to issue licences to football players and the sports regulations which it has adopted must be applied in a manner which takes priority over the principle of non-discrimination laid down in that provision. It also submits that the issue of a licence and the rules relating thereto form part of the organisation of competitions and do not concern working conditions. 18 The Spanish Government adopts the views expressed by the RFEF and submits in particular that, under the national rules and the case-law which interprets them, a federation licence is not a working condition but rather an administrative permit which serves as an authorisation to take part in sporting competitions. 19 In order to provide a useful reply to the question posed, it is necessary, first of all, to examine whether Article 23(1) of the Communities-Russia Partnership Agreement can be relied on by an individual before the courts of a Member State and, second, if the answer is affirmative, to determine the scope of the principle of non-discrimination which that provision lays down. The direct effect of Article 23(1) of the Communities-Russia Partnership Agreement 20 It must be pointed out that, as this question concerning the effect of the provisions of the Communities-Russia Partnership Agreement within the legal systems of the parties to that Agreement (‘the parties’) has not been resolved therein, it is for the Court to resolve that question in the same way as any other question of interpretation concerning the application of agreements within the Community (judgment in Case C-149/96 Portugal v Council [1999] ECR I-8395, paragraph 34). 21 In this regard, according to well-established case-law, a provision in an agreement concluded by the Communities with a non-member country must be regarded as being directly applicable when, regard being had to its wording and to the purpose and nature of the agreement, the provision contains a clear and precise obligation which is not


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subject, in its implementation or effects, to the adoption of any subsequent measure (judgments in Case C-63/99 Gloszczuk [2001] ECR I-6369, paragraph 30, and in Case C-171/01 Wählergruppe Gemeinsam [2003] ECR I-4301, paragraph 54). 22 It follows from the wording of Article 23(1) of the Communities-Russia Partnership Agreement that that provision lays down, in clear, precise and unconditional terms, a prohibition precluding any Member State from discriminating, on grounds of nationality, against Russian workers, vis-à-vis their own nationals, so far as their conditions of employment, remuneration and dismissal are concerned. Workers who are entitled to the benefit of that provision are those who hold Russian nationality and who are lawfully employed in the territory of a Member State. 23 Such a rule of equal treatment lays down a precise obligation as to results and, by its nature, can be relied on by an individual before a national court as a basis for requesting that court to disapply discriminatory provisions without any further implementing measures being required to that end (judgments in Case C-162/00 Pokrzeptowicz-Meyer [2002] ECR I-1049, paragraph 22, and in Wählergruppe Gemeinsam, cited above, paragraph 58). 24 That interpretation cannot be brought into question by the words ‘[s]ubject to the laws, conditions and procedures applicable in each Member State’, which feature at the beginning of Article 23(1) of the Communities-Russia Partnership Agreement, or by Article 48 of that Agreement. Those provisions cannot be construed as allowing the Member States to subject application of the principle of non-discrimination set out in Article 23(1) of that agreement to discretionary limitations, which would have the effect of rendering that provision meaningless and thus depriving it of any practical effect (Pokrzeptowicz-Meyer, cited above, paragraphs 23 and 24, and Case C-438/00 Deutscher Handballbund [2003] ECR I-4135, paragraph 29). 25 Nor does Article 27 of the Communities-Russia Partnership Agreement preclude Article 23(1) thereof from having direct effect. The fact that Article 27 provides that Article 23 is to be implemented on the basis of recommendations by the Cooperation Council does not make the applicability of Article 23, in its implementation or effects, subject to the adoption of any subsequent measure. The role which Article 27 confers on that council is to facilitate compliance with the prohibition of discrimination but cannot be regarded as limiting the immediate application of that prohibition (see, in that regard, Case C-18/90 Kziber [1991] ECR I-199, paragraph 19, and Case C-262/96 Sürül [1999] ECR I-2685, paragraph 66). 26 The finding that the principle of non-discrimination set out in Article 23(1) of the Communities-Russia Partnership Agreement is directly effective is not, moreover, gainsaid by its purpose and nature. 27 Article 1 states that the purpose of the Agreement is to establish a partnership between the parties with a view to promoting, inter alia, the development between them of close political relations, trade and harmonious economic relations, political and economic freedoms, and the achievement of gradual integration between the Russian Federation and a wider area of cooperation in Europe. 28 The fact that the Agreement is thus limited to establishing a partnership between the parties, without providing for an association or future accession of the Russian Federation to the Communities, is not such as to prevent certain of its provisions from having direct effect. It is clear from the Court’s case-law that when an agreement establishes cooperation between the parties, some of the provisions of that agreement may, under the conditions set out in paragraph 21 of the present judgment, directly govern the legal position of individuals (Kziber, cited above, paragraph 21, Case C-


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113/97 Babahenini [1998] ECR I-183, paragraph 17, and Case C-162/96 Racke [1998] ECR I-3655, paragraphs 34 to 36). 29 In the light of all of the foregoing, it must be held that Article 23(1) of the Communities-Russia Partnership Agreement has direct effect, with the result that individuals to whom that provision applies are entitled to rely on it before the courts of the Member States. The scope of the principle of non-discrimination set out in Article 23(1) of the Communities-Russia Partnership Agreement 30 The question which has been referred by the national court is similar to that referred to the Court in the case which led to the above judgment in Deutscher Handballbund. In that judgment the Court ruled that the first indent of Article 38(1) of the Europe Agreement establishing an association between the European Communities and their Member States, of the one part, and the Slovak Republic, of the other part, signed in Luxembourg on 4 October 1993 and approved on behalf of the Communities by Decision 94/909/ECSC, EEC, Euratom of the Council and the Commission of 19 December 1994 (OJ 1994 L 359, p. 1) (‘the Communities-Slovakia Association Agreement’) had to be construed as precluding the application to a professional sportsman of Slovak nationality, who was lawfully employed by a club established in a Member State, of a rule drawn up by a sports federation in that State under which clubs were authorised to field, during league or cup matches, only a limited number of players from non-member countries that are not parties to the EEA Agreement. 31 The first indent of Article 38(1) of the Communities-Slovakia Association Agreement was worded as follows: ‘Subject to the conditions and modalities applicable in each Member State: – treatment accorded to workers of Slovak Republic nationality legally employed in the territory of a Member State shall be free from any discrimination based on nationality, as regards working conditions, remuneration or dismissal, as compared to its own nationals’. 32 The Court ruled, inter alia, that a rule which limits the number of professional players, nationals of the non-member country in question, who might be fielded in national competitions did relate to working conditions within the meaning of the first indent of Article 38(1) of the Communities-Slovakia Association Agreement inasmuch as it directly affected participation in league and cup matches of a Slovak professional player who was already lawfully employed in the host Member State (Deutscher Handballbund, cited above, paragraphs 44 to 46). 33 The Court also ruled that the interpretation of Article 48(2) of the EC Treaty (now, after amendment, Article 39(2) EC) which it handed down in its judgment in Case C-415/93 Bosman [1995] ECR I-4921 to the effect that the prohibition of discrimination on grounds of nationality applies to rules laid down by sporting associations which determine the conditions under which professional sportsmen can engage in gainful employment and precludes a limitation, based on nationality, on the number of players who may be fielded at the same time, could be transposed to the first indent of Article 38(1) of the Communities-Slovakia Association Agreement (Deutscher Handballbund, paragraphs 31 to 37 and 48 to 51). 34 The wording of Article 23(1) of the Communities-Russia Partnership Agreement is very similar to that of the first indent of Article 38(1) of the Communities-Slovakia Association Agreement. The only significant difference between the respective wording of those two provisions is in the use of the terms ‘the Community and its Member


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States shall ensure that the treatment accorded to Russian nationals … shall be free from any discrimination based on nationality’ and ‘treatment accorded to workers of Slovak Republic nationality … shall be free from any discrimination based on nationality’. In view of the finding in paragraphs 22 and 23 of this judgment that the wording of Article 23(1) of the Communities-Russia Partnership Agreement lays down, in clear, precise and unconditional terms, a prohibition of discrimination on grounds of nationality, the difference in drafting highlighted above is not a bar to the transposition, to Article 23(1) of the Communities-Russia Partnership Agreement, of the interpretation upheld by the Court in Deutscher Handballbund. 35 Admittedly, unlike the Communities-Slovakia Association Agreement, the Communities-Russia Partnership Agreement is not intended to establish an association with a view to the gradual integration of that non-member country into the European Communities but is designed rather to bring about ‘the gradual integration between Russia and a wider area of cooperation in Europe’. 36 However, it does not in any way follow from the context or purpose of that Partnership Agreement that it intended to give to the prohibition of ‘discrimination based on nationality, as regards working conditions … as compared to [the Member State’s] own nationals’ any meaning other than that which follows from the ordinary sense of those words. Consequently, in a manner similar to the first indent of Article 38(1) of the Communities-Slovakia Association Agreement, Article 23(1) of the Communities-Russia Partnership Agreement establishes, for the benefit of Russian workers lawfully employed in the territory of a Member State, a right to equal treatment in working conditions of the same scope as that which, in similar terms, nationals of Member States are recognised as having under the EC Treaty, which precludes any limitation based on nationality, such as that in issue in the main proceedings, as the Court established in similar circumstances in the above judgments in Bosman and Deutscher Handballbund. 37 Furthermore, in the judgments in Bosman and Deutscher Handballbund, the Court held that a rule such as that in issue in the main proceedings related to working conditions (Deutscher Handballbund, paragraphs 44 to 46). The fact that Article 23(1) of the Communities-Russia Partnership Agreement applies only in regard to working conditions, remuneration or dismissal, and thus does not extend to rules concerning access to employment, is accordingly irrelevant. 38 In addition, the limitation based on nationality does not relate to specific matches between teams representing their respective countries but applies to official matches between clubs and thus to the essence of the activity performed by professional players. As the Court has also ruled, such a limitation cannot be justified on sporting grounds (Bosman, paragraphs 128 to 137; Deutscher Handballbund, paragraphs 54 to 56). 39 Moreover, no other argument has been put forward in the observations submitted to the Court that is capable of providing objective justification for the difference in treatment between, on the one hand, professional players who are nationals of a Member State or of a State which is a party to the EEA Agreement and, on the other, professional players who are Russian nationals. 40 Finally, as has been stated in paragraph 24 of the present judgment, the words ‘[s]ubject to the laws, conditions and procedures applicable in each Member State’, which feature at the beginning of Article 23(1) of the Communities-Russia Partnership Agreement, and Article 48 of that Agreement cannot be construed as allowing Member States to subject the application of the principle of non-discrimination set out in the former of those two provisions to discretionary limitations, inasmuch as such an


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interpretation would have the effect of rendering that provision meaningless and thus depriving it of any practical effect. 41 In the light of the foregoing, the answer to the question referred must be that Article 23(1) of the Communities-Russia Partnership Agreement is to be construed as precluding the application to a professional sportsman of Russian nationality, who is lawfully employed by a club established in a Member State, of a rule drawn up by a sports federation of that State which provides that clubs may field in competitions organised at national level only a limited number of players from countries which are not parties to the EEA Agreement.

On those grounds,


rules:

Article 23(1) of the Agreement on partnership and cooperation establishing a partnership between the European Communities and their Member States, of one part, and the Russian Federation, of the other part, signed in Corfu on 24 June 1994 and approved on behalf of the Communities by Decision 97/800/ECSC, EC, Euratom: Council and Commission Decision of 30 October 1997, must be construed as precluding the application to a professional sportsman of Russian nationality, who is lawfully employed by a club established in a Member State, of a rule drawn up by a sports federation of that State which provides that clubs may field in competitions organised at national level only a limited number of players from countries which are not parties to the Agreement on the European Economic Area.


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26. Case T-33/01,

Infront WM AG,

formerly KirchMedia WM AG, established in Zug (Switzerland),

applicant,

v


defendant,

supported by

French Republic,

United Kingdom of Great Britain and Northern Ireland,

European Parliament,

Council of the European Union,

interveners,

APPLICATION for annulment of the alleged decision of the Commission adopted

under Article 3a of Council Directive 89/552/EEC of 3 October 1989 on the

coordination of certain provisions laid down by law, regulation or administrative action

in Member States concerning the pursuit of television broadcasting activities (OJ 1989

L 298, p. 23), as amended by Directive 97/36/EC of the European Parliament and of the

Council of 30 June 1997 (OJ 1997 L 202, p. 60),


(Fourth Chamber, Extended Composition),


Legal context 1 Council Directive 89/552/EEC of 3 October 1989 on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities (OJ 1989 L 298, p. 23) was adopted on the basis of Article 57(2) of the EEC Treaty (now, after amendment, Article 47(2) EC) and Article 66 of the EEC Treaty (now Article 55 EC). That directive was amended by Directive 97/36/EC of the European Parliament and of the Council of 30 June 1997 (OJ 1997 L 202, p. 60). 2 Directive 89/552 as amended provides the legal framework for television broadcasting in the common market. Its primary objective is to facilitate the free movement of television broadcasts within the European Community by laying down minimum rules with which the Member States are required to ensure that television broadcasters under their jurisdiction comply. 3 Recitals 18 to 21 in the preamble to Directive 97/36 read as follows:


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‘(18) … it is essential that Member States should be able to take measures to protect the right to information and to ensure wide access by the public to television coverage of national or non-national events of major importance for society, such as the Olympic games, the football World Cup and the European football championship; … to this end Member States retain the right to take measures compatible with Community law aimed at regulating the exercise by broadcasters under their jurisdiction of exclusive broadcasting rights to such events; (19) … it is necessary to make arrangements within a Community framework, in order to avoid potential legal uncertainty and market distortions and to reconcile free circulation of television services with the need to prevent the possibility of circumvention of national measures protecting a legitimate general interest; (20) ... in particular, it is appropriate to lay down in this Directive provisions concerning the exercise by broadcasters of exclusive broadcasting rights that they may have purchased to events considered to be of major importance for society in a Member State other than that having jurisdiction over the broadcasters, and ... in order to avoid speculative rights purchased with a view to circumvention of national measures, it is necessary to apply these provisions to contracts entered into after the publication of this Directive and concerning events which take place after the date of implementation, and ... when contracts that predate the publication of this Directive are renewed, they are considered to be new contracts; (21) ... events of major importance for society should, for the purposes of this Directive, meet certain criteria, that is to say be outstanding events which are of interest to the general public in the European Union or in a given Member State or in an important component part of a given Member State and are organised in advance by an event organiser who is legally entitled to sell the rights pertaining to that event’. 4 Article 1 of Directive 89/552 as amended (‘the directive’) provides: ‘(a) “television broadcasting” means the initial transmission by wire or over the air, including that by satellite, in unencoded or encoded form, of television programmes intended for reception by the public. It includes the communication of programmes between undertakings with a view to their being relayed to the public. It does not include communication services providing items of information or other messages on individual demand such as telecopying, electronic data banks and other similar services; (b) “broadcaster” means the natural or legal person who has editorial responsibility for the composition of schedules of television programmes within the meaning of (a) and who transmits them or has them transmitted by third parties.’ 5 Article 3a of the directive provides: ‘1. Each Member State may take measures in accordance with Community law to ensure that broadcasters under its jurisdiction do not broadcast on an exclusive basis events which are regarded by that Member State as being of major importance for society in such a way as to deprive a substantial proportion of the public in that Member State of the possibility of following such events via live coverage or deferred coverage on free television. If it does so, the Member State concerned shall draw up a list of designated events, national or non-national, which it considers to be of major importance for society. It shall do so in a clear and transparent manner in due and effective time. In so doing the Member State concerned shall also determine whether these events should be available via whole or partial live coverage, or where necessary or appropriate for objective reasons in the public interest, whole or partial deferred coverage. 2. Member States shall immediately notify to the Commission any measures taken or to be taken pursuant to paragraph 1. Within a period of three months from the


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notification, the Commission shall verify that such measures are compatible with Community law and communicate them to the other Member States. It shall seek the opinion of the Committee established pursuant to Article 23a. It shall forthwith publish the measures taken in the [Official Journal] and at least once a year the consolidated list of the measures taken by Member States. 3. Member States shall ensure, by appropriate means, within the framework of their legislation that broadcasters under their jurisdiction do not exercise the exclusive rights purchased by those broadcasters following the date of publication of this Directive in such a way that a substantial proportion of the public in another Member State is deprived of the possibility of following events which are designated by that other Member State in accordance with the preceding paragraphs via whole or partial live coverage or, where necessary or appropriate for objective reasons in the public interest, whole or partial deferred coverage on free television as determined by that other Member State in accordance with paragraph 1.’ 6 Under Article 23a(1) of the directive: ‘A contact committee shall be set up under the aegis of the Commission. It shall be composed of representatives of the competent authorities of the Member States. It shall be chaired by a representative of the Commission and meet either on his initiative or at the request of the delegation of a Member State.’ Facts 7 Kirch Media GmbH & Co. KGaA, formerly known as TaurusFilm GmbH & Co., and KirchMedia WM AG, now Infront WM AG, are involved in the acquisition, management and marketing of television broadcasting rights for sporting events and typically purchase such rights from the organiser of the sporting event concerned. They sell the rights acquired in this way to broadcasters. 8 On 10 September 1996, TaurusFilm GmbH & Co. and its co-licensee Sporis Holding AG signed a contract with the Fédération internationale de football association (‘FIFA’) for the worldwide (excluding the USA) exclusive broadcasting rights to the final-stage matches (‘the finals’) of the 2002 and 2006 FIFA World Cup. By an agreement between FIFA and TaurusFilm GmbH & Co. entered into on 26 May 1998 which replaced the preceding contract, the latter acquired the exclusive broadcasting rights to those matches in the countries of Europe including Russia, the former soviet socialist republics and Turkey for a minimum sum of CHF 1.4 billion. 9 On 14 October 1998, Kirch Media GmbH & Co. KGaA assigned its rights to broadcast the 2002 FIFA World Cup (excluding the rights to broadcast in Germany) to its Swiss affiliate FWC Medien AG, now KirchMedia WM AG. The broadcasting rights for the 2006 FIFA World Cup were subsequently also assigned to KirchMedia WM AG. 10 As required by Article 3a(2) of the directive, the United Kingdom notified the Commission on 25 September 1998 of the measures taken pursuant to Article 3a(1). Those measures included the list of events of major importance for society designated by that Member State. 11 On 2 November 1998, the Commission communicated those measures to the other Member States as required by Article 3a(2) of the directive and it received the observations of the contact committee established pursuant to Article 23a(1) of that directive (‘the Contact Committee’) at a meeting on 20 November 1998. 12 By letter of 23 December 1998, the Commission informed the United Kingdom that there were doubts as to the scope of the measures notified which prevented it from assessing whether those measures were compatible with Community law.


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13 The United Kingdom notified a new version of those measures to the Commission by letter of 5 May 2000. 14 By letter of 14 July 2000, addressed to the Commission, the applicant submitted that the list drawn up by the United Kingdom could not be approved because it was incompatible with both Article 3a of the directive and other provisions of Community law. It alleged inter alia in that letter that the list in question was not drawn up pursuant to a clear and transparent procedure, that it included events which were not of major importance for United Kingdom society and that the national and Community consultation procedures were marred by serious deficiencies, and it criticised the retroactive nature of the relevant legislation. 15 By letter of 28 July 2000, the Director-General of the Directorate-General (DG) for Education and Culture sent a letter to the United Kingdom, in which he stated as follows: ‘By letter dated 5 May 2000, received by the European Commission on 11 May 2000, the UK Permanent Representation to the European Union notified [to] the Commission a set of national measures concerning the television coverage of events of national interest in the UK. These measures include: sections 97, 98, 101, 103, 104 and 105 of Part IV of the Broadcasting Act [1996]; [paragraphs 1, 3 and 9 of Regulation 3 in] the Schedule to the Television Broadcasting Regulations 2000; the relevant provisions of the [Independent Television Commission] Code on Sports and other Listed Events published pursuant to section 104 of the Broadcasting Act 1996; the criteria for determining sporting and other events of national interest announced by the Secretary of State [for Culture, Media and Sport] (25 November 1997) and the Secretary of State’s announcement to Parliament of the outcome of the review of sporting and other events of national interest made pursuant to section 97(3) of the Broadcasting Act 1996 (25 June 1998). As required under Article 3a(2) of [the directive], the Commission communicated the [notified] measures to the other Member States and sought the opinion of the [Contact Committee]. I have the honour to inform you that pursuant to the examination of the conformity of the measures taken with the directive and on the basis of the facts available in relation to the audiovisual landscape in the United Kingdom, the European Commission does not intend to object to the measures notified by your authorities. As required by Article 3a(2) of the directive, the Commission will proceed with the publication of the notified measures in the [Official Journal].’ 16 By letter of 7 November 2000, the applicant informed the Commission that it was aware of the Commission’s imminent approval of the list of events of major importance for society designated by the United Kingdom and complained in particular of the infringement of its property rights caused by the adoption by that State of those measures under Article 3a(1) of the directive. 17 Pursuant to Article 3a(2) of the directive, the Commission published on 18 November 2000 (OJ 2000 C 328, p. 2) the measures taken by the United Kingdom pursuant to Article 3a(1) of the directive and notified to the Commission in accordance with the procedure laid down in Article 3a(2). 18 Those measures include extracts from Part IV of the Broadcasting Act 1996 (‘the 1996 Act’), extracts from Regulation 3 annexed to the Television Broadcasting Regulations 2000 (‘the TBR 2000’), extracts from the Independent Television Commission Code on Sports and other Listed Events, as amended in January 2000 (‘the ITC Code’), to which are appended a list of the events of major importance for society designated by the United Kingdom and a list of services meeting the qualifying


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conditions set out in the TBR 2000, together with the written replies of the United Kingdom Secretary of State for Culture, Media and Sport to two parliamentary questions of 25 November 1997 and 25 June 1998 concerning the revision of the list of sporting events set out in Part IV of the 1996 Act. Included in that list are the FIFA World Cup finals. 19 On 7 December 2000, the applicant wrote to the Commission, stating inter alia as follows: ‘… I would appreciate if you could … confirm that the Commission has completed the verification process under Article 3a [of the directive] in connection with the list drawn up by the United Kingdom and [the 1996 Act], and … inform us of the outcome of this process, including any relevant Commission measures. In addition, we would appreciate having access to all relevant documentation.’ 20 The applicant repeated its request to the Commission by letter of 22 December 2000. 21 By letter of 22 January 2001, the Commission replied to the applicant as follows: ‘In legal terms, pursuant to Article 3a(2) of the directive, the publication of measures is the consequence of a (positive) verification procedure performed by the Commission. Your assumption is therefore correct that the verification procedure by the Commission has been completed and that the UK list has been accepted as compatible with the Directive.’ 22 The Commission annexed to that letter the opinion of the Contact Committee of 6 June 2000. Procedure 23 On 12 February 2001, Kirch Media GmbH & Co. KGaA and KirchMedia WM AG brought the present action. 24 By letter of 5 April 2001, the Council sought leave to intervene in support of the forms of order sought by the Commission. 25 By separate document lodged at the Registry of the Court on 11 June 2001, the Commission brought an application for a decision on admissibility under Article 114 of the Rules of Procedure of the Court. On 26 July 2001, the applicants lodged their observations on that plea of inadmissibility, to which they attached, as Annex 6, excised versions of the agreements entered into with FIFA relating to the assignment of broadcasting rights to the 2002 and 2006 FIFA World Cup finals (see paragraph 8 above). 26 By letters of 14 and 20 June 2001 respectively, the United Kingdom and the Kingdom of Denmark sought leave to intervene in support of the forms of order sought by the Commission. By letters of 25 June 2001, the French Republic, the Communauté française de Belgique (the French Community of Belgium) and the Parliament also sought leave to intervene in support of the forms of order sought by the Commission. 27 By letter of 2 August 2001, the applicants submitted a request for confidential treatment in respect of the applicants for leave to intervene, in the event of the applications for leave to intervene being granted, of certain parts of Annex 6 to their observations on the plea of inadmissibility. 28 In their observations lodged at the Registry of the Court on 31 August 2001, the applicants requested the Court to reject the application by the Communauté française de Belgique for leave to intervene and to order it to pay the costs arising out of its application. The main parties did not object to the other applications for leave to intervene.


