61994CC0157_EN
Opinion of the Advocate-General
Opinion of the Advocate-General
By means of four applications, which, for reasons of practicality, I shall consider together, the Commission has asked the Court to declare that, by granting exclusive rights to import (and, in the case of the French Republic, the Kingdom of Spain and the Italian Republic, to export) electricity (and, in the case of the French Republic, natural gas) the defendant Member States have failed to fulfil their obligations under Articles 30, 34 and 37 (and, in the case of the Kingdom of the Netherlands, Articles 30 and 37) of the Treaty and also, in the case of the Kingdom of Spain, under Article 48 of the Act concerning the Conditions of Accession of the Kingdom of Spain and the Portuguese Republic and the Adjustments to the Treaties (OJ 1985 L 302, hereinafter `the Act of Accession').
The United Kingdom has intervened in the actions in support of granting the applications, Ireland has intervened in support of dismissing them, and the French Republic has intervened in support of dismissing the applications directed against the Kingdom of Spain, the Italian Republic and the Kingdom of the Netherlands.
A brief description of the subject-matter of the applications is sufficient to show the quite exceptional interest of the questions which they raise.
The Court is asked to construe and apply, in a sector such as that of energy, the provisions of Articles 30, 34 and 37 (and also, as I shall explain, Article 90(2)) of the Treaty and essentially, perhaps for the first time in such a direct manner, to rule whether the concept of public service which prevails in certain Member States (if not most of them) is, at least with regard to certain decisively important aspects, compatible with the fundamental principle of the free movement of goods.
I - Community law context
1 Although the original version of the Treaty establishing the European Economic Community contains no provisions relating specifically to the subject, (1) the question of establishing a common market in energy occupied the Community from a very early date.
As early as 1964 the Governments of the Member States agreed, in the `Protocol of Agreement concerning energy problems', (2) that it was necessary to create a common market in the energy sector, laying down in very general outline in the same document the data on the basis of which that policy should be determined and the objectives which it should pursue. Also, on 18 December 1968 the Commission presented to the Council a document entitled `Initial Guidelines for a Community Energy Policy' which represented the first attempt to undertake a detailed analysis of the framework for the common energy policy, to identify the main problems involved and to determine the means available to the Community institutions for resolving them.
2 No progress beyond those first steps was made for a considerable period of time.
The question was raised again later, after Europe and the rest of the world experienced the two oil crises of 1973 and 1979.
The new starting point was the adoption of Article 8a of the Treaty by means of the Single European Act.
The prospect of completing the internal market by 31 December 1992 brought back to the agenda the question of establishing an internal market in energy as a matter of urgency.
Only a few months after the Single European Act was signed, and almost before it came into force, the Council, by means of the Resolution of 16 September 1986, (3) laid down as an objective of Community energy policy, inter alia [Article 5(d)], `greater integration, free from barriers to trade, of the internal energy market with a view to improving security of supply, reducing costs and improving economic competitiveness'.
On 2 May 1988 the Commission for its part published a working document entitled `The Internal Energy Market', (4) in which, after stressing that, to establish an internal energy market, it would be necessary, inter alia, to apply strictly all the relevant provisions of Community law in force, express reference was made to the need to supervise, in the light of those provisions, monopolies for the importation and export of electricity and natural gas.
3 At the same time the Commission undertook a series of legislative initiatives designed to remove, by means of harmonization rules, at least some of the obstacles to the establishment of an internal energy market.
Thus Council Directive 90/377/EEC of 29 June 1990 concerning a Community procedure to improve the transparency of gas and electricity prices charged to industrial end-users, (5) Council Directive 90/547/EEC of 29 October 1990 on the transit of electricity through transmission grids, (6) and Council Directive 91/296/EEC of 31 May 1991 on the transit of natural gas through grids (7) were adopted.
4 The scope of the proposals for directives presented by the Commission on 24 February 1992 is far wider.
The most ambitious element of the proposals, which, according to their preambles, constitute, after the adoption of the Directives referred to in paragraph 3, the second phase in the process of establishing the internal market in electricity (8) and natural gas, (9) is the introduction of a system of rules designed to give producers of electricity and natural gas and their customers (or at least some of them) a right of access, subject to certain requirements and limitations, to the grids of the Member States through which electricity or natural gas is transmitted from the point of production to the distributors or final users (transmission grids), and also to the grids of the Member States through which distributors supply those forms of energy to final users (distribution systems).
The logic behind those proposals is clear: a right of access for producers, distributors and final users to the transmission and distribution systems (without which, of course, trading in electricity and natural gas would be impossible) is the necessary prerequisite for the establishment of conditions for effective competition in the electricity and natural gas sector, as it enables distributors and final consumers to be supplied by the producer of their choice, irrespective of where the producer is established in the Community.
Nevertheless, it is also clear that in the Member States where exclusive rights of access to transmission and distribution systems have been established, the grant of a right of that kind would necessitate a review of the fundamental principles of the organization and functioning of the energy sector, ranging from measures to ensure the safety of systems to long-term planning of energy needs.
In such circumstances it is not surprising that the Commission's proposals, as in the meantime amended, (10) are still the subject of negotiation in the Council at the time of the proceedings relating to these applications. (11)
5 What role do the present applications play in relation to the establishment of the internal market in energy?
The Commission seeks a ruling that, irrespective of the progress achieved in drawing up the secondary legislation concerning electricity and natural gas, the defendant Member States are under an obligation to repeal certain provisions of their domestic law relating thereto, namely those granting exclusive rights to import (and, in the case of France, Spain and Italy, export) electricity and (with regard to France) natural gas.
Also, according to the Commission, those provisions are contrary to the Treaty itself, in particular, firstly, Articles 30 and 34 (which prohibit, as between Member States, quantitative restrictions on imports and exports and measures having equivalent effect) and, secondly, Article 37(1), which provides as follows: `Member States shall progressively adjust any State monopolies of a commercial character so as to ensure that when the transitional period has ended no discrimination regarding the conditions under which goods are produced and marketed exists between nationals of Member States.
The provisions of this Article shall apply to any body through which a Member State, in law or in fact, either directly or indirectly supervises, determines or appreciably influences imports or exports between Member States.
These provisions shall likewise apply to monopolies delegated by the State to others.'
In that connection, it is noteworthy that the Commission emphasizes, in the preamble to each of the proposed directives referred to above, that `the present Directive does not prejudice the application of the rules of the Treaty'.
Should the present applications succeed, will the defendant States be under an obligation to repeal, or at least amend radically, the remaining exclusive rights in the sectors at issue in order to comply fully with the Court's judgment?
One of the longer-term consequences of an outcome favourable to the Commission, and no doubt the most important, would be the imposition of an obligation on the defendant States to ensure, by one means or another, access to the respective transmission and distribution systems for distributors or final users who may wish to import or export electricity or natural gas.
In the Commission's opinion, this would remove one of the main obstacles (if not the main obstacle) to the establishment of the internal energy market.
II - Admissibility
6 The French Republic (although emphasizing that in that connection it `relies on the Court's assessment') objects that the Commission's action is inadmissible on the grounds that the Commission did not adopt a reasoned position, except in its application, on some of the arguments put forward during the preceding administrative procedure; that, in any case, such position differs from that set out in the reasoned opinion; and that, under those circumstances, the Commission disregarded the purpose of the procedure under Article 169 of the Treaty, infringing the right of the defendant State to defend its viewpoint. The French Republic makes the following submissions:
(a) In reply to the letter before action, the French Government contended that the monopolies on the import and export of electricity and natural gas were intended to ensure the national energy supply and consequently were bound up with grounds of `public security' for the purposes of Article 36 of the Treaty.
With regard to electricity, the Commission's reasoned opinion stated that Article 36 could not be relied upon and set out the reasons why the Commission considered that the removal of such monopolies could not endanger security of supply.
However, according to the French Government, the arguments relating to that question in the application are quite different because, although the Commission accepts the need for centralized control of the electricity supply system, it takes the view that security of supply can be attained by less onerous means than import and export monopolies.
So far as natural gas is concerned, the Commission contends before this Court that the monopoly of imports is not bound up with security of supply, relying on arguments some of which (the existence of relatively large-scale Community production, the lack of alternative medium-term outlets for the countries which export gas in the Community, the greater dependence of France on oil, which it can import freely, than on gas) were not put forward during the preceding administrative procedure.
(b) In reply to the letter before action, the French Government also sought to rely on Article 90(2) of the Treaty by alleging that the monopolies in question were justified by the services of general economic interest whose operation had been entrusted to the bodies in favour of which the monopolies had been created.
Those arguments were dismissed in the reasoned opinion on the ground that in this case that provision could not be relied upon because it relates only to conduct of the undertakings referred to in Article 90(1).
