Judgment — ECLI:EU:C:2010:321
Date: 2010-06-08
Language of the case: English
Court formation: Grand Chamber
Subject matter: Telecommunications
Procedure: Reference for a preliminary ruling
Origin: United Kingdom

summary of the impact assessment, more than five times higher than the actual cost of providing the wholesale service. 59 The Eurotariff provided for in Article 4(2) of Regulation No 717/2007 has been set at a level that is significantly below that average charge. Furthermore, the ceilings on charges introduced in that article are set, as is clear from point 3 of the explanatory memorandum to the proposal for a regulation, in relation to the ceilings for the corresponding wholesale charges, so that the retail charges reflect more accurately the costs incurred by providers. 60 In those circumstances, the introduction by that provision of ceilings for retail charges must be considered to be appropriate for the purpose of protecting consumers against high levels of charges. 61 As to whether the measure at issue was necessary, it is argued that the said measure goes beyond what is necessary to achieve the objective pursued, given the competitive nature of retail markets. A less intrusive and more proportionate approach would have been to regulate wholesale charges only, while allowing competition in retail markets to bring retail prices down in the normal way, according to the rules of supply and demand, and leaving the NRAs free to intervene in cases where the markets were not functioning properly, on the basis of well‑established regulatory criteria. 62 In this regard, it is apparent, in particular, from recital 14 in the preamble to Regulation No 717/2007 that the Community legislature proceeded on the basis that reductions in wholesale prices might not be reflected in lower retail prices for roaming owing to the absence of incentives for that to happen. 63 Referring to the explanatory memorandum to the proposal for a regulation, which served as the basis for the Community legislature when it adopted Regulation No 717/2007, the Parliament and the Commission submit, inter alia, that regulation of the wholesale market for Community-wide roaming services alone would not have ensured that the reduction in wholesale charges would be reflected in retail charges, given that there was no competitive pressure on operators to pass on that reduction. Experience had shown that a reduction in wholesale charges did not necessarily lead to a reduction in retail charges. 64 In this respect, the Council stated that the legislature considered retail controls to be necessary, in particular because, in that specific area, competition at retail level took place mainly in terms of the complete retail package and, for the majority of consumers, roaming was only a small part of that package and accordingly not a critical consideration when they choose or change their provider. 65 The institutions that submitted observations to the Court also referred to the impact assessment, which shows that the dynamics of the roaming markets were considered to be complex and in the process of changing, so that there was a risk that a reduction in wholesale charges would not be reflected in retail charges. The impact assessment also shows that it would therefore be more prudent to regulate retail charges at the same time. Such a risk was moreover acknowledged by the ERG in paragraph 3.12 of its response of 22 March 2006, submitted during the public consultation that preceded the impact assessment, especially in respect of Member States with less competitive markets. 66 In addition, it is clear that regulation of wholesale charges alone would not have had a direct and immediate effect for consumers. By contrast, only the regulation of retail charges could improve the situation of consumers directly. 67 Further, it must be recalled that, as indicated in recital 13 in the preamble to Regulation No 717/2007, the Community legislature recognised that the measures adopted were exceptional and justified by the unique characteristics of the roaming markets. 68 In those circumstances, and particularly in the light of the broad discretion which the Community legislature has in the area at issue, which involves choices to be made of an economic nature, requiring complex assessments and evaluations, it could legitimately take the view that regulation of the wholesale market alone would not achieve the same result as regulation such as that at issue, which covers at the same time the wholesale market and the retail market, and that the latter was therefore necessary. 69 Finally, in the light of the importance of the objective of consumer protection within the context of Article 95(3) EC, intervention that is limited in time in a market that is subject to competition, which makes it possible, in the immediate future, to protect consumers against excessive prices, such as that at issue, even if it might have negative economic consequences for certain operators, is proportionate to the aim pursued. 70 Therefore, by adopting, in Article 4 of Regulation No 717/2007, ceilings for retail charges in addition to ceilings for wholesale charges, the Community legislature did not exceed the limits of the discretion it is recognised as having. The same is true of the obligation to provide information laid down in Article 6(3) of that same regulation, given that that provision reinforces the effectiveness of the regulation of retail charges and is therefore justified by the objective of consumer protection. 71 It follows that Articles 4 and 6(3) of Regulation No 717/2007 do not infringe the principle of proportionality. Infringement of the principle of subsidiarity 72 It is appropriate to recall that the principle of subsidiarity is referred to in the second paragraph of Article 5 EC – and given actual definition by the Protocol on the application of the principles of subsidiarity and proportionality, annexed to the Treaty –, which provides that the Community, in areas which do not fall within its exclusive competence, is to take action only if and insofar as the objectives of the proposed action cannot be sufficiently achieved by the Member States and can therefore, by reason of the scale or effects of the proposed action, be better achieved by the Community. That protocol, in paragraph 5, also lays down guidelines for the purposes of determining whether those conditions are met. 73 As regards legislative acts, the protocol states, in paragraphs 6 and 7, that the Community is to legislate only to the extent necessary and that Community measures should leave as much scope for national decision as possible, consistent however with securing the aim of the measure and observing the requirements of the Treaty. 74 In addition, it states in its paragraph 3 that the principle of subsidiarity does not call into question the powers conferred on the European Community by the Treaty, as interpreted by the Court of Justice. 75 As regards Article 95 EC, the Court has held that the principle of subsidiarity applies where the Community legislature uses it as a legal basis, inasmuch as that provision does not give it exclusive competence to regulate economic activity on the internal market (British American Tobacco (Investments) and Imperial Tobacco, paragraph 179). 76 In this respect, it must be pointed out that the Community legislature, wishing to maintain competition among mobile telephone network operators, has, in adopting Regulation No 717/2007, introduced a common approach, in order in particular to contribute to the smooth functioning of the internal market, allowing those operators to act within a single coherent regulatory framework. 77 As is clear from recital 14 in the preamble to the regulation, the interdependence of retail and wholesale charges for roaming services is considerable, so that any measure seeking to reduce retail charges alone without affecting the level of costs for the wholesale supply of Community-wide roaming services would have been liable to disrupt the smooth functioning of the Community-wide roaming market. For that reason, the Community legislature decided that any action would require a joint approach at the level of both wholesale charges and retail charges, in order to contribute to the smooth functioning of the internal market in those services. 78 That interdependence means that the Community legislature could legitimately take the view that it had to intervene at the level of retail charges as well. Thus, by reason of the effects of the common approach laid down in Regulation No 717/2007, the objective pursued by that regulation could best be achieved at Community level. 79 Therefore, the provisions of Articles 4 and 6(3) of Regulation No 717/2007 are not invalidated by any infringement of the principle of subsidiarity. 80 In the light of all the foregoing considerations, the answer to the second question referred is that consideration of that question has disclosed no factor of such a kind as to affect the validity of Articles 4 and 6(3) of Regulation No 717/2007. Costs 81 Since these proceedings are, for the parties to the main proceedings, a step in the proceedings 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 (Grand Chamber) hereby rules: Consideration of the questions raised has disclosed no factor of such a kind as to affect the validity of Regulation (EC) No 717/2007 of the European Parliament and of the Council of 27 June 2007 on roaming on public mobile telephone networks within the Community and amending Directive 2002/21/EC. [Signatures] * Language of the case: English.