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29 By letter of 7 November 2001, the Commission sought leave to submit observations on the fact that, in Annex 6 to their observations on the plea of inadmissibility, the applicants had supplied excised versions of the agreements entered into with FIFA and, by letter of 12 April 2002, the Commission requested production of complete copies of those agreements. By letter of 4 July 2002, the Court requested the applicants to submit observations on the disclosure to the Commission of complete copies of the licence agreements entered into with FIFA. 30 By order of the Court of 11 March 2002, the decision on the application for a decision on admissibility made by the Commission was joined to the substance of the case and costs were reserved. 31 On 13 May 2002, the Court received complete copies of the agreements entered into with FIFA on 10 September 1996 and 26 May 1998. 32 By letter of 29 November 2002, the applicants requested, pursuant to Article 64(4) of the Rules of Procedure, that the Commission be asked to lodge documents. By letter of 20 January 2003, the Commission requested the removal of Annex 17 to the application from the file before the Court. By letter of 26 March 2003, the applicants made observations in that regard. 33 By letter of 11 February 2003, the Registry of the Court informed the parties that a ruling on the request for the removal of that item from the file before the Court would be given subsequently. 34 By letter of 26 March 2003, Kirch Media GmbH & Co. KGaA applied to discontinue its application. By order of 24 June 2003, the President of the Fifth Chamber of the Court ordered that that be done. 35 By order of 9 July 2003, the Court granted the Kingdom of Denmark, the French Republic, the United Kingdom, the Parliament and the Council leave to intervene in support of the forms of order sought by the defendant. By contrast, the Communauté française de Belgique was refused leave to intervene. The parties granted leave to intervene lodged statements in intervention, with the exception of the Kingdom of Denmark and the Council. The applicant lodged observations on those statements in intervention. 36 By letter of 19 August 2003, the Registry of the Court invited the applicant to produce non-confidential versions of its pleadings. 37 By letter of 19 September 2003, the applicant applied for certain parts of the defence to be treated as confidential. 38 By order of 4 December 2003, the President of the Fifth Chamber of the Court ordered that a non-confidential copy of every procedural document served on the parties be served on the interveners and invited the interveners to lodge their observations in that regard. The interveners lodged no observations within the period allowed to them for that purpose, except for the United Kingdom, which did not raise any objections on that issue. 39 By decision of 13 September 2004 on the composition of the Chambers of the Court, the Judge-Rapporteur was assigned to the Fourth Chamber, to which this case was accordingly allocated by decision of 21 October 2004. 40 Pursuant to Article 14 of the Rules of Procedure and acting on a proposal from the Fourth Chamber, the Court decided, after the parties had been heard in accordance with Article 51 of those rules, to refer the case to a Chamber with an extended composition. 41 By letter lodged at the Registry of the Court on 1 July 2005, the Kingdom of Denmark informed the Court that it was withdrawing its intervention. As the applicant, the defendant and the United Kingdom did not object to the Kingdom of Denmark’s withdrawal and the other interveners made no observations, the President of the Fourth


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Chamber, Extended Composition, by order of 31 August 2005, ordered that the Kingdom of Denmark’s intervention be withdrawn and that each party bear its own costs in relation to that intervention. 42 Upon hearing the report of the Judge-Rapporteur, the Court (Fourth Chamber, Extended Composition) decided to open the oral procedure and, by way of measures of organisation of procedure as provided for in Article 64(3)(c) and (d) of the Rules of Procedure of the Court, requested the main parties and the United Kingdom to lodge certain documents and sent questions in writing to the applicant and the Commission, requesting that they reply to those questions prior to the hearing. The applicant, the defendant and the United Kingdom complied with those requests within the time-limit laid down. 43 With the exception of the French Republic, the parties submitted oral argument and answered the questions put by the Court at the hearing on 7 July 2005. 44 By letter of 22 August 2005, lodged at the Registry of the Court on 23 August 2005, the applicant requested that a document, which was enclosed with that letter and which the United Kingdom had only disclosed to it after the hearing, be added to the file. Forms of order sought 45 The applicant claims that the Court should: – annul, in whole or in part, the Commission’s decision under Article 3(a) of the directive that the measures notified by the United Kingdom were compatible with Community law (‘the contested decision’); – declare that Article 3(a) of the directive is inapplicable and could not serve as a legal basis for the adoption of the contested decision; – order the Commission to pay the costs; – order the French Republic, the United Kingdom and the Parliament to bear their own costs including those incurred by reason of their interventions. 46 The Commission contends that the Court should: – dismiss the action as inadmissible; – in the alternative, dismiss the action as unfounded; – order the applicant to pay the costs. 47 The Parliament, in support of the Commission, submits that the Court should: – dismiss the action as inadmissible; – in the alternative, dismiss the action as unfounded. 48 The United Kingdom, in support of the Commission, contends that the Court should dismiss the action. 49 The French Republic, in support of the Commission, contends that the Court should: – dismiss the action; – order the applicant to pay the costs. Law A – The request for measures of organisation of procedure 50 In its pleadings the applicant asks that the Commission be requested to produce various documents concerning the procedure for verifying that the measures adopted by the United Kingdom are compatible with Community law.


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51 By way of measures of organisation of procedure pursuant to Article 64(3)(c) and (d) of the Rules of Procedure of the Court of First Instance, the Court requested the Commission and the United Kingdom to disclose those documents. At the hearing the applicant stated in reply to a question from the Court that it was satisfied with the response to its application for documents to be disclosed. 52 In those circumstances, the Court finds that there is no need to make a ruling in that regard. B – The application to withdraw a document 53 By letter of 20 January 2003, the Commission requested the Court to remove from the proceedings a document produced by the applicant in Annex 17 to its application on the ground that it was a document drafted by its staff for the purposes of discussion within the Contact Committee which was confidential. The applicant objected to that removal. 54 The Commission’s request seeks the removal from the proceedings of the document entitled ‘Discussion paper for the Contact Committee on Art. 3(a) [of the directive]’ with the reference number DOC CC TVSF (2000) 6. It should however be noted that the Commission has not expressly claimed that it is an internal document. 55 Furthermore, when questioned by the Court at the hearing on the confidential nature of that document, the Commission stated that the Contact Committee, the addressee of that document, no longer considered it to be confidential and that it could be assumed that it would therefore be disseminated widely. 56 In those circumstances, notwithstanding the fact that at the hearing the Commission sought to confirm its application for the removal of that document from the case-file, it cannot be considered that that document was or in any event remains an internal confidential document of the institution. 57 Consequently, the Commission’s application for the removal of the document in question from the case-file must be rejected. C – Admissibility 1. Admissibility of the applicant’s first claim 58 The Commission claims that the application is inadmissible because, first, it did not adopt any measure on the basis of Article 3a(2) (of the directive) capable of being challenged, second, the contested measure is of neither direct nor individual concern to the applicant and, third, as the applicant failed to communicate with its application copies of the contracts entered into with FIFA on 10 September 1996 and 26 May 1998, it was not able to prepare its defence. 59 In relation to that third plea of inadmissibility, it should be noted that during the proceedings before the Court the applicant did produce copies of the contracts in question (see paragraphs 25 and 31 above), which were disclosed to the Commission. When questioned on that point at the hearing the Commission, in reply to a request from the Court, withdrew the third plea of inadmissibility. 60 Furthermore, in its defence and following the applicant’s disclosure of the contracts entered into with FIFA on 10 September 1996 and 26 May 1998, the Commission submitted that those contracts considerably limited the applicant’s ability to exploit its rights by awarding exclusive sub-licences to television broadcasters. It considered that, given the content of certain clauses of those contracts, it is not clear


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that the loss which the applicant claims to have suffered results from the contested measure. 61 It should be noted that the Commission drew no conclusion from its contentions regarding the admissibility of the present action. In any event, in so far as the Commission sought by those allegations to challenge the applicant’s interest in the annulment of the contested measure, it should be noted that it has not submitted that the content of the contracts in question deprived the applicant of such an interest and that that fact is by no means apparent from the file having regard, moreover, to the applicant’s reply to the Court’s written questions concerning in particular the extent of the contractual restrictions on the exercise of the applicant’s broadcasting rights in respect of FIFA World Cup matches. 62 In the light of the foregoing, only the first and second grounds of inadmissibility advanced by the Commission need be examined. a) The legal nature of the contested decision Arguments of the parties 63 The Commission submits that, unlike Article 2a(2) of the directive, Article 3a(2) makes no mention of a ‘decision’ which it must adopt. The French Republic states in that regard that Article 3a does not confer decision-making power on the Commission. Its role is to carry out a preliminary check of the compatibility with Community law of the national measures notified. 64 If the national measures notified do not appear to infringe Community law, the Commission informs the Member State concerned that it does not intend to object to those measures and proceeds to publish them in the Official Journal so that the other Member States may comply with their obligations under Article 3a(3) of the directive. The defendant and the French Republic state that, if those measures infringe Community law and assuming that the Member State does not introduce the necessary amendments, the Commission is obliged to initiate infringement proceedings pursuant to Article 226 EC. 65 The preliminary finding that there has been no infringement of Community law is therefore a decision not immediately to initiate infringement proceedings against the Member State concerned. Private parties are not entitled to contest a refusal by the Commission to initiate infringement proceedings under Article 226 EC, since the Commission’s adoption of a position on that question is not an act producing definitive legal effects (order of the Court of First Instance of 13 November 1995 in Case T-126/95 Dumez v Commission [1995] ECR II-2863, paragraph 37). 66 The French Republic states in that regard that according to Article 226 EC the rights and duties of Member States may be determined and their conduct appraised only by a judgment of the Court of Justice (Case C-393/98 Gomes Valente [2001] ECR I-1327). The position adopted by the Commission concerning the compatibility with Community law of a list of events of major importance for society does not therefore alter the legal situation of the Member State concerned. Moreover, the legally binding nature of the list in question, published in the Official Journal, does not flow from the Commission’s letter to the United Kingdom of 28 July 2000 informing it that those measures are compatible with Community law but from national law alone. The Commission states in that regard that if there were a decision in the present case it would be that letter of 28 July 2000.


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67 Whatever the Commission’s position in relation to the national measures notified, it does not affect their implementation in the notifying Member State. The Commission has no power to declare the legislation of a Member State incompatible with Community law. 68 The Commission further points out that in its letter of 28 July 2000 to the United Kingdom it stated that, ‘on the basis of the facts available’, it did not intend to oppose the measures notified and that that finding did not constitute a decision. It points out in that regard that where it must be legally bound its decision must be adopted by the College of Commissioners and must be reasoned. Its letter of 28 July 2000 is therefore comparable to a comfort letter (Joined Cases 253/78 and 1/79 to 3/79 Giry and Guerlain and Others [1980] ECR 2327, and Case T-3/93 Air France v Commission [1994] ECR II-121, paragraph 50). 69 As for the obligation upon it to publish the approved national measures in the Official Journal, the Commission considers that it in no way alters the nature of its letter of 28 July 2000. The only purpose of such publication is to inform the other Member States so that they can comply with their obligation under Article 3a(3) of the directive. It points out however that it is not its provisional approval of the notified measures which triggers the Member States’ obligation to comply with the obligations on them under that article but rather that article itself, which refers to ‘events which are designated by that other Member State in accordance with the preceding paragraphs’ and not to ‘events included in a list published by the Commission’. Therefore, both the notification of the measures in question to the other Member States and the publication of those measures in the Official Journal are administrative measures which in no way imply the exercise of any decision-making power whatsoever on the part of the Commission. 70 In that respect, concerning the reference in Article 3a(3) to the ‘preceding paragraphs’ and not to ‘paragraph 1’, it seems that the applicant’s approach is to treat the obligation imposed on the Member States as subordinate to the description of the measures referred to in Article 3a(1) of the directive and to their notification and approval by the Commission pursuant to Article 3a(2) of that directive. However, the only requirement is that the Member State has complied with its obligations of designation and notification of the measures pursuant to Article 3a(1) and (2) of the directive, which is compatible with the apparent intention of the legislature to implement a system of mutual recognition of the measures adopted by the Member States whilst conferring on the Commission the role of arbitrator. The applicant’s interpretation therefore confers binding force on a mere finding by the Commission, which does not give rise to legal effects for the other Member States. The obligation of mutual recognition arising from Article 3a(3) of the directive is not subject to the Commission’s assessment of the compatibility with Community law of the measures notified. 71 Moreover, the other Member States cannot, as a matter of Community law, be obliged to apply another Member State’s measures which are incompatible with Community law, notwithstanding the position adopted by the Commission with regard to those measures. The Commission refers in that context to its letter to the United Kingdom of 23 December 1998, in which it cast doubt on the compatibility with Community law of the measures initially notified. It also points out that the national measures in question were published in the C series of the Official Journal and not the L series. 72 The Commission, supported by the Parliament, submits lastly that the applicant does not deny that the measures in question could have been challenged before the


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United Kingdom courts. The national court in the case which gave rise to the judgment of the House of Lords of 25 July 2001 in R v ITC ex parte TV Danmark 1 Ltd [2001] UKHL 42, cited by the applicant, merely stated that it would make no finding on the question of the balance between the interests of the organisers of sporting events and television broadcasters in maintaining a free market, on the one hand, and the interest of the citizen in being able to watch major sporting events on the other. It did not, however, hold that it would not reassess the legality of the measures adopted under Article 3a of the directive. If an action had been brought before the United Kingdom courts and a reference for a preliminary ruling had been made to the Court of Justice under Article 234 EC, no parallel could have been drawn by the applicant with the case which led to the judgment in Case C-188/92 TWD Textilwerke Deggendorf [1994] ECR I-833. In the present case, the applicant is time-barred from bringing an action before the United Kingdom courts. If the Court of First Instance were to declare admissible the present action brought against an alleged Commission decision it would sanction an abuse of procedure such as that condemned by the Court in TWD Textilwerke Deggendorf, cited above. 73 According to the Commission, it is not open to the Court of First Instance to review the validity of the United Kingdom measures or to interpret them. Moreover, it would be particularly difficult for a court other than one in the United Kingdom to interpret those measures, which include the ITC Code on Sports and other Listed Events, given their lack of clarity. 74 The Parliament states that it was open to the applicant to defend its rights by way of a reference for a preliminary ruling from the High Court in London to the Court of Justice (Case C-491/01 British American Tobacco (Investments) and Imperial Tobacco [2002] ECR I-11453, paragraphs 32 to 41). 75 Furthermore, the Parliament adds that an analogy may also be drawn between the present case and the circumstances which gave rise to the judgment in Joined Cases T-74/00, T 76/00, T 83/00, T-84/00, T-85/00, T-132/00, T-137/00 and T-141/00 Artegodan and Others v Commission [2002] ECR II-4945, paragraph 142, confirmed on appeal, which states that, in the absence of an express transfer of competence to the Commission, the matter in question remains within the residual competence of the Member States. It refers in that context to Article 7 EC, which provides that each institution is to act within the limits of the powers conferred on it by the Treaty. There is nothing in either Directive 89/552 or Directive 97/36 to suggest that the Member States have, by implication, deprived themselves of their competence. In particular, Article 3a of the directive does not expressly confer any competence on the Commission, as is confirmed by the absence of any comitology procedure. Furthermore, the duties of the Contact Committee do not amount to implementing powers under the third indent of Article 202 EC. In addition, neither the general structure, nor the essential purpose and wording of Article 3a of the directive, nor the intention of the legislature have the aim of conferring a specific decision-making power on the Commission. 76 In conclusion, the Commission considers that, in the light of the above, its assessment of the compatibility of the disputed measures does not constitute a challengeable act. In maintaining that the Commission should not have communicated the notified measures to the other Member States or published them in the Official Journal, the applicant is in fact challenging the validity of Article 3a(2) of the directive. 77 The applicant challenges the Commission’s argument and submits, essentially, that the Commission’s decision approving the measures notified produces legal effects both in the United Kingdom and in the other Member States.


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78 The contested act is an act which produces binding legal effects, inasmuch as it is the outcome of the exercise, upon the conclusion of an internal procedure laid down by law, of a power provided for by law which is intended to produce legal effects of such a nature as to affect adversely the interests of the applicant by modifying its legal position (Case 182/80 Gauff v Commission [1982] ECR 799, paragraph 18). 79 It refers, first, to the wording of Article 3a(2) of the directive which provides that the Commission is required to adopt a binding act after verifying the compatibility of the notified measures with Community law. 80 Second, it is clear from the purpose and objective of Article 3a(2) of the directive that that provision is intended to produce legal effects. The applicant refers in that context to recitals 18 and 19 to Directive 97/36 and notes that the drawing up of the national lists, in which Member States may be inclined to specify a large number of events, allows those States to favour television broadcasters established in their territory. 81 Third, the procedure for the application of Article 3a(2) of Directive 89/552 makes it clear that it leads to the adoption of a binding decision. The applicant refers in that regard to the time-limits and course of that procedure. 82 Furthermore, the applicant submits that neither the wording nor the purpose of Article 3a of the directive nor the relevant recitals to Directive 97/36 support the Commission’s position that the act it adopted is comparable to a refusal to institute infringement proceedings under Article 226 EC. The present procedure requires the Commission to act as arbiter and to adopt a definitive decision on the legality of the notified measures. Such a decision cannot be withdrawn without affecting the legal position of the United Kingdom and of all individuals who have derived rights from the Commission’s approval of those measures and their mutual recognition. The applicant adds that the Commission’s argument deprives the procedure laid down by Article 3a of the directive of any practical effect. 83 The applicant also argues that the contested act produces legal effects in the other Member States, as the latter are required to enforce the United Kingdom measures against television broadcasters within their jurisdiction under Article 3a(3) of the directive. Accordingly, without a Commission decision approving the notified measures, the latter would produce no legal effects in other Member States. Any other interpretation would deprive the procedure laid down by Article 3a(2) of any practical effect and would be contrary to the purpose of Article 3a of the directive, which is to reconcile the free movement of television services with the need to prevent the possible circumvention of national measures designed to protect a legitimate general interest. 84 The applicant submits lastly that it is clear from the file that mutual recognition is affected by the Commission’s review of the compatibility with Community law of the measures notified and does not arise automatically from their notification. Findings of the Court 85 In its application, the applicant seeks annulment of the Commission decision finding, first, that the measures notified by the United Kingdom are compatible with Community law and providing, second, that those measures must be communicated to the other Member States so that the television broadcasters under their jurisdiction comply with them. It states in that respect that the only document available to the public is the Commission’s publication of the measures adopted by the United Kingdom in the Official Journal of 18 November 2000 pursuant to Article 3a(2) of the directive.


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86 In an annex to its plea of inadmissibility, the Commission however disclosed a letter from the Director-General of the Education and Culture DG dated 28 July 2000, informing the United Kingdom that pursuant to the examination of the conformity of the measures notified on 5 May 2000 and on the basis of the facts available in relation to the audiovisual landscape in the United Kingdom, the Commission did not intend to object to those and would publish them in the Official Journal (see paragraph 15 above). The Commission stated in that respect that if there were a decision in the present case, quod non, it would be that letter (see paragraph 66 above). 87 In those circumstances, it must be found that the letter of 28 July 2000 is, in substance, the contested measure in the present case, since it is the sole document expressly informing the United Kingdom of the Commission’s position with regard to the compatibility with Community law of the measures it notified and of the forthcoming publication of those measures in the Official Journal. At the hearing, the applicant stated in answer to a question from the Court that its action in fact sought the annulment of that letter from the Commission to the United Kingdom. 88 It is therefore necessary to consider whether the Commission’s letter of 28 July 2000 to the United Kingdom (‘the contested letter’) is an act susceptible to challenge. 89 According to settled case-law, any measure the legal effects of which are binding on, and capable of affecting the interests of, the applicant by bringing about a distinct change in his legal position is an act or decision which may be the subject of an action for annulment under Article 230 EC. The form in which such acts or decisions are cast is, in principle, immaterial as regards the question whether they are open to challenge by an action for annulment (Case 60/81 IBM v Commission [1981] ECR 2639, paragraph 9, and Case T-241/97 Stork Amsterdam v Commission [2000] ECR II-309, paragraph 49). In order to ascertain whether or not a measure which has been challenged produces such effects it is necessary to look to its substance (Case C-147/96 Netherlands v Commission [2000] ECR I-4723, paragraphs 25 to 27). 90 In order to determine, in the light of the abovementioned principles, the legal nature of the contested letter and whether it produces legal effects, it is necessary to examine it in the context of the rules regarding events of major importance for society laid down by Article 3a of the directive. 91 It should be noted in that regard that the directive seeks to facilitate the free movement of television broadcasts within the Community whilst taking account of the specificities, particularly cultural and sociological, of audiovisual programmes. 92 As for the specific system of audiovisual rights for events of major importance for society established by Article 3a of the directive, recital 18 to Directive 97/36 states that it is essential that Member States should be able to take measures to protect the right to information and to ensure wide access by the public to television coverage of national or non-national events of major importance for society. In that context, it is provided that Member States retain the right to take measures compatible with Community law to regulate the exercise by television broadcasters under their jurisdiction of the exclusive broadcasting rights to such events. For the purposes of their mutual recognition by the other Member States under Article 3a(3) of the directive, the measures adopted or to be adopted by a Member State must be notified to the Commission. 93 Article 3a(2) of the directive provides, in that regard, that within a period of three months from the notification, the Commission is to verify that such measures taken by States are compatible with Community law. In doing so it is to consult the Contact Committee which is to give an opinion.