Nevertheless, according to the defendant State, the Commission, for the first time in its application, firstly, admits that Article 90(2) enables the Member States to grant to those undertakings exclusive rights which restrict or, in some cases, exclude competition provided that this is necessary for the performance of the particular task assigned to them and, secondly, refers extensively to the criteria for determining whether or not that condition is fulfilled.
In my opinion, those arguments of the French Government cannot succeed.
7 As the Court has repeatedly observed, (12) the purpose of the pre-litigation procedure is to give the Member State concerned an opportunity to comply with its obligations under Community law and to avail itself of its right to defend itself against the complaints made by the Commission.
Therefore the reasoned opinion with which that procedure concludes must determine as clearly and specifically as possible the subject-matter of the dispute, that is to say, it must contain all the particulars necessary to enable the Member State concerned to understand the factual (13) and the legal (14) basis of the Commission's allegation that the State in question has failed to fulfil its obligations.
If the reasoned opinion satisfies those requirements, the Commission's application will be admissible even though the arguments it contains, both factual (relating to the facts constituting the situation or the conduct seen by the Commission as involving a failure by the defendant State to fulfil its obligations) and legal (concerning the interpretation of the provisions of Community law which the Commission regards as having been infringed), may have been enhanced by comparison with the arguments in the reasoned opinion, provided that such enhancement does not conceal an alteration or extension to the legal and factual basis of the case as crystallized in the reasoned opinion. (15)
8 In the present case the differences indicated by the French Government between the reasoned opinion and the application do not alter or widen the subject-matter of the dispute as established in the preceding administrative procedure.
From both the factual viewpoint (retention of exclusive rights of public bodies to import and export electricity and gas) and the legal viewpoint (infringement of Articles 30, 34 and 37 of the Treaty), the essence of France's alleged failure is the same in the reasoned opinion and in the application, and therefore the Member State concerned was not deprived of the opportunity to submit effectively its observations on the essential points of the dispute during the preceding administrative procedure.
The situation is as follows:
(a) With regard to the need to ensure supplies, which the French Republic relies upon as justifying, in the light of Article 36 of the Treaty, the grant of exclusive rights to import electricity and gas, the reasoned opinion sets out clearly enough the substance of the Commission's argument (rejecting the French Government's submissions and arguing that security of supply could be attained by means less restrictive of imports).
In the application that argument is merely particularized, so far as electricity is concerned, by an indication of the factors which, according to the Commission, constitute the concept of `security of supply', and the observation that none of those factors would be affected by withdrawal of the contested exclusive rights and, so far as gas is concerned, by the provision of certain factual information on the existing situation in the market in question.
(b) With regard to Article 90(2) of the Treaty, upon which the French Government seeks to rely, it is true that, whereas in the reasoned opinion the Commission merely stated that that provision did not concern State measures contrary to Articles 30, 34 and 37 of the Treaty, but related to conduct contrary to the Treaty by the undertakings referred to in Article 90(1), the application adds that, even assuming that Article 90(2) could justify State measures contrary to Article 30 et seq. of the Treaty, it would in any case be necessary to show, following examination of those measures in the light of the principle of proportionality, that they were necessary for performance of the particular task assigned to the undertakings for whose benefit they were adopted.
However, the latter argument (which, it should be noted, is by way of an alternative: the Commission's viewpoint given in the reasoned opinion constitutes its main argument, as it does in the application, against the French Government's submissions concerning Article 90(2)) does not alter the legal or the factual basis of the defendant State's failure to fulfil its obligations or otherwise affect its right to a fair hearing, but aims precisely to refute that State's defence.
Furthermore, in its reply to the reasoned opinion, the defendant State referred, at least superficially, to the question of the extent to which the contested exclusive rights are necessary for performance of the particular task assigned to the undertakings to which they were granted, pointing out (see page 15 of the document in question) that `the control of trade is technically and economically necessary for the performance of this task'.
Therefore, even assuming that the Commission was not entitled to allude to that matter in the application without having previously mentioned it in the reasoned opinion, the defendant State, having considered, before the application was lodged, that the question was one relevant to the case, certainly cannot be regarded as having been denied the right to a fair hearing. (16)
9 Before going on to examine the substance of the present applications, I consider it appropriate to refer very briefly to another question.
The Spanish Government contends, in its defence in Case C-160/94, that in view of the differing energy policies of the Member States, and the diversity of the ways in which the sector is organized, the establishment of a genuine internal market in energy (particularly in the electricity sector) makes it necessary to harmonize or amend the legislation governing that sector in the other Member States and to deal with the technical problems associated with the liberalization of trade in electricity.
In those circumstances, continues the Spanish Government, legislative initiatives are a method of establishing the internal energy market which is far preferable to out-and-out, uncontrolled liberalization such as that which the present applications seek to achieve.
Furthermore, it concludes that it may be directly inferred from the preamble to the Proposal for a Council Directive concerning common rules for the internal market in electricity (cited in paragraph 4) that, in the Commission's opinion, complete liberalization of this market can proceed only gradually.
10 The French Republic also expresses doubts as to the objectives of the action against it.
In its defence in Case C-159/94 it observes that the application refers only to the exclusive rights to import and export electricity and gas, when in France those sectors are organized in such a way that it would be pointless to abolish those rights without removing the other exclusive rights in existence (particularly the exclusive right of transmission).
In that connection, adds the French Government, it is significant that the Commission's Proposals for Council Directives concerning common rules for the internal market in electricity and natural gas consider the system for importing and exporting those products not in isolation but in conjunction with the other parameters of the sectors in question.
Similar reasoning is followed by the Italian Republic in its observations concerning the intervention of the United Kingdom in support of the Commission's action against Italy.
11 If the abovementioned objections concerning the appropriateness of the present applications are intended to indicate that the latter are inadmissible, those arguments cannot be accepted.
The Court has consistently held that, in the context of the balance of powers between the institutions laid down in the Treaty, it is not for the Court to consider what objectives are pursued in an action brought under Article 169 of the Treaty; an action against a Member State for failure to fulfil its obligations, the bringing of which is a matter for the Commission in its entire discretion, is objective in nature. (17)
From that point of view, the fact that the Commission has presented proposals for directives laying down common rules in the sectors of electricity and natural gas is of no relevance at all.
Likewise neither the fact that negotiations on the subject were in progress within the Council at the time when these actions were brought nor the content of legislative measures under consideration exempts the Member States from fulfilling their obligations under the legislation which continues to govern the sectors in question until the provisions under discussion enter into force. (18)
III - Substance
A - Articles 30, 34 and 37
(a) Are forms of energy such as electricity and natural gas `goods'?
12 The term `goods', as used in Title I of the Treaty, is given a broad interpretation in the Court's case-law.
As the Court stated in its judgment in Case 7/68, for the purpose of the Treaty provisions concerning the free movement of goods, `goods' means `products which can be valued in money and which are capable, as such, of forming the subject of commercial transactions'. (19)
Likewise in Case C-2/90, (20) when faced with the question whether non-recyclable waste constituted `goods' as defined above, the Court replied in the affirmative (paragraph 26), stating that `objects which are shipped across a frontier for the purposes of commercial transactions are subject to Article 30, whatever the nature of those transactions'.
13 It is true that the special physical characteristics of electricity and natural gas might justify some doubt as to how far those forms of energy are `products' or `objects_' as defined above, which are subject to Articles 30, 34 and 37 (21) of the Treaty.
The Court does not appear to have shared those doubts at any time.
As early as its judgment of 15 April 1964 in Case 6/64, (22) the Court accepted indirectly that electricity was subject to the provisions of the Treaty concerning the removal of quantitative restrictions between the Member States.
That position was expressly confirmed in the judgment of 27 April 1994 in Case C-393/92, (23) in paragraph 28 of which the Court observes that `in Community law, and indeed in the national laws of the Member States, it is accepted that electricity constitutes a good within the meaning of Article 30 of the Treaty'; that is apparent, according to the same paragraph, from the fact that electricity is regarded as a good under the Community's tariff nomenclature.
14 The Italian Republic, the only one of the defendant States which questions whether electricity falls under the heading of `goods', contends that the paragraph cited from the Almelo judgment does not take sufficient account of the natural characteristics of electricity and the conditions under which it is produced, transmitted, distributed and consumed.
A detailed study of those factors leads, according to the Italian Republic, to the conclusion that the import and export of electricity are activities subject to the provisions concerning the freedom to provide services, rather than those relating to the free movement of goods.
Electricity is intangible, it cannot be warehoused and it has no independent economic existence since its use can be conceived of only by reference to its applications.
Furthermore, the import and export of electricity are mere acts of management of the grid in question and can only be deemed to be included under the heading of `service'.
