# C_2007042EN.01001501.xml

| 24.2.2007 | EN | Official Journal of the European Union | C 42/15 |
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Action brought on 20 December 2006 — Commission of the European Communities v Italian Republic

(Case C-518/06)

(2007/C 42/25)

Language of the case: Italian

Parties

Applicant: Commission of the European Communities (represented by: E. Traversa and N. Yerrell, acting as Agents)

Defendant: Italian Republic

Forms of order sought

The applicant claims that the Court should:

| (1) | declare that the Italian Republic,
—
by introducing and maintaining legislation pursuant to which premiums for third party motor vehicle liability insurance must be calculated on the basis of fixed parameters; —
by making the premiums for third party motor vehicle liability insurance subject to controls ex post facto, has failed to fulfil the obligations relating to the free marketing of insurance products incumbent upon it under the provisions on pricing freedom laid down in Articles 6, 29 and 39 of Council Directive 92/49/EEC of 18 June 1992 on the coordination of laws, regulations and administrative provisions relating to direct insurance other than life assurance and amending Directives 73/239/EEC and 88/357/EEC (third non-life insurance Directive)( 1 ) (‘Directive 92/49’);
—
by controlling the detailed rules in accordance with which insurance undertakings which have their head office in another Member State, but operate in Italy in exercise of the freedom of establishment or the freedom to provide services, calculate their insurance premiums; —
by imposing penalties for infringement of the Italian rules concerning the detailed rules for calculating insurance premiums, even in the case of insurance undertakings which have their head office in another Member State but which operate in Italy in exercise of the freedom of establishment or the freedom to provide services, has failed to fulfil its obligations under Article 9 of Directive 92/49;
—
by maintaining an obligation to provide coverage for third party motor vehicle liability, incumbent upon all insurance undertakings, including those which have their head office in another Member State but which operate in Italy in exercise of the freedom of establishment or the freedom to provide services, has failed to fulfil its obligations under Articles 43 and 49 of the Treaty establishing the European Community. | — | by introducing and maintaining legislation pursuant to which premiums for third party motor vehicle liability insurance must be calculated on the basis of fixed parameters; | — | by making the premiums for third party motor vehicle liability insurance subject to controls ex post facto, | — | by controlling the detailed rules in accordance with which insurance undertakings which have their head office in another Member State, but operate in Italy in exercise of the freedom of establishment or the freedom to provide services, calculate their insurance premiums; | — | by imposing penalties for infringement of the Italian rules concerning the detailed rules for calculating insurance premiums, even in the case of insurance undertakings which have their head office in another Member State but which operate in Italy in exercise of the freedom of establishment or the freedom to provide services, | — | by maintaining an obligation to provide coverage for third party motor vehicle liability, incumbent upon all insurance undertakings, including those which have their head office in another Member State but which operate in Italy in exercise of the freedom of establishment or the freedom to provide services, |
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| — | by introducing and maintaining legislation pursuant to which premiums for third party motor vehicle liability insurance must be calculated on the basis of fixed parameters; | | | | | | | | | | |
| — | by making the premiums for third party motor vehicle liability insurance subject to controls ex post facto, | | | | | | | | | | |
| — | by controlling the detailed rules in accordance with which insurance undertakings which have their head office in another Member State, but operate in Italy in exercise of the freedom of establishment or the freedom to provide services, calculate their insurance premiums; | | | | | | | | | | |
| — | by imposing penalties for infringement of the Italian rules concerning the detailed rules for calculating insurance premiums, even in the case of insurance undertakings which have their head office in another Member State but which operate in Italy in exercise of the freedom of establishment or the freedom to provide services, | | | | | | | | | | |
| — | by maintaining an obligation to provide coverage for third party motor vehicle liability, incumbent upon all insurance undertakings, including those which have their head office in another Member State but which operate in Italy in exercise of the freedom of establishment or the freedom to provide services, | | | | | | | | | | |

| (2) | order the Italian Republic to pay the costs. |
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Pleas in law and main arguments

The obligation for insurance companies to establish net premiums in accordance with ‘proper technical bases, which are sufficiently wide and which extend over at least five business years’ and to ensure that those premiums comply with a particular market average, together with the subjection of those premiums to controls ex post facto — with the consequence that substantial fines may be imposed by the Italian supervisory authority in the case of infringement of those obligations — constitutes a breach of the principle of pricing freedom provided for in Directive 92/49. The effect of the Italian legislation is to set up a system of regulated premiums and thus to prevent insurance undertakings from marketing their services as they see fit and freely establishing their pricing policies, and thereby jeopardising the establishment of the single market in insurance.

The general interest underlying the adoption of the national provisions cannot be used by the Italian State to legitimise a derogation from the principle of pricing freedom for undertakings as established by Community legislation in so far as it does not fall within the exceptions expressly provided for in the second paragraph of Article 29, and in Article 39(3), of Directive 92/49.

The control effectively exercised by the Italian supervisory authority, that is to say, the supervisory authority of the host Member State, over the detailed rules in accordance with which insurance undertakings operating in Italy in exercise of freedom of establishment or the freedom to provide services calculate their insurance premiums, together with the imposition of penalties by the Italian supervisory authority for infringement of the Italian legislation, constitutes a failure to comply with the allocation of tasks and responsibilities — between the home Member State (the Member State in which the insurance company is principally established) and the host Member State — as provided for in Article 9 of Directive 92/49.

The obligation to provide coverage, imposed on all insurance undertakings engaged in motor vehicle liability, independently of the location of the head office, and in relation to all categories of insured persons and all regions of Italy — coupled with the possibility that penalties may be applied by the Italian supervisory authority for infringement of that obligation — entails a restriction on the fundamental freedom of establishment, prohibited as such by Article 43 EC, and also constitutes a restriction of the freedom to provide services, incompatible with Article 49 EC. Indeed, the obligation under the Italian legislation to provide the compulsory motor vehicle liability insurance constitutes a serious obstacle to engaging in the activities of an insurance undertaking in Italy, in that such an obligation discourages insurance undertakings established in other Member States from establishing themselves in Italy or from providing services there, and thus impairs access to the Italian market.

The obligation to provide coverage constitutes an obstacle which is neither justified nor proportionate in relation to the aim pursued. Indeed, ‘the concept of public policy may be relied upon in the event of a genuine and sufficiently serious threat to ... one of the fundamental interests of society’ and ‘the public policy exception, like all derogations from a fundamental principle of the Treaty, must be interpreted restrictively’ (see Case C-348/96 Criminal proceedings against Donatella Calfa [1999] ECR I-11, paragraphs 21 and 23).

Furthermore, that restriction appears to be an inappropriate means of attaining the objective for which it was adopted, in that such a generalised obligation to provide coverage hampers the development and operability of specialised services within insurance undertakings, which would be better able to satisfy the needs of consumers properly and efficiently simply because of being so specialised.

Lastly, such a restriction goes beyond what is necessary in order to achieve the objective of maintaining public order or of protecting consumers, both in geographical terms — in that the problems relating to public order concern, according to the Italian authorities themselves, only ‘specific geographical areas’ of the national territory — and in terms of content — in that insurance undertakings operating in Italy are required to offer coverage to any owner or driver of motor vehicles, regardless of the risk posed in practice by that owner or driver as regards liability for damage caused to third parties.

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( 1 )  OJ 1992 L 228, p. 1.

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