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94 In the present case, since the contested letter in substance informs the United Kingdom of the Commission’s approval of the measures it notified to it and of their subsequent publication in the Official Journal, that letter closes the verification procedure which the Commission is required to carry out under that article. The publication in the Official Journal of those measures approved by the Commission informs the other Member States of their existence, as the Commission itself notes in its pleadings (see paragraph 69 above), and, therefore, enables them to comply with their obligations under Article 3a(3) of the directive pursuant to the mechanism for mutual recognition of those measures instituted by that article. 95 The contested letter therefore produces legal effects for the Member States in so far as it envisages the publication in the Official Journal of the national measures in question, since the effect of that publication is to trigger the mechanism for mutual recognition laid down by Article 3a(3) of the directive. 96 First, that analysis follows from the wording of Article 3a(3) of the directive, which provides for the mutual recognition of the measures adopted by the Member States so as to ensure free access by the public to the events designated ‘in accordance with the preceding paragraphs’, that is, in particular, those for which the national measures notified were considered by the Commission to be compatible with Community law and published in the Official Journal in accordance with Article 3a(2). 97 Furthermore, the course of the verification procedure as described in Article 3a(2) of the directive and the thoroughness of that verification prevent it from being considered as a ‘preliminary’ verification at the end of which an ‘opinion’ is given. First, the Commission is required to carry out that verification within a strict time-limit of three months from the notification of the measures by the Member State concerned and must, to that end, consult the Contact Committee which issues its own opinion, in accordance with the requirements of Article 3a(2) of the directive. Second, the Commission admitted at the hearing that it had to carry out a detailed assessment of the compatibility of those measures with Community law, since the Commission must inter alia be satisfied that the provisions of the directive and the rules on the freedom to provide services and competition law have been complied with. 98 Second, given the general scheme of the rules on events of major importance for society laid down by Article 3a of the directive, the Commission’s allegation that it is neither the approval of those measures nor their publication in the Official Journal which triggers the obligation on the other Member States to comply with their duties under Article 3a(3) of the directive cannot be correct. 99 That is because, in the first place, the review procedure which the Commission is required to carry out under Article 3a(2) of the directive seeks to ensure the compatibility of those measures with Community law (recital 18 to Directive 97/36). 100 In that connection, regarding the course of the procedure for the verification of the measures notified by the United Kingdom, the Commission stated in its letter of 23 December 1998 (see paragraph 12 above) inter alia as follows: ‘I enclose herewith the preliminary result of the examination by Commission services of the notified measures. … [T]he Commission concludes that, pending clarification of a number of important issues on which further information and comments from your authorities are needed, it is not in a position to formally start the evaluation of conformity with Community law of the measures for which the UK is seeking mutual recognition by other Member States.’ 101 The wording of that letter from the Commission confirms the interpretation of Article 3a(2) and (3) of the directive set out in paragraphs 98 and 99 above, according


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to which the mutual recognition of the national measures notified is subject to the verification of their compatibility with Community law. 102 Moreover, the verification of the compatibility with Community law of the measures notified, which the Commission is required to carry out, would have no practical effect if their mutual recognition by the other Member States was not dependent upon the approval of those measures. Even if the mechanism of mutual recognition were to apply to national measures considered by the Commission to be incompatible with Community law, the risk of legal uncertainty and market distortion would not be avoided, whereas such risks are proscribed by recital 19 to Directive 97/36. Mutual recognition of national measures incompatible with Community law would equally not serve to ensure reconciliation of the free movement of television services with the need to prevent the possibility of circumventing national measures protecting a legitimate public interest, as recital 19 to that directive also provides. 103 In the second place, the fact that the publication of the national measures in the Official Journal, which informs the other Member States of those measures so that they can comply with the obligations imposed by Article 3a(3), can only occur after the Commission has, following its verification, established their compatibility with Community law is further corroborated by various documents in the file. 104 Firstly, the course of the procedure for verifying the measures notified by the United Kingdom supports that interpretation. The United Kingdom notified measures to the Commission for the first time on 25 September 1998 and, as stated above, by letter of 23 December 1998 the Commission informed that Member State that certain aspects of those measures raised problems of compatibility with Community law. By letter of 5 May 2000, the United Kingdom notified an amended version of those measures. Only those latter measures, held by the Commission to be compatible with Community law, were published in the Official Journal, after the Commission informed the United Kingdom by means of the contested letter that they were compatible with Community law. 105 In its letter of 22 January 2001, the Commission further replied to the applicant that ‘in legal terms, pursuant to Article 3a(2) of the directive, the publication of measures is the consequence of a (positive) verification procedure performed by the Commission’ (see paragraph 21 above). 106 Secondly, the Commission’s position in that regard is shown by several documents annexed to the file of which it is the author. Thus on the page of its internet site devoted to Article 3a of the directive, produced by the applicant as an annex to its observations on the plea of inadmissibility, the Commission states that ‘a positive decision on the measures [as to their compatibility with Community law] is ratified by their publication in the Official Journal’. The Commission’s position is also apparent from its working document CCTVSF (97) 9/3, produced at the Court’s request, which states that ‘this need of legal certainty requires that the compatibility with Community law of the relevant measures be assessed under a fast-track procedure and – if positively evaluated – be published in the Official Journal’, that ‘it follows that only specific national measures falling within the scope of Article [3a(1)] … will be subject to the procedure of notification to the Commission and to the subsequent assessment and eventual publication’ or again that ‘in the event of a positive outcome of the evaluation process it will have the relevant measures published in the Official Journal’. 107 It is clear from all of the foregoing that under Article 3a(2) of the directive the Commission has the power to make a decision and that the contested letter produces definitive legal effects, notwithstanding the fact that Article 3a of Directive 89/552 does not expressly refer to the adoption by the Commission of a ‘decision’.


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108 The argument of the Commission and the French Republic that the contested letter is a decision not to initiate infringement proceedings forthwith against the Member State concerned must therefore be rejected. In any event, even if the Commission were to find that the measures notified were incompatible with Community law and the notifying Member State does not remedy that incompatibility, it suffices for the Commission not to publish those measures in the Official Journal for them not to take effect under the mechanism of mutual recognition established by Article 3a(3) of the directive. 109 The argument that the applicant was able to challenge the measures in question before the United Kingdom courts cannot succeed because the review which the Court of First Instance is being invited to carry out in the present case concerns solely the legality of the Commission’s finding that those measures are compatible with Community law for the purposes of implementing the mechanism of mutual recognition of events of major importance established by Article 3a(3) of the directive. The reference in that context to the judgment of the House of Lords in R v ITC ex parte TV Danmark 1 Ltd [2001] UKHL 42 (cited above) is irrelevant, since the action in that case was brought by a Danish broadcaster subject to United Kingdom law, against the decision of the relevant authorities of that Member State refusing to allow it exclusive broadcasting rights to five qualifying matches for the FIFA World Cup which appear on the list of events of major importance for society nominated by the Kingdom of Denmark. The purpose of that action was therefore to challenge the application by the United Kingdom, under the principle of mutual recognition, of the Danish measures and not, as in the present case, the Commission’s decision establishing their compatibility with Community law. 110 Lastly, the defendant’s argument that the fact that it is not legally bound is confirmed by the nature of the wording used in the contested letter, by the failure by the College of Commissioners to adopt a reasoned decision and by the choice to publish the measures notified which are found to be compatible with Community law in the C series, ‘Information and Notices’, and not in the L series, ‘Legislation’, of the Official Journal must also be rejected. It suffices to note that, according to settled case-law, the form in which acts or decisions are cast is, in principle, immaterial as regards the question whether they are open to challenge by way of an action for annulment, and it is necessary to look to their substance in order to ascertain whether they are actionable measures for the purposes of Article 230 EC (see paragraph 89 above). 111 It follows from all the foregoing considerations of law and of fact that the contested letter produces binding legal effects and therefore constitutes a decision within the meaning of Article 249 EC. Accordingly, since the contested letter is an act susceptible to challenge for the purposes of Article 230 EC, the present plea of inadmissibility must be rejected. b) The applicant’s standing 112 The fourth paragraph of Article 230 EC provides that any natural or legal person may institute proceedings against a decision which, although in the form of a decision addressed to another person, is of direct and individual concern to him. 113 In the present case, since the Commission claims that the action is inadmissible by reason of the applicant’s lack of standing, it is necessary to determine whether the applicant is directly and individually concerned by the contested letter. Whether the applicant is directly concerned


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– Arguments of the parties 114 The Commission, supported by the French Republic, refers to Case C-386/96 P Dreyfus v Commission [1998] ECR I-2309 and Case T 69/99 DSTV v Commission [2000] ECR II-4039, paragraph 24. 115 It submits that in this case the applicant’s legal situation is not affected, since both the directive and the United Kingdom legislation concern solely the rights and obligations of television broadcasters and they may broadcast live an event which appears on the list only in certain circumstances. The applicant suffers only the indirect economic consequences of those constraints, which are linked to the risk that broadcasters may refuse to pay as high a price as that which the applicant had hoped to obtain in selling sub-licences to broadcast FIFA World Cup matches. 116 The Commission also states that only some of the provisions of the Broadcasting Act 1996, read in conjunction with the ITC Code on Sports and other Listed Events, have directly affected the applicant. The French Republic observes that the effects felt by the applicant do not result from the contested letter, but from the legislation in force in the United Kingdom, which includes the list of events of major importance for society. Although the applicant’s economic situation was clear as soon as the 1996 Act came into force, as the list of events had already been drawn up and included the FIFA World Cup finals, it never challenged the United Kingdom legislation or the list of events of major importance for society drawn up by the United Kingdom. 117 In adopting the contested measures, the United Kingdom authorities were exercising full legislative discretion. Article 3a(1) confers on Member States the right to adopt the provisions relating to events of major importance for society. As regards the verification that the provisions notified are compatible with Community law, the Commission and the Parliament submit that that is comparable to the procedure laid down in Article 2a(2) of the directive, in relation to which the Court of First Instance has held that an applicant may not be directly affected by the measure adopted by the Commission on that basis (DSTV v Commission, paragraphs 26 and 27). 118 The Commission points out that it carried out its assessment as to the compatibility with Community law of the measures notified by the United Kingdom in the present case after the adoption of those measures, and that solely those measures directly affected the economic interests of the applicant. 119 The Commission disputes the applicant’s contention that the publication in the Official Journal of the measures notified by the United Kingdom had the consequence of imposing obligations on the other Member States. In any event, that circumstance does not mean that the applicant is directly concerned by the contested act. The other Member States are required to ensure that broadcasters in their jurisdiction respect the United Kingdom’s list of events of major importance for society, but they do this by application of their domestic rules. The implementation of the Commission’s decision as to the compatibility of the measure notified is therefore not ‘purely automatic’ and does not result from Community rules alone. 120 The Commission also observes that even if its preliminary verification of the measures notified were to cause other Member States to ensure that broadcasters in their jurisdiction respected the list of events of major importance for society, that would have no effect in the present case. It is inconceivable that the applicant would sub-licence its television rights for the United Kingdom to a television broadcaster not established in the United Kingdom, as those rights are granted on a national basis. At the national level, the income of television broadcasters is generated from advertising


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directed at the national audience, national licence fees or national subscription fees for pay television. As their interest is in providing programmes to a national audience, only those broadcasters reaching a high proportion of the national population are prepared to pay very large amounts for the broadcasting rights held by the applicant. Therefore, since potential sub-licensees of such rights for the United Kingdom are entities under the jurisdiction of the United Kingdom authorities, only the national measures directly affect the applicant. 121 The Commission notes in that context that in the United Kingdom the television broadcasting market is one of the most competitive in Europe and that 25% of broadcasters operating in the sector are licensed in the United Kingdom. 122 In those circumstances, even if it is accepted that publication of the measures in the Official Journal obliges the other Member States to comply with their obligation under Article 3a(3) of the directive, that fact is irrelevant for the purposes of the present case. 123 The Commission concludes therefore that verification and publication in the Official Journal of the measures notified by the United Kingdom do not directly concern the applicant. 124 The applicant challenges all the Commission’s arguments. 125 It submits, essentially, that its legal position is directly affected, since the United Kingdom measures approved by the contested letter affect the terms on which it may resell the rights to broadcast the FIFA World Cup live in the United Kingdom. It refers in that regard to sections 99 and 101 of the 1996 Act. 126 As to the effects in the other Member States, the applicant alleges that the consequence of the contested letter is that those Member States are required to ensure that their television broadcasters respect the measures in question. The obligations placed in that respect on broadcasters under the jurisdiction of the other Member States are automatic and result from Community rules alone without the application of other intermediate rules. Those States are not required to ensure that the broadcasters under their jurisdiction comply with the measures adopted by the United Kingdom as long as the Commission has not adopted the decision finding that the measures notified are compatible with Community law. Article 3a(3) of the directive was thus transposed into national law by the majority of the Member States and applies automatically to all notified national measures which have been approved and published by the Commission. 127 According to the applicant it is precluded from granting an exclusive license of its rights to a television broadcaster based in another Member State, and the Commission cannot validly allege in those circumstances that the contested letter produces legal effects only with regard to television broadcasters. 128 The applicant also argues that, contrary to what the Commission contends, the judgment in DSTV v Commission (paragraph 27) regarding Article 2a(2) of the directive is not applicable in these proceedings since the measures were notified to the Commission in accordance with Article 3a(2) of the directive prior to their entry into force. Thus it cannot be found that the measures notified by the United Kingdom existed independently of the Commission’s decision, since their existence depended on the outcome of the verification which that institution was required to carry out. 129 Lastly, the applicant challenges the Commission’s argument that it is implausible that a television broadcaster not based in the United Kingdom would wish to acquire rights to broadcast the FIFA World Cup finals live in the United Kingdom. – Findings of the Court


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130 It has consistently been held that, in order to be of direct concern to an individual within the meaning of the fourth paragraph of Article 230 EC the contested Community measure must directly affect the applicant’s legal situation and its implementation must be purely automatic and result from Community rules alone without the application of other intermediate rules (see Dreyfus v Commission, paragraph 43 and the case-law there cited). 131 In the present case, in order to determine in the light of that case-law whether the applicant is directly concerned by the contested letter it is necessary to examine the two cases envisaged by the applicant, namely that in which the rights to broadcast the matches of the FIFA World Cup finals which it holds for 2002 and 2006 are sold for retransmission in the United Kingdom to a television broadcaster under the jurisdiction of the United Kingdom, and that in which those rights are sold to a television broadcaster established in another Member State. 132 As regards the first case, the applicant alleges that the measures notified ‘fundamentally undermine the market for [its] products amongst its UK-based customers’. To comply with the legislation in force in the United Kingdom the applicant could no longer grant an exclusive licence to a broadcaster established in the United Kingdom. 133 However, where the television broadcaster in question is established in the United Kingdom, it should be noted that, strictly speaking, it is the measures adopted by the United Kingdom which are directly applicable, since the Commission’s approval of those measures for the purposes of their mutual recognition has no bearing on their applicability in that Member State. 134 Furthermore, it should be noted that pursuant to Article 3a(2) of the directive, the Member States are to notify to the Commission any measures taken or to be taken. However, in the present case, the measures adopted by the United Kingdom entered into force prior to their notification to the Commission on 5 May 2000, as that institution confirmed at the hearing, and were therefore already capable of producing legal effects in that State at the time of their notification. 135 By the contested letter the Commission could not in those circumstances grant the United Kingdom prior authorisation to adopt those measures. Furthermore, the Commission did not authorise the retrospective maintenance of those measures for the purposes of their application to the United Kingdom (see, to that effect, Case 62/70 Bock v Commission [1971] ECR 897) but enabled that Member State to profit from the recognition of those measures by the other Member States. 136 In that respect, the applicant’s argument that the United Kingdom first notified measures to the Commission by letter of 25 September 1998 is irrelevant as the latter considered, by letter of 23 December 1998, that they raised problems of compatibility with Community law and did not publish them in the Official Journal. In addition to the fact that some of the measures initially notified came into force upon their notification, it remains the case that all of the measures declared compatible with Community law by the Commission by means of the contested letter were, in any event, in force in the United Kingdom at the time of that notification. 137 Consequently, once the applicant assigns its broadcasting rights for the FIFA World Cup finals to a television broadcaster established in the United Kingdom for the purposes of broadcasting those matches in that State, the measures adopted by the United Kingdom authorities exist in law independently of the contested letter (see, to that effect, DSTV v Commission, paragraph 25). In so far as the measures notified are applicable to the television broadcasters established in the United Kingdom under the


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national law in force in that Member State and not by virtue of the Commission’s decision, the applicant is not directly concerned by the contested letter within the meaning of the fourth paragraph of Article 230 EC and may not therefore bring an action for annulment of that measure. 138 As regards the second case, in which the applicant assigns its broadcasting rights for the FIFA World Cup finals to a television broadcaster established in a Member State other than the United Kingdom for the purposes of broadcasting those matches in the latter State, it must be held that that other Member State will be required under Article 3a(3) of the directive to satisfy itself that that broadcaster does not circumvent the measures approved by the Commission and published in the Official Journal. 139 It should be noted in that regard that the obligation imposed on the other Member States is to ensure by appropriate means, within the framework of their legislation, that broadcasters under their jurisdiction do not exercise the exclusive rights purchased by those broadcasters following the date of publication of the directive in such a way that a substantial proportion of the public in another Member State is deprived of the possibility of following, in the manner determined by that other Member State in accordance with Article 3a(1), events which are designated by that other Member State in accordance with Article 3a(1) and (2). 140 The Member States to which a directive is addressed are thus required to adopt, within the framework of their national legal orders, all the measures necessary to ensure that the directive is fully effective, in accordance with the objective that it pursues and, in that context, to implement inter alia Article 3a(3). 141 In the context of that control exercised by their authorities under the mechanism of mutual recognition, the other Member States must ensure that the measures notified by the United Kingdom are not circumvented by television broadcasters subject to their jurisdiction wishing to broadcast an event designated by that Member State. 142 However, as previously stated (see paragraph 94 above), only the Commission’s decision finding that the measures notified by the United Kingdom are compatible with Community law and providing for the subsequent publication of those measures in the Official Journal enables the mechanism of mutual recognition to operate effectively, by triggering the obligation for the other Member States to comply with their obligations under Article 3a(3) of the directive. 143 It follows that, in this case, the contested letter validates ex nunc the measures adopted by the United Kingdom for the sole purposes of their mutual recognition by the other Member States. 144 As regards the Commission’s citation in that context of the judgment in DSTV v Commission, it should be noted that the second paragraph of Article 2a(2) of the directive, at issue in the case giving rise to that judgment, requires a posteriori verification of the compatibility with Community law of the measures adopted by a Member State in order to prevent the broadcast on its territory of programmes from other Member States and not verification of compatibility with Community law giving rise to the mutual recognition of national measures. 145 Moreover, unlike the specific provision at issue in the case giving rise to the judgment in Artegodan and Others v Commission, cited by the Parliament, Article 3a(2) of the directive confers on the Commission power to make decisions ensuring the effectiveness of the mechanism of mutual recognition and does not seek merely to establish a consultative procedure. 146 Furthermore, since the mutual recognition of the measures adopted by the United Kingdom is subject to their approval by the Commission and their subsequent publication in the Official Journal, it is clear that the contested letter does not leave the


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national authorities any discretion, once that publication has occurred, as to the performance of their obligations. Although the detailed rules for the control which the national authorities are required to exercise under the mechanism of mutual recognition are determined by each Member State in the framework of its legislation implementing Article 3a(3) of the directive, those authorities must ensure that broadcasters under their jurisdiction comply with the conditions for broadcasting the events in question as defined by the Member State in its measures approved and published in the Official Journal by the Commission. 147 Lastly, as regards the Commission’s argument that only broadcasters established in the United Kingdom would be interested in purchasing from the applicant the rights to broadcast the FIFA World Cup finals in order to broadcast them in the United Kingdom, it should be noted that such an assumption deprives Article 3a(3) of the directive of all practical effect. According to recitals 18 and 19 to Directive 97/36, the purpose of that article is to ensure wide access by the public to television coverage of events considered to be of major importance for society by the Member States and, on the basis of the principle of mutual recognition, to require the Member States to ensure that broadcasters under their jurisdiction respect the list of events established by another Member State so as not to deprive a substantial proportion of the public in that State of the possibility of following the events designated by that State. 148 The facts of the case which gave rise to the judgment of the House of Lords in R v ITC ex parte TV Danmark 1 Ltd [2001] UKHL 42 (cited above), although relating to events designated by the Kingdom of Denmark, also confirm the existence of situations implementing the mechanism of mutual recognition established by Article 3a(3) of the directive. Furthermore, the 2001 Third Report from the Commission to the Council, the European Parliament and the Economic and Social Committee on the Application of [the directive] (COM(2001) 9 final) states that in three cases, television broadcasters under the jurisdiction of the United Kingdom have broadcast events listed by the Kingdom of Denmark in a way that prevented a substantial part of the Danish population from seeing those events. 149 In those circumstances, notwithstanding the Commission’s unsupported allegations as to the specificity of the television broadcasting market in the United Kingdom (see paragraph 121 above), it cannot be assumed that the rights to broadcast the FIFA World Cup finals in that State will be acquired by broadcasters established in that State. 150 It follows that the applicant is directly concerned by the contested letter in so far as it enables the implementation of the mechanism of mutual recognition by the other Member States of the measures notified by the United Kingdom, and that the plea of inadmissibility raised by the Commission must be rejected. Whether the applicant is individually concerned – Arguments of the parties 151 The Commission challenges the applicant’s argument that it is individually concerned because it belongs to a ‘closed group’ of undertakings which were holders, even prior to the entry into force of Article 3a of the directive, of exclusive broadcasting rights for events of major importance for society designated by the United Kingdom. 152 According to the Commission, that criterion of holding exclusive rights is irrelevant, as all other organisations and undertakings holding rights to broadcast any of the events listed by the United Kingdom would have to be taken into account. Those


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other holders of television rights may have been more radically affected by the list than was the applicant. 153 Furthermore, unlike the holders of the television rights to events of major importance for society listed by the United Kingdom, the undertakings and organisations which may have entered into licensing agreements with one of those holders may be numerous and are impossible for the Commission to identify. It cannot therefore be accepted that the applicant forms part of a closed group of undertakings. 154 In addition, neither the applicant nor the holders of television rights in relation to events of major importance for society listed by the United Kingdom can be individually concerned by a Commission measure solely on the ground that it affects their economic activity (see, to that effect, the order in Case T-113/99 Galileo and GalileoInternational v Council [2000] ECR II-4141). The economic activities of the applicant were affected by the measures notified and, indirectly, by the acceptance of those measures by the Commission. There is, however, no question of any impact on its legal situation. 155 The applicant also maintains that an undertaking which has written on several occasions to the Commission to inform it of that undertaking’s concerns as to the United Kingdom’s application of Article 3a(1) of the directive is individually concerned. According to the Commission, only the applicant’s letter of 14 July 2000 can be taken into account in that context, as its other letters were written after the Commission had adopted its position in relation to the compatibility with Community law of the measures notified. In any event, none of those letters can be characterised as a complaint, as their purpose was not to ask the Commission to take action against the Member State concerned, but merely to influence it in its consideration of the compatibility with Community law of the measures notified. The sending of those letters to the Commission therefore cannot suffice to distinguish an undertaking individually. 156 The French Republic refers, inter alia, to Case 25/62 Plaumann v Commission [1963] ECR 95 and Case C-50/00 P Unión de Pequeños Agricultores v Council [2002] ECR I-6677 and points out that the general scope, and hence the legislative nature, of a measure are not called into question by the fact that it is possible to determine the number or even the identity of the persons to whom it applies at a given moment with a greater or lesser degree of precision, as long as it is established that it is applied by virtue of an objective legal or factual situation defined by the measure in relation to the objective of the latter (order in Case T-183/94 Cantina cooperativa fra produttori vitivinicoli di Torre di Mosto and Others v Commission [1995] ECR II-1941, paragraph 48). Although the applicant is the holder of the broadcasting rights for the 2002 and 2006 FIFA World Cup finals, that is not sufficient to distinguish it individually, for the purposes of the fourth paragraph of Article 230 EC, from all other economic operators which might acquire or hold broadcasting rights in relation to the sporting events included in that list. 157 The applicant replies in essence that it is individually concerned given, first, that it belongs to a ‘closed group’ of undertakings which acquired broadcasting rights for an event on the United Kingdom list prior to the proposal for the adoption of Article 3a of the directive and prior to the entry into force of the measures notified by the United Kingdom to the Commission. It is specifically affected within that group in a manner different from the other rights holders. It is also individually concerned by reason of its participation in the Commission’s procedure to verify the compatibility with Community law of the measures notified. It alleges in that regard inter alia that the United Kingdom failed to comply with its obligation to draw up its list of events of


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major importance for society in a clear and transparent manner, as required by Article 3a(1) of the directive. – Findings of the Court 158 As regards first the attributes peculiar to it, the applicant submits that it acquired rights to broadcast an event on the list drawn up by the United Kingdom prior to its entry into force and prior even to the proposal for the adoption of Article 3a of the directive. 159 According to well-established case-law, persons other than those to whom a decision is addressed may claim to be individually concerned only if that decision affects them by virtue of certain attributes which are peculiar to them or by reason of circumstances in which they are differentiated from all other persons and by virtue of these factors distinguishes them individually just as in the case of the person to whom the decision is addressed (Plaumann v Commission, p. 107; Case C-309/89 Codorníu v Council [1994] ECR I-1853, paragraph 20; Case T-435/93 ASPEC and Others v Commission [1995] ECR II-1281, paragraph 62). 160 In this case it should be noted that the applicant holds exclusive rights to broadcast the 2002 and 2006 FIFA World Cup finals, which are included in the list of events of major importance for society adopted by the United Kingdom and approved by the Commission in the contested letter. 161 Television broadcasters under the jurisdiction of the Member States other than the United Kingdom must therefore necessarily deal with the applicant in its capacity as broker of the broadcasting rights to that event, for the purposes of obtaining licences to broadcast that event. 162 Whilst the measures adopted by the United Kingdom under Article 3a(1) of the directive and approved by the contested letter, in accordance with Article 3a(2), impose restrictions on television broadcasters as to the exclusive broadcasting of the events of major importance which appear on that list, with the exception of those which had already acquired rights prior to the entry into force of the measures in question, those restrictions are linked to the circumstances, considered generally and in the abstract, in which those broadcasters obtain those exclusive rights from those who hold them. 163 Sections 98 and 101 in Part IV of the Broadcasting Act 1996, as amended by the Television Broadcasting Regulations 2000, provide as follows: ‘98(1) For the purposes of this Part, television programme services and EEA [European Economic Area] satellite services shall be divided into two categories as follows: (a) those television programme services and EEA satellite services which for the time being satisfy the qualifying conditions, and (b) all other television programme services and EEA satellite services. (2) In this section “the qualifying conditions”, in relation to a service, means the conditions: (a) that the service is provided without any consideration being required for reception of the service, and (b) that the service is received by at least 95% of the population of the United Kingdom. 101(1) A television programme provider providing a service falling within either of the categories set out in subsection (1) of section 98 (“the first service”) for reception in the United Kingdom or in any area of the United Kingdom shall not, without the