According to the Italian Government, the Schindler and ERT judgments also show that activities consisting in the import or export of goods with the sole object of providing a particular service are absorbed by the latter and therefore do not fall within the ambit of the provisions relating to the free movement of goods.
The Italian Republic adds that the fact that it was necessary to introduce in Italian law provisions to the effect that electricity should, by way of a legal fiction, be deemed a `movable' shows precisely that the definition of electricity as `goods' is far from obvious.
15 That argument cannot be accepted.
Irrespective of the reasons which may have led to the introduction in Italian law of express provisions defining electricity as a `movable', there is no doubt that in Community law (having regard also to the fact that `services' are subordinate to `goods', which may be directly inferred from Article 60 of the Treaty) (24) the involvement of services without which a thing cannot be used does not mean that the latter ceases to be capable of being described as a `good' if, in spite of everything, that thing corresponds to the primary and principal purpose pursued by the contracting parties.
In that connection I must observe that, notwithstanding the special characteristics of electricity, that form of energy may be, and is in practice, the subject of commercial transactions in which the contracting parties (for example, the distributor and the final consumer) regard it not only as something which remains entirely independent from the various activities needed, after its production, in order to transmit, distribute and consume it, but also as something which is more important than those activities.
16 Neither the Schindler judgment nor the ERT judgment to which the Italian Government refers in this connection contains sufficient particulars to detract from that conclusion.
The facts of the
Schindler case (25) differ entirely from those of the present matter.
In response to a question referred for a preliminary ruling, by means of which the national court asked whether lotteries fall, at least partly, within the ambit of Article 30 in so far as they entail the sending and distribution of material objects to and in another Member State, the Court replied in the negative, observing (paragraph 22) that the latter activities could not be considered independently of the lottery to which they relate, which must be regarded as a `service' activity for the purposes of the Treaty, since they are not ends in themselves and their sole purpose is to enable residents of the Member State into which those objects are imported to participate in the lottery. (26) The differences between the activity to which the Schindler judgment refers and an activity consisting in importing or exporting electricity for subsequent distribution or consumption are, I think, clear.
In the latter activity, the objective of the transaction is the purchase or transmission of electricity, and the independence of that objective (as an end in itself) is not affected in the slightest by the fact that, in order to attain it, the party concerned must in all probability become a user of services supplied in return for remuneration.
Finally, in paragraph 14 of the ERT judgment, (27) the Court pointed out, thus following the Sacchi judgment, (28) that trade in any kind of material used for television broadcasting is subject to the rules on the free movement of goods, and went on to say (paragraphs 15 and 16) that the grant to a single undertaking of an exclusive right to import the material and products necessary for exercising the exclusive right (also owned by that undertaking) to supply television broadcasting services did not constitute a measure having an effect equivalent to a quantitative restriction on imports unless the grant of the exclusive right of importation resulted, directly or indirectly, in discrimination against imported products.
However, it certainly cannot be said that that assessment (that an exclusive right to import goods which is granted in order to facilitate the exercise of an exclusive right to supply a service is not in itself a measure having equivalent effect - and I shall revert to the exact significance of that assessment in paragraph 65 below) excludes a priori from the ambit of the provisions concerning the free movement of goods the activity of importing or exporting a good the purchase or transmission of which is connected with the supply of a service or even depends on it where, as in the case of imports or exports of electricity, such purchase and transmission are purposes which are entirely independent of the service. (29)
17 Consequently electricity and natural gas are `goods' for the purpose of Title I of the Treaty, and activities such as the import and export of those forms of energy fall within the ambit of the Treaty provisions relating to the free movement of goods.
(b) Does maintenance of the exclusive rights in question constitute an infringement of Articles 30, 34 and 37?
(aa) The relationship between Articles 30 and 34 and Article 37
18 As the Court is asked by the Commission to declare that the defendant Member States have failed to fulfil their obligations under Article 30 (and also Article 34 in the cases of France, Spain and Italy) and Article 37, the question immediately arises of the relationship between Articles 30 and 34 on the one hand and Article 37 on the other: must the exclusive rights in question be regarded as contrary both to Articles 30 and 34 and to Article 37, or should perhaps the question whether those rights are compatible with the Treaty be judged solely by reference to Article 37, in view of its special character?
19 This is by no means the first time that the Court has had to consider the relationship between Article 37 and other provisions of the Treaty.
In the mid-1960s Advocate General Gand, in his Opinion in Case 20/64, (30) took the view that, to reply to the questions referred to the Court as to whether in 1959, at the material time, Articles 30, 31, 32 and 33, on the one hand, and Article 37, on the other, automatically required, in accordance with their exact meaning, the abolition of the national measures falling within the ambit of those provisions, it was necessary to clarify the relationship between Article 37 and the other provisions of the chapter of the Treaty relating to the elimination of quantitative restrictions in trade between the Member States.
According to the Advocate General, there were two possible solutions: either the elements of the State monopolies of a commercial character referred to by Article 37 should be examined on each occasion and should subsequently be assessed in the light of Articles 30 and 36, or else Article 37 was to be regarded as the only one governing the question of State monopolies of a commercial character.
According to that Opinion, the second solution would not totally exclude the application of Articles 30 and 36, although it would mean they would have to be applied through Article 37 to the extent to which the latter refers to the former provisions. The Advocate General inclined in favour of the second solution, concluding that the quantitative restrictions on imports and exports prohibited under Articles 30 and 34 were one of the forms which might be taken by `discrimination regarding the conditions under which goods are procured and marketed', such discrimination being connected with the existence and operation of the State monopolies of a commercial character of which Article 37 requires the abolition.
However, in its judgment of 4 February 1965, the Court did not give a ruling on that question.
It found that the Treaty did not require the immediate abrogation of all the measures for controlling imports existing when it entered into force but did, on the other hand, prohibit any new restriction or discrimination and impose the obligation progressively to abolish existing restrictions and discrimination, which should disappear totally by the end of the transitional period at the latest.
The Court added that there was no need, under those
circumstances, to decide `whether the application of Article 37 to State monopolies does or does not exclude the application of any other provision of the Chapter relating to the elimination of quantitative restrictions between Member States, the effect of both interpretations being identical in the context of the legal information supplied by the Italian court'.
20 The opinion of Advocate General Reischl in Case 45/75 (31) was similar to that of the Advocate General in the Albatros case.
In the later case the Court was asked to give a preliminary ruling on various questions relating to the interpretation, in connection with a national tax on imported and domestic products in the framework of a monopoly of a commercial character, of Article 37 of the Treaty, on the one hand, and Article 95, on the other, with regard to the prohibition on imposing on products imported from other Member States internal taxation in excess of that imposed on domestic products.
The Advocate General took the view (32) that, in order to reply to the questions, it was not necessary to construe Article 95, observing that, in his opinion, `Article 37 is the sole criterion for judging monopoly charges since Article 37 is the lex specialis in relation to Article 95', and in support of that viewpoint he cited the judgment of 16 December 1970 in the Cinzano case, (33) in which a question relating to the taxation of imported goods subject to a monopoly in the importing country was answered solely on the basis of Article 37 and the prohibition of discrimination for which it provides.
Nevertheless, in its judgment of 17 February 1976, the Court took a different approach: (34) firstly, it examined the contested tax in the light of Article 95 and, after finding that that provision did not, under certain circumstances, prohibit the tax, it considered the same tax in the light of Article 37 of the Treaty, observing (paragraph 21) that `the fact that a national measure complies with the requirements of Article 95 does not imply that it is valid in relation to other provisions of the Treaty' and that therefore it was necessary to determine whether the contested tax, although fulfilling the requirements of Article 95, nevertheless, constituted, for the purpose of Article 37, unfavourable discrimination regarding the conditions under which goods are procured and marketed, linked with the existence and operation of a State monopoly of a commercial character.
21 The judgment in the Miritz case, (35) which was published on the same day as that in Case 45/75, dealt with a number of preliminary questions, the first of which concerned the interpretation, in relation to a charge imposed by the Member State on imported products, of Article 12 of the Treaty concerning the elimination between Member States of customs duties on imports or exports or any charges having equivalent effect, while the other two questions sought an interpretation of Article 37 of the Treaty in relation to the same charge.
The first question referred directly to Article 12, but the Court's reply did not consider Article 12, following Advocate General Trabucchi on that point.
The Court observed (paragraph 5) that `since the structure and character [of the charge in question] link it to the system of the German alcohol monopoly, the answer to the first question must be ascertained from the text of Article 37, which deals specifically with the adjustment of State monopolies'. (36) Further on, the Court stated (paragraph 8) that, as Article 37(1) is not concerned exclusively with quantitative restrictions on imports, but prohibits all discrimination between nationals of Member States regarding the conditions under which goods are procured and marketed, the prohibition which it imposes is not limited to imports and exports which are directly subject to the monopoly, but covers all measures which are connected with its existence and affect intra-Community trade, including therefore even charges which result in discrimination against imported products as compared with national products coming under the monopoly.
