Opinion of the Advocate General — ECLI:EU:C:2018:869
Date: 2018-10-25
Language of the case: Italian
Subject matter: Transport
Procedure: Reference for a preliminary ruling
Origin: Italy

summary, as the French Government clearly explained at the hearing, Regulation No 1370/2007 provided for three distinct arrangements on the basis of the date of the contract award, with a view to reconciling the imperatives of openness to competition, legal certainty and legitimate expectations. 61. The definitive arrangement applies to new awards of contracts made as from 3 December 2019, which must comply with Regulation No 1370/2007 in their entirety. 62. The first transitional arrangement concerns new awards made between 3 December 2009 and 2 December 2019, in respect of which the application of Article 5 of that regulation is suspended pursuant to Article 8(2) of the regulation. 63. The second transitional arrangement excludes the application of the regulation to awards made before 3 December 2009, in accordance with the detailed rules laid down in Article 8(3) of that regulation. 64. In the following section, I shall examine the applicability of that last arrangement in circumstances such as those of the main proceedings. B. The applicability of the transitional arrangement provided for in Article 8(3) of Regulation No 1370/2007 to a contract covered by point (b) of the first subparagraph of Article 8(3) of that regulation and expiring after the 30-year period prescribed in that provision (first and fourth questions) 65. By its first and fourth questions, which must be examined together, the referring court asks, in essence, whether Article 8(3) of Regulation No 1370/2007 must be interpreted as meaning that Article 5(2) of that regulation is applicable to the direct award of a contract made before the entry into force of the regulation, it being understood that that contract will expire after the 30-year period prescribed for the contracts referred to in point (b) of the first subparagraph of Article 8(3) of that regulation. 66. I would again emphasise that the ‘direct award’ referred to in that question was not made by Regione Toscana in the procedure which gave rise to the dispute in the main proceedings, since that procedure took place in the context of a competitive tender organised after the entry into force of Regulation No 1370/2007. 67. In fact, that question concerns the direct award of a contract to RATP in France before that regulation entered into force. I would point out, in that regard, that the referring court seeks to ascertain whether Autolinee Toscane must be excluded from the award procedure at issue in the main proceedings on the ground that it is controlled by RATP. (17) 68. Like the French Government and the Commission, I consider that, in accordance with the detailed rules provided for in Article 8(3) of Regulation No 1370/2007, Article 5(2) of that regulation, and in particular Article 5(2)(b) thereof, does not apply to a direct award made before that regulation entered into force, for the following reasons. 69. In the first place, it is clear from points (a) to (d) of the first subparagraph of Article 8(3) of Regulation No 1370/2007 that that transitional arrangement applies to any contract awarded before the entry into force of that regulation on 3 December 2009. (18) 70. In the second place, the purpose of Article 8(3) of Regulation No 1370/2007 is to exclude the application of that regulation, in accordance with the detailed rules laid down in that provision, to contracts awarded before 3 December 2009. That exclusion may, in my view, take two distinct forms. 71. First, the validity of such contracts cannot be called into question on grounds of infringement of Regulation No 1370/2007, and in particular Article 5 thereof. This follows from the second subparagraph of Article 8(3) of that regulation, according to which the contracts referred to ‘may continue’. 72. Secondly, under the first subparagraph of Article 8(3) of that regulation, ‘no account shall be taken of’ such contracts. I infer from that provision that the competent authorities of the Member States must not take into account contracts awarded before the entry into force of that regulation when awarding a contract pursuant to Article 5 of that regulation. 73. In the dispute in the main proceedings, only that second effect is relevant, since the referring court is raising the question of the possibility of excluding Autolinee Toscane from the award procedure at issue on account of the direct award of a contract to RATP before 3 December 2009. 74. In the third place, the second subparagraph of Article 8(3) of Regulation No 1370/2007 determines the duration of that transitional arrangement, which varies according to the date and type of award. 75. In that regard, it is clear from the findings of fact made by the Tribunale amministrativo della Toscana (Administrative Court of Tuscany, Italy), which were reproduced by the referring court (19) and have not been challenged by the parties submitting observations to the Court, that: – the direct award to RATP in France dates back to 1948, and – the contract awarded to RATP in France, and in force at the material time, expires on 31 December 2039. 