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previous consent of the Commission, include in that service live coverage of the whole or any part of a listed event unless: (a) another person, who is providing a service falling within the other category set out in that subsection (“the second service”) has acquired the right to include in the second service live coverage of the whole of the event or of that part of the event, and (b) the area for which the second service is provided consists of or includes the whole, or substantially the whole, of the area for which the first service is provided. … (4) Subsection (1) shall not have effect where the television programme provider providing the first section is exercising rights acquired before the commencement of this section.’ 164 In that context, as regards the consent which must be obtained from the ITC referred to in section 101 of the 1996 Act as amended, and cited above, it is clear from all of the measures approved by the Commission, and more particularly from the ITC Code on Sports and other Listed Events, that the factors on which the ITC’s consent depends are essentially that the sale of broadcasting rights has been the subject of a public announcement and that the broadcasters have had a genuine opportunity to acquire those rights on terms which were fair and reasonable. In that respect, the ITC may in particular verify that the offer for sale was communicated openly and simultaneously to the two categories of broadcasters defined in section 98 of the 1996 Act, that the price sought is fair, reasonable and non-discriminatory as between the two categories of broadcasters and that the broadcasters are given a reasonable time, thereby giving them a genuine opportunity to acquire those rights. 165 Thus, although the applicant in its capacity as broker of the rights to broadcast the 2002 and 2006 FIFA World Cup finals is not expressly covered by those provisions, they impede its ability freely to dispose of its rights by restricting their transfer exclusively to a broadcaster established in a Member State other than the United Kingdom which wishes to broadcast that event in the latter State. 166 Furthermore, although the legal validity of the contracts which the applicant entered into with FIFA are not affected by the contested letter, since the performance of those contracts could in no way be prevented by that letter within the meaning of the case-law to that effect (Case 11/82 Piraiki-Patraiki and Others v Commission [1985] ECR 207 and Case C-152/88 Sofrimport v Commission [1990] ECR I-2477), the applicant acquired exclusively the rights in question before the entry into force of Article 3a of the directive and, a fortiori, before the adoption of the contested letter. 167 In those circumstances, it must be held that the contested letter concerns the applicant by reason of a characteristic peculiar to it, namely its capacity as the exclusive holder of the broadcasting rights for one of the events designated by the United Kingdom. 168 It follows that the applicant, as the holder of the broadcasting rights for an event included in the list of measures notified by the United Kingdom and having acquired those rights prior to the adoption of the measures applicable in the United Kingdom and, a fortiori, prior to their approval by the Commission, must be considered, for the purposes of assessing the admissibility of the present action, to be individually concerned by the contested letter. 169 The plea of inadmissibility raised by the Commission must therefore be rejected. 2. The admissibility of the applicant’s second plea


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170 Included in the form of order which the applicant asks the Court to make is a declaration that Article 3(a) of the directive is inapplicable and cannot serve as a legal basis for the adoption of the contested letter. 171 It suffices in this regard to note that in proceedings before the Community judicature there is no remedy whereby the Court can adopt a position by means of a general declaration or statement of principle (see, to that effect, Case T-62/99 Sodima v Commission [2001] ECR II-655, paragraph 28, and the order of 7 June 2004 in Case T-338/02 Segi and Others v Council [2004] ECR II-0000, paragraph 48; see also, by analogy, Case T-76/03 Meister v OHIM [2004] ECR II-0000, paragraph 38). 172 That plea is therefore inadmissible. D – Substance 173 In support of its action, the applicant relies on four pleas in law alleging, first, infringement of general principles of Community law, second, infringement of Article 3a(2) of the directive, third, inapplicability of Article 3a(3) of that directive and fourth, infringement of essential procedural requirements. 174 It is appropriate, first of all, to examine the fourth plea alleging infringement of essential procedural requirements. 175 By that plea, the applicant claims, inter alia, that the author of the contested letter, namely the Director-General of the Education and Culture DG, lacked the necessary competence. It alleges in that connection that the contested letter was not adopted in conformity with the Commission’s rules on collegiate procedure, delegation and enforcement of decisions. 176 To counter that argument the Commission in its pleadings and in response to a question from the Court merely submitted that the contested letter was not a decision within the meaning of Article 249 EC and that it was not therefore required to comply with the relevant rules of procedure. 177 Thus, the Commission admitted in reply to a written question from the Court and at the hearing that the College of Commissioners had not been consulted and that the Director-General who signed the contested letter had received no specific power from the College. 178 In those circumstances, the contested letter, which, as has been held in the course of the assessment of admissibility, constitutes a decision within the meaning of Article 249 EC, is vitiated by lack of powers and must, on that ground and without there being any need to consider the other argument in support of that plea and the other three pleas in law in support of the action, be annulled. 179 In that context, the Court finds that there is no need to grant the request made by the applicant in its letter of 22 August 2005 (see paragraph 44 above), which is not pertinent to the resolution of the dispute (see, to that effect, Case T-311/00 British American Tobacco (Investments) v Commission [2002] ECR II-2781, paragraph 50).

On those grounds, THE COURT OF FIRST INSTANCE (Fourth Chamber, Extended Composition)

hereby: 1. Annuls the decision of the Commission contained in its letter of 28 July 2000 to the United Kingdom of Great Britain and Northern Ireland; 2. Dismisses the remainder of the action.


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27. Case C-89/05,

REFERENCE for a preliminary ruling under Article 234 EC, from the House of Lords

(United Kingdom), made by decision of 3 November 2004, received at the Court on 18

February 2005, in the proceedings

United Utilities plc

v

Commissioners of Customs & Excise,

THE COURT (Second Chamber),

gives the following

Judgment

1 This reference for a preliminary ruling concerns the interpretation of Article 13B(f) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes - Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1) (‘the Sixth Directive’). 2 The reference was made in the course of proceedings between United Utilities plc (‘United Utilities’) and the Commissioners of Customs & Excise (‘the Commissioners’), who are responsible for the collection of value added tax (‘VAT’) in the United Kingdom, on the question of whether the services provided by Vertex Data Science Ltd (‘Vertex’) to Littlewoods Promotions Ltd (‘Littlewoods’), which organises telephone bookmaking, are subject to VAT. Legal context Community legislation 3 Article 2 of the Sixth Directive, which constitutes Title II thereof, entitled ‘Scope’, provides: ‘The following shall be subject to value added tax: (1) the supply of goods or services effected for consideration within the territory of the country by a taxable person acting as such; ...’ 4 Under Article 13B(f) of the Sixth Directive, the Member States are to exempt from VAT ‘betting, lotteries and other forms of gambling, subject to conditions and limitations laid down by each Member State’. National legislation 5 Article 13B(f) of the Sixth VAT Directive was transposed into national law in Group 4 of Schedule 9 of the Value Added Tax Act 1994, which exempts from VAT the provision of any facilities for the placing of bets or the playing of any games of chance. The main proceedings and the question referred for a preliminary ruling


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6 United Utilities is the representative member of a group of companies treated as a single taxable person within the meaning of the second subparagraph of Article 4(4) of the Sixth Directive. Vertex is also a member of that group. 7 Littlewoods organises telephone bookmaking under the name of ‘Bet Direct’. Its customers can bet on the outcome of sporting events or other random events, such as meteorological events. The bets are placed exclusively by telephone. In 1999, Littlewoods decided to outsource part of its operations and, for that purpose, entered into a contract with Vertex for the provision of call centre services. Pursuant to that contract, Vertex, which is also authorised to act as Littlewood’s agent, is required to provide the staff, premises and telephone and computer equipment necessary to take the bets in question. 8 Littlewoods selects sporting or other events on which bets may be placed, fixes the odds, appraises the bets and manages the revenue and expenditure relating to the bets. 9 For its part, Vertex merely receives telephone calls and records the bets in accordance with the conditions stipulated by Littlewoods. In that respect, Vertex has no discretion. Moreover, at no stage do Vertex employees disclose to customers placing bets that they are dealing with Vertex and not with Littlewoods. In addition, the name ‘Vertex’ does not appear in any documentation intended for customers. 10 Vertex’s fee consists of a fixed element and a variable element. The variable element is based on the number of call minutes for telephone calls received by Vertex. Various penalties are provided for if Vertex makes a mistake in the performance of its duties. The fee takes no account of either the number or value of bets recorded, or the odds on those bets. Vertex bears no financial risk in relation to the bets offered by Littlewoods. 11 United Utilities takes the view that the services provided by Vertex fall within the scope of Article 13B(f) of the Sixth Directive and must accordingly qualify for the exemption from VAT provided for by that provision. 12 In support of its position, United Utilities submits, firstly, that Article 13B(f) of the Sixth Directive is intended to exempt the activity of providing the framework within which gambling can take place. The provision of the framework, that is, the facilities, within which or by means of which gambling can take place is, therefore, an activity that may be exempted from charge. 13 Further, it is clear from Case C-2/95 SDC [1997] ECR I-3017 and Case C-235/00 CSC Financial Services [2001] ECR I-10237 that the exemption at issue in the main proceedings should apply to the services of an agent so long as the agent is instrumental in the gambling transaction itself. On any other interpretation, that exemption would apply only to certain of the elements which make up the framework within which a gambling transaction is carried on. 14 United Utilities then submits that it is clear from the case-law of the Court relating to the exemption from VAT of financial services (SDC Case C 349/96 CPP [1999] ECR I-973, and CSC Financial Services, cited above) that, where an agent undertakes a transaction on behalf of a principal, then, for the purposes of exemption from VAT, the agent’s supply to the principal is to be analysed by reference to its precise role in the underlying transaction between the principal and the end customer. Only if the agent carries out an ‘essential act which alters the legal or financial situation between the parties’, in a transaction falling within one of the exempt categories, will that agent’s supply be exempt. It is irrelevant whether that agent is an agent for the principal or an agent for the customer.


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15 That case-law applies, mutatis mutandis, to the exemption from VAT of betting and gambling. Thus, entering into the betting contract is the specific essential function of gambling or betting as it alters the legal and financial situation between the parties. Since Vertex’s oral acceptance of bets is sufficient to establish a legal relationship between customers placing bets and Littlewoods, Vertex performs the specific essential function of betting organiser. 16 Lastly, United Utilities maintains that the interpretation it puts forward is not affected by the fact that Vertex does not have any discretion whether or not to accept bets on behalf of Littlewoods, since entering into a contract could never constitute an administrative act. 17 The Commissioners do not share that view and consider that the exemption provided for in Article 13B(f) of the Sixth Directive does not apply to the services provided by Vertex as they are merely physical, technical or administrative services supplied to the betting organiser. 18 The VAT and Duties Tribunal, the High Court of Justice and the Court of Appeal, in turn, rejected United Utilities’ arguments. 19 In those circumstances, the House of Lords, before which the matter was brought, decided to stay the proceedings and refer the following question to the Court of Justice for a preliminary ruling: ‘Does the exemption for betting laid down in Article 13B(f) of the … Sixth … Directive … apply where a person (‘the agent’) provides services on behalf of another person (‘the principal’) of accepting bets from customers and communicating their acceptance by the principal to customers where: (a) the actions of the agent perform a necessary step in creating the legal relationship of a bet between the principal and its customer and thereby consummate the betting transaction; but (b) the agent makes no decisions as to the setting of odds, the odds being set by the principal or in some cases determined by third parties under the rules of the sport in question; and (c) the agent decides whether or not to accept bets on behalf of the principal in accordance with criteria laid down by the principal so that the agent has no discretion?’ The question referred for a preliminary ruling 20 By its question, the national court asks, in essence, whether Article 13B(f) of the Sixth Directive is to be interpreted as meaning that the provision of call centre services to a telephone bookmaking organiser, which entails the staff of the supplier of those services accepting bets on behalf of the organiser, constitutes a betting transaction within the meaning of that provision and may, therefore, qualify for the exemption from VAT laid down by that provision. 21 In order to answer that question, it is to be noted at the outset that the terms used to specify the exemptions provided for by Article 13 of the Sixth Directive are to be interpreted strictly, since they constitute exceptions to the general principle that VAT is to be levied on all services supplied for consideration by a taxable person (see, inter alia, SDC, cited above, paragraph 20, and Case C-472/03 Arthur Andersen [2005] ECR I-1719, paragraph 24). 22 Moreover, the interpretation of the terms used in that provision must be consistent with the objectives pursued by those exemptions and comply with the requirements of the principle of fiscal neutrality inherent in the common system of VAT (Case C-45/01 Dornier [2003] ECR I-12911, paragraph 42).


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23 More particularly, it should be noted that the exemption from which betting, lotteries and other forms of gambling benefit is based on practical considerations, gambling transactions not lending themselves easily to the application of VAT (Case C-86/99 Freemans [2001] ECR I-4167, paragraph 30) and not, as is the case with certain public interest services supplied in the social sector, on a desire to afford those activities more advantageous VAT treatment. 24 It is in the light of those considerations that it is necessary to examine whether an activity such as that at issue in the main proceedings constitutes a betting transaction within the meaning of Article 13B(f) of the Sixth Directive which may, as such, be exempt from VAT. 25 The order for reference states that the services supplied by Vertex involve providing the staff, premises and telephone and computer equipment necessary to take bets, whilst the subject-matter of the bets and the odds are fixed by the recipient of that supply, namely, Littlewoods. 26 Clearly, in contrast to the betting transaction referred to in Article 13B(f) of the Sixth Directive, that activity alone cannot in any way be said to be characterised by the offer to customers placing bets of a chance of winning in consideration for accepting the risk of having to pay for winnings and cannot, therefore, be classified as a betting transaction within the meaning of that provision. 27 For the same reason, that interpretation is not affected by the fact that the acceptance of bets, in this case by Vertex staff, is a stage, however important , in the placing of those bets, since it is as a result of that acceptance that a legal relationship between Littlewoods and its customers is brought about. 28 Further, case-law to the effect that the change in the legal and financial relationship between a supplier of services and its customer is a specific aspect of transactions concerning transfers (SDC, cited above, paragraph 66, and CSC Financial Services, paragraph 26) cannot be applied, mutatis mutandis, to the activities referred to in Article 13B(f) of the Sixth Directive since the objectives on which exemptions for transactions concerning transfers under Article 13B(d) of that directive are founded are not the same as those on which the exemption in Article 13B(f) of that directive are based. 29 In the light of the foregoing, the answer to the question referred must be that Article 13B(f) of the Sixth Directive must be interpreted as meaning that the provision of call centre services to a telephone bookmaking organiser, which entails the staff of the supplier of those services accepting bets on behalf of the organiser, does not constitute a betting transaction within the meaning of that provision and cannot, therefore, qualify for the exemption from VAT laid down by that provision. Costs 30 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds,

the Court (Second Chamber)

hereby rules:

Article 13B(f) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes - Common


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system of value added tax: uniform basis of assessment, must be interpreted as meaning that the provision of call centre services to a telephone bookmaking organiser, which entails the staff of the supplier of those services accepting bets on behalf of the organiser, does not constitute a betting transaction within the meaning of that provision and cannot, therefore, qualify for the exemption from VAT laid down by that provision.


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28. Case T-477/04,

Aktieselskabet af 21. november 2001, established in Brande (Denmark),

applicant,

v

Office for Harmonisation in the Internal Market (Trade Marks and Designs)

(OHIM),

defendant,

the other party to the proceedings before the Board of Appeal of OHIM and intervener

before the Court of First Instance being

TDK Kabushiki Kaisha (TDK Corp.), established in Tokyo (Japan),

ACTION brought against the decision of the First Board of Appeal of OHIM of 7

October 2004 (Case R 364/2003-1) concerning opposition proceedings between TDK

Kabushiki Kaisha (TDK Corp.) and Aktieselskabet af 21. november 2001,


(First Chamber),

gives the following

Judgment

Background 1 On 21 June 1999, the applicant submitted an application for a Community trade mark to the Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM) pursuant to Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark (OJ 1994 L 11, p. 1). 2 The trade mark for which registration was sought is the word mark TDK. The goods for which registration was sought are in Class 25 of the Nice Agreement concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks of 15 June 1957, as revised and amended. They correspond to the following description: ‘clothing, footwear, headgear’. On 24 January 2000, the trade mark application was published in the Community Trade Marks Bulletin No 8/2000. 3 On 25 April 2000, TDK Kabushiki Kaisha (TDK Corp.) filed an opposition against the registration of the trade mark applied for. 4 The opposition was based on the existence of a Community trade mark, together with 35 earlier national trade marks, which were registered for goods in Class 9 (in particular, ‘apparatus for recording transmission or reproduction of sound or images’). 5 The earlier marks in question were either the word mark TDK, or the word and figurative mark reproduced below:


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6 The intervener based its opposition on Article 8(1)(b) and Article 8(5) of Regulation No 40/94. The opposition was directed against all the goods specified in the trade mark application. In order to establish the reputation of its earlier trade marks, the intervener submitted annexes, marked A to R. 7 By decision of 28 March 2003, the Opposition Division found that there was no likelihood of confusion within the meaning of Article 8(1)(b) of Regulation No 40/94. It none the less upheld the opposition on the basis of Article 8(5) of that regulation and refused the application for a Community trade mark. 8 On 27 May 2003, the applicant brought an appeal against the decision referred to above, pursuant to Articles 57 to 62 of Regulation No 40/94. 9 By decision of 7 October 2004 (Case R 364/2003-1) (‘the contested decision’), the First Board of Appeal of OHIM dismissed the appeal brought by the applicant, thereby confirming the decision of the Opposition Division. Forms of order sought 10 The applicant claims that the Court should: – annul the contested decision; – order OHIM to pay the costs. 11 OHIM and the intervener contend that the Court should: – dismiss the action ; – order the applicant to pay the costs. Law Arguments of the parties Arguments of the applicant 12 In support of its application, the applicant puts forward a single plea in law based on infringement of Article 8(5) of Regulation No 40/94. 13 The applicant’s primary submission is that the intervener has failed to establish that the earlier marks had a distinctive character or a reputation which would entitle them to the broader protection conferred by Article 8(5) of Regulation No 40/94. 14 In that regard, the applicant argues that the annexes submitted by the intervener in order to establish the reputation of its earlier marks have no probative value. Thus, the market survey provided by the intervener (Annex O) was undertaken immediately after the World Championships in Athletics in Gothenburg in 1995, that is to say, several years before the application for registration of the mark in question. The public awareness of the earlier marks may have diminished rapidly since then. The applicant adds that the survey concerned was commissioned by the intervener and cannot be considered as reliable as an independent survey. At the hearing, the applicant emphasised that Annex O gave no details as to the range of those questioned or of the number of visitors to the championships in question and did not take some types of answers into account. The applicant added that the intervener had drawn conclusions from Annex O that were manifestly incorrect, because they did not appear in the annex, to the effect that the level of knowledge of the earlier marks in the German, Swedish and United Kingdom populations was as high as 85%. 15 The applicant also notes that, according to OHIM’s settled practice, it is only very intensive marketing efforts that are capable of conferring a distinctive character or a reputation on a mark. While the annexes submitted by the intervener prove that the


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earlier marks have been used in certain countries within the Union on particular types of goods, they do not, however, satisfy the criteria laid down by the Court of Justice for establishing the reputation of the mark among the relevant public (Case C-375/97 General Motors [1999] ECR I-5421, paragraphs 26 and 27). 16 It must also be borne in mind that the details given by the intervener of its marketing costs show that these were spread over a large part of the Community. Thus, while Annexes A to R may be capable of establishing that the earlier marks were used in a large part of the Community over a particular period of time and were the subject of media exposure and sponsorship, they do not, however, prove that the earlier marks have acquired a distinctive character or a strong or lasting reputation. 17 At the hearing, the applicant accepted, in reply to a question from the Court, that Annexes A to R had to be considered as a whole. It none the less maintained that, even on that basis, those annexes were not capable of establishing the reputation of the earlier marks for the purposes of Article 8(5) of Regulation No 40/94. 18 The applicant also submits that, even if it were to be accepted that the distinctive character or the reputation of the earlier marks had been established, the other conditions for the application of Article 8(5) of Regulation No 40/94 are, in any event, not satisfied. 19 In that regard, the applicant first of all states that evidence of the taking of unfair advantage of the distinctive character or the reputation of the earlier marks, or of detriment done to those marks, which it is necessary for the intervener to show, has not been adduced. 20 On the basis of the annexes submitted by the intervener, it would appear that a wide range of the intervener’s goods is marketed only to a specialist section of the public, that is to say to professionals in the medical sector or industry. These are areas in which the applicant’s goods have been neither marketed nor sold. Although some of the intervener’s goods are marketed by it to final consumers among the general public, the applicant’s goods are, for their part, sold in other types of shops. 21 The fact that the intervener has already used the earlier marks in question on clothing has no effect on the above, because such use was only on athletes’ identification numbers or on T-shirts of a distinct brand (for example, Adidas). In those circumstances, the earlier marks cannot be connected with clothing in the mind of the public, but are only associated with advertising or sponsorship campaigns. 22 In those circumstances, the applicant considers that the grant to it of the exclusive right to use the TDK mark only for ‘clothing, footwear and headgear’ would not enable it to gain unfair advantage from the distinctive character or the reputation of the earlier marks, nor would it allow it to benefit from the marketing efforts of the intervener. 23 With respect to the intervener’s argument that the use by the applicant of the TDK mark would have a negative impact on it and would lead consumers to believe that there is a link between the intervener and the applicant, the applicant replies that the intervener uses the marks in question only in relation to goods that are very different, in terms of nature and use, from those for which the mark is sought. Similarly, the distribution channels, the sales outlets and use of the goods vary widely as between those goods, and they are not complementary from a competitive point of view. Consequently, there is no risk of image transfer, and the applicant would find it impossible to take unfair advantage of the distinctive character or the reputation allegedly acquired by the earlier marks. 24 As regards the intervener’s argument that its reputation could be damaged by the dilution of the earlier marks or by the use of the TDK mark on goods of poor quality, over which it has no control, the applicant replies that there is no basis for such an


