Judgment;Summary — ECLI:EU:C:2019:632
Date: 2019-07-29
Language of the case: German
Court formation: Fourth Chamber
Subject matter: Right of establishment;Internal market - Principles;Freedom to provide services
Procedure: Action for failure to fulfil obligations - successful
Origin: Austria

summary of which appeared in the Commission’s application, the Republic of Austria informs the Court that it intends to amend Paragraph 29a(1)(b) to (e) of the PAG, to add a new subparagraph to that paragraph to extend the category of persons who may be members of those companies, and to repeal Paragraph 29a(4) of that law. 73 With respect to companies of veterinary surgeons, the Republic of Austria submits that it is not possible to maintain that there is no connection between the profession of veterinary surgeon and the protection of public health, in so far as that profession plays the part of guarantor as regards the production of safe foodstuffs. The Republic of Austria submits that veterinary surgeons are obliged, not only under the TÄG but also under other legislation, to declare diseases of animals and certain human diseases or the suspicion of infection by one of those diseases. 74 The Republic of Austria further considers that the rules of professional conduct can have binding effects only on veterinary surgeons practising the profession, and are not suited to excluding relations of dependency on persons not belonging to the profession, unless a strict system of State supervision of those persons is put in place. The Republic of Austria takes the view that the Commission’s position that the removal of Paragraph 15a of the TÄG would bring about price advantages for consumers is by no means clear, especially as that provision does not exclude the activity of companies in which persons who are not members of the profession of veterinary surgeon participate. 75 The Federal Republic of Germany intervenes in support of the form of order sought by the Republic of Austria, confining its observations, which are contested by the Commission, to an examination of the compatibility with Directive 2006/123 of the provisions of the ZTG. In this respect, the Federal Republic of Germany submits that Paragraph 26(1) and Paragraph 28(1) of the ZTG, if they are considered to be ‘requirements’ within the meaning of Article 15(2) of Directive 2006/123, fulfil the conditions set out in Article 15(3) of that directive, and are therefore justified. 76 On this point, the Federal Republic of Germany submits, first, that the restriction of access to the status of member of a company of civil engineers solely to civil engineers and companies of civil engineers is necessary to attain the objectives of the preservation of independence, preventive administration of justice, quality of services, protection of consumers and compliance with the obligation of confidentiality. It submits, second, that the requirement that only civil engineers may be managers and statutory representatives of companies of civil engineers ensures transparency and quality of service and makes it easier to determine the responsible person within such a company. 77 According to the Federal Republic of Germany, less restrictive measures such as internal rules and rules of professional conduct are not suitable for attaining the objectives stated in the same way as the national provisions at issue. Moreover, the provisions concerning insurance have a completely different function, namely providing compensation for damage already suffered, not the prevention of such damage. Findings of the Court 78 In accordance with Article 15(1) of Directive 2006/123, the Member States must examine whether, under their legal system, any of the requirements listed in paragraph 2 of that article are imposed, and must ensure that any such requirements are compatible with the conditions laid down in paragraph 3 of that article. 79 Article 15(2)(b) of Directive 2006/123 mentions requirements which impose an obligation on a provider to take a specific legal form. Article 15(2)(c) mentions requirements which relate to the shareholding of a company. 80 It follows from Article 15(5) and (6) of the directive that the Member States are allowed to maintain or, as the case may be, introduce requirements of the kind listed in Article 15(2), provided that they satisfy the conditions laid down in Article 15(3) (see, to that effect, judgment of 16 June 2015, Rina Services and Others, C‑593/13, EU:C:2015:399, paragraph 33). 81 The cumulative conditions set out in Article 15(3) of Directive 2006/123 relate, first, to the non-discriminatory nature of the requirements in question, which may not be directly or indirectly discriminatory according to nationality or, with regard to companies, according to the location of the registered office; second, to their necessity, in other words they must be justified by an overriding reason relating to the public interest; and, third, to their proportionality, meaning that they must be suitable for securing the attainment of the objective pursued and must not go beyond what is necessary to attain that objective, and it must not be possible to replace those requirements with other, less restrictive measures which attain the same result. 