In those circumstances, the Court concluded that the purpose of the obligation of the Member States under Article 37(1) is to ensure compliance with the fundamental rule of the free movement of goods, `in particular by the abolition, in trade between Member States, of customs duties and charges having equivalent effect', and that a charge of the type at issue in that case, which was introduced after the Treaty came into force, was contrary to rule requiring the maintenance of the status quo in Article 37(2).
22 Are the Rewe-Zentrale des Lebensmittel-Grosshandels and Miritz judgments compatible?
A first reading might lead to the opposite conclusion since, in the former, the Court examined the charge on imported goods subject to a State monopoly in the importing State, first in the light of Article 95 and then by reference to Article 37, whereas in the latter the charge which was levied on the import of goods and was connected with the operation of a State monopoly of a commercial character was examined solely in the light of Article 37, considered as a special rule. Nevertheless, I think that the approaches in the two judgments with regard to the relationship between Article 37 and similar provisions of the Treaty are not necessarily incompatible.
In the Miritz judgment, the Court appears to have accepted that levying on the imported product a tax which constitutes a `charge of equivalent effect to customs duty', which is prohibited by Article 12, necessarily involves `discrimination between nationals of the Member States regarding the conditions under which goods are procured and marketed', which is prohibited by Article 37(1) of the Treaty, where, in addition, that tax is connected with the operation of a State monopoly of a commercial character, and that, since the latter provision refers specifically to State monopolies of a commercial character, it is the only one which is applicable to this question.
In the Rewe-Zentrale case, the Court, after stating that the charge referred to in the questions was, in certain circumstances, compatible with Article 95, went on to determine whether, notwithstanding, the charge constituted from another viewpoint `discrimination regarding the conditions under which goods are procured and marketed', which is prohibited by Article 37(1).
Therefore the Court did not have an opportunity (and, in my opinion, it is in this respect that the judgment may differ from the Miritz judgment) to consider whether the charge on the imported goods contrary to Article 95 necessarily, where in addition it was connected with the operation of a State monopoly of a commercial character, involved discrimination regarding the conditions under which goods are procured and marketed, which is prohibited by Article 37, and whether, in that case, only the latter provision could be regarded as having been infringed.
23 Nevertheless, there is no doubt that in the later judgment of 13 March 1979, in Peureux II, (37) giving a preliminary ruling on the interpretation of Article 37 and other provisions of the Treaty relating to the free movement of goods, although the Court confirmed (paragraph 27) that Article 37 is a special rule (`specific provision'), it ruled that a national provision (prohibiting the distillation, for the purpose of manufacturing products reserved to a national commercial monopoly, of raw materials coming from other Member States - a prohibition which did not apply to identical raw materials produced within the national territory - was simultaneously, firstly, a measure having an effect equivalent to a quantitative restriction within the meaning of Article 30 and, secondly, a measure involving discrimination regarding the conditions under which goods are procured and marketed within the meaning of Article 37(1).
Consequently the Court appears to have abandoned the approach taken in the Miritz judgment (examination of a national measure connected with the operation of a State monopoly solely in the light of Article 37).
A similar course was followed in the subsequent judgments of 21 June 1983, Commission v France, (38) and 13 December 1990, Commission v Greece, (39) in which the national measures were held (paragraphs 27 and 50 respectively) to be contrary to both Article 30 and Article 37(1).
24 It seems, therefore, that in the Court's view a national measure may be contrary to Article 30 (and/or Article 34) as well as Article 37.
However, I think that the borderlines between Articles 30 and/or 34, on the one hand, and Article 37, on the other, are such that, where a question relates to the compatibility of a national measure with those provisions, it must be the subject of a single examination which, for reasons of methodology, must begin with an analysis of the requirements for applying Article 37, that is to say ascertaining the extent to which the measure in question may be regarded as connected with the exercise by a State monopoly of a commercial character of its exclusive rights. (40)
If the reply to that question were in the negative, it would be logical to examine the matter solely in the light of Article 30 and/or Article 34. On the other hand, if it were found that the requirements for applying Article 37 were in principle satisfied, it would then be necessary to consider whether the measure in question involved `discrimination between nationals of the Member States regarding the conditions under which goods are procured and marketed', which is prohibited by the latter Article.
25 That is precisely the dividing line between the respective fields of application of Article 37 on the one hand and Articles 30 and 34 on the other.
The Court has repeatedly observed (41) that Article 37(1) has the object, in prohibiting `discrimination between nationals of the Member States regarding the conditions under which goods are procured and marketed', of removing, by the end of the relevant transitional period, (42) all obstacles to the free movement of goods which may arise from the existence in the Member States of State monopolies of a commercial character, and of maintaining in this way normal conditions of competition between the economies of the Member States. As the case-law clearly shows, (43) some of the greatest obstacles of this kind are national measures inseparably connected with the existence of such State monopolies which constitute quantitative restrictions on imports or exports, or measures having equivalent effect within the meaning of those terms in Articles 30 and 34. (44)
Consequently, if it is shown that the national measure in question is a quantitative restriction or a measure having equivalent effect, it is not only contrary to Articles 30 or 34, but also ipso facto infringes Article 37.
26 There is only one way of ensuring that a measure of that kind does not thus automatically fall within the prohibition laid down by Article 37(1), and that is to show that the measure is justified on one of the grounds set out in Article 36 of the Treaty.
In my view that follows from the need for the chapter of the Treaty of which Article 37 forms part, concerning the elimination of quantitative restrictions, to be logically consistent.
Otherwise, a national measure which, despite being a quantitative restriction or measure having equivalent effect, could be based on one of the grounds set out in Article 36, would infringe the Treaty merely because it was connected with the operation of a State monopoly.
However, no possible interpretation can serve as a basis for the view that such a measure may be covered by two different sets of rules, depending on the existence or otherwise of a connection with a State monopoly.
I believe that my view also conforms with the Court's case-law.
In the Commission v Greece judgment cited above (footnote 39), the declaration that Greece had failed to fulfil its obligations under Article 37(1) (paragraph 50) followed the Court's rejection (paragraphs 47 to 49) of the defendant State's argument that the maintenance of the measure in question (which, as is clear from paragraphs 42 to 46, was, in the Court's view, also contrary to Article 30) was justified on grounds of public security, that is to say, grounds included in the list in Article 36. (45)
Nevertheless, in my opinion, the latter article should not be relied upon to justify `discrimination regarding the conditions under which goods are procured and marketed' if such discrimination does not involve a quantitative restriction or measure having equivalent effect for the purpose of Articles 30 and 34. (46)
To take the opposite approach would conflict with the need, which is repeatedly confirmed by the case-law, to construe strictly Article 36 which, by laying down exceptions to the fundamental rule of the free movement of goods, cannot justify the imposition of measures other than those referred to in Articles 30 and 34. (47)
27 Taking the approach outlined above, I shall consider firstly whether the exclusive rights at issue are inseparably connected with the operation of State monopolies of a commercial character (see section (bb) below) and then whether such rights constitute discrimination between nationals of Member States regarding the conditions under which goods are procured and marketed (see section (cc) below).
At that second stage I shall deal firstly (see section (cc)(1)) with the question whether such exclusive rights amount to quantitative restrictions or measures having equivalent effect and then (see section (cc)(2)) with the question whether such measures may be justified on the basis of Article 36 of the Treaty.
(bb) Are the rights at issue connected with the specific operation of State monopolies of a commercial character?
28 It is clear from Article 37(1) itself that, in using the phrase `State monopolies of a commercial character', the article applies to situations in which the national authorities are in a position to control or supervise imports and exports between Member States, or even to influence them through a body established for that purpose or a monopoly delegated by the State to a third party. (48) Consequently a `State monopoly of a commercial character' must consist of two elements:
(a) an organic element, which may consist either in the constitution, by a sovereign State measure and in any legal form, (49) of an ad hoc `body' with monopoly rights which most typically take the form of various exclusive rights, (50) or in the grant of rights of that kind to an entity of another form such as, for example, a private undertaking or a territorial public body; (51)
(b) a functional element, consisting in the capacity of the national authorities to influence intra-Community trade by means of the abovementioned `bodies' or entities, where such influence may, in accordance with the second subparagraph of Article 37(1), consist in controlling or supervising, in law or in fact, imports or exports between Member States, or any other type of direct or indirect influence, provided that it is appreciable.
In order for such influence to be possible, the `bodies' or other entities must, according to the Costa v ENEL judgment (cited in footnote 22), `have as their object transactions regarding a commercial product capable of being the subject of competition and trade between Member States and [...] must play an effective part in such trade'.