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argument. Consumers will be able to distinguish clearly between the marks concerned. Furthermore, the applicant maintains that it sells only luxury goods and engages in high-class advertising using top models. More generally, the goods covered by the mark applied for do not convey any image which could be negative or damaging. 25 Lastly, the applicant submits general comments on Annexes A to R. It argues that some of the annexes submitted by the intervener do not prove that the sign TDK has been used as a mark. Furthermore, the intensity of the use of the earlier marks is less than that claimed by the intervener. At the hearing, the applicant argued in particular that the annexes failed to provide figures in relation to the intervener’s sales volumes for the goods concerned and the costs incurred in marketing and sponsorship. Such information is essential. Arguments of OHIM 26 OHIM first of all notes that the Board of Appeal considered that Article 8(5) of Regulation No 40/94 was applicable and found, on the basis of evidence submitted by the intervener, that the latter had succeeded in establishing the matters referred to in paragraph 29 of the contested decision (see paragraph 53 below). It was on that basis that the Board of Appeal was entitled to draw the conclusions set out in paragraphs 31 and 32 of the contested decision, according to which, as the Opposition Division had held, the intervener’s earlier marks were entitled to the benefit of the broader protection conferred by Article 8(5) of Regulation No 40/94, and had an enhanced distinctive character by reason of their reputation. 27 It submits that the appraisal by the Board of Appeal of the reputation of the earlier marks is not vitiated by any error. As regards the evidence submitted by the intervener, the Board of Appeal rightly considered the 18 annexes as a whole, and not in isolation. That thorough analysis of the annexes also included the parties’ observations relating to them. 28 As regards the territory in which the reputation must be established, OHIM takes the view that the intervener succeeded in showing particularly high awareness of the earlier marks in France, Germany, Sweden and the United Kingdom, thus satisfying the requirements as to reputation both at a national and Community level. 29 Furthermore, OHIM fully adheres to the finding of the Board of Appeal that the evidence adduced in the opposition procedure proves the establishment and maintenance of a reputation resulting from a large sponsorship effort over a long period. It also records its agreement with the Board of Appeal’s assessment that significant goodwill was created and maintained, and lays the ground for continuing expansion and investment. 30 It is thus clear to OHIM that the earlier marks enjoy a reputation of great value by reason of the fact that they are known to a significant part of the relevant public in the Community, as is shown in particular by the survey set out in Annex O, even though OHIM none the less acknowledged at the hearing that, as the applicant suggested (see paragraph 27 above), Annex O did not satisfy OHIM’s normal rules for the taking into account of market surveys. 31 OHIM next considers unfounded the applicant’s arguments that the intervener has not succeeded in showing that the use of the mark applied for would allow the applicant to take unfair advantage of the distinctive character or the reputation of the earlier marks and maintains that since, in any case, the goods in question are very different, the use by the applicant of the TDK mark on clothes sold by it would not take


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unfair advantage of the distinctive character of the mark or the investments made by the intervener. 32 It argues that the Board of Appeal correctly applied the concepts of unfair advantage and detriment to the distinctive character of the earlier mark. Thus, the Board of Appeal was right to hold that the evidence submitted by the intervener showed that the reputation with which it has been credited was perceived by a sizeable proportion of the public, particularly in its role as a manufacturer of certain goods and also as a sponsor of sporting events and concerts featuring pop stars. 33 According to OHIM, the applicant’s argument that it intends to use the mark solely in relation to clothing (see paragraph 22 above), so that there could be no taking of unfair advantage or detriment, as the public will distinguish between the marks and the goods in question, is neither relevant nor well founded. 34 Thus, even though the intervener has established no presence in the clothing sector, nor any public awareness of the earlier marks in that sector, similarity of the goods is not a requirement for Article 8(5) of Regulation No 40/94 to apply. Detriment to the reputation of an earlier mark is not a necessary condition. It is sufficient that there be detriment to the distinctive character of a mark, which does not necessarily require degradation or tarnishment of the mark. 35 In that regard, according to OHIM, there is no reason to exclude the possibility of the applicant using the letters TDK on sports clothing (or footwear or headgear used for sporting activities) manufactured by it. Thus, to the extent that the mark applied for is identical to one or other of the intervener’s earlier marks, everything would seem to suggest that the relevant public could be led to believe that the goods sold by the applicant were manufactured by, or under licence from, the intervener as part of its many sponsorship activities. 36 As regards, lastly, the final condition for the application of Article 8(5) of Regulation No 40/94, namely that relating to due cause, OHIM argues that, in the absence of any indication by the applicant to show that it wishes to use the mark applied for with due cause, it shares the Board of Appeal’s finding that the use of the mark applied for would be without due cause. Arguments of the intervener 37 The intervener essentially puts forward the same arguments as OHIM. 38 As regards the reputation of the earlier marks, it places particular emphasis on some aspects of the evidence submitted to OHIM, such as the fact that its European turnover in 1996 was USD 628 million. In addition, it points out that all its video and audio cassettes sold in Europe were also manufactured there. 39 As regards the first of the criteria defined in General Motors relating to market share, it states that it holds one of the largest market shares in Europe. With respect to the second criterion, which relates to the intensity, geographical extent and duration of use of the earlier marks, the intervener essentially argues that the intensity of the use of the earlier marks is in keeping with its large market shares, that it commenced its operations in Europe in 1973 and has been expanding them ever since and that its goods have been promoted under the marks concerned in all countries of the European Union. It also states that the earlier marks in question achieved exposure not only on the sale of goods bearing the marks but also, on a wider front, through its sponsorship activities at musical and sporting events. 40 As regards the conditions for the application of Article 8(5) of Regulation No 40/94 other than that relating to reputation, the intervener contends that the applicant’s


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argument, to the effect that the earlier marks could not in any event be adversely affected since the mark applied for is intended to be used on luxury clothing, is irrelevant and that detriment would be caused whether or not the goods in question were luxury goods. At the hearing, the intervener also stated that there was no reason to exclude the possibility of the applicant selling T-shirts carrying the sign TDK at events sponsored by the intervener itself. 41 The intervener also points out that the absence of a likelihood of confusion, put forward by the applicant, is not determinative as regards the application of Article 8(5) of Regulation No 40/94. 42 The intervener observes, finally, that the applicant has not put forward any arguments relating to the use of the mark applied for with due cause. Findings of the Court 43 For an earlier mark to be afforded the broader protection under Article 8(5) of Regulation No 40/94, a number of conditions must be satisfied. First, the earlier mark which is claimed to have a reputation must be registered. Secondly, that mark and the mark applied for must be identical or similar. Thirdly, it must have a reputation in the Community, in the case of an earlier Community trade mark, or in the Member State concerned, in the case of a national trade mark. Fourthly, the use of the mark applied for must lead to at least one of the two following conditions being satisfied: (i) unfair advantage would be taken of the distinctive character or the reputation of the earlier trade mark, or (ii) it would be detrimental to the distinctive character or the reputation of the earlier trade mark. Lastly, such use of the mark applied for must be without due cause. 44 In the present case, it is not in dispute that the mark applied for is identical to the earlier marks or similar to them (paragraph 25 of the contested decision) and that those marks are registered. 45 Moreover, since the Board of Appeal held that the use of the mark applied for would take unfair advantage of the distinctive character or the reputation of the earlier marks, and since the conditions for the application of Article 8(5) of Regulation No 40/94 are alternative, it did not consider whether the condition referred to at point (ii) of paragraph 43 above was satisfied. It is also a matter of agreement that the applicant has not put forward any plea based on due cause within the meaning of Article 8(5) of Regulation No 40/94. 46 In those circumstances, it is necessary to determine, first, whether the earlier marks enjoy a reputation and, secondly, whether the use of the mark applied for would take unfair advantage of the distinctive character or the reputation of the earlier marks. Reputation 47 The applicant essentially maintains that the Board of Appeal committed an error in its assessment of the probative value of the annexes submitted by the intervener in order to establish the reputation and distinctive character of the earlier marks for the purposes of Article 8(5) of Regulation No 40/94. 48 Article 8(5) of Regulation No 40/94 does not define ‘reputation’. However, it is clear from the case-law of the Court of Justice relating to the interpretation of Article 5(2) of First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks (OJ 1989 L 40, p. 1), the substantive content of which is, in essence, identical to that of Article 8(5) of Regulation No 40/94,


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that, in order to satisfy the requirement of reputation, the earlier national mark must be known to a significant part of the public concerned by the goods or services covered by that trade mark. 49 In examining that condition, it is necessary to take into consideration all the relevant facts of the case, in particular the market share held by the mark, the intensity, geographical extent and duration of its use, and the size of the investment made by the undertaking in promoting it (General Motors, paragraphs 26 and 27). The Court of Justice stated in General Motors that it cannot be inferred from either the letter or the spirit of Article 5(2) of the directive that the earlier mark must be known by a given percentage of the relevant public (paragraph 25) but that that reputation must exist in a substantial part of the territory concerned (paragraph 28). Two judgments of the Court of First Instance adopt, either expressly (Case T-8/03 El Corte Inglés v OHIM –Pucci (EMILIO PUCCI) [2004] ECR II-4297, paragraph 67), or by implication (Case T-67/04 Spa Monopole v OHIM – Spa-Finders Travel Arrangements (SPA-FINDERS) [2005] ECR II-1825, paragraph 34) the criteria thus laid down by the Court of Justice in that judgment. 50 The Court finds, first of all, that the contested decision (paragraph 26) correctly sets out the criteria laid down in General Motors for the purposes of assessing reputation within the meaning of Article 8(5) of Regulation No 40/94. 51 Next, the Court considers that the Board of Appeal did not commit any error in assessing the evidence put forward by the intervener for the purposes of establishing the reputation of the earlier marks. 52 The Board of Appeal was right to take into consideration, in paragraph 27 of the contested decision, Annexes A to R as a whole, with particular reference to the intensity, the duration and the geographical coverage of the use of the earlier marks in question. 53 The Board of Appeal states, in paragraph 29 of the contested decision, that the intervener had demonstrated in the course of the procedure before the Opposition Division that: – ‘[it had] had a commercial presence in Europe since 1973’; – ‘[it had] manufactured audio and video tape components in Europe since 1988’; – ‘[it had] sales offices in Germany, France, Austria, Sweden, Poland [and] the United Kingdom’; – ‘in addition to a Community trade mark, [it had] national registrations of either or both the word mark TDK and the mark TDK and device in 12 of the Member States of the European Community, the earliest of which dates from 1969’; – ‘[it had], between October 1998 and September 1999, using its TDK trade marks, achieved a share in the 8 mm camcorder tape market of 49.5% in Great Britain and 22.1% in Europe; [and had], during the same period, achieved a share in the audio tape market of 64.1% in Great Britain and 39.3% in Europe’; – ‘[it had] sponsored, using its marks, five European musical tours/events featuring the Rolling Stones (1990), Paul McCartney (1991), Phil Collins (1994), Tina Turner (1996) and Janet Jackson (1998); every one of the World Championships in Athletics since 1983; at one time or another, the Finland national team in athletics and ice hockey, the Italian football club Milan AC, the Netherlands football club Ajax Amsterdam, in Spain, TDK Manresa, basketball club, in Sweden, the Uppsala Gators basketball team and, in the United Kingdom, Crystal Palace football club’; – ‘the mark appear[ed] either printed on the competitors’ event number or directly onto the players of competitors’ sports clothing ; this clothing [had] been available for


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purchase bearing the TDK mark and consist[ed] principally of sports clothing, including football shirts and shorts, basketball vests and shorts, track suits and the like’; – ‘the marks appear[ed] around stadia, on billboards, balloons and the like’. 54 In paragraph 30 of the contested decision, the Board of Appeal found that both the commercial and sponsorship activities referred to in the preceding paragraph extended throughout Europe and required the investment of substantial amounts of money, time and effort. It also held that the sponsored events were often televised or recorded, thereby ensuring wider exposure of the earlier marks to the public. 55 In paragraphs 31 and 32 of the contested decision, the Board of Appeal went on to consider the evidence put forward by the intervener and concluded that the earlier marks possessed a reputation and distinctive character. It stated as follows: ‘In the Board’s estimation, the material referred to above represents the results of a significant amount of investment both in effort, time and money which has been maintained over an unusually long and significant period of time in respect of the opponent’s audio and videotape goods and the promotion of the mark. The fact that market surveys are included together with actual sales figures and information about advertising, supports all the claims which the opponent has made in respect of the reputation and goodwill which attaches to its marks. The material points to the establishment and maintenance of a reputation in connection with sponsorship over a significant period of time and to the creation and existence of goodwill of considerable public interest and of a particular commercial value, justifying continuing investment. From the material filed, and the investment made by the opponent in promoting its mark by way of sponsorship, it is clear that the mark enjoys a reputation of significant value which must be founded upon the fact that it is known by a significant part of the public concerned in the Community. Since activities such as athletics, basketball, football and musical events attract the devotion and loyalty of “fans”, ardent admirers of pop stars and football teams and devotees of the particular sport in question, the Board is persuaded that the connection of the opponent’s mark with those activities will have attracted a very substantial amount of goodwill and reputation which goes beyond that which would simply attach to the goods which bear the mark. Accordingly, the opponent is entitled to claim for its mark the broader protection referred to above for the purposes of Article 8(5) [of Regulation No 40/94] as concluded by the Opposition Division. It follows that the mark, in addition to whatever distinctive character it has per se, the letters TDK having no connection with any of the goods at issue, … has an enhanced distinctive character because of the reputation which has accrued to it.’ 56 Having regard to the documents before the Court, the findings made in paragraphs 29 to 32 of the contested decision must be upheld. The intervener has, on the basis of Annexes A to R, taken as a whole, established the nature and scope of its commercial activities in Europe since 1988, as regards the production, marketing, sponsorship and advertising of the earlier marks in question; this extends to heavily populated Member States. 57 The Court also finds that the sales levels achieved by the goods bearing the earlier marks in question, such as audio and video cassettes, the use of which is widespread in European homes, and the size, frequency and regularity of sponsored events attracting large numbers of spectators at which those marks are used, support the finding of the Board of Appeal that the earlier marks in question satisfy the criteria laid down in the case-law in respect of reputation, that is to say, that they are known by a substantial part of the public.


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58 As regards the alleged lack of evidential value of certain of the annexes submitted by the intervener in order to establish the reputation of its earlier marks for the purposes of Article 8(5) of Regulation No 40/94 (see paragraphs 14 and 15 above), in particular Annex O, the Court finds that, even if their evidential value was inadequate, that would not undermine the findings set out in paragraphs 56 and 57 above. The Board of Appeal based its consideration of the reputation of the earlier marks in question on all the annexes submitted by the intervener. When they are read together, it is clear that the Board of Appeal did not commit any error in its assessment of the evidential value of the annexes taken as a whole. 59 There is accordingly no reason to set aside the contested decision as far as concerns the reputation of the earlier marks in question within the meaning of Article 8(5) of Regulation No 40/94. The taking of unfair advantage of the distinctive character or the reputation of the earlier marks 60 It is therefore necessary to consider whether the use of the mark applied for would take unfair advantage of the distinctive character or the reputation of the earlier marks. 61 The Board of Appeal set out in that regard (paragraphs 33 to 39 of the contested decision) the bases on which such an unfair advantage would arise and stated in particular as follows: ’37 In the Board’s estimation, the material provided by the opponent shows that the reputation which has accrued to it is perceived by a substantial part of the public, not only as a manufacturer of certain goods but also as reflecting the nature of its sponsorship activities which fall predominantly in the field of sports and in the staging of large musical events. 38 It is also undoubtedly the case that, as part of these sponsorship activities, the opponent produces or arranges for the production of clothing bearing its mark. Although the principal purpose of the goods is to promote the mark, it is nevertheless the case that the relevant public is used to seeing the mark on such goods in connection with sporting or musical events. 39 The applicant proposes to use the mark in respect of clothing, footwear and headgear without any restriction. This means that the specification includes every type of clothing including that which is suitable for sports. There is no reason to suppose that the applicant might not use the letters TDK upon T-shirts, shorts or track suits or similar sporting apparel. The same considerations must apply to footwear and headgear used in sports events. Since the mark applied for is identical to one of the opponent’s marks, the relevant public will assume that the clothing, footwear and headgear is produced by or under licence from TDK in connection with its sponsorship activities. This will mean that the applicant will attract to its goods all the goodwill currently associated with the opponent as a sponsor of world famous athletics and European musical events and in which the opponent has invested enormous amounts of time, effort and money as noted by the contested decision. This is both free-riding on the coat-tails of renowned marks and an attempt to trade on their reputation. In the Board’s estimation, this would amount to taking unfair advantage of both the distinctive character and repute of the earlier marks.’ 62 Thus, the Board of Appeal essentially based its conclusion on the following considerations. The reputation, as established, of the earlier marks and their distinctive character extended to the intervener’s activities of promotion and advertising in sponsoring sporting and musical events. As regards, more particularly, sporting events, the public is accustomed to seeing the TDK mark on clothing associated with such


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events. In addition, the use of the mark applied for by the applicant on clothing in general and, in particular, on clothing habitually used by the intervener in its sponsored sporting events, could lead the public to believe that such clothing was manufactured by, or under licence from, the intervener. On the basis of the evidence available to it, the Board of Appeal found that use by the applicant of the mark applied for could encourage the public to buy the applicant’s goods by reason of the association it would be likely to make between the TDK mark and the commercial value attached to the reputation and distinctive character of the earlier marks. 63 The applicant essentially calls into question the evidential value of the documents in the case on which the Board of Appeal’s conclusion was based. It maintains in particular that the fact that the goods it proposes to sell to the public will be sold through very different distribution channels and that the earlier marks, which appear on athletes’ identification numbers and on branded T-shirts (for example, Adidas) are associated in the mind of the public only with the intervener’s sponsorship activities (see paragraphs 33 and 21 above). 64 The Court would point out that the Board of Appeal is not required to establish actual and present harm to an earlier mark. It must simply have available to it prima facie evidence of a future risk, which is not hypothetical, of unfair advantage (SPA-FINDERS, paragraph 40). 65 It must also be noted that the concept of taking unfair advantage of the distinctive character or the reputation of the earlier mark must be understood as encompassing instances where there is clear exploitation and free-riding on the coat-tails of a famous mark or an attempt to trade upon its reputation (SPA-FINDERS, paragraph 51). The stronger the earlier mark’s distinctive character and reputation, the easier it will be to accept that detriment has been caused to it (General Motors, paragraph 30, and SPA-FINDERS, paragraph 41). 66 In the present case, it is clear that the intervener established the reputation of its earlier marks for the purposes of Article 8(5) of Regulation No 40/94 and that the Board of Appeal found (paragraph 32 of the contested decision), without being seriously challenged on the point, that the earlier marks had an enhanced distinctive character by reason of the reputation attached to them. That conclusion is, moreover, supported by the very high degree of penetration of the earlier marks in their reference markets. 67 In those circumstances, the Court finds that the Board of Appeal was entitled to take the view, based on the sponsorship activities of the intervener, particularly in the sporting field, that were the mark applied for to be used by the applicant on sports clothing – a possibility which cannot be ruled out – such use would lead to the perception that that clothing was manufactured by, or under licence from, the intervener. That in itself is sufficient to constitute prima facie evidence of a future risk, which is not hypothetical, of the taking of unfair advantage by the applicant of the reputation of the earlier marks, a reputation which is the result of the activities, efforts and investments undertaken by the intervener for more than 20 years. 68 It follows from all of the above that the single plea put forward by the applicant must be rejected and, accordingly, that the action must be dismissed.

On those grounds,

THE COURT OF FIRST INSTANCE (First Chamber)

hereby:

Dismisses the action.


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29. Case C-345/04,

REFERENCE for a preliminary ruling under Article 234 EC from the Bundesfinanzhof

(Germany), made by decision of 26 May 2004, received at the Court on 12 August

2004, in the proceedings

Centro Equestre da Lezíria Grande Lda

v

Bundesamt für Finanzen,


gives the following

Judgment

1 This reference for a preliminary ruling concerns the interpretation of Article 59 of the EC Treaty (now, after amendment, Article 49 EC). 2 The reference has been made in proceedings between Centro Equestre da Lezíria Grande Lda (‘CELG’), a company incorporated under Portuguese law, and the Bundesamt für Finanzen (Federal Finance Office) (Germany) (‘the Bundesamt’) concerning the latter’s refusal to allow an application for repayment of corporation tax deducted at source on income received by CELG in Germany in its capacity as a taxpayer with restricted tax liability. National legal context 3 Under Paragraph 2(1) of the Körperschaftsteuergesetz (German Law on Corporation Tax) (BGBl. 1991 I, p. 639) (‘the KStG’), companies which are not established in Germany have restricted liability to tax and are liable to corporation tax in Germany only on their income received in that country. 4 In accordance with Paragraph 49(1) of the Einkommensteuergesetz (Law on Income Tax) (BGB1. 1997 I, p. 821), in the version applicable in 1997 (‘the EStG 1997’), in conjunction with Paragraph 8(1) of the KStG and Article 17(2) of the Abkommen zwischen der Bundesrepublik Deutschland und der Portugiesischen Republik zur Vermeidung der Doppelbesteuerung auf dem Gebiet der Steuern vom Einkommen und vom Vermögen (Agreement between the Federal Republic of Germany and the Portuguese Republic for the prevention of double taxation in the field of income and wealth taxes) of 15 July 1980 (BGB1. 1982 II p. 129), the income received by a company incorporated under Portuguese law in connection with artistic performances given in Germany is liable to corporation tax in that country. 5 Paragraph 50a(4)(1) of the EStG (BGB1. 1990 I, p. 1898), in the version applicable in 1996, was worded as follows: ‘In the case of persons with restricted liability to tax, income tax shall be levied by means of retention at source on income from artistic, sporting or other performances organised in Germany or conducted in Germany, including income from other services provided in connection with those performances, irrespective of the person receiving the income …’.