82 It follows, in particular, that, while it is indeed for a Member State relying on an overriding reason of general interest to justify a requirement within the meaning of Article 15 of the directive to demonstrate that its rules are appropriate and necessary to attain the legitimate objective pursued, that burden of proof cannot extend to requiring the Member State to prove, positively, that no other conceivable measure could enable that objective to be attained under the same conditions (see, to that effect, judgments of 28 April 2009, Commission v Italy, C‑518/06, EU:C:2009:270, paragraph 84 and the case-law cited; of 24 March 2011, Commission v Spain, C‑400/08, EU:C:2011:172, paragraph 123; and of 23 December 2015, Scotch Whisky Association and Others, C‑333/14, EU:C:2015:845, paragraph 55). Such a requirement would amount in practice to depriving the Member State concerned of its legislative power in the field in question. 83 In the present case, it follows from the national provisions that are the subject of the present complaint that, first, only natural persons and companies of civil engineers may be members of a company of civil engineers, and only natural persons who are members of the company of civil engineers and hold the majority of its shares can be appointed managers and representatives of such a company. Second, only patent agents themselves, members of their families and foundations established by those natural persons may hold shares in a company of patent agents, and patent agents must have a decisive influence within such a company. Third, only veterinary surgeons or companies of veterinary surgeons may operate a veterinary practice or clinic, persons not belonging to the profession may participate only as silent partners, and only veterinary surgeons holding substantial shares in such a company may become managers of a branch of the company. 84 Such requirements relate both to the legal form and to the holders of shares in companies of civil engineers, patent agents and veterinary surgeons, so that they come under Article 15(2)(b) and (c) of Directive 2006/123. 85 It must therefore be ascertained whether the national requirements at issue satisfy the conditions laid down in Article 15(3) of Directive 2006/123, namely that they must be non-discriminatory, necessary and proportionate to the attainment of an overriding reason relating to the public interest (see, to that effect, judgment of 1 March 2018, CMVRO, C‑297/16, EU:C:2018:141, paragraph 54). 86 With respect, to begin with, to the first of those conditions, there is nothing in the documents before the Court to indicate that the requirements mentioned in paragraph 83 above are directly or indirectly discriminatory within the meaning of Article 15(3)(a) of Directive 2006/123. 87 Next, with respect to the second of those conditions, the Republic of Austria states essentially that the requirements at issue aim to achieve the objectives of guaranteeing the objectivity and independence of the professions concerned and of legal certainty, and also, as regards veterinary surgeons, the objective of protection of health. 88 It must be observed that the objectives of guaranteeing the objectivity and independence of the professions concerned and of legal certainty are connected with the objective of the protection of recipients of services, referred to in recital 40 of Directive 2006/123, and the objective of guaranteeing the quality of services. 89 The objectives of the protection of recipients of services, guaranteeing the quality of services and protection of health are overriding reasons relating to the public interest, capable of justifying restrictions of the freedoms guaranteed by EU law (see, to that effect, judgments of 3 October 2000, Corsten, C‑58/98, EU:C:2000:527, paragraph 38, and of 1 March 2018, CMVRO, C‑297/16, EU:C:2018:141, paragraph 57). 90 Finally, with respect to the third condition laid down in Article 15(3) of Directive 2006/123, three elements must be present, namely that the requirement is suitable for attaining the objective pursued, that it does not go beyond what is necessary to attain that objective, and that the objective cannot be attained by means of a less restrictive measure. 91 In this respect, it follows from the wording of Article 15(3) of Directive 2006/123 that it is for the Member State concerned to verify, and consequently to demonstrate, by relying on specific evidence substantiating its arguments, that requirements such as those at issue in the present case satisfy the conditions laid down by that provision (see, to that effect, judgment of 23 January 2014, Commission v Belgium, C‑296/12, EU:C:2014:24, paragraph 33 and the case-law cited). 92 As regards the suitability of the requirements at issue for attaining the objectives mentioned, it must be stated that restrictions concerning the legal form and shareholding of a company, in so far as they ensure that the holding of shares in the company is transparent and that the persons holding shares are qualified and determine precisely the responsible persons in the company, are in principle suitable for attaining the objectives of the protection of recipients of services and of guaranteeing the quality of services. 