76. Consequently, the contract awarded to RATP in France falls within point (b) of the first subparagraph of Article 8(3) of Regulation No 1370/2007, as noted by the referring court. 77. Under the second subparagraph of Article 8(3) of that regulation, those types of contract may ‘continue until they expire, but for no longer than 30 years’. 78. It is unfortunate that this latter provision does not specify the starting point of the 30-year period, as pointed out by Mobit and by the Commission. In theory, there are various possible starting points, such as the date of the original draft regulation proposed by the Commission (26 July 2000), as suggested by Mobit, the date of the entry into force of Regulation No 1370/2007 (3 December 2009), the day following the expiry of the transitional period established in Article 8(2) of that regulation (3 December 2019), the date on which the contract in question was awarded, or even the date on which the contract came into effect. 79. However, in my estimation the starting point for that 30-year period should be the date of the entry into force of Regulation No 1370/2007, for the following two reasons. First, using a date that relates to the contract in question would not permit the application of a uniform solution to all contracts that come within Article 8(3) of that regulation. This would give rise to implementation difficulties for the competent authorities and to legal uncertainty for operators in the transport sector. 80. Secondly, it should be noted that that provision refers to all contracts entered into before 3 December 2009, which is the date on which the regulation came into force. Therefore, it seems reasonable to me to consider that this date also represents the starting point for the 30 years stipulated in the second paragraph of Article 8(3) of Regulation No 1370/2007 with regard to the contracts referred to in subparagraphs (b) and (c) of the first paragraph of Article 8(3) of that regulation, as assumed by the referring court and the French Government. 81. According to that interpretation of the relevant provisions, this 30-year period must therefore be considered to expire on 3 December 2039. (20) 82. By its fourth question, the referring court seeks to clarify whether the contract awarded by the French Government to RATP can take advantage of the transitional arrangement set out in Article 8(3) of Regulation No 1370/2007 even though that contract will expire on 31 December 2039, that is, after 3 December 2039, which is the date on which the 30-year period expires. 83. On this point, Mobit argues that the contract awarded to RATP does not comply with the aforesaid provision, because of the duration of the contract. However, it seems to me that this stance is the product of confusion between the conditions required in order for the transitional arrangement to apply and the effects of that arrangement. 84. On the one hand, it can be seen from the wording of the first subparagraph of Article 8(3) of Regulation No 1370/2007 that that transitional arrangement applies to all contracts awarded before 3 December 2009, regardless of their duration. On the other, the second subparagraph of Article 8(3) specifies the effects and duration of the arrangement rather than the type of contract that is subject to them. 85. Under this interpretation of the relevant provisions, there can be no doubt that the contract awarded by the French Government to RATP can indeed take advantage of the transitional arrangement set out in Article 8(3) of Regulation No 1370/2007, in spite of the fact that it will expire on 31 December 2039, as stated by Autolinee Toscane, RATP, the region of Tuscany, the French and Portuguese Governments, and the Commission. However, it may benefit from that arrangement only during the period of 30 years laid down for the contracts specified in point (b) of the first subparagraph of Article 8(3) of that regulation, which will expire on 3 December 2039. 86. Consequently, Article 5(2)(b) of Regulation No 1370/2007 may not apply to a contract such as that held by RATP until 4 December 2039. The relatively lengthy duration of that transitional arrangement can be attributed, in particular, to the difficulty in reaching agreement within the Council on the adoption of the aforesaid regulation. (21) 87. Having regard to the considerations set out above, I propose that the Court of Justice should reply to the first and fourth questions referred as follows: Article 8(3) of Regulation No 1370/2007 must be interpreted as meaning that Article 5(2) and (3) of that regulation does not apply to a contract specified in point (b) of the first subparagraph of Article 8(3) of that regulation for a period of 30 years, which will expire on 3 December 2039, in spite of the fact that that contract will expire after 3 December 2039. 