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6 However, the third clause of the fourth sentence of Paragraph 50(5) of the EStG 1997, applicable retroactively to the 1996 tax year, provides: ‘[A] person subject to limited tax liability, whose income is subject to retention at source in accordance with Paragraph 50a(4)(1) or (2), [may] apply for full or partial repayment of the tax deducted and paid. Repayment shall be subject to the condition that the operating expenses or business costs that have a direct economic connection to that income are greater than half of that income.’ 7 It is apparent from the documents in the case-file submitted to the Court that, unlike persons with restricted liability, those with unrestricted liability to tax in Germany may deduct from their taxable income in that Member State all of the costs relating to artistic or sporting performances which took place in that country. The dispute in the main proceedings and the question referred for a preliminary ruling 8 CELG, the applicant in the main proceedings, is a capital company incorporated under Portuguese law which has its registered office and place of central management in Portugal. CELG has restricted liability to corporation tax in Germany, which is payable only on income received in that country. In 1996, it organised a tour in which equestrian presentations and lessons in dressage were given in 14 cities in various countries of the European Union, including 11 in Germany. 9 In 1997, CELG applied to the Bundesamt for repayment of the corporation tax that had been deducted at source on its income in Germany, namely a sum of DEM 71 758, on the basis of Paragraph 50(5) of the EStG 1997 and Paragraph 8(1) of the KStG. 10 To that end, CELG provided a certified Portuguese balance sheet which included a statement of the costs arising in relation to the whole of the 1996 tour. That statement set out communications, travel, accommodation, advertising and personnel costs, in addition to day-to-day expenses relating to the horses, water and electricity supply costs, costs relating to veterinary, medication and blacksmith services and to equipment for horses and riders, transporter and tax advice costs, together with writing-down costs for the horses. CELG subsequently claimed further costs relating to accountancy costs and the payment of licence fees. It sought to set 11/14ths of the total of those costs against the income it had received in Germany. 11 The Bundesamt refused to allow the repayment sought on the ground of the applicant’s failure to supply the original invoices relating to the expenditure claimed. 12 The objection lodged by CELG against that decision was dismissed on the ground, inter alia, of the absence of a direct economic connection between certain of the costs declared and the income received in Germany. 13 CELG appealed against that decision rejecting its application to the Finanzgericht Köln (Cologne Finance Court) (Germany). That court dismissed the appeal on the grounds that, firstly, in respect of some of the costs claimed, there was no direct connection to the income that was taxable in Germany and, secondly, the costs claimed did not represent more than 50% of that income. 14 CELG thereupon appealed on a point of law (‘Revision’) to the Bundesfinanzhof (Federal Finance Court) (Germany) against the decision of the Finanzgericht Köln. 15 The Bundesfinanzhof observes that it is apparent from the findings of fact made by the Finanzgericht Köln that the costs incurred by CELG that have a direct economic connection to the income which that company received in Germany do not exceed 50% of that income. It notes, however, that CELG also claims overhead costs and that, although there is some confusion surrounding those overhead costs, as regards their nature, composition and amount, and as to whether there is additional income to be


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taken into account, it is apparent from those findings of fact that all of the costs incurred by CELG, including those overhead costs, are greater than half of the income. 16 However, the Bundesfinanzhof considers that, with regard to the computation of taxable income, the difference in treatment of a resident taxpayer, who is fully liable, and a non-resident taxpayer, who has only restricted liability, raises doubts as to whether the third clause of the fourth sentence of Paragraph 50(5) of the EStG 1997 is compatible with Community law, especially with regard to the freedom to provide services guaranteed by Article 59 of the EC Treaty. It refers in that connection to the judgment of the Court in Case C-234/01 Gerritse [2003] ECR I-5933. 17 In those circumstances, the Bundesfinanzhof decided to stay the proceedings and to refer the following question to the Court for a preliminary ruling: ‘Is it contrary to Article 59 of the Treaty establishing the European Communities if a person with restricted tax liability in Germany who is a national of a Member State may claim repayment of tax deducted at source on his income in Germany only when the operating expenses that have a direct economic connection to that income are greater than half of that income?’ The question referred for a preliminary ruling 18 By its question, the national court wishes to know whether Article 59 of the EC Treaty precludes national legislation of a Member State, such as that at issue in the main proceedings, which, in the case of a taxpayer with restricted tax liability claiming repayment of corporation tax deducted at source, makes the deduction of operating expenses incurred in connection with activities which gave rise to the receipt of income in that State subject to the double condition that those expenses have a direct connection to that income in that State and that they are greater than half of that income. 19 As a preliminary point, it is to be noted that, according to settled case-law, although direct taxation falls within their competence, Member States must none the less exercise that competence consistently with Community law (see, to that effect, in particular, Case C-250/95 Futura Participations and Singer [1997] ECR I-2471, paragraph 19; Case C-294/97 Eurowings Luftverkehr [1999] ECR I-7447, paragraph 32; Case C-55/98 Vestergaard [1999] ECR I-7641, paragraph 15; Case C-141/99 AMID [2000] ECR I-11619, paragraph 19; and Case C-446/03 Marks & Spencer [2005] ECR I-10837, paragraph 29). 20 It is also to be noted that, according to the Court’s case-law, Article 59 of the EC Treaty requires the abolition of any restriction on the freedom to provide services imposed on the ground that the person providing a service is established in a Member State other than that in which the service is provided (see, to that effect, in particular, Case 205/84 Commission v Germany [1986] ECR 3755, paragraph 25; Case C-180/89 Commission v Italy [1991] ECR I-709, paragraph 15; and Case C-290/04 FKP ScorpioKonzertproduktionen [2006] ECR I-0000, paragraph 31). The existence of a direct economic connection 21 As is apparent from paragraph 18 above, the first condition for repayment of corporation tax deducted at source is that the operating expenses must have a direct economic connection to the income received in the State in which the activity is pursued. 22 It is clear from the Court’s case-law that a tax system under which, for the purposes of calculating the basis of assessment for non-resident taxpayers in a


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particular Member State, only profits and losses arising from their activities in that State are taken into account is consistent with the principle of territoriality enshrined in international tax law and recognised by Community law (see, to that effect, Futura Participations and Singer, paragraphs 21 and 22). 23 With regard to operating expenses which have a direct connection to the activity pursued by a non-resident in a Member State and which generated taxable income in that country, such expenses should, in principle, be taken into account in that State if residents are taxed on their net income after deduction of those expenses. In its judgment in Gerritse, the Court found that, for the purposes of taking such costs into account, residents and non-residents were placed in a comparable situation. Since the Member State granted residents the possibility of deducting the costs in question, it could not, in principle, preclude their being taken into account for non-residents (see, to that effect, Gerritse, paragraph 27). 24 Thus, where powers of taxation are exercised by a State in the territory in which activity has generated taxable income, it must be possible for the costs directly connected to that activity to be taken into account in the taxation of non-residents. In that connection, Community law does not preclude a Member State from going further, by allowing costs that do not have such a connection to be taken into account (see, to that effect, FKP Scorpio Konzertproduktionen, paragraphs 50 to 52). 25 Operating expenses directly connected to the income received in the Member State in which the activity is pursued must be understood as being expenses which have a direct economic connection to the provision of services which gave rise to taxation in that State and which are therefore inextricably linked to those services, such as travel and accommodation costs. In that context, the place and time at which the costs were incurred are immaterial. 26 It is apparent from the documents before the Court that CELG, which is established in Portugal, received income in Germany from its artistic activities. CELG incurred a number of operating expenses in connection with its presentations, some of which were incurred beforehand in the organisation and planning of those presentations, and others in the course of giving those presentations, in respect of which it seeks a deduction in Germany. It is for the referring court, before which the dispute has been brought and which must assume responsibility for the subsequent judicial decision, to determine in the main proceedings which of the operating expenses claimed by CELG are directly connected to the provision of services which gave rise to taxation in that State and are therefore inextricably linked to those services. 27 Article 59 of the EC Treaty does not therefore preclude national legislation from making repayment of corporation tax deducted at source on the income of a taxpayer with restricted tax liability subject to the condition that the operating expenses in respect of which that taxpayer seeks a deduction have a direct economic connection to the income received from activities pursued within the Member State concerned, provided that all of the costs that are inextricably linked to that activity are considered to have such a direct connection, irrespective of the place and time at which those costs were incurred. The requirement that the costs be greater than half of the income 28 The second condition laid down in the legislation at issue in the main proceedings concerning repayment of tax deducted at source on a non-resident’s income in Germany requires the operating expenses that have a direct economic connection to that income to be greater than half of that income.


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29 Such a condition is liable to constitute a restriction on the freedom to provide services of a company wishing to pursue artistic, sporting or other activities in a Member State other than that in which it is established. 30 The consequence of that condition is that, where such a company seeks repayment of tax deducted at source, it cannot automatically obtain a deduction in respect of the costs directly connected to the economic activity concerned when the income from that activity is taxed. 31 It must therefore be held that, by making deduction of the operating expenses incurred by a taxpayer with restricted tax liability subject to that additional condition, the legislation in issue in the main proceedings constitutes, in principle, a restriction that is prohibited under Article 59 of the EC Treaty. 32 It is accordingly necessary to consider whether such a restriction can be justified. 33 The justification put forward by the German Government that the national legislation is intended to avoid the double counting of costs, that is to say, in both the Member State in which the registered office is situated and the State in which the services were provided and the income taxed, cannot be accepted. 34 Firstly, it should be noted that the Agreement between the Federal Republic of Germany and the Portuguese Republic for the prevention of double taxation in the field of income and wealth taxes of 15 July 1980 applies what is known as the offsetting method. 35 It follows that a Portuguese company is taxed in Portugal on all of its income, including income from activities pursued in Germany, where that income is also taxed. Double taxation is avoided through deduction in the first State of an amount equal to the tax paid in the second State. Such a mechanism is appropriate for preventing the double counting of costs since, where it is applied by the first State, that State can check the operating expenses that have been taken into account in calculating the tax paid in the second State. 36 Moreover, Paragraph 50(5) of the EStG 1997 lays down a procedure under which the Ministry of Finance can provide the State of residence of a taxpayer with restricted tax liability with information concerning the application for repayment submitted by that taxpayer. That mechanism for cooperation between the competent national authorities also makes it possible to prevent any double counting of costs. Similarly, Council Directive 77/799/EEC of 19 December 1977 concerning mutual assistance by the competent authorities of the Member States in the field of direct taxation (OJ 1977 L 336, p. 15) also contributes to the realisation of that objective by providing for the exchange of information between the tax authorities concerned. 37 A restriction on the freedom to provide services cannot therefore be justified where it arises from national legislation which makes repayment of tax deducted at source on the income received in the Member State concerned by a taxpayer with restricted tax liability subject to the condition that the operating expenses directly connected to that income are greater than half of that income. It must therefore be concluded that Article 59 of the EC Treaty precludes such legislation. 38 In the light of the foregoing, the answer to the question referred must be that Article 59 of the EC Treaty does not preclude national legislation such as that at issue in the main proceedings in so far as that legislation makes repayment of corporation tax deducted at source on the income of a taxpayer with restricted tax liability subject to the condition that the operating expenses in respect of which a deduction is claimed for that purpose by that taxpayer have a direct economic connection to the income received from activities pursued in the Member State concerned, on condition that all the costs that are inextricably linked to that activity are considered to have such a direct


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connection, irrespective of the place and time at which those costs were incurred. By contrast, that article precludes such national legislation in so far as it makes repayment of that tax to that taxpayer subject to the condition that those same operating expenses exceed half of that income.

On those grounds,


hereby rules:

Article 59 of the EC Treaty (now, after amendment, Article 49 EC) does not preclude national legislation such as that at issue in the main proceedings in so far as that legislation makes repayment of corporation tax deducted at source on the income of a taxpayer with restricted tax liability subject to the condition that the operating expenses in respect of which a deduction is claimed for that purpose by that taxpayer have a direct economic connection to the income received from activities pursued in the Member State concerned, on condition that all the costs that are inextricably linked to that activity are considered to have such a direct connection, irrespective of the place and time at which those costs were incurred. By contrast, that article precludes such national legislation in so far as it makes repayment of that tax to that taxpayer subject to the condition that those same operating expenses exceed half of that income.


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30. Case C-519/04 P,

APPEAL under Article 56 of the Statute of the Court of Justice lodged on

22 December 2004,

David Meca-Medina,

residing in Barcelona (Spain),

Igor Majcen,

residing in Ljubljana (Slovenia),

appellants,

the other parties to the proceedings being:


defendant at first instance,

Republic of Finland,

intervener at first instance,


gives the following

Judgment

1 By their appeal, Mr Meca-Medina and Mr Majcen ( ‘the appellants’) ask the Court to set aside the judgment of the Court of First Instance of the European Communities of 30 September 2004 in Case T-313/02 Meca-Medina and Majcen v Commission [2004] ECR II-3291 (‘the contested judgment’) by which the latter dismissed their action for annulment of the decision of the Commission of the European Communities of 1 August 2002 rejecting the complaint – lodged by them against the International Olympic Committee (‘the IOC’) – seeking a declaration that certain rules adopted by the IOC and implemented by the Fédération internationale de natation (International Swimming Federation; ‘FINA’) and certain practices relating to doping control were incompatible with the Community rules on competition and freedom to provide services (Case COMP/38158 – Meca-Medina and Majcen/IOC) (‘the decision at issue’). Background to the dispute 2 The Court of First Instance summarised the relevant anti-doping rules (‘the anti-doping rules at issue’) in paragraphs 1 to 6 of the contested judgment: ‘1 The [IOC] is the supreme authority of the Olympic Movement, which brings together the various international sporting federations, among which is [FINA]). 2 FINA implements for swimming, by its Doping Control Rules (“the DCR”, cited here in the version in force at the material time), the Olympic Movement’s Anti-Doping Code. DCR 1.2(a) states that the offence of doping “occurs when a banned substance is found to be present within a competitor’s body tissue or fluids”. That definition corresponds to that in Article 2(2) of the abovementioned Anti-Doping


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Code, where doping is defined as the presence in an athlete’s body of a prohibited substance or the finding that such a substance or a prohibited technique has been used. 3 Nandrolone and its metabolites, Norandrosterone (NA) and Norethiocholanolone (NE) (hereinafter together called “Nandrolone”), are prohibited anabolic substances. However, according to the practice of the 27 laboratories accredited by the IOC and FINA, and to take account of the possibility of endogenous, therefore innocent, production of Nandrolone, the presence of that substance in a male athlete’s body is defined as doping only if it exceeds a limit of 2 nanogrammes (ng) per millilitre (ml) of urine. 4 For a first offence of doping with an anabolic substance, DCR 9.2(a) requires the suspension of the athlete for a minimum of four years, which may however be reduced, under the final sentence of DCR 9.2, DCR 9.3 and DCR 9.10, if the athlete proves that he did not knowingly take the prohibited substance or establishes how that substance could be present in his body without negligence on his part. 5 The penalties are imposed by FINA’s Doping Panel, whose decisions are subject to appeal to the Court of Arbitration for Sport (“the CAS”) under DCR 8.9. The CAS, which is based in Lausanne, is financed and administered by an organisation independent of the IOC, the International Council of Arbitration for Sport (“the ICAS”). 6 The CAS’s rulings are subject to appeal to the Swiss Federal Court, which has jurisdiction to review international arbitration awards made in Switzerland.’ 3 The factual background to the dispute was summarised by the Court of First Instance in paragraphs 7 to 20 of the contested judgment: ‘7 The applicants are two professional athletes who compete in long-distance swimming, the aquatic equivalent of the marathon. 8 In an anti-doping test carried out on 31 January 1999 during the World Cup in that discipline at Salvador de Bahia (Brazil), where they had finished first and second respectively, the applicants tested positive for Nandrolone. The level found for Mr D. Meca-Medina was 9.7 ng/ml and that for Mr I. Majcen 3.9 ng/ml. 9 On 8 August 1999, FINA’s Doping Panel suspended the applicants for a period of four years. 10 On the applicants’ appeal, the CAS, by arbitration award of 29 February 2000, confirmed the suspension. 11 In January 2000, certain scientific experiments showed that Nandrolone’s metabolites can be produced endogenously by the human body at a level which may exceed the accepted limit when certain foods, such as boar meat, have been consumed. 12 In view of that development, FINA and the applicants consented, by an arbitration agreement of 20 April 2000, to refer the case anew to the CAS for reconsideration. 13 By arbitration award of 23 May 2001, the CAS reduced the penalty to two years’ suspension. 14 The applicants did not appeal against that award to the Swiss Federal Court. 15 By letter of 30 May 2001, the applicants filed a complaint with the Commission, under Article 3 of Council Regulation No 17 of 6 February 1962: First Regulation implementing Articles [81] and [82] of the Treaty (OJ, English Special Edition 1959-1962, p. 87), alleging a breach of Article 81 EC and/or Article 82 EC. 16 In their complaint, the applicants challenged the compatibility of certain regulations adopted by the IOC and implemented by FINA and certain practices relating to doping control with the Community rules on competition and freedom to


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provide services. First of all, the fixing of the limit at 2 ng/ml is a concerted practice between the IOC and the 27 laboratories accredited by it. That limit is scientifically unfounded and can lead to the exclusion of innocent or merely negligent athletes. In the applicants’ case, the excesses could have been the result of the consumption of a dish containing boar meat. Also, the IOC’s adoption of a mechanism of strict liability and the establishment of tribunals responsible for the settlement of sports disputes by arbitration (the CAS and the ICAS) which are insufficiently independent of the IOC strengthens the anti-competitive nature of that limit. 17 According to that complaint, the application of those rules (hereinafter “the anti-doping rules at issue”) leads to the infringement of the athletes’ economic freedoms, guaranteed inter alia by Article 49 EC and, from the point of view of competition law, to the infringement of the rights which the athletes can assert under Articles 81 EC and 82 EC. 18 By letter of 8 March 2002, the Commission informed the applicants, in accordance with Article 6 of Commission Regulation (EC) No 2842/98 of 22 December 1998 on the hearing of parties in certain proceedings under Articles [81] and [82] of the EC Treaty (OJ 1998 L 354, p. 18), of the reasons for which it considered that the complaint should not be upheld. 19 By letter of 11 April 2002, the applicants sent the Commission their observations on the letter of 8 March 2002. 20 By decision of 1 August 2002 …, the Commission, after analysing the anti-doping rules at issue according to the assessment criteria of competition law and concluding that those rules did not fall foul of the prohibition under Articles 81 EC and 82 EC, rejected the applicants’ complaint …’. Procedure before the Court of First Instance and the contested judgment 4 On 11 October 2002, the present appellants brought an action before the Court of First Instance to have the decision at issue set aside. They raised three pleas in law in support of their action. First, the Commission made a manifest error of assessment in fact and in law, by deciding that the IOC is not an undertaking within the meaning of the Community case-law. Second, it misapplied the criteria established by the Court of Justice in Case C-309/99 Wouters and Others [2002] ECR I-1577, in deciding that the anti-doping rules at issue are not a restriction of competition within the meaning of Article 81 EC. Finally, the Commission made a manifest error of assessment in fact and in law at point 71 of the decision at issue, in rejecting the grounds under Article 49 EC relied upon by the appellants to challenge the anti-doping rules. 5 On 24 January 2003, the Republic of Finland sought leave to intervene in support of the Commission. By order of 25 February 2003, the President of the Fourth Chamber of the Court of First Instance granted leave. 6 By the contested judgment, the Court of First Instance dismissed the action brought by the present appellants. 7 In paragraphs 40 and 41 of the contested judgment, the Court of First Instance held, on the basis of case-law of the Court of Justice, that while the prohibitions laid down by Articles 39 EC and 49 EC apply to the rules adopted in the field of sport that concern the economic aspect which sporting activity can present, on the other hand those prohibitions do not affect purely sporting rules, that is to say rules relating to questions of purely sporting interest and, as such, having nothing to do with economic activity.


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8 The Court of First Instance observed, in paragraph 42 of the contested judgment, that the fact that purely sporting rules may have nothing to do with economic activity, with the result that they do not fall within the scope of Articles 39 EC and 49 EC, means, also, that they have nothing to do with the economic relationships of competition, with the result that they also do not fall within the scope of Articles 81 EC and 82 EC. 9 In paragraphs 44 and 47 of the contested judgment, the Court of First Instance held that the prohibition of doping is based on purely sporting considerations and therefore has nothing to do with any economic consideration. It concluded that the rules to combat doping consequently cannot come within the scope of the Treaty provisions on the economic freedoms and, in particular, of Articles 49 EC, 81 EC and 82 EC. 10 The Court of First Instance held, in paragraph 49 of the contested judgment, that the anti-doping rules at issue, which have no discriminatory aim, are intimately linked to sport as such. It found furthermore, in paragraph 57 of the contested judgment, that the fact that the IOC might possibly, when adopting the anti-doping rules at issue, have had in mind the concern, legitimate according to the present appellants themselves, of safeguarding the economic potential of the Olympic Games is not sufficient to alter the purely sporting nature of those rules. 11 The Court of First Instance further stated, in paragraph 66 of the contested judgment, that since the Commission concluded in the decision at issue that the anti-doping rules at issue fell outside the scope of Articles 81 EC and 82 EC because of their purely sporting nature, the reference in that decision to the method of analysis in Wouters and Others cannot, in any event, bring into question that conclusion. The Court held in addition, in paragraph 67 of the contested judgment, that the challenging of those rules fell within the jurisdiction of the sporting dispute settlement bodies. 12 The Court of First Instance also dismissed the third plea put forward by the present appellants, holding, in paragraph 68 of the contested judgment, that since the anti-doping rules at issue were purely sporting, they did not fall within the scope of Article 49 EC. Forms of order sought on appeal 13 In their appeal, the appellants claim that the Court should: – set aside the contested judgment; – grant the form of order sought before the Court of First Instance; – order the Commission to pay the costs of both sets of proceedings. 14 The Commission contends that the Court should: – dismiss the appeal in its entirety; – in the alternative, grant the form of order sought at first instance and dismiss the action for annulment of the decision at issue; – order the appellants to pay the costs including those of the proceedings at first instance. 15 The Republic of Finland contends that the Court should: – dismiss the appeal in its entirety. The appeal 16 By their arguments, the appellants put forward four pleas in law in support of their appeal. By the first plea, which is in several parts, they submit that the contested judgment is vitiated by an error of law in that the Court of First Instance held that the anti-doping rules at issue did not fall within the scope of Articles 49 EC, 81 EC and


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82 EC. By the second plea, they contend that the contested judgment should be annulled because it distorts the clear sense of the decision at issue. By the third plea, they argue that the contested judgment fails to comply with formal requirements because certain of its grounds are contradictory and the reasoning is inadequate. By the fourth plea, they submit that the contested judgment was delivered following flawed proceedings, since the Court of First Instance infringed the rights of the defence. The first plea 17 The first plea, alleging an error of law, is in three parts. The appellants submit, first, that the Court of First Instance was mistaken as to the interpretation of the Court of Justice’s case-law relating to the relationship between sporting rules and the scope of the Treaty provisions. They submit, second, that the Court of First Instance misconstrued the effect, in the light of that case-law, of rules prohibiting doping, generally, and the anti-doping rules at issue, in particular. They contend, third, that the Court of First Instance was wrong in holding that the anti-doping rules at issue could not be likened to market conduct falling within the scope of Articles 81 EC and 82 EC and therefore could not be subject to the method of analysis established by the Court of Justice in Wouters and Others. The first part of the plea – Arguments of the parties 18 In the appellants’ submission, the Court of First Instance misinterpreted the case-law of the Court of Justice according to which sport is subject to Community law only in so far as it constitutes an economic activity. In particular, contrary to what was held by the Court of First Instance, purely sporting rules have never been excluded generally by the Court of Justice from the scope of the provisions of the Treaty. While the Court of Justice has held the formation of national teams to be a question of purely sporting interest and, as such, having nothing to do with economic activity, the Court of First Instance could not infer therefrom that any rule relating to a question of purely sporting interest has, as such, nothing to do with economic activity and thus is not covered by the prohibitions laid down in Articles 39 EC, 49 EC, 81 EC and 82 EC. The concept of a purely sporting rule must therefore be confined solely to rules relating to the composition and formation of national teams. 19 The appellants further contend that the Court of First Instance was wrong in finding that rules of purely sporting interest are necessarily inherent in the organisation and proper conduct of competitive sport, when, according to the case-law of the Court of Justice, they must also relate to the particular nature and context of sporting events. The appellants also submit that, because professional sporting activity is, in practical terms, indivisible in nature, the distinction drawn by the Court of First Instance between the economic and the non-economic aspect of the same sporting activity is entirely artificial. 20 In the Commission’s submission, the Court of First Instance applied correctly the case-law of the Court of Justice according to which purely sporting rules are, as such, not covered by the rules on freedom of movement. This does therefore involve an exception of general application for purely sporting rules, which is thus not limited to the composition and formation of national teams. Nor does the Commission see


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how a rule of purely sporting interest and relating to the specific nature of sporting events could fail to be inherent in the proper conduct of the events. 21 In the Finnish Government’s submission, the Court of First Instance’s approach is consistent with Community law. – Findings of the Court 22 It is to be remembered that, having regard to the objectives of the Community, sport is subject to Community law in so far as it constitutes an economic activity within the meaning of Article 2 EC (see Case 36/74 Walrave and Koch [1974] ECR 1405, paragraph 4; Case 13/76 Donà [1976] ECR 1333, paragraph 12; Case C-415/93 Bosman [1995] ECR I-4921, paragraph 73; Joined Cases C-51/96 and C-191/97 Deliège [2000] ECR I-2549, paragraph 41; and Case C-176/96 Lehtonen and Castors Braine [2000] ECR I-2681, paragraph 32). 23 Thus, where a sporting activity takes the form of gainful employment or the provision of services for remuneration, which is true of the activities of semi-professional or professional sportsmen (see, to this effect, Walrave and Koch, paragraph 5, Donà, paragraph 12, and Bosman, paragraph 73), it falls, more specifically, within the scope of Article 39 EC et seq. or Article 49 EC et seq. 24 These Community provisions on freedom of movement for persons and freedom to provide services not only apply to the action of public authorities but extend also to rules of any other nature aimed at regulating gainful employment and the provision of services in a collective manner (Deliège, paragraph 47, and Lehtonen and Castors Braine, paragraph 35). 25 The Court has, however, held that the prohibitions enacted by those provisions of the Treaty do not affect rules concerning questions which are of purely sporting interest and, as such, have nothing to do with economic activity (see, to this effect, Walrave and Koch, paragraph 8). 26 With regard to the difficulty of severing the economic aspects from the sporting aspects of a sport, the Court has held (in Donà, paragraphs 14 and 15) that the provisions of Community law concerning freedom of movement for persons and freedom to provide services do not preclude rules or practices justified on non-economic grounds which relate to the particular nature and context of certain sporting events. It has stressed, however, that such a restriction on the scope of the provisions in question must remain limited to its proper objective. It cannot, therefore, be relied upon to exclude the whole of a sporting activity from the scope of the Treaty (Bosman, paragraph 76, and Deliège, paragraph 43). 27 In light of all of these considerations, it is apparent that the mere fact that a rule is purely sporting in nature does not have the effect of removing from the scope of the Treaty the person engaging in the activity governed by that rule or the body which has laid it down. 28 If the sporting activity in question falls within the scope of the Treaty, the conditions for engaging in it are then subject to all the obligations which result from the various provisions of the Treaty. It follows that the rules which govern that activity must satisfy the requirements of those provisions, which, in particular, seek to ensure freedom of movement for workers, freedom of establishment, freedom to provide services, or competition. 29 Thus, where engagement in the sporting activity must be assessed in the light of the Treaty provisions relating to freedom of movement for workers or freedom to provide services, it will be necessary to determine whether the rules which govern that


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activity satisfy the requirements of Articles 39 EC and 49 EC, that is to say do not constitute restrictions prohibited by those articles (Deliège, paragraph 60). 30 Likewise, where engagement in the activity must be assessed in the light of the Treaty provisions relating to competition, it will be necessary to determine, given the specific requirements of Articles 81 EC and 82 EC, whether the rules which govern that activity emanate from an undertaking, whether the latter restricts competition or abuses its dominant position, and whether that restriction or that abuse affects trade between Member States. 31 Therefore, even if those rules do not constitute restrictions on freedom of movement because they concern questions of purely sporting interest and, as such, have nothing to do with economic activity (Walrave and Koch and Donà), that fact means neither that the sporting activity in question necessarily falls outside the scope of Articles 81 EC and 82 EC nor that the rules do not satisfy the specific requirements of those articles. 32 However, in paragraph 42 of the contested judgment, the Court of First Instance held that the fact that purely sporting rules may have nothing to do with economic activity, with the result that they do not fall within the scope of Articles 39 EC and 49 EC, means, also, that they have nothing to do with the economic relationships of competition, with the result that they also do not fall within the scope of Articles 81 EC and 82 EC. 33 In holding that rules could thus be excluded straightaway from the scope of those articles solely on the ground that they were regarded as purely sporting with regard to the application of Articles 39 EC and 49 EC, without any need to determine first whether the rules fulfilled the specific requirements of Articles 81 EC and 82 EC, as set out in paragraph 30 of the present judgment, the Court of First Instance made an error of law. 34 Accordingly, the appellants are justified in asserting that, in paragraph 68 of the contested judgment, the Court of First Instance erred in dismissing their application on the ground that the anti-doping rules at issue were subject to neither Article 49 EC nor competition law. The contested judgment must therefore be set aside, and there is no need to examine either the remaining parts of the first plea or the other pleas put forward by the appellants. Substance 35 In accordance with Article 61 of the Statute of the Court of Justice, since the state of the proceedings so permits it is appropriate to give judgment on the substance of the appellants’ claims for annulment of the decision at issue. 36 The appellants advanced three pleas in support of their action. They criticised the Commission for having found, first, that the IOC was not an undertaking within the meaning of the Community case-law, second, that the anti-doping rules at issue were not a restriction of competition within the meaning of Article 81 EC and, finally, that their complaint did not contain facts capable of leading to the conclusion that there could have been an infringement of Article 49 EC. The first plea 37 The appellants contend that the Commission was wrong not to treat the IOC as an undertaking for the purposes of application of Article 81 EC.