93 As regards the objective of protection of public health, it follows from the Court’s case-law that requirements relating to shares in companies of veterinary surgeons being held exclusively by members of that profession are suitable for reducing the risks that such companies may adopt economic strategies liable to undermine the objective of protection of health and the independence of veterinary surgeons (see, to that effect, judgment of 1 March 2018, CMVRO, C‑297/16, EU:C:2018:141, paragraphs 82 and 83). 94 However, it must be recalled that, according to settled case-law of the Court, national legislation is suitable for securing the attainment of the objective pursued only if it genuinely reflects a concern to attain the objective in a consistent and systematic manner (see, to that effect, judgments of 10 March 2009, Hartlauer, C‑169/07, EU:C:2009:141, paragraph 55; of 15 October 2015, Grupo Itevelesa and Others, C‑168/14, EU:C:2015:685, paragraph 76; and order of 30 June 2016, Sokoll-Seebacher and Naderhirn, C‑634/15, EU:C:2016:510, paragraph 27). 95 In the present case, it must be observed that, as the Commission rightly submitted without being challenged by the Republic of Austria, the shareholding requirements imposed on patent agents cannot be regarded as consistent within the meaning of that case-law, since Austrian legislation allows persons not belonging to the profession of patent agents, namely members of the family of a patent agent, to become members of a company of patent agents, whereas no such possibility is provided for in the case of companies active in that field which are established in Member States other than the Republic of Austria. 96 It follows that the Republic of Austria has not succeeded in showing that those requirements are suitable for securing the attainment of the objectives pursued. 97 Otherwise, on the other hand, it must be stated that the Commission does not put forward any specific arguments to deny that the requirements at issue are suitable for attaining the objectives stated, and confines itself to submitting that the requirements go beyond what is necessary for attaining those objectives. 98 As regards the second element in Article 15(3)(c) of Directive 2006/123, as set out in paragraph 90 above, the argument of the Republic of Austria that proposed laws, not yet in force at the time of bringing the present action, are intended to amend that legislation must be rejected as immaterial. 99 As follows from paragraph 48 above, the existence of a failure to fulfil obligations must be determined by reference to the situation obtaining in the Member State at the end of the period fixed in the reasoned opinion, and the Court cannot take account of any subsequent changes. 100 Consequently, the Court must examine whether the Republic of Austria’s arguments concerning the requirements at issue, in force at the end of the period fixed in the reasoned opinion, can show that they do not go beyond what is necessary for attaining the objectives stated. 101 First, as regards the requirement set out in Paragraph 28(1) of the ZTG, it must be noted that the Commission suggested various less restrictive alternative measures, such as rules of conduct and rules concerning insurance and guarantees, which, especially if they were taken together, might allow the objectives pursued to be attained. While the Republic of Austria argues that that requirement appears indispensable for ensuring that managers of companies of civil engineers are personally liable for their services, it does not substantiate that argument in such a way as to allow the Court to conclude that the less restrictive measures would not suffice to attain those objectives. 102 Second, as regards Paragraph 29a of the PAG, it should be added, in addition to the considerations set out in paragraphs 95 and 96 above, that the Commission’s arguments mentioned in paragraphs 62 to 64 above suggest that the requirements of that provision go beyond what is necessary to attain the objectives it pursues, and that the Republic of Austria has not put forward before the Court any arguments capable of refuting that argument. 103 Third, as regards Paragraph 15a of the TÄG, the Republic of Austria submits that veterinary surgeons are subject to a number of obligations relating to the protection of health, such as ensuring the production of safe foodstuffs and reporting diseases of animals and certain human diseases. The Republic of Austria further submits that the rules of conduct cannot, unless compliance with them is strictly supervised by the State, exclude relationships of dependency and the influence of persons not belonging to the profession, so that such rules are not suitable for attaining the objectives pursued. 104 It must be observed that the legitimate pursuit of the objectives of protection of health and the independence of veterinary surgeons cannot justify the complete exclusion of non-veterinary operators from holding shares in companies of veterinary surgeons, where it is not excluded that veterinary surgeons will be able to supervise such companies effectively even if they do not hold all the shares in those companies, in so far as the holding of a limited number of those shares by persons who are not veterinary surgeons will not necessarily prevent such supervision (see, to that effect, judgment of 1 March 2018, CMVRO, C‑297/16, EU:C:2018:141, paragraph 86). 