88. Like the answer proposed in Section A of this Opinion, that answer provides a response to all the questions raised by the referring court. In the further alternative, I shall examine in the next section whether Article 5 of Regulation No 1370/2007 may be interpreted as meaning that an undertaking must be excluded from a competitive tendering procedure on the ground that it is controlled by an undertaking which previously benefited from a direct award. C. The nature of the penalty attaching to the requirement under Article 5(2) of Regulation No 1370/2007 to limit the activities of internal operators 89. The second and third questions raised by the referring court are based on a premiss which requires particular examination, that is to say the possibility or even obligation to exclude an undertaking, such as Autolinee Toscane in the dispute in the main proceedings, from a competitive tendering procedure, within the meaning of Article 5(3) of Regulation No 1370/2007, on the ground that that undertaking or the undertaking which controls it, such as RATP in that dispute, has been directly awarded a contract for the purposes of Article 5(2) of that regulation. 90. For the following reasons, I consider that that premiss is erroneous. Indeed, I agree with the position put forward by the Commission that an undertaking cannot be excluded from a competitive tendering procedure on the ground that it has also been directly awarded a contract. 91. I would point out that Article 5 of Regulation No 1370/2007 offers the competent authority the freedom to choose between a direct award procedure, governed by Article 5(2) of that regulation, and a competitive tendering procedure, referred to in Article 5(3) of that regulation. 92. Nevertheless, that freedom of choice was made subject to a requirement that the activity of the internal operator be geographically limited if the competent authority chooses to award a contract directly. That principle of limitation, the content of which is set out in Article 5(2) of Regulation No 1370/2007, is intended to prevent any distortions of competition which might result from the participation, in a competitive tendering procedure, of an internal operator benefitting from favourable economic terms under another contract awarded without a competitive tender. 93. None of the parties submitting observations to the Court has disputed the principle of that requirement to limit the activities of the internal operator. However, those parties have put forward differing views as to the penalty provided for in the event of infringement of that requirement. 94. The referring court has assumed that that penalty consists in the exclusion of internal operators from all competitive tendering procedures. That view has been taken by Mobit and the Italian Government. 95. On the other hand, Autolinee Toscane, Regione Toscana, RATP, the French Government and the Commission have argued that an internal operator’s participation in a competitive tendering procedure does not lead to that operator’s exclusion from that procedure but rather to the invalidity of the direct award from which that operator benefited. 96. In my view, failure to comply with the limitation requirement laid down in Article 5(2)(b) of Regulation No 1370/2007 cannot have any impact on a competitive tendering procedure within the meaning of Article 5(3) of that regulation. 97. First, I note that the limitation requirement is provided for in Article 5(2) of Regulation No 1370/2007, which governs direct awards, and not in Article 5(3) of that regulation, which covers awards by way of a competitive tender. 98. Secondly, that interpretation follows from the wording of Article 5(2) of Regulation No 1370/2007. Indeed, it is apparent from Article 5(2)(b) of that regulation, and in particular from the words ‘the condition for applying this paragraph is that’, that the requirement to limit the activities of the internal operator is a condition for the validity of internal award procedures. 99. Thirdly, the wording of the second sentence of Article 5(3) of Regulation No 1370/2007 also militates against excluding operators who have benefited from a direct award, since it expressly requires that that procedure be ‘open to all operators’. I would point out, in that regard, that Article 5(3) of that regulation, which concerns competitive tendering procedures, contains a reference neither to the limitation requirement laid down in Article 5(2)(b) of that regulation nor to any similar requirement. 100. It is true that a formal reading of the wording ‘any competent authority which has recourse to a third party other than an internal operator’, which opens the first sentence of Article 5(3) of Regulation No 1370/2007, might suggest that all internal operators are automatically excluded from competitive tendering procedures. In reality, that expression necessarily refers only to the internal operators of the competent authority concerned, namely the authority which is awarding the contract by competitive tender. 101. Indeed, the effect of that wording is not to exclude any internal operator from competitive tendering procedures, but rather to require competitive tendering whenever a competent authority does not directly award a contract in accordance with Article 5(2) of Regulation No 1370/2007. In other words, competent authorities are required to award a contract either directly or following a competitive tendering procedure, (22) and are also required, when opting for the latter procedure, to open it to all operators. 102. Fourthly, the interpretation proposed by the Commission is consistent with one of the objectives pursued by Regulation No 1370/2007, namely to increase the use of competitive tendering procedures for the award of public service transport contracts. (23) According to that interpretation, an internal operator’s participation in a competitive tendering procedure is liable to be penalised by the invalidity of the direct awards made to it. (24) In my view, there is little doubt that that penalty is likely to deter an internal operator from participating in a competitive tendering procedure. Nevertheless, any internal operator remains fully entitled to participate in competitive tendering procedures, the effectiveness of which is thus preserved. 103. I infer from the foregoing that Article 5 of Regulation No 1370/2007 must be interpreted as meaning that it does not preclude a public service transport contract, such as that at issue in the dispute in the main proceedings, from being awarded on the basis of a competitive tendering procedure to an operator controlled by another operator which was directly awarded a contract before the entry into force of that regulation. 104. On the other hand, the participation of an internal operator in a competitive tendering procedure could, where appropriate, call into question the validity of the direct award of a contract to that undertaking, or to the undertaking which controls it, assuming that Article 5 is applicable. (25) I would point out that that issue, in my view, falls outside the subject matter of the dispute in the main proceedings. D. The concepts of ‘internal operator’ and ‘competent authority’, referred to in Article 2(b) and (j), and in Article 5(2) of Regulation No 1370/2007 (second and third questions) 105. Like RATP, Autolinee Toscane, the French Government and the Commission, I consider that there is no need to answer the second and third questions. 106. It is clear from the answers which I have proposed in the preceding sections of this Opinion that Regulation No 1370/2007 does not preclude, in the circumstances of the main proceedings, a public service transport contract from being awarded on the basis of a competitive tendering procedure to an operator such as Autolinee Toscane. 107. Nevertheless, for the sake of completeness, I shall briefly answer in this section the second and third questions. 108. By its second question, the referring court asks, in essence, whether Article 2(j) and Article 5(2) of Regulation No 1370/2007 must be interpreted as meaning that it is possible to regard as an ‘internal operator’ a legal person governed by public law to which a State authority has directly awarded a public service contract for the provision of local transport and which is directly connected to that authority in terms of its organisation and control and whose capital is owned by the State. 109. According to the explanations provided by that court, that question seeks to clarify the status of RATP in the light of that regulation. 110. In my view, the answer to that question largely depends on the findings of fact which fall within the jurisdiction of the national court. 111. More specifically, it is for the national court to ascertain whether the competent authority exercises over the operator concerned ‘control similar to that exercised over its own departments’, in the light of the criteria laid down in Article 5(2)(a) of Regulation No 1370/2007. 112. As Mobit rightly noted, the fact that an operator, such as RATP, takes the legal form of a legal person governed by public law is irrelevant for the purposes of classification as an internal operator. Regulation No 1370/2007 makes no distinction between public undertakings and private undertakings, according to recital 12 thereof. 113. By its third question, the referring court asks, in essence, whether Article 5(2) of Regulation No 1370/2007, read in the light of Article 2(b) of that regulation, must be interpreted as meaning that a contract which has been directly awarded in accordance with that provision may subsequently be excluded from its scope because the power to organise the transport services concerned has been transferred to an institution which does not exercise ‘similar control’ over the contractor directly awarded those services. 114. According to the explanations provided by the referring court, that question is motivated by the need to identify the competent authority for the transport services provided by RATP. According to that court, that competent authority could be either the French State, which has retained the real right to award the concession granted to RATP, or the Syndicat des transports d’Île-de-France (‘STIF’), a public administrative institution which has not been controlled by the French State since 2004 and which has been entrusted with the task of organising transport in the Paris area. The referring court points out, however, that STIF has no power as regards the supervision, arrangements, scope and duties of the concession awarded ‘ex lege’ to RATP. 115. Again, I feel that the answer to that question largely depends on findings of fact which it is for the national court to make. 116. In the light of the definition of ‘competent authority’ set out in Article 2(b) of Regulation No 1370/2007, three scenarios may be envisaged following the transfer to STIF of the power to organise the transport services concerned: – the French State has retained the sole power to intervene in public passenger transport in the geographical area concerned; – that power is now shared between the French State and STIF, or – that power is held solely by STIF. 117. Thus, for the purposes of deciding whether the contract directly awarded to RATP continues to fall within Article 5(2) of Regulation No 1370/2007, the national court must determine, first, whether the French State and/or STIF must be regarded as competent authorities. Secondly, it must assess whether the requirements of ‘similar control’ and of limitation of the internal operator’s activities are fulfilled. 118. In accordance with the wording of the question raised, the referring court considers that STIF does not exercise ‘similar control’over RATP, for the purposes of Article 5(2) of Regulation No 1370/2007. Therefore, the contract held by RATP continues to fall within that provision, notwithstanding the transfer to STIF of the power to organise the transport services concerned, if, first, the State authority retains, alone or jointly with STIF, the power to intervene in public passenger transport in the geographical area concerned (and hence may be regarded as a ‘competent authority’) and, secondly, that authority continues to exercise ‘similar control’ over the contractor. 119. I therefore propose that the Court answer as follows the second and third questions referred. 120. Article 5(2) of Regulation No 1370/2007, read in the light of Article 2(j) of that regulation, must be interpreted as meaning that it is possible to regard as an ‘internal operator’ a legal person governed by public law to which a State authority has directly awarded a public service contract for the provision of local transport, provided that that authority exercises over that person ‘control similar’ to that exercised over its own departments. 121. Moreover, Article 5(2) of Regulation No 1370/2007, read in the light of Article 2(b) of that regulation, must be interpreted as meaning that the transfer of the power to organise transport services from the State authority to an institution not exercising ‘similar control’ over the contractor does not result in the exclusion of the contract awarded from the scope of that provision provided, first, that the State authority retains, alone or jointly with that institution, the power to intervene in public passenger transport in the geographical area concerned (and hence may be regarded as a ‘competent authority’) and, secondly, that that authority continues to exercise ‘similar control’ over the contractor. VI. Conclusion 122. In view of the foregoing, I propose that the Court answer as follows the questions referred by the Consiglio di Stato (Council of State, Italy): (1) Article 8(2) of Regulation (EC) No 1370/2007 of the European Parliament and of the Council of 23 October 2007 on public passenger transport services by rail and by road and repealing Council Regulations (EEC) Nos 1191/69 and 1107/70 must be interpreted as meaning that Article 5 of that regulation is not applicable in the context of an award procedure carried out before the expiry of the transitional period prescribed in Article 8(2) of that regulation, such as that at issue in the main proceedings, except where that award falls within a national scheme implementing Article 5 of that regulation in advance and to the extent determined by that scheme. (2) In the alternative, Article 8(3) of Regulation No 1370/2007 must be interpreted as meaning that Article 5 of that regulation does not apply to a contract specified in point (b) of the first subparagraph of Article 8(3) of that regulation for a period of 30 years, which will expire on 3 December 2039, in spite of the fact that that contract will expire after 3 December 2039. (3) In the further alternative, Article 5 of Regulation No 1370/2007 must be interpreted as meaning that it does not preclude a public service transport contract, such that at issue in the dispute in the main proceedings, from being awarded on the basis of a competitive tendering procedure to an operator controlled by another operator which was directly awarded a contract before the entry into force of that regulation. (4) In the even further alternative, Article 5(2) of Regulation No 1370/2007, read in the light of Article 2(j) of that regulation, must be interpreted as meaning that it is possible to regard as an ‘internal operator’ a legal person governed by public law to which a State authority has directly awarded a public service contract for the provision of local transport, provided that that authority exercises over that person ‘control similar’ to that exercised over its own departments. Moreover, Article 5(2) of that regulation, read in the light of Article 2(b) of the regulation, must be interpreted as meaning that the transfer of the power to organise transport services from the State authority to an institution not exercising ‘similar control’ over the contractor does not result in the exclusion of the contract awarded from the scope of that provision provided, first, that the State authority retains, alone or jointly with that institution, the power to intervene in public passenger transport in the geographical area concerned (and hence may be regarded as a ‘competent authority’) and, secondly, that that authority continues to exercise ‘similar control’ over the contractor. 1 Original language: French. 2 OJ 2007 L 315, p. 1. 3 See points 21 and 22 of this Opinion. 4 See points 21 and 22 of this Opinion. 5 See point 16 of this Opinion. 6 See point 16 of this Opinion. 7 Communication from the Commission on interpretative guidelines concerning Regulation (EC) No 1370/2007 on public passenger transport services by rail and by road (OJ 2014 C 92, p. 1), paragraph 2.6.1. 8 OJ 2016 L 354, p. 22. That amending regulation came into force on 24 December 2017 under Article 2 thereof. 9 Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EC) No 1370/2007 concerning the opening of the market for domestic passenger transport services by rail, 30 January 2013, COM(2013) 28 final, pp. 7 and 16. 10 See Article 1(9) of Regulation 2016/2338. 11 See, in particular, the Commission’s Revised proposal for a Regulation of the European Parliament and of the Council on public passenger transport services by rail and by road, 20 July 2005, COM(2005) 319 final, p. 4: ‘After five years, this proposal is still blocked in the Council. It has not been possible to reach a compromise with a view to a common position, as the Member States are very divided on the actual extent to which inland transport should be opened up to competition given, among other things, their different experiences in this area.’ 12 Common Position (EC) No 2/2007 adopted by the Council on 11 December 2006 (OJ 2007 C 70E, p. 1, see in particular pp. 9 and 17). 13 See Article 12 of Regulation No 1370/2007. 14 See points 75 to 85 of this Opinion. 15 The transitional mechanism provided for in Article 8(3) of that regulation could concern, in particular, in addition to Article 5 of Regulation No 1370/2007, the obligation to draw up a public service contract (Article 3), the rules on compensation (Article 4(1) and (2) and Article 6) or the rules governing the duration of the contract (Article 4(3) and (4)). 16 Common Position (EC) No 2/2007 adopted by the Council on 11 December 2006 (OJ 2007 C 70E, p. 1), p. 17: ‘With a view to providing authorities and operators with sufficient time to adapt to the new legislative framework, the Council makes several modifications to the transitional arrangements proposed by the Commission. First of all, the Regulation enters into force three years after the publication of the Regulation. Twelve years thereafter, public service contracts [for transport] by rail and by road need to be awarded in accordance with the Regulation. … As regards contracts concluded before the entry into force of the Regulation, the Common Position provides for a transitional arrangement that is very much in line with the proposals the Parliament put forward in first reading. The Council seeks a balance between, on the one hand, respecting the principle “pacta sunt servanda” and, on the other hand, avoiding closure of markets for too long a period. ...’ (Emphasis added.) 17 See points 21 and 22 of this Opinion. 18 I would point out that the two dates used in Article 8(3) of Regulation No 1370/2007 are, first, the date on which the Commission submitted its initial proposal for a regulation (26 July 2000) and, secondly, the date of entry into force of that regulation (3 December 2009). See Common Position (EC) No 2/2007 adopted by the Council on 11 December 2006 (OJ 2007 C 70E, p. 1), in particular p. 17. 19 See point 13 of this Opinion. 20 I note that, according to the traditional rules on the calculation of time limits, where a time limit is expressed in years, the dies ad quem is to be the day of the last year whose date corresponds to that of the dies a quo. See Article 4(2) of the European Convention on the Calculation of Time Limits, signed at Basle on 16 May 1972. The Court referred to that Convention in the judgment of 11 November 2004, Toeters and Verberk (C‑171/03, EU:C:2004:714, paragraph 34). 21 See point 51 of this Opinion. 22 The mutually exclusive nature of the two award procedures provided for in Article 5 of Regulation No 1370/2007 is confirmed by the definition of the concept of direct award laid down in Article 2(h) of that regulation: ‘the award of a public service contract to a given public service operator without any prior competitive tendering procedure.’ 23 See, in particular, recitals 6 and 7 of Regulation No 1370/2007. 24 Regulations are binding in their entirety and directly applicable in the internal order of the Member States pursuant to the second paragraph of Article 288 TFEU. According to the settled case-law, regulations, owing to their very nature and their place in the system of sources of EU law, operate to confer rights on individuals which the national courts have a duty to protect (see, in particular, judgments of 14 December 1971, Politi, 43/71, EU:C:1971:122, paragraph 9, and of 17 September 2002, Muñoz and Superior Fruiticola, C‑253/00, EU:C:2002:497, paragraph 27). 25 See, in that regard, Section B, points 65 to 88 of this Opinion.