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38 It is, however, common ground that, in order to rule on the complaint submitted to it by the appellants in the light of Articles 81 EC and 82 EC, the Commission sought, as is explicitly made clear in point 37 of the decision at issue, to proceed on the basis that the IOC was to be treated as an undertaking and, within the Olympic Movement, as an association of international and national associations of undertakings. 39 Since this plea is founded on an incorrect reading of the decision at issue, it is of no consequence and must, for that reason, be dismissed. The second plea 40 The appellants contend that in rejecting their complaint the Commission wrongly decided that the anti-doping rules at issue were not a restriction of competition within the meaning of Article 81 EC. They submit that the Commission misapplied the criteria established by the Court of Justice in Woutersand Others in justifying the restrictive effects of the anti-doping rules on their freedom of action. According to the appellants, first, those rules are, contrary to the Commission’s findings, in no way solely inherent in the objectives of safeguarding the integrity of competitive sport and athletes’ health, but seek to protect the IOC’s own economic interests. Second, in laying down a maximum level of 2 ng/ml of urine which does not correspond to any scientifically safe criterion, those rules are excessive in nature and thus go beyond what is necessary in order to combat doping effectively. 41 It should be stated first of all that, while the appellants contend that the Commission made a manifest error of assessment in treating the overall context in which the IOC adopted the rules at issue like that in which the Netherlands Bar had adopted the regulation upon which the Court was called to rule in Wouters and Others, they do not provide any accompanying detail to enable the merits of this submission to be assessed. 42 Next, the compatibility of rules with the Community rules on competition cannot be assessed in the abstract (see, to this effect, Case C-250/92 DLG [1994] ECR I-5641, paragraph 31). Not every agreement between undertakings or every decision of an association of undertakings which restricts the freedom of action of the parties or of one of them necessarily falls within the prohibition laid down in Article 81(1) EC. For the purposes of application of that provision to a particular case, account must first of all be taken of the overall context in which the decision of the association of undertakings was taken or produces its effects and, more specifically, of its objectives. It has then to be considered whether the consequential effects restrictive of competition are inherent in the pursuit of those objectives (Wouters and Others, paragraph 97) and are proportionate to them. 43 As regards the overall context in which the rules at issue were adopted, the Commission could rightly take the view that the general objective of the rules was, as none of the parties disputes, to combat doping in order for competitive sport to be conducted fairly and that it included the need to safeguard equal chances for athletes, athletes’ health, the integrity and objectivity of competitive sport and ethical values in sport. 44 In addition, given that penalties are necessary to ensure enforcement of the doping ban, their effect on athletes’ freedom of action must be considered to be, in principle, inherent itself in the anti-doping rules. 45 Therefore, even if the anti-doping rules at issue are to be regarded as a decision of an association of undertakings limiting the appellants’ freedom of action, they do


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not, for all that, necessarily constitute a restriction of competition incompatible with the common market, within the meaning of Article 81 EC, since they are justified by a legitimate objective. Such a limitation is inherent in the organisation and proper conduct of competitive sport and its very purpose is to ensure healthy rivalry between athletes. 46 While the appellants do not dispute the truth of this objective, they nevertheless contend that the anti-doping rules at issue are also intended to protect the IOC’s own economic interests and that it is in order to safeguard this objective that excessive rules, such as those contested in the present case, are adopted. The latter cannot therefore, in their submission, be regarded as inherent in the proper conduct of competitive sport and fall outside the prohibitions in Article 81 EC. 47 It must be acknowledged that the penal nature of the anti-doping rules at issue and the magnitude of the penalties applicable if they are breached are capable of producing adverse effects on competition because they could, if penalties were ultimately to prove unjustified, result in an athlete’s unwarranted exclusion from sporting events, and thus in impairment of the conditions under which the activity at issue is engaged in. It follows that, in order not to be covered by the prohibition laid down in Article 81(1) EC, the restrictions thus imposed by those rules must be limited to what is necessary to ensure the proper conduct of competitive sport (see, to this effect, DLG, paragraph 35). 48 Rules of that kind could indeed prove excessive by virtue of, first, the conditions laid down for establishing the dividing line between circumstances which amount to doping in respect of which penalties may be imposed and those which do not, and second, the severity of those penalties. 49 Here, that dividing line is determined in the anti-doping rules at issue by the threshold of 2 ng/ml of urine above which the presence of Nandrolone in an athlete’s body constitutes doping. The appellants contest that rule, asserting that the threshold adopted is set at an excessively low level which is not founded on any scientifically safe criterion. 50 However, the appellants fail to establish that the Commission made a manifest error of assessment in finding that rule to be justified. 51 It is common ground that Nandrolone is an anabolic substance the presence of which in athletes’ bodies is liable to improve their performance and compromise the fairness of the sporting events in which they participate. The ban on that substance is accordingly in principle justified in light of the objective of anti-doping rules. 52 It is also common ground that that substance may be produced endogenously and that, in order to take account of this phenomenon, sporting bodies, including the IOC by means of the anti-doping rules at issue, have accepted that doping is considered to have occurred only where the substance is present in an amount exceeding a certain threshold. It is therefore only if, having regard to scientific knowledge as it stood when the anti-doping rules at issue were adopted or even when they were applied to punish the appellants, in 1999, the threshold is set at such a low level that it should be regarded as not taking sufficient account of this phenomenon that those rules should be regarded as not justified in light of the objective which they were intended to achieve. 53 It is apparent from the documents before the Court that at the material time the average endogenous production observed in all studies then published was 20 times lower than 2ng/ml of urine and that the maximum endogenous production value observed was nearly a third lower. While the appellants contend that, from 1993, the IOC could not have been unaware of the risk reported by an expert that merely


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consuming a limited quantity of boar meat could cause entirely innocent athletes to exceed the threshold in question, it is not in any event established that at the material time this risk had been confirmed by the majority of the scientific community. Moreover, the results of the studies and the experiments carried out on this point subsequent to the decision at issue have no bearing in any event on the legality of that decision. 54 In those circumstances, and as the appellants do not specify at what level the threshold in question should have been set at the material time, it does not appear that the restrictions which that threshold imposes on professional sportsmen go beyond what is necessary in order to ensure that sporting events take place and function properly. 55 Since the appellants have, moreover, not pleaded that the penalties which were applicable and were imposed in the present case are excessive, it has not been established that the anti-doping rules at issue are disproportionate. 56 Accordingly, the second plea must be dismissed. The third plea 57 The appellants contend that the decision at issue is vitiated by an error of law in that it rejects, at point 71, their argument that the IOC rules infringe Article 49 EC. 58 However, the application made by the appellants to the Court of First Instance relates to the legality of a decision adopted by the Commission following a procedure which was conducted on the basis of a complaint lodged pursuant to Council Regulation No 17 of 6 February 1962: First Regulation implementing Articles [81] and [82] of the Treaty (OJ, English Special Edition 1959-1962, p. 87). It follows that judicial review of that decision must necessarily be limited to the competition rules as resulting from Articles 81 EC and 82 EC, and consequently cannot extend to compliance with other provisions of the Treaty (see, to this effect, the order of 23 February 2006 in Case C-171/05 P Piau, not published in the ECR, paragraph 58). 59 Accordingly, whatever the ground on which the Commission rejected the argument relied upon by the appellants with regard to Article 49 EC, the plea which they now put forward is misplaced and must accordingly also be rejected. 60 In light of all the foregoing considerations, the action brought by the appellants challenging the decision at issue must therefore be dismissed.

On those grounds,


hereby:

1. Sets aside the judgment of the Court of First Instance of the European Communities of 30 September 2004 in Case T-313/02 Meca-Medina and Majcen v Commission; 2. Dismisses the action under No T-313/02 brought before the Court of First Instance for annulment of the Commission’s decision of 1 August 2002 rejecting the complaint lodged by Mr Meca-Medina and Mr Majcen.


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31. Joined Cases C-338/04, C-359/04 and C-360/04,

REFERENCES for a preliminary ruling under Article 234 EC, by the Tribunale di

Larino (Italy) (Case C-338/04) and the Tribunale di Teramo (Italy) (Cases C-359/04

and C-360/04), by decisions of 8 July 2004 and 31 July 2004, received at the Court on 6

August 2004 and 18 August 2004 respectively, in the criminal proceedings before those

courts against

Massimiliano Placanica (Case C-338/04),

Christian Palazzese (Case C-359/04),

Angelo Sorricchio (Case C-360/04),


gives the following

Judgment

1 The references for a preliminary ruling concern the interpretation of Articles 43 EC and 49 EC. 2 The references have been made in the course of criminal proceedings against Mr Placanica, Mr Palazzese and Mr Sorricchio for failure to comply with the Italian legislation governing the collection of bets. The legal and factual context of these references is similar to the situations that gave rise to the judgments in Case C-67/98 Zenatti [1999] ECR I-7289 and Case C-243/01 Gambelli and Others [2003] ECR I-13031. Legal context 3 Italian legislation essentially provides that participation in the organising of games of chance, including the collection of bets, is subject to possession of a licence and a police authorisation. Any infringement of that legislation carries criminal penalties of up to three years’ imprisonment. Licences 4 Until 2002 the awarding of licences for the organising of bets on sporting events was managed by the Italian National Olympic Committee (Comitato olimpico nazionale italiano (CONI)) and the National Union for the Improvement of Horse Breeds (Unione nazionale per l’incremento delle razze equine (UNIRE)), which had the authority to organise bets relating to sporting events organised or conducted under their supervision. That resulted from Legislative Decree No 496 of 14 April 1948 (GURI No 118 of 14 April 1948), read in conjunction with Article 3(229) of Law No 549 of 28 December 1995 (GURI No 302 of 29 December 1995, Ordinary Supplement) and Article 3(78) of Law No 662 of 23 December 1996 (GURI No 303 of 28 December 1996, Ordinary Supplement). 5 Specific rules for the award of licences were laid down, in the case of CONI, by Decree No 174 of the Ministry of Economic Affairs and Finance of 2 June 1998 (GURI


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No 129 of 5 June 1998; ‘Decree No 174/98’) and, in the case of UNIRE, by Decree No 169 of the President of the Republic of 8 April 1998 (GURI No 125 of 1 June 1998; ‘Decree No 169/98’). 6 Decree No 174/98 provided that the award of licences by CONI was to be made by means of calls for tender. When awarding the licences, CONI had, in particular, to make sure that the share ownership of the licence holders was transparent and that the outlets for collecting and taking bets were rationally distributed across the national territory. 7 In order to ensure transparency of share ownership, Article 2(6) of Decree No 174/98 provided that where the licence holder took the form of a company, shares carrying voting rights had to be issued in the name of natural persons, general partnerships or limited partnerships, and could not be transferred by simple endorsement. 8 Similar provision was made with regard to the award of licences by UNIRE. 9 In 2002, following a number of legislative initiatives, the competences of CONI and UNIRE with respect to bets on sporting events were transferred to the independent authority for the administration of State monopolies, acting under the supervision of the Ministry of Economic Affairs and Finance. 10 Pursuant to an amendment introduced at that time by Article 22(11) of Law No 289 of 27 December 2002 (GURI No 305 of 31 December 2002, Ordinary Supplement; ‘the 2003 Finance Law’) all companies – without any limitation as to their form – may now take part in tender procedures for the award of licences. Police authorisation 11 Police authorisation may be granted only to those who hold a licence or authorisation granted by a Ministry or other body to which the law reserves the right to organise or manage betting. Those conditions are laid down in Article 88 of Royal Decree No 773, approving a single text of the laws on public security (Regio Decreto No 773, Testo unico delle leggi di pubblica sicurezza), of 18 June 1931 (GURI No 146 of 26 June 1931), as amended by Article 37(4) of Law No 388 of 23 December 2000 (GURI No 302 of 29 December 2000, Ordinary Supplement; ‘the Royal Decree’). 12 Furthermore, by virtue of Article 11 of the Royal Decree, read in conjunction with Article 14 thereof, a police authorisation may not be issued to a person who has had certain penalties imposed on him or who has been convicted of certain offences, in particular offences reflecting a lack of probity or good conduct, and infringements of the betting and gaming legislation. 13 Once authorisation has been granted, the holder must, pursuant to Article 16 of the Royal Decree, permit law enforcement officials access at any time to the premises where the authorised activity is pursued. Criminal penalties 14 Article 4 of Law No 401 of 13 December 1989 on gaming, clandestine betting and ensuring the proper conduct of sporting contests (GURI No 294 of 18 December 1989) as amended by Article 37(5) of Law No 388 (‘Law No 401/89’) provides as follows in respect of criminal penalties for malpractice in the organising of games of chance: ‘1. Any person who unlawfully participates in the organising of lotteries, betting or pools reserved by law to the State or to entities operating under licence from the State


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shall be liable to a term of imprisonment of 6 months to 3 years. Any person who organises betting or pools in respect of sporting events run by CONI, or by organisations under the authority of CONI, or by UNIRE shall be liable to the same penalty. Any person who unlawfully participates in the public organising of betting on other contests between people or animals, or on games of skill, shall be liable to a term of imprisonment of 3 months to 1 year and a minimum fine of ITL 1 000 000. … 2. Any person who advertises competitions, games or betting organised in the manner described in paragraph 1, albeit without being an accomplice to an offence defined therein, shall be liable to a term of imprisonment of up to 3 months and a fine of between ITL 100 000 and ITL 1 000 000. 3. Any person who participates in competitions, games or betting organised in the manner described in paragraph 1, albeit without being an accomplice to an offence defined therein, shall be liable to a term of imprisonment of up to 3 months or a fine of between ITL 100 000 and ITL 1 000 000. … 4a. The penalties laid down in this article shall be applicable to any person who, without the concession, authorisation or licence required by Article 88 of [the Royal Decree], carries out activities in Italy for the purposes of accepting or collecting, or, in any case, of assisting the acceptance or in any way whatsoever the collection, including by telephone or by data transfer, of bets of any kind accepted by any person in Italy or abroad. …’ Case-law of the Corte suprema di cassazione 15 In its judgment No 111/04 of 26 April 2004 in Gesualdi, the Corte suprema di cassazione (Supreme Court of Cassation) (Italy) was called upon to determine whether the Italian betting and gaming legislation is compatible with Articles 43 EC and 49 EC. On completion of its analysis, that court reached the conclusion that the Italian legislation does not conflict with Articles 43 EC and 49 EC. 16 In Gesualdi, the Corte suprema di cassazione noted that, for several years, the Italian legislature had been pursuing a policy of expansion in the betting and gaming sector with the manifest aim of increasing tax revenue, and that the Italian legislation could not be justified by reference to the aim of protecting consumers or of limiting their propensity to gamble or of limiting the availability of games of chance. Rather, the Corte suprema di cassazione identified as the true purpose of the Italian legislation a desire to channel betting and gaming activities into systems that are controllable, with the objective of preventing their exploitation for criminal purposes. That is why the Italian legislation provided for the control and supervision of the persons who operate betting and tipster contests, as well as the premises in which they do so. In the view of the Corte suprema di cassazione, that objective is sufficient in itself to justify the restrictions on the freedom of establishment and the freedom to provide services. 17 As regards the conditions designed to ensure the transparency of the share ownership of licence holders – the principal effect of which is to exclude from tender procedures for licences companies whose individual shareholders are not always identifiable at any given moment – the Corte suprema di cassazione found in Gesualdi that the Italian legislation did not discriminate against foreign companies at all, even indirectly, since it had the effect of excluding not only the foreign companies whose shareholders cannot be precisely identified, but also all the Italian companies whose shareholders cannot be precisely identified.


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The main proceedings and the questions referred for a preliminary ruling The award of licences 18 According to the documents before the Court, CONI – acting in accordance with the Italian legislation – launched a call for tenders on 11 December 1998 for the award of 1 000 licences for sports betting operations, that being the number of licences considered on the basis of a specific assessment to be sufficient for the whole of the national territory. At the same time, a call for tenders in respect of 671 new licences for the taking of bets on competitive horse events was organised by the Ministry of Economic Affairs and Finance in agreement with the Ministry of Agricultural and Forestry Policy, and 329 existing licences were automatically renewed. 19 The application of the provisions concerning the transparency of share ownership that were in force at the time of those calls for tender had primarily the effect of excluding the participation of operators in the form of companies whose shares were quoted on the regulated markets, since in their case the precise identification of individual shareholders was not possible on an ongoing basis. Following those calls for tender, a number of licences – valid for six years and renewable for a further six years – were awarded in 1999. Stanley International Betting Ltd 20 Stanley International Betting Ltd (‘Stanley’) is a company incorporated under English law and a member of the group Stanley Leisure plc (‘Stanley Leisure’), a company incorporated under English law and quoted on the London (United Kingdom) stock exchange. Both companies have their head office in Liverpool (United Kingdom). Stanley Leisure operates in the betting and gaming sector and is the fourth biggest bookmaker and the largest casino operator in the United Kingdom. 21 Stanley is one of Stanley Leisure’s operational conduits outside the United Kingdom. It is duly authorised to operate as a bookmaker in the United Kingdom by virtue of a licence issued by the City of Liverpool. It is subject to controls by the British authorities in the interests of public order and safety; to internal controls over the lawfulness of its activities; to controls carried out by a private audit company; and to controls carried out by the Inland Revenue and the United Kingdom customs authorities. 22 In the hope of obtaining licences for at least 100 betting outlets in Italy, Stanley investigated the possibility of taking part in the tendering procedures, but realised that it could not meet the conditions concerning the transparency of share ownership because it formed part of a group quoted on the regulated markets. Accordingly, it did not participate in the tendering procedure and holds no licence for betting operations. Data transmission centres 23 Stanley operates in Italy through more than 200 agencies, commonly called ‘data transmission centres’ (DTCs). The DTCs supply their services in premises open to the public in which a data transmission link is placed at the disposal of bettors so that they can access the server of Stanley’s host computer in the United Kingdom. In that way, bettors are able – electronically – to forward sports bets proposals to Stanley (chosen from lists of events, and the odds on them, supplied by Stanley), to receive notice that


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their proposals have been accepted, to pay their stakes and, where appropriate, to receive their winnings. 24 The DTCs are run by independent operators who have contractual links to Stanley. Mr Placanica, Mr Palazzese and Mr Sorricchio, the defendants in the main proceedings, are all DTC operators linked to Stanley. 25 According to the case-file forwarded by the Tribunale (District Court) di Teramo (Italy), Mr Palazzese and Mr Sorricchio applied, before commencing their activities, to Atri Police Headquarters for police authorisation in accordance with Article 88 of the Royal Decree. Those applications met with no response. The reference for a preliminary ruling from the Tribunale di Larino (Case C-338/04) 26 Accusing Mr Placanica of the offence set out in Article 4(4a) of Law No 401/89 in that, as a DTC operator for Stanley, Mr Placanica had pursued the organised activity of collecting bets without the required police authorisation, the Public Prosecutor brought criminal proceedings against him before the Tribunale di Larino (Italy). 27 That court expresses misgivings as to the soundness of the conclusion reached by the Corte suprema di cassazione in Gesualdi, with regard to the compatibility of Article 4(4a) of Law No 401/89 with Community law. The Tribunale di Larino is uncertain whether the public order objectives invoked by the Corte suprema di cassazione justify the restrictions at issue. 28 Accordingly, the Tribunale di Larino decided to stay proceedings and to refer the following question to the Court for a preliminary ruling: ‘Does the Court of Justice consider Article 4(4a) of Law No 401/89 to be compatible with the principles enshrined in Article 43 [EC] et seq. and 49 [EC] concerning the freedom of establishment and the freedom to provide cross-border services, having regard to the difference between the interpretation emerging from the decisions of the Court … (in particular the judgment in Gambelli and Others) and the decision of the Corte Suprema di Cassazione, Sezione Uniti, in Case No 23271/04? In particular, the Court is requested to rule on the applicability in Italy of the rules on penalties referred to in the indictment and relied upon against [Mr] Placanica.’ The references for a preliminary ruling from the Tribunale di Teramo (Cases C-359/04 and C-360/04) 29 The Atri police authorities charged Mr Palazzese and Mr Sorricchio with pursuing, without a licence or a police authorisation, an organised activity with a view to facilitating the collection of bets, and placed their premises and equipment under preventive seizure on the basis of Article 4(4a) of Law No 401/89. Upon confirmation of the seizure measures by the Public Prosecutor, Mr Palazzese and Mr Sorricchio each brought an action challenging those measures before the Tribunale di Teramo. 30 In the view of that court, the restrictions imposed on companies quoted on the regulated markets, which prevented them in 1999 from taking part in the last tender procedure for the award of licences for the operation of betting activities, are incompatible with the principles of Community law because they discriminate against operators who are not Italian. In consequence – like the Tribunale di Larino – the Tribunale di Teramo has doubts as to whether the judgment in Gesualdi is sound. 31 In those circumstances, the Tribunale di Teramo decided to stay proceedings and to refer the following question to the Court for a preliminary ruling:


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‘The District Court [of Teramo] needs to know, in particular, whether [the first paragraph of Article 43 EC and the first paragraph of Article 49 EC] may be interpreted as allowing the Member States to derogate temporarily (for 6 to 12 years) from the freedom of establishment and the freedom to provide services within the European Union, and to legislate as follows, without undermining those Community principles: – allocating to certain persons licences for the pursuit of certain activities involving provision of services, valid for 6 or 12 years, on the basis of a body of rules which excluded from the tender procedure certain kinds of (non-Italian) competitors; – amending that system, after subsequently noting that it was not compatible with the principles enshrined in Articles 43 [EC] and 49 [EC], so as to allow in future the participation of those persons who had been excluded; – not revoking the licences granted on the basis of the earlier system which, as stated, infringed the principles of freedom of establishment and of free movement of services or setting up a new tender procedure pursuant to the new rules which now comply with the abovementioned principles; – continuing, on the other hand, to bring criminal proceedings against anyone carrying on business via a link with operators who, [despite] being entitled to pursue such an activity in the Member State of origin, were nevertheless unable to seek an operating licence precisely because of the restrictions contained in the earlier licensing rules, later repealed?’ 32 By order of the President of the Court of 14 October 2004, Cases C-359/04 and C-360/04 were joined for the purposes of the written and oral procedures and of the judgment. By a second order of the President of the Court of 27 January 2006, Case C-338/04 was joined with Joined Cases C-359/04 and C-360/04 for the purposes of the oral procedure and of the judgment. Admissibility of the questions referred for a preliminary ruling 33 In Case C-338/04, all the Governments which lodged observations – with the exception of the Belgian Government – call in question the admissibility of the question referred. With regard to Cases C-359/04 and C-360/04, the Italian and Spanish Governments question the admissibility of the question referred. With regard to Case C-338/04, the Portuguese and Finnish Governments submit that the reference from the Tribunale di Larino does not contain sufficient information to enable a reply to be given whereas, according to the Italian, German, Spanish and French Governments, the question referred concerns the interpretation of national law, not Community law, and in consequence calls for the Court to rule on the compatibility with Community law of rules of national law. The Italian and Spanish Governments express the same reservation as regards the admissibility of the question referred in Cases C-359/04 and C-360/04. 34 Concerning the information that must be provided to the Court in the context of a reference for a preliminary ruling, it should be noted that that information does not serve only to enable the Court to provide answers which will be of use to the national court; it must also enable the Governments of the Member States, and other interested parties, to submit observations in accordance with Article 23 of the Statute of the Court of Justice. For those purposes, according to settled case-law, it is firstly necessary that the national court should define the factual and legislative context of the questions it is asking or, at the very least, explain the factual circumstances on which those questions are based. Secondly, the referring court must set out the precise reasons why it was unsure as to the interpretation of Community law and why it considered it necessary to refer questions to the Court for a preliminary ruling. In consequence, it is essential that


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the referring court provide at the very least some explanation of the reasons for the choice of the Community provisions which it requires to be interpreted and of the link it establishes between those provisions and the national legislation applicable to the dispute in the main proceedings (see to that effect, inter alia, Joined Cases C-320/90 to C-322/90 Telemarsicabruzzo and Others [1993] ECR I-393, paragraph 6; Joined Cases C-453/03, C-11/04, C-12/04 and C-194/04 ABNA and Others [2005] ECR I-10423, paragraphs 45 to 47; and Case C-506/04 Wilson [2006] ECR I-0000, paragraphs 38 and 39). 35 The reference from the Tribunale di Larino (Case C-338/04) meets those requirements. In so far as the national legal context, and the arguments relied upon by the parties are in essence identical to those in Gambelli and Others, a reference to that judgment was sufficient to enable the Court, as well as the Governments of Member States and the other interested parties, to identify the subject-matter of the dispute. 36 Admittedly, as regards the division of responsibilities under the cooperative arrangements established by Article 234 EC, the interpretation of provisions of national law is a matter for the national courts, not for the Court of Justice, and the Court has no jurisdiction, in proceedings brought on the basis of that article, to rule on the compatibility of national rules with Community law. On the other hand, the Court does have jurisdiction to provide the national court with all the guidance as to the interpretation of Community law necessary to enable that court to rule on the compatibility of those national rules with Community law (see, in particular, Case C-55/94 Gebhard [1995] ECR I-4165, paragraph 19, and Wilson, paragraphs 34 and 35). 37 In that regard, the Advocate General pointed out, quite correctly, at point 70 of his Opinion that, on a literal reading of the question referred for a preliminary ruling by the Tribunale di Larino (Case C-338/04), the Court is being asked to rule on the compatibility with Community law of a provision of national law. Nevertheless, although the Court cannot answer that question in the terms in which it is framed, there is nothing to prevent it from giving an answer of use to the national court by providing the latter with the guidance as to the interpretation of Community law necessary to enable that court to rule on the compatibility of those national rules with Community law. 38 As for the question referred for a preliminary ruling by the Tribunale di Teramo (Cases C-359/04 and C-360/04), this identifies with precision the effects of a number of national legislative developments and asks the Court whether those effects are compatible with the EC Treaty. It follows that, by that question, the Court is not being called upon to rule on the interpretation of national law or on the compatibility of national law with Community law. 39 The questions referred must therefore be declared admissible. The questions referred for a preliminary ruling 40 It is clear from the case-files forwarded to the Court that an operator wishing to pursue, in Italy, an activity in the betting and gaming sector must comply with national legislation characterised by the following elements: – the obligation to obtain a licence; – a method of awarding those licences, by means of a tender procedure excluding certain types of operator and, in particular, companies whose individual shareholders are not always identifiable at any given moment; – the obligation to obtain a police authorisation; and – criminal penalties for failure to comply with the legislation at issue.


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41 By the questions referred, which it is appropriate to consider together, the national courts essentially ask whether Articles 43 EC and 49 EC preclude national legislation on betting and gaming, such as that at issue in the main proceedings, in so far as it contains such elements. 42 The Court has already ruled that, in so far as the national legislation at issue in the main proceedings prohibits – on pain of criminal penalties – the pursuit of activities in the betting and gaming sector without a licence or police authorisation issued by the State, it constitutes a restriction on the freedom of establishment and the freedom to provide services (see Gambelli and Others, paragraph 59 and the operative part). 43 In the first place, the restrictions imposed on intermediaries such as the defendants in the main proceedings constitute obstacles to the freedom of establishment of companies established in another Member State, such as Stanley, which pursue the activity of collecting bets in other Member States through an organisation of agencies such as the DTCs operated by the defendants in the main proceedings (see Gambelli and Others, paragraph 46). 44 Secondly, the prohibition imposed on intermediaries such as the defendants in the main proceedings, under which they are forbidden to facilitate the provision of betting services in relation to sporting events organised by a supplier, such as Stanley, established in a Member State other than that in which the intermediaries pursue their activity, constitutes a restriction on the right of that supplier freely to provide services, even if the intermediaries are established in the same Member State as the recipients of the services (see Gambelli and Others, paragraph 58). 45 In those circumstances, it is necessary to consider whether the restrictions at issue in the main proceedings may be recognised as exceptional measures, as expressly provided for in Articles 45 EC and 46 EC, or justified, in accordance with the case-law of the Court, for reasons of overriding general interest (see Gambelli and Others, paragraph 60). 46 On that point, a certain number of reasons of overriding general interest have been recognised by the case-law, such as the objectives of consumer protection and the prevention of both fraud and incitement to squander on gaming, as well as the general need to preserve public order (see, to that effect, Case C-275/92 Schindler [1994] ECR I-1039, paragraphs 57 to 60; Case C-124/97 Läärä and Others [1999] ECR I-6067, paragraphs 32 and 33; Zenatti, paragraphs 30 and 31; and Gambelli and Others, paragraph 67). 47 In that context, moral, religious or cultural factors, as well as the morally and financially harmful consequences for the individual and for society associated with betting and gaming, may serve to justify a margin of discretion for the national authorities, sufficient to enable them to determine what is required in order to ensure consumer protection and the preservation of public order (Gambelli and Others, paragraph 63). 48 However, although the Member States are free to set the objectives of their policy on betting and gaming and, where appropriate, to define in detail the level of protection sought, the restrictive measures that they impose must nevertheless satisfy the conditions laid down in the case-law of the Court as regards their proportionality. 49 The restrictive measures imposed by the national legislation should therefore be examined in turn in order to determine in each case in particular whether the measure is suitable for achieving the objective or objectives invoked by the Member State concerned and whether it does not go beyond what is necessary in order to achieve those objectives. In any case, those restrictions must be applied without discrimination


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(see to that effect Gebhard, paragraph 37, as well as Gambelli and Others, paragraphs 64 and 65, and Case C-42/02 Lindman [2003] ECR I-13519, paragraph 25). The licensing requirement 50 Before an operator can be active in the betting and gaming sector in Italy, it must obtain a licence. Under the licensing system in use, the number of operators is limited. So far as concerns the taking of bets, the number of licences for the management of sports bets on competitive events not involving horses is limited to 1 000, as is the number of licences for the acceptance of bets on competitive horse events. 51 It should be made clear from the outset that the fact that that number of licences for each of those two categories was, according to the documents before the Court, considered on the basis of a specific assessment to be ‘sufficient’ for the whole of the national territory could not of itself justify the obstacles to the freedom of establishment and the freedom to provide services brought about by that limitation. 52 As regards the objectives capable of justifying those obstacles, a distinction must be drawn in this context between, on the one hand, the objective of reducing gambling opportunities and, on the other hand – in so far as games of chance are permitted – the objective of combating criminality by making the operators active in the sector subject to control and channelling the activities of betting and gaming into the systems thus controlled. 53 With regard to the first type of objective, it is clear from the case-law that although restrictions on the number of operators are in principle capable of being justified, those restrictions must in any event reflect a concern to bring about a genuine diminution of gambling opportunities and to limit activities in that sector in a consistent and systematic manner (see, to that effect, Zenatti, paragraphs 35 and 36, and Gambelli and Others, paragraphs 62 and 67). 54 It is, however, common ground in the present case, according to the case-law of the Corte suprema di cassazione, that the Italian legislature is pursuing a policy of expanding activity in the betting and gaming sector, with the aim of increasing tax revenue, and that no justification for the Italian legislation is to be found in the objectives of limiting the propensity of consumers to gamble or of curtailing the availability of gambling. 55 Indeed it is the second type of objective, namely that of preventing the use of betting and gaming activities for criminal or fraudulent purposes by channelling them into controllable systems, that is identified, both by the Corte suprema di cassazione and by the Italian Government in its observations before the Court, as the true goal of the Italian legislation at issue in the main proceedings. Viewed from that perspective, it is possible that a policy of controlled expansion in the betting and gaming sector may be entirely consistent with the objective of drawing players away from clandestine betting and gaming – and, as such, activities which are prohibited – to activities which are authorised and regulated. As the Belgian and French Governments, in particular, have pointed out, in order to achieve that objective, authorised operators must represent a reliable, but at the same time attractive, alternative to a prohibited activity. This may as such necessitate the offer of an extensive range of games, advertising on a certain scale and the use of new distribution techniques. 56 The Italian Government also referred to a number of factual elements, including, notably, an investigation into the betting and gaming sector, carried out by the Sixth Permanent Committee (Finance and the Treasury) of the Italian Senate. That investigation led to the conclusion that the activities of clandestine betting and gaming,


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prohibited as such, are a considerable problem in Italy, which it may be possible to solve through the expansion of authorised and regulated activities. Thus, according to that investigation, half the total turnover figure for the betting and gaming sector in Italy is generated by illegal activities. It was also thought that, by extending the betting and gaming activities permitted by law, it might be possible to recover from those illegal activities a proportion of that turnover figure at least equivalent in value to the amount generated by the activities permitted by law. 57 A licensing system may, in those circumstances, constitute an efficient mechanism enabling operators active in the betting and gaming sector to be controlled with a view to preventing the exploitation of those activities for criminal or fraudulent purposes. However, as regards the limitation of the total number of such licences, the Court does not have sufficient facts before it to be able to assess that limitation, as such, in the light of the requirements flowing from Community law. 58 It will be for the referring courts to determine whether, in limiting the number of operators active in the betting and gaming sector, the national legislation genuinely contributes to the objective invoked by the Italian Government, namely, that of preventing the exploitation of activities in that sector for criminal or fraudulent purposes. By the same token, it will be for the referring courts to ascertain whether those restrictions satisfy the conditions laid down by the case-law of the Court as regards their proportionality. The tender procedures 59 The Tribunale di Teramo (Cases C-359/04 and C-360/04) expressly refers to the exclusion of companies whose individual shareholders are not always identifiable at any given moment, and thus of all companies quoted on the regulated markets, from tender procedures for the award of licences. The Commission of the European Communities has pointed out that the effect of that restriction is to exclude from those tender procedures the leading Community operators in the betting and gaming sector – operators in the form of companies whose shares are quoted on the regulated markets. 60 By way of a preliminary point, it should be noted that the question of the lawfulness of the conditions imposed in the context of the 1999 tender procedures is far from having been made redundant by the legislative amendments introduced in 2002 and allowing from then on all companies – with no limitation as to their form – to participate in tender procedures for the award of licences. Indeed, as the Tribunale di Teramo pointed out, since the licences awarded in 1999 were valid for six years and renewable for an additional period of six years, and meanwhile no new tender procedure has been planned, the exclusion from the betting and gaming sector of companies quoted on the regulated markets, and of intermediaries such as the defendants in the main proceedings who might act on behalf on such companies, is liable to produce effects until the year 2011. 61 The Court has already ruled that, even if the exclusion from tender procedures is applied without distinction to all companies quoted on the regulated markets which could be interested in those licences – regardless of whether they are established in Italy or in another Member State – in so far as the lack of foreign operators among the licensees is attributable to the fact that the Italian rules governing invitations to tender make it impossible in practice for companies quoted on the regulated markets of other Member States to obtain licences, those rules constitute prima facie a restriction on the freedom of establishment (see Gambelli and Others, paragraph 48).


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62 Independently of the question whether the exclusion of companies quoted on the regulated markets applies, in fact, in the same way to operators established in Italy and to those from other Member States, that blanket exclusion goes beyond what is necessary in order to achieve the objective of preventing operators active in the betting and gaming sector from being involved in criminal or fraudulent activities. Indeed, as the Advocate General pointed out in point 125 of his Opinion, there are other ways of monitoring the accounts and activities of operators in the betting and gaming sector which impinge to a lesser extent on the freedom of establishment and the freedom to provide services, one such possibility being the gathering of information on their representatives or their main shareholders. Support for that observation is to be found in the fact that the Italian legislature believed it possible to repeal the exclusion completely by the 2003 Finance Law without, however, adopting other restrictive measures in its place. 63 As regards the consequences flowing from the unlawful nature of the exclusion of a certain number of operators from tender procedures for the award of existing licences, it is for the national legal order to lay down detailed procedural rules to ensure the protection of the rights which those operators derive by direct effect of Community law, provided, however, that those detailed rules are not less favourable than those governing similar domestic situations (principle of equivalence) and that they do not make it excessively difficult or impossible in practice to exercise the rights conferred by Community law (principle of effectiveness) (see Case C-453/99 Courage and Crehan [2001] ECR I-6297, paragraph 29, and Joined Cases C-392/04 and C-422/04 i-21 Germany and Arcor [2006] ECR I-0000, paragraph 57). In that connection, appropriate courses of action could be the revocation and redistribution of the old licences or the award by public tender of an adequate number of new licences. In any case, it should nevertheless be noted that, in the absence of a procedure for the award of licences which is open to operators who have been unlawfully barred from any possibility of obtaining a licence under the last tender procedure, the lack of a licence cannot be a ground for the application of sanctions to such operators. 64 Articles 43 EC and 49 EC must therefore be interpreted as precluding national legislation such as that at issue in the main proceedings, which excludes – and, moreover, continues to exclude – from the betting and gaming sector operators in the form of companies whose shares are quoted on the regulated markets. The police authorisation requirement 65 The requirement that operators active in the betting and gaming sector, as well as their premises, be subject to ex ante controls as well as to ongoing supervision clearly contributes to the objective of preventing the involvement of those operators in criminal or fraudulent activities and appears to be a measure that is entirely commensurate with that objective. 66 However, it is clear from the documents before the Court that the defendants in the main proceedings were ready to obtain police authorisations and to submit to such controls and to such supervision. Nevertheless, since a police authorisation is issued only to licence holders, it would have been impossible for the defendants in the main proceedings to obtain it. On that point, it is also clear from the case-files that, before commencing their activities, Mr Palazzese and Mr Sorricchio had applied for police authorisation in accordance with Article 88 of the Royal Decree, but that their applications met with no response.


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67 As the Advocate General pointed out at point 123 of his Opinion, the procedure for granting police authorisations is, in consequence, vitiated by the defects identified above, which taint the award of the licences. Accordingly, the lack of a police authorisation cannot, in any case, be a valid ground for complaint in respect of persons such as the defendants in the main proceedings, who were unable to obtain authorisations because the grant of an authorisation presupposed the award of a licence – a licence which, contrary to Community law, those persons were unable to obtain. The criminal penalties 68 Although in principle criminal legislation is a matter for which the Member States are responsible, the Court has consistently held that Community law sets certain limits to their power, and such legislation may not restrict the fundamental freedoms guaranteed by Community law (see Case C-348/96 Calfa [1999] ECR I-11, paragraph 17). 69 The case-law has also made it quite clear that a Member State may not apply a criminal penalty for failure to complete an administrative formality where such completion has been refused or rendered impossible by the Member State concerned, in infringement of Community law (see, to that effect, Case 5/83 Rienks [1983] ECR 4233, paragraphs 10 and 11). 70 It appears that persons such as the defendants in the main proceedings, in their capacity as DTC operators linked to a company organising bets which is quoted on the regulated markets and which is established in another Member State, had no way of being able to obtain the licences or police authorisation required under Italian legislation because, contrary to Community law, Italy makes the grant of police authorisations subject to possession of a licence and, at the time of the last tender procedure in the case which is the subject of the main proceedings, had refused to award licences to companies quoted on the regulated markets. In consequence, Italy cannot apply criminal penalties to persons such as the defendants in the main proceedings for pursuing the organised activity of collecting bets without a licence or a police authorisation. 71 Articles 43 EC and 49 EC must therefore be interpreted as precluding national legislation, such as that at issue in the main proceedings, which imposes a criminal penalty on persons such as the defendants in the main proceedings for pursuing the organised activity of collecting bets without a licence or a police authorisation as required under the national legislation where those persons were unable to obtain licences or authorisations because that Member State, in breach of Community law, refused to grant licences or authorisations to such persons. 72 In the light of the foregoing, it is appropriate to state in answer to the questions referred for a preliminary ruling that: 1. National legislation which prohibits the pursuit of the activities of collecting, taking, booking and forwarding offers of bets, in particular bets on sporting events, without a licence or a police authorisation issued by the Member State concerned, constitutes a restriction on the freedom of establishment and the freedom to provide services provided for in Articles 43 EC and 49 EC respectively. 2. It is for the national courts to determine whether, in so far as national legislation limits the number of operators active in the betting and gaming sector, it genuinely contributes to the objective of preventing the exploitation of activities in that sector for criminal or fraudulent purposes.


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3. Articles 43 EC and 49 EC must be interpreted as precluding national legislation, such as that at issue in the main proceedings, which excludes – and, moreover, continues to exclude – from the betting and gaming sector operators in the form of companies whose shares are quoted on the regulated markets. 4. Articles 43 EC and 49 EC must be interpreted as precluding national legislation, such as that at issue in the main proceedings, which imposes a criminal penalty on persons such as the defendants in the main proceedings for pursuing the organised activity of collecting bets without a licence or a police authorisation as required under the national legislation, where those persons were unable to obtain licences or authorisations because that Member State, in breach of Community law, refused to grant licences or authorisations to such persons.

On those grounds,


hereby rules:

1. National legislation which prohibits the pursuit of the activities of collecting, taking, booking and forwarding offers of bets, in particular bets on sporting events, without a licence or a police authorisation issued by the Member State concerned, constitutes a restriction on the freedom of establishment and the freedom to provide services, provided for in Articles 43 EC and 49 EC respectively. 2. It is for the national courts to determine whether, in so far as national legislation limits the number of operators active in the betting and gaming sector, it genuinely contributes to the objective of preventing the exploitation of activities in that sector for criminal or fraudulent purposes. 3. Articles 43 EC and 49 EC must be interpreted as precluding national legislation, such as that at issue in the main proceedings, which excludes – and, moreover, continues to exclude – from the betting and gaming sector operators in the form of companies whose shares are quoted on the regulated markets. 4. Articles 43 EC and 49 EC must be interpreted as precluding national legislation, such as that at issue in the main proceedings, which imposes a criminal penalty on persons such as the defendants in the main proceedings for pursuing the organised activity of collecting bets without a licence or a police authorisation as required under the national legislation, where those persons were unable to obtain licences or authorisations because that Member State, in violation of Community law, refused to grant licences or authorisations to such persons.


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32. Reference for a preliminary ruling from the Verwaltungsgericht Köln

(Germany) lodged on 9 October 2006

Winner Wetten GmbH v Mayor of Bergheim

(Case C-409/06)

Referring court

Verwaltungsgericht Köln

Parties to the main proceedings

Applicant:

Winner Wetten GmbH

Defendant:

Mayor of Bergheim

Questions referred:

1. Are Article 43 EC and Article 49 EC to be interpreted as meaning that national rules governing a State monopoly on sports betting, which contain impermissible restrictions on the freedom of establishment and the freedom to provide services enshrined in Article 43 EC and Article 49 EC, inasmuch as they do not serve to limit betting activities in a consistent and systematic manner within the terms of the Court's case-law (judgment in Case C-243/01 Gambelli and Others [2003] ECR-13031), may still continue to apply for a transitional period on an exceptional basis, notwithstanding the primacy of directly applicable Community law? 2. If Question 1 is to be answered in the affirmative: what conditions need to be met for the purpose of derogating from that primacy and how is the transitional period to be determined?


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33. Reference for a preliminary ruling from the Diikitiko Efetio Athinon

(Greece) lodged on 5 February 2007

Motosikletistiki Omospondia Ellados (MOT.O.E) v Elliniko Dimosio

(Case C-49/07)

Referring court

Diikitiko Efetio Athinon


Applicant:

Motosikletistiki Omospondia Ellados (MOT.O.E)

Respondent:

Elliniko Dimosio (Greek State)

Questions referred:

1. Can Articles 82 and 86 of the EC Treaty be interpreted so as also to include within their scope the activity of a legal person which has the status of national representative of the Fédération Internationale de Motocyclisme (the International Motorcycling Federation) and engages in economic activity as described above by entering into sponsorship, advertising and insurance contracts, in the context of the organisation of motor sport events by it? 2. Should the answer be in the affirmative, is Article 49 of Law 2696/1999, which, in relation to issue by the competent national public authority (in the present case, the Ministry for Public Order) of permission to organise a motor-vehicle competition, gives the foregoing legal person the power to provide a concurring opinion as to the holding of the competition without that power being made subject to restrictions, obligations and review, compatible with those provisions of the Treaty?


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34. Reference for a preliminary ruling from the Verwaltungsgericht Stuttgart

(Germany), lodged on 2 August 2007 –

SOBO Sport & Entertainment GmbH v Land Baden-Württemberg

(Case C-359/07)

Referring court

Verwaltungsgericht Stuttgart


Applicant:

SOBO Sport & Entertainment GmbH

Defendant:

Land Baden-Württemberg

Questions referred

1. Are Articles 43 and 49 EC to be interpreted as precluding a national monopoly on certain gaming, such as sports betting and lotteries, where there is no consistent and systematic policy to limit gaming in the Member State concerned as a whole, because the operators which have been granted a licence within that Member State encourage and advertise participation in other gaming - such as State-run sports betting and lotteries - and, moreover, other games with the same or even higher potential danger of addiction - such as betting on certain sporting events (horse racing), slot machines and casino games - may be provided by private service providers? 2. Are Articles 43 and 49 EC to be interpreted as meaning that authorisations to operate sports betting, granted by the competent State bodies of the Member States, which are not restricted to the particular national territory, entitle the holder of the authorisation and third parties appointed by it to make and implement offers to conclude contracts in other Member States as well without any additional national authorisations being required?

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