105 Consequently, national legislation which excludes from the holding of any shares in companies of veterinary surgeons all persons not having a professional qualification goes beyond what is necessary for attaining the objectives of the protection of public health and the independence of veterinary surgeons. 106 It follows from all the above considerations that the national requirements at issue go beyond what is necessary for attaining the objectives pursued, so that they infringe Article 15(3) of Directive 2006/123. 107 Consequently, the complaint relating to infringement of Article 15 of Directive 2006/123 is well founded. In those circumstances, there is no need to examine the legislation at issue from the point of view of Article 49 TFEU. The complaint of infringement of Article 25 of Directive 2006/123 Arguments of the parties 108 The Commission submits that Paragraph 21(1) of the ZTG and Paragraph 29a(6) of the PAG require the professional companies concerned to confine themselves to carrying on the profession of civil engineer or patent agent respectively. However, Article 25 of Directive 2006/123 requires Member States to abolish requirements which oblige providers to exercise a given specific activity exclusively or which restrict the exercise jointly or in partnership of different activities. According to the Commission, those national provisions obstruct both the establishment by companies established in a Member State other than the Republic of Austria of secondary multidisciplinary establishments and the primary establishment of companies with their seat in Austria. Those provisions also hinder the freedom to provide services. 109 With respect to companies of civil engineers, the Commission submits that Paragraph 21(3) of the ZTG, under which the formation of a civil-law partnership with persons carrying on a trade is permissible for companies of civil engineers only if those persons are not authorised to perform implementing actions, infringes Article 25 of Directive 2006/123. 110 The Commission submits, first, that only architects and engineers can form joint companies, because it is possible to form civil-law partnerships with persons carrying on other professions only on condition that those persons are not authorised to perform implementing actions. Second, according to the Commission, an association with persons exercising other professions is not possible in the form of a company of civil engineers, but only in the form of a civil-law partnership in which the members are personally liable and do not enjoy the limited liability of a limited company. Third, the Commission observes that the approach that an engineer who provides his services in accordance with the ZTG may join with civil engineers to form a company of civil engineers, whereas an engineer who provides his services in accordance with the GewO can do that only in the form of a civil-law partnership, appears to be contradictory and disproportionate. 111 With respect to companies of patent agents, the Commission submits that under Paragraph 29a(6) of the PAG the activity of such a company must be confined to the exercise of the profession of patent agent, including ancillary activities, and the management of the company’s assets. According to the Commission, the objectives of ensuring a high level of the quality of advice and defending the interests of consumers may be attained by measures that do not exclude absolutely the exercise of activities of patent agents jointly or in partnership with other professions. 112 The Republic of Austria submits that it follows from Directive 2006/123 that restrictions on multidisciplinary activities are permitted to the extent that they aim to preserve the impartiality, independence and integrity of regulated professions. 113 As regards companies of civil engineers, the Republic of Austria submits that Paragraph 21(1) of the ZTG allows the establishment of companies of civil engineers with different specialisations. It further observes that Paragraph 21(3) of the ZTG also allows association with other professions on condition that they are not authorised to carry out implementing activities. 114 According to the Republic of Austria, in view of the strict separation of planning and implementing activities, rules on internal organisation do not suffice to attain the objective of ensuring the impartiality and independence of the profession. Furthermore, the Republic of Austria takes the view that the Commission’s idea that it would suffice to lay down guidelines on the prevention of conflicts of interest is not capable of attaining the objective sought, in that such guidelines do not have binding effect. 115 As regards companies of patent agents, the Republic of Austria informs the Court that the proposed amendments to Paragraph 29a(6) and (11) of the PAG consist simply in repealing those provisions, so that it cannot be accused of any restriction of multidisciplinary activities. Findings of the Court 116 In accordance with Article 25(1) of Directive 2006/123, the Member States are to ensure that providers are not made subject to requirements which oblige them to exercise a given specific activity exclusively or which restrict the exercise jointly or in partnership of different activities. However, the providers mentioned in points (a) and (b) of Article 25(1) may be made subject to such requirements, in accordance with the conditions stated in those points. 