Are these two elements present in the cases now before the Court and, if so, can the exclusive rights in question be considered inherent in State monopolies of a commercial character existing in the defendant States?
(i) Netherlands
29 In the Netherlands Article 34 of the Elektriciteitswet of 16 November 1989 regulating the generation, import, transmission and sale of electricity (Staatsblad 535, `EW'), provides as follows:
`1. Only the company designated for that purpose shall be authorized to import electricity intended for public distribution.
2. Paragraph 1 shall not apply to the import of electricity of under 500 V.'
Article 37 of the same Law also prohibits the supply of electricity which has not been imported into the country by the undertaking referred to in Article 34(1).
NV Samenwerkende Elektriciteitsproduktiebedrijven (`SEP') was designated by the Ministerial Order of 20 March 1990 (Staatscourant, 22 March 1990) as the undertaking with the right to import electricity for public distribution.
30 The Commission infers from the abovementioned provisions that SEP's exclusive right, to which the application against the Kingdom of the Netherlands refers, to import electricity for public distribution constitutes a State monopoly of a commercial character for the purpose of Article 37(1) of the Treaty.
31 The Netherlands Government contends, on the contrary, that there is no question of Article 37 of the Treaty being applied since:
`The contested exclusive right is not a monopoly because, as Article 34(1) in conjunction with Article 37(1) of the EW makes clear, final consumers also have the right to import electricity, provided that the electricity which they import is intended solely for their own needs.
Even if it were accepted that SEP's exclusive right constituted a "State monopoly", it would not in any event be a monopoly "of a commercial character" because SEP does not operate in accordance with commercial principles.'
32 These arguments are untenable.
It is true that the abovementioned articles of the EW show that individual consumers may import electricity if it is intended for their own use.
It is also clear from Article 47 of the EW that such consumers may, subject to certain conditions, transmit imported electricity through the existing grids which are in principle intended for the public distribution service.
However, that does not mean that SEP's exclusive right is not a monopoly.
The other undertakings, except SEP (and mainly the existing electricity distribution undertakings, of which there are approximately 40, according to the defence), have no right whatever to engage in a specific economic activity, that is to say, no right to import electricity for distribution to final consumers.
33 Even if it were accepted that the import of electricity into the Netherlands should be considered as a whole, without taking account of whether imported electricity is intended for the importer's own consumption or for distribution to final consumers, in any event SEP's exclusive right, because of its subject-matter, has such a decisive effect on imports that, even if that interpretation is accepted, it must be considered a monopoly.
It seems to me obvious that for a consumer to consider meeting his requirements by means of the direct import of electricity, his consumption would have to be so large that, firstly, he could use it as a means of obtaining an advantageous price and, secondly, the transmission costs could be amortized.
I think it unlikely that there are many consumers in that position and that, in practice, the great majority will have no alternative to obtaining supplies through the public grid. (52)
However, in that connection, since the subject-matter of SEP's exclusive right of importation is precisely electricity intended for public distribution, that right enables the national authorities of the Netherlands, through SEP, `to influence appreciably' electricity imports and therefore that right is, in the final analysis, a State monopoly for the purpose of Article 37(1) of the Treaty. (53)
34 Furthermore, the Netherlands Government's argument that SEP does not operate in accordance with commercial criteria has absolutely no bearing on the finding that the State monopoly in question is commercial.
This finding is sufficiently justified (see paragraph 28 above) by the fact that because the subject-matter of SEP's monopoly is the importation of a good such as electricity, that monopoly makes it possible to influence appreciably the intra-Community trade in question.
35 For all the foregoing reasons, SEP's exclusive right to import electricity for public distribution in the Netherlands is a `State monopoly of a commercial character' which falls within the ambit of Article 37(1) of the Treaty.
(ii) Italy
36 In Italy the electricity industry was nationalized by means of Law No 1643 of 6 December 1962 (GURI No 316, 12 December 1962), which established the Ente Nazionale per l'Energia Elettrica (`ENEL'), a public undertaking to which the industrial undertakings in the electricity sector were transferred.
Article 1(1) of Law No 1643 assigned to ENEL the
functions of the generation, import and export, transmission, transformation, distribution and sale of electricity throughout Italy, irrespective of its source.
Subsequently, ENEL's rights were clearly set out by Legislative Decree No 342 of 18 March 1965 (GURI No 104, 26 March 1965), Article 20 of which expressly prohibits any undertaking other than ENEL from importing, exporting and trading in electricity, and transmitting it for third parties.
37 Likewise a number of provisions (Article 133 et seq. of Consolidated Enactment No 1775 of 11 December 1933, as amended by Law No 127 of 26 January 1942, and Law No 606 of 19 July 1959) require an authorization to be obtained to import or export electricity.
The authorization is granted by the Ministry of Public Works after it has been shown that several requirements have been satisfied (including, in the case of imports, a shortfall in national production and, in the case of exports, a surplus in national production).
The Commission states in its application (relying on figures said to have been supplied by the Italian Government) that, when the application was lodged, ENEL had the right, under the authorization which was granted in 1989 and is due to expire on 31 December 1997, to import or export annually, from and to European countries bordering on Italy, up to 30 000 TWh (1 TWh (terawatt-hour) = 1 000 million KWh), subject to a tolerance of
20%.
38 In those circumstances, ENEL's exclusive rights to import and export electricity, at issue in the action brought by the Commission against the Italian Republic are the subject of a State monopoly of a commercial character for the purposes of Article 37 of the Treaty.
The national authorities may, through the undertaking constituted by law and enjoying those exclusive rights, control imports and exports of electricity from and to other Member States.
(iii) France
39 In France, Article 1 of Law No 46-628 of 8 April 1946 on the nationalisation of electricity and natural gas (JORF, 9 April 1946, `the 1946 Law') provides as follows:
`From the publication of this Law, the following shall be nationalized:
1. the generation, transmission, distribution, import and export of electricity;
2. the production, transmission, distribution, import and export of natural fuel gas.'
Articles 2 and 3 of the Law entrust management of the nationalized electricity and natural gas undertakings to public bodies of an industrial and commercial nature called Electricité de France (EDF), Service National, and Gaz de France (GDF), Service National (hereinafter `EDF' and `GDF' respectively).
40 It is clear from those provisions that the exclusive rights to import and export electricity and natural gas, which are the subject of this action against the French Republic and which are exercised by public bodies through which the national authorities are able to control intra-Community trade in such goods, constitute State monopolies of a commercial character falling within the ambit of Article 37 of the Treaty.
(iv) Spain
41 In Spain, Article 1(1) of Law 49/84, of 26 December 1984, on the unified operation of the national electricity system (BOE Nos 311 and 312, p. 5466, `the 1984 Law') provides as follows:
`The unified operation of the national electricity system over the high-voltage networks is a public State service, the purpose of which is to optimise the system as a whole on the basis of the functions and activities set out in Article 2 of this Law.
The service shall be managed by a State company in accordance with the present Law and the provisions adopted for its implementation.'
Article 2(1) of the Law specifies the functions and activities comprising the public service, which include:
`[...]
(e) to operate and maintain [..] all international connection facilities [...];
[...]
(i) to engage in such international trade as is considered appropriate in order to ensure the supply of electric energy, to reduce production costs on a national scale or, for reasons of national interest, to allocate to each undertaking its share of such international trade and monitor the conduct thereof.'
These functions and activities were assigned to a State corporation called Red Eléctrica de España (`Redesa') by Royal Decree 91/85, of 23 January 1985 (BOE No 24, p. 448, `the 1985 Royal Decree'), adopted pursuant to the 1984 Law. (54)
42 According to the Commission, it is quite clear from the abovementioned provisions of the 1984 Law that in Spain there is a State monopoly of a commercial character for the purposes of Article 37 of the Treaty because, under those provisions, the import and export of electricity are the subject of exclusive rights granted to the State corporation Redesa, through which the national authorities control intra-Community trade in electricity.
43 In reply, the Kingdom of Spain contends that the present action for a declaration that the exclusive rights in Spain to import and export electricity are contrary to Articles 30, 34 and 37 of the Treaty, and to Article 48 of the Act of Accession, is based in its entirety on a false assumption, since the provisions referred to by the Commission do not confer upon Redesa exclusive rights to import and export electricity.
In particular, the defendant State makes the following submissions:
- The Royal Decree of 12 December 1924 laid down that the supply of electricity should be deemed a public service. The only consequence of this which is still in effect is that electricity tariffs are determined by the State authorities, as provided for by the Royal Decree. Furthermore, neither the generation nor the distribution of electricity was brought within the exclusive remit of the State.
They are still activities carried on by numerous undertakings subject to a system of administrative authorization.