117 In the present case, first, under Paragraph 21(1) of the ZTG, civil engineers can form companies of civil engineers for the exclusive purpose of exercising their profession, whereas, under Paragraph 21(3) of the ZTG, the formation by civil engineers of a company with persons carrying on a trade is permitted only if it is a civil-law partnership in which those persons are not authorised to perform implementing actions. 118 Second, under Paragraph 29(a)(6) of the PAG, the activities of companies of patent agents are limited to the exercise of that profession, ancillary activities, and the management of the company’s assets. 119 It follows that those provisions subject the providers mentioned in them to requirements such as those concerned by Article 25(1) of Directive 2006/123. It therefore remains to be examined whether those requirements may be justified in accordance with points (a) and (b) of Article 25(1). 120 In this respect, the Republic of Austria submits that Paragraph 21 of the ZTG aims to preserve the impartiality, independence and integrity of the profession of civil engineer, and considers that those objectives cannot be guaranteed by rules of conduct. As regards patent agents, the Republic of Austria informs the Court of legislative amendments intended to repeal the provisions objected to by the Commission. 121 In accordance with the case-law cited in paragraph 48 above, the Republic of Austria’s arguments relating to legislative amendments to the PAG made after the expiry of the period fixed in the reasoned opinion, which, moreover, had not entered into force at the time of bringing the present action, must be rejected. 122 With respect to Paragraph 21 of the ZTG, the Republic of Austria has given no explanation of precisely how the impartiality, independence and integrity of the profession of civil engineer could be affected if civil engineers were allowed, in a company such as those referred to in Paragraph 21(1) of the ZTG, to join with persons exercising other professions. That is all the more so as Paragraph 21(3) of the ZTG allows civil engineers, on certain conditions, to join with persons carrying on another activity in a civil-law partnership. 123 In any event, the Republic of Austria has not put forward any specific arguments to show that other less restrictive measures, such as the adoption of rules on the internal organisation of a multidisciplinary company suggested in argument by the Commission, would not be suitable for ensuring the impartiality, independence and integrity of a civil engineer carrying on his activity within such a company. It cannot therefore be accepted that the prohibition of forming such companies resulting from Paragraph 21 of the ZTG is ‘necessary’ to that end within the meaning of Article 25(1)(a) or (b) of Directive 2006/123. 124 It follows from the above observations that the complaint of infringement of Article 25 of Directive 2006/123 is well founded. 125 Consequently, it must be held that, by maintaining the requirements relating to the location of the seat for partnerships and companies of civil engineers and patent agents, the requirements relating to legal form and shareholding for partnerships and companies of civil engineers, patent agents and veterinary surgeons, and the restriction of multidisciplinary activities for partnerships and companies of civil engineers and patent agents, the Republic of Austria has failed to fulfil its obligations under Article 14(1), Article 15(1), (2)(b) and (c), and (3), and Article 25 of Directive 2006/123. Costs 126 Under Article 138(1) of the Rules of Procedure of the Court, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the Commission has applied for costs to be awarded against the Republic of Austria and the Republic of Austria has been unsuccessful, it must be ordered to bear its own costs and to pay those incurred by the Commission. 127 In accordance with Article 140(1) of the Rules of Procedure, the Federal Republic of Germany is to bear its own costs. On those grounds, the Court (Fourth Chamber) hereby: 1. Declares that, by maintaining the requirements relating to the location of the seat for partnerships and companies of civil engineers and patent agents, the requirements relating to legal form and shareholding for partnerships and companies of civil engineers, patent agents and veterinary surgeons, and the restriction of multidisciplinary activities for partnerships and companies of civil engineers and patent agents, the Republic of Austria has failed to fulfil its obligations under Article 14(1), Article 15(1), (2)(b) and (c), and (3), and Article 25 of Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market; 2. Orders the Republic of Austria to bear its own costs and to pay those incurred by the European Commission; 3. Orders the Federal Republic of Germany to bear its own costs. [Signatures] * Language of the case: German.