- The presence of a large number of electricity undertakings led to problems with regard to, inter alia, security of supply for consumers and the emergence of large surpluses the management of which increased the production cost.
To resolve these problems, the 1984 Law classified the `unified operation of the national electricity system through high-voltage grids' (Article 1(1)) as a public service and assigned its management to a State corporation. According to the explanatory memorandum to the Law, to which the defendant State refers in detail, the legislature did not intend, in enacting that measure, to entrust to one State corporation all the activities which until then had been carried on by the private undertakings generating and distributing electricity.
The intention was, without affecting the system of ownership of the latter or their freedom to use and manage their installations, only to establish a system whereby each and every one of them would interact with the State corporation in order that, through the introduction of unified criteria of economic efficiency and management of the generation and distribution cycle, it would be possible to ensure the best method of supply and the success of the energy policy of each Government.
- For the purpose of the `unified operation' system, various powers were conferred upon the abovementioned State corporation, including:
(1) the operation and maintenance of a high-voltage grid (transmitting electricity from the point of generation to the point of reception by distribution undertakings, which supply it, through low-voltage grids, to the final consumers), and the operation and maintenance of the parts of the high-voltage grid which permit connection with grids in other countries [Article 2(1)(e) of the 1984 Law];
(2) powers relating to international trading in electricity [Article 2(1)(i) of the same Law], by virtue of which Redesa, in the opinion of the Spanish Government, only has an opportunity to carry out transactions in this sector.
Those transactions may consist in imports and exports of electricity by Redesa itself, where this is considered conducive to ensuring supply or to reducing production costs of electricity at national level, or in the allocation, on grounds of national interest, of the precise share of each undertaking in international trade, and also in supervising the implementation of decisions in that area.
According to the Spanish Government, Redesa's power to import and export electricity, if it sees fit, does not affect the right of private undertakings to do the same: their right can only be limited on `grounds of national interest', when the State corporation allocates the share of each undertaking in international trade in electricity. Nevertheless, the Spanish Government adds that an implied requirement, for private undertakings to be able to exercise such right, is that in each case fulfilment of the technical prerequisites must be verified so as to ensure that the electricity import or export transaction concerned (which can only be carried out through the international interconnection equipment of the high-voltage grid, for the operation of which Redesa is responsible under the 1984 Law) does not endanger the operation of the electricity system.
On the basis of those considerations, the Spanish Government claims that neither a literal nor a systematic interpretation of the provisions relied upon by the Commission can support the latter's contention that Redesa has exclusive rights to import and export electricity.
44 Indeed, I find the Commission's arguments on this point unconvincing.
45 The Commission's claim that Redesa has exclusive rights to import and export electricity, although there is no provision expressly conferring such rights upon the State corporation, is based mainly on the fact that, firstly, Redesa manages the `unified operation' of the national electricity system, which is described as a public service and, secondly, that it operates the country's high-voltage grid, including all the international connection facilities of the grid.
However, I do not think that either of those factors sufficiently supports the conclusion that Redesa has exclusive rights to import and export electricity, having regard in particular to the defendant State's clarification of the exact meaning of the term `unified operation' and to the underlying objective of the 1984 Law.
46 As the Spanish Government points out (without being challenged by the Commission), exclusive rights to generate and distribute electricity did not exist in Spain before the 1984 Law was enacted, nor have they existed since then. The fact that the `unified operation' of the national electricity system was entrusted to Redesa can under no circumstances be construed as amounting to covert nationalization of the system as a whole or the grant to the State corporation of exclusive rights to carry on all the associated activities without exception, including importing and exporting electricity. (55)
47 Secondly, the fact that the operation and maintenance of the international connection facilities of the national transmission system were entrusted to Redesa alone is not sufficient to conclude necessarily that it was granted exclusive rights to import and export electricity, because the aforementioned task does not make it technically impossible for other undertakings to import and export electricity. (56)
In addition, Article 2(1)(i) of the 1984 Law provides that Redesa may, subject to certain conditions, take steps to regulate the exact shares of the other undertakings in trade in international electricity which implies, without a shadow of doubt, that in principle they may engage in activities of that kind. (57)
48 To show the existence of the exclusive rights in question, the Commission also alleges that the Spanish Government has not cited a single specific case of a private undertaking which has imported or exported electricity to or from Spain and adds that, according to the information it has obtained, there is no undertaking, save Redesa, which imports or exports electricity.
On that point, it seems to me sufficient to observe that the absence of information concerning imports or exports of electricity does not in itself justify the presumption that exclusive rights exist. (58)
Furthermore, if, with regard to the lack of information, the Commission is in reality alleging that, although there is no express provision in the 1984 Law granting Redesa exclusive rights to import and export electricity, in the present case the requirements for applying Article 37 of the Treaty are fulfilled because the State authorities are in a position, through the State corporation, to control de facto the intra-Community trade in question, the Commission's argument would be untenable even on that basis.
I think that, to show de facto control by the Spanish authorities of imports and exports of electricity for the purposes of the second subparagraph of Article 37(1) of the Treaty, it is not sufficient for the Commission (which bears the burden of proof) to rely on the mere lack of information concerning trade in electricity: it would be necessary to adduce evidence to show at least that the relevant provisions of the 1984 Law have been used as a basis for measures (for example, the refusal of requests) by means of which undertakings other than Redesa have simply been prevented from importing or exporting electricity.
49 Finally, the Commission claims that the Spanish Government, in its reply to the reasoned opinion, stated that the Draft Law, which was then being debated (and which subsequently replaced the 1984 Law after the present action was brought: see footnote 54), expressly provided that undertakings other than Redesa could import and export electricity, subject to certain requirements and restrictions.
The Commission's reasoning here seems to me to be particularly weak.
The fact that a subsequent provision expressly confers a right to pursue an economic activity, at the same time laying down the requirements for that activity, does not justify the contrary inference that under the previous system that activity was entirely prohibited when, as in this case, that conclusion is not supported by other evidence.
50 In view of the foregoing, I consider that the Commission has not shown that in Spain there are exclusive rights to import and export electricity.
Mainly on that ground, therefore, the application for a declaration that, by introducing such rights, the Kingdom of Spain has failed to fulfil its obligations under certain articles of the Treaty and Article 48 of the Act of Accession should be dismissed in its entirety. (59)
(cc) Do the rights at issue amount to discrimination between nationals of Member States regarding the conditions under which goods are procured and marketed?
51 For the reasons I have already given (see paragraph 24 et seq. above), I shall now consider whether the exclusive rights in question constitute quantitative restrictions or measures having equivalent effect to restrictions on imports (see section 1 below) and then whether such rights may be justified on the basis of Article 36 of the Treaty (see section 2 below).
(1) Do the contested rights constitute quantitative restrictions or measures having equivalent effect?
(i) Exclusive import rights
52 According to the Commission, the exclusive rights in the defendant States (60) to import electricity and (in the case of France) natural gas may create a barrier to trade in the Community and may therefore be measures having effects equivalent to quantitative restrictions on imports for the purpose of Article 30 of the Treaty because:
- they prevent producers in other Member States from selling electricity or natural gas to persons in the defendant States other than those vested with the contested rights, and
- they prevent undertakings in the defendant States (for example, distributors) and (in the case of Italy, France and Spain) consumers from choosing a supplier of electricity or natural gas who is established in another Member State.
53 I think there is firm support in the Court's case-law for the Commission's view.
54 The earliest of those cases is Manghera (cited in footnote 36).
That judgment gave a preliminary ruling on certain questions, the first of which was whether, in connection with the `adjustment' of State monopolies of a commercial character, required by Article 37(1) of the Treaty, exclusive rights to import from other Member States should be abolished.
The Court replied in the affirmative (paragraph 13), after observing that the object of Article 37(1) is to ensure compliance with the fundamental rule of the free movement of goods throughout the common market, `in particular by the abolition of quantitative restrictions and measures having equivalent effect in trade between Member States' (paragraph 9), that `this object would not be attained if, in a Member State where a commercial monopoly exists, the free movement of goods from other Member States similar to those goods with which the national monopoly is concerned were not ensured' (paragraph 10), and that, accordingly, an exclusive right to import manufactured goods granted to a monopoly of a commercial character constitutes, in respect of Community exporters, discrimination prohibited by Article 37(1) of the Treaty (paragraph 12).
The sequence of steps in that reasoning leaves hardly any doubt, in my opinion, that an exclusive import right, in conjunction with a State monopoly of a commercial character, constitutes, according to the Manghera judgment, discrimination prohibited by Article 37(1), precisely because it is a measure having an effect equivalent to a quantitative restriction on imports. (61) In that connection it is noteworthy that, in his Opinion in Manghera, Advocate General Warner was in favour of construing Article 37 as requiring the abolition of exclusive import rights on the ground, inter alia, that it prohibits not only actual but also potential discrimination, which in his view made it necessary to interpret Article 37 in conformity with Dassonville (cited in footnote 44) with regard to the definition of `measure having equivalent effect'. (62)
55 If the precise meaning of the Manghera judgment is that exclusive import rights are measures having an effect equivalent to quantitative restrictions on imports, that assessment is by no means an isolated instance.
On the contrary, it is in line with the Court's settled case-law that measures which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade include any national provision or practice which results in imports being channelled in such a way that only certain traders can carry them out, whereas others are prevented from doing so. (63)
56 Nevertheless, it could be argued that the conclusion reached by the Court in Manghera is connected with the fact that the holder of the exclusive right to import tobacco, which was the subject of the question before the Court, had also been given the exclusive right to manufacture the same product in the Member State in question.
Therefore the adverse effect of the exclusive import right on trade in the Community was attributable, from that viewpoint, to the `natural' tendency of the holder of exclusive rights to promote trade in his own products rather than in imported products.
I must say that this reading of the Manghera judgment is not supported by the wording of the judgment (no part of it appears to uphold the view that the Court's attitude would be different if the holder of the exclusive import right did not also possess the exclusive right of manufacture) or by the approach taken in the case-law cited in paragraph 55 relating to national measures restricting the category of persons who can import goods from other Member States.
57 In any case, in my opinion, there has been no justification for such doubts since the judgment in France v Commission. (64)
The French Republic brought an action for the annulment of certain provisions of Commission Directive 88/301/EEC, (65) which was adopted under Article 90(3) of the Treaty.
The provisions in question included Article 2 of the Directive, whereby Member States which have granted special or exclusive rights to undertakings for, inter alia, the import of telecommunications terminal equipment are to `ensure that those rights are withdrawn'. It is clear from the preamble to the directive that Article 2 was adopted because, according to the Commission, the retention of such rights would be inconsistent with, inter alia, Article 30 of the Treaty since it `can, and often does, lead to restrictions on imports from other Member States' (see the third recital in the preamble).
France claimed that Article 2 should be annulled because, inter alia, the Commission had mistakenly taken the view that the exclusive rights referred to by Article 2 were contrary to the Treaty.
The Court, taking as its starting point (paragraph 33) the classic formulation of the Dassonville judgment (cited in footnote 44 above), stated that, on the contrary, the Commission was right to consider exclusive import (and marketing) rights in the telecommunications terminal sector to be incompatible with Article 30 of the Treaty because such rights `are capable of restricting intra-Community trade' (paragraph 36).
Among the reasons given by the Court was that the existence of such rights `deprives traders of the opportunity of having their products purchased by consumers' (paragraph 34), and that, because of the diversity and technical nature of the products concerned, `there is no certainty that the holder of the monopoly can offer the entire range of models available on the market, inform customers about the state and operation of all the terminals and guarantee their quality' (paragraph 35).
The Court thus recognized that the exclusive rights in question (which included exclusive import rights) restricted intra-Community trade, without taking any account of the fact that the holders of the exclusive rights in question also manufactured the products concerned.
For the Court, it was sufficient that, on the supply side, such rights prevent traders from offering their products to all consumers without exception and, on the demand side, such rights deny consumers access to the full range of products available on the market in question.
58 In view of that case-law, the exclusive rights to import electricity and natural gas to which the present actions refer must (leaving aside the fact that the bodies to which they were granted are also the producers of the products in question) (66) be regarded as measures having equivalent effect to quantitative restrictions on imports.
By depriving producers and distributors of the opportunity to offer the aforementioned products to all potential customers in the defendant States and by preventing those potential customers (simply the other side of the coin) from obtaining the products in question from the undertaking of their choice, such rights may adversely affect trade in the Community by restricting the category of persons who can take part in that trade.
59 To counter that conclusion, the defendant States contend, firstly, that the exclusive rights in question do not fall within the ambit of Article 30 of the Treaty because they do not have the object or effect of discriminating between imported products and domestic products, since exactly the same commercial conditions (method of transmission and distribution, prices, etc.) apply to imported as to domestic electricity and natural gas.
The Italian, French and Spanish Governments consider, in particular, that in order to determine whether a national measure falls within the scope of Article 30 of the Treaty, the question whether the measure pursues the object of creating discrimination, or may by other means create it, has become a criterion of the greatest importance, in the wake of Keck and Mithouard, (67) according to which the application of national provisions restricting or prohibiting certain selling arrangements cannot hinder trade in the Community `so long as those provisions 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'.
60 The paragraph cited from Keck and Mithouard concludes a line of reasoning which starts (paragraph 11) with the observation in Dassonville (cited in footnote 44) that any measure which is capable of directly or indirectly, actually or potentially, hindering intra-Community trade constitutes a measure having equivalent effect to a quantitative restriction.
On that basis, the Court, ruling on certain national legislation imposing a general prohibition on resale at a loss, stated first (paragraph 12) that such legislation `is not designed to regulate trade in goods between Member States' and then added (paragraph 15) that, as established by the case law beginning with Rewe-Zentral (`Cassis de Dijon', cited in footnote 40 above), national rules laying down requirements to be met by goods coming from other Member States are measures having equivalent effect, prohibited in principle by Article 30, even if such rules apply without distinction to all products.
Finally, the Court stated that, provided the conditions set out in paragraph 15 of the judgment were fulfilled, the application to products from other Member States of national provisions restricting or prohibiting certain selling arrangements is not such as to hinder directly or indirectly, actually or potentially, trade between Member States within the meaning of Dassonville. From that reasoning the French Government infers that (a) only two types of national measure (namely those relating to requirements to be met by imported products and those prohibiting or restricting certain selling arrangements) can raise the question of applying Article 30 of the Treaty, and (b) if the exclusive import rights in question can under no circumstances be regarded as coming within the first category of national measures, the question whether they are measures having equivalent effect must be examined in the light of the criteria set out by the Court in Keck and Mithouard concerning provisions prohibiting or restricting certain selling arrangements.
Therefore, if they apply in the same way to all traders and affect the marketing of imported and domestic products in the same manner, they must be deemed consistent with Article 30 of the Treaty.
61 That argument cannot succeed, firstly because it overlooks the fact that Keck and Mithouard itself (paragraph 12) clearly shows that there is another type of national measure which may be described as a measure having equivalent effect, namely measures designed to regulate trade in goods between Member States.
The criteria for determining whether or not such measures fall within the scope of Article 30 are not affected in any way by the Court's observations as to whether national provisions prohibiting or restricting certain selling arrangements are covered by Article 30.
Although the Court took the view, for the reasons given in paragraph 17 of Keck and Mithouard, that provisions of the latter kind cannot in principle impede trade in the Community, the question remains open as regards national measures relating directly to intra-Community trade and it must be assessed on each occasion, even after Keck and Mithouard, solely by reference to the definition of measures having equivalent effect, as formulated in Dassonville. (68)
Since the exclusive import rights in question relate directly to the conditions and requirements for the foreign trade of the defendant States and are measures `designed to regulate trade in goods between Member States', the fact that they may (for the reasons given in point 58), at least potentially, have an adverse effect on intra-Community trade is sufficient to justify regarding them as measures having equivalent effect to restrictions on imports, and it is not necessary to compare the circumstances under which trade is carried on in the imported products and in the domestic products, as the defendant States have argued without justification.
62 There is likewise no foundation for the claim (raised, with certain variations, by all the defendant States) that the exclusive rights in question to import electricity do not restrict intra-Community trade in that sector because the bodies vested with the rights, being under an obligation to ensure the supply of electricity under the best possible economic conditions, import electricity whenever the need to do so is apparent from a comparison of the prices offered by foreign producers or distributors with the production cost of domestic electricity.
Although the holder of the exclusive right may import electricity when the prices offered are deemed favourable, that fact is not sufficient to neutralize the potential restrictive effect of that right when no other operator or consumer (69) can make direct contact with operators in other Member States in order to decide, by reference to his own needs and capacity, whether it would be advantageous to import electricity.
63 The fact that this cannot be done also invalidates the claims that the exclusive import rights do not in practice affect the amounts of electricity and natural gas imported into the defendant States.
Even if, as the Netherlands Government alleges, in 1993 15% of the total demand for electricity in the Netherlands was covered by imports; even if, as the Italian Government alleges, Italy is the country which imports the largest amount of electricity in Europe, and even if, as the French Government claims, France is necessarily a large importer of natural gas because domestic production is insufficient, those circumstances do not change the important fact that exclusive import rights are of such a nature as to affect imports which could otherwise take place. (70)
64 The Italian Government also contends that, as the Court observed in ERT (cited in footnote 27), in order for an exclusive right to import a product the movement of which is closely connected with the supply of a service to fall within the ambit of Article 30 of the Treaty, it is not sufficient to show that it may restrict intra-Community trade within the meaning of Dassonville, but it must also be shown that it results in discrimination between imported and domestic products.
According to the Italian Government, that is precisely the effect of the exclusive right to import electricity because, even assuming that electricity may be regarded as a `good' (which the Italian Government does not accept: see point 12 et seq. of this Opinion), it is any case a good the marketing of which depends so directly on the manner of transmission that, ultimately, it is inseparable from the service supplied. The French Government argues along similar lines, taking the view that an exclusive right to import electricity is inherent in an exclusive right to transmit it.
65 Does the ERT judgment have the implications attributed to it by the Italian and the French Governments?
It finds, firstly (paragraph 12), that Community law does not prevent the granting, as such, of a television monopoly for considerations relating to the public interest, although the manner in which the monopoly is organized or exercised must not infringe the rules of the Treaty.
On the question whether a television monopoly is contrary to the provisions of the Treaty relating to the free movement of goods, the Court held, as I have already said (paragraph 16), that the grant of an exclusive right to import (hire or distribute) material and products necessary for exercising the exclusive right to supply a television broadcasting service does not constitute a measure having an effect equivalent to a quantitative restriction unless the grant of those rights `resulted, directly or indirectly, in discrimination between domestic products and imported products to the detriment of the latter' (see paragraphs 15 and 16 of the judgment).
In my view, what the ERT judgment really means is that granting to the holder of an exclusive right to supply a service (which is not in itself contrary to Community law) an exclusive right to import goods necessary for that service is not, in principle, a measure which can have an adverse effect on the trade of the State in question with other Member States because in any case the activity for which those products must be imported is carried on by only one person (and, I repeat, without infringing Community law).
In that case, the question of an infringement of Article 30 of the Treaty would only arise if, under the cover of the `necessary' monopoly of imports, as described above, there was concealed discrimination in favour of domestic products.
However, in Italy and France the context of the exclusive right to import electricity is entirely different.
The electricity imported by the undertakings holding exclusive rights is certainly not intended for their consumption alone, but is intended for all undertakings and consumers in the Member State in question.
Therefore the special conditions which, in principle, result in the exclusive right of importation referred to in the ERT judgment not endangering intra-Community trade are not fulfilled.
By excluding contact between operators in other Member States and their numerous potential customers in Italy and France, the exclusive right to import electricity may, as I have said repeatedly, restrict the volume of intra-Community trade in electricity.
This last observation justifies classifying those rights as measures having an effect equivalent to quantitative restrictions on imports (71) and therefore the counter-arguments of the Italian and French Governments, which seek to rely on the ERT judgment and the close connection between the exclusive rights to import electricity and the terms of transmission within the country, are unfounded. (72)
(ii) Exclusive export rights
66 Are the other measures to which the present applications refer, namely exclusive export rights, (73) measures having an effect equivalent to quantitative restrictions on exports for the purposes of Article 34 of the Treaty?
67 In my opinion, the case-law on that provision of the Treaty shows that the Court distinguishes between:
- measures which directly impose a prohibition or quantitative restriction on exports: such measures, as quantitative restrictions in the strict sense, are undoubtedly regarded as contrary to Article 34; (74)
- measures which refer directly to conditions and requirements for exports, without expressly imposing quantitative restrictions: although the judgments concerning their compatibility with the Treaty do not set out a general criterion on this point, I think it may easily be inferred from the decided cases as a whole that such measures are regarded as having an effect equivalent to quantitative restrictions, prohibited by Article 34, if they are deemed to be capable, even if only potentially, of impeding intra-Community trade; (75)
- measures which do not refer directly to the export trade of the Member State in question: these may be considered to have an effect equivalent to quantitative restrictions on exports only where it is shown that they are `national measures which have as their specific object or effect the restriction of patterns of exports and thereby the establishment of a difference in treatment between the domestic trade of a Member State and its export trade in such a way as to provide a particular advantage for national production or for the domestic market of the State in question'. (76)
Thus, national provisions which, while appearing to apply without differentiation to products for export and those for the domestic market, establish implicit prohibitions or restrictions on exports have been declared contrary to Article 34 of the Treaty. (77)
68 The exclusive rights at issue, which refer directly to the conditions for exporting electricity and gas, clearly belong to the second of the abovementioned categories. Therefore the question whether such rights are compatible with Article 34 of the Treaty must be answered in conformity with the reasoning of the judgments cited in footnote 75 and not, as the Commission appears to suggest, the line of cases starting with Groenveld (cited in footnote 76) which, I repeat, in my view refer to national measures which do not relate directly to the export trade. Therefore, where it is shown that the contested measures, which grant export rights to only one organization, prevent operators or consumers in other Member States from contacting other entities in order to obtain supplies, in my opinion such measures, which may, at least potentially, adversely affect intra-Community trade, may justly be regarded as having an effect equivalent to quantitative restrictions on exports for the purposes of Article 34 of the Treaty, (78) and it is not necessary, as the Spanish Government seems to argue, to examine in addition the conditions under which trade in the products concerned takes place within the defendant States.
Secondly, I cannot accept the Italian Government's argument that, as Italy has an electricity shortage, ENEL's exclusive right to export does not in practice affect Italian exports.
The rights at issue fall within the ambit of Article 34 if it is shown that they may impede trade in the Community, and it is unnecessary to prove that they actually restrict exports. (79)
Finally, for the same reason the French Government's submissions that the export of electricity, which began in 1981, amounted in 1993 to approximately 12% of national production, and that French production of natural gas is in any case negligible and in constant decline, are irrelevant.
Furthermore, the French Government itself states that the electricity and natural gas produced in France are primarily intended for consumers in that country, for which reason - and also because EDF and GDF, the undertakings with exclusive rights, have an obligation to provide an uninterrupted supply of electricity and gas - `it is possible that the principle laid down in Article 34 of the Treaty is not observed in every case'.
(2) The contested rights may be justified under Article 36 of the Treaty
69 The defendant States contend that, assuming that the exclusive rights in question are measures having an effect equivalent to quantitative restrictions on imports and exports, they are nevertheless justified under Article 36 and are therefore compatible with the Treaty.
The arguments they put forward reflect, of course, the conditions prevailing in each country, but they all centre around the idea that the contested rights are justified on grounds of `public security' for the purposes of Article 36 of the Treaty, as their purpose is to ensure the supply of electricity and natural gas in all the defendant States.
70 These arguments are no doubt based on Campus Oil. (80) In that case the High Court of Ireland requested a preliminary ruling on various questions relating to the interpretation of Articles 30, 31 and 36 of the Treaty in order to ascertain whether national provisions requiring importers of petroleum products to obtain their supplies, up to a certain percentage, from a State corporation operating a refinery in Ireland, at prices fixed by the competent Ministry, were compatible with the Treaty.
After finding that the national rules constituted a measure having an effect equivalent to a quantitative restriction on imports (paragraph 20), the Court went on to consider whether the reasons for the rules constituted grounds of `public security' for the purposes of Article 36 of the Treaty.
The Court accepted (paragraph 34) that `petroleum products ... are of fundamental importance for a country's existence since not only its economy but above all its institutions, its essential public services and even the survival of its inhabitants depend on them', and `an interruption of supplies of petroleum products, with the resultant dangers for the country's existence, could therefore seriously affect the public security that Article 36 allows States to protect'.
The Court added (paragraph 35): `It is true that ... Article 36 refers to matters of a non-economic nature.
A Member State cannot be allowed to avoid the effects of measures provided for in the Treaty by pleading the economic difficulties caused by the elimination of barriers to intra-Community trade.
However, in the light of the seriousness of the consequences that an interruption in supplies of petroleum products may have for a country's existence, the aim of ensuring a minimum supply of petroleum products at all times is to be regarded as transcending purely economic considerations and thus as capable of constituting an objective covered by the concept of public security.'
71 There can be no doubt that the observations underlying the paragraphs cited above from Campus Oil apply equally to electricity.
A modern State or economy could not conceivably function without a continuous, uninterrupted supply of electricity, which is also essential for meeting the basic daily needs of the population.
Although less obviously, natural gas is of similar importance in the functioning of the State, society and the economy, at least in France, the only Member State which has introduced exclusive rights to import and export natural gas.
It appears from France's defence that in 1990 13% of that country's primary energy requirements was met by natural gas.
Apart from the fact that, as is also indicated in the defence, experts agree that in the next 20 years the consumption of natural gas will rise by up to 50%, the mere fact that natural gas is already being used in France as a primary energy source in the abovementioned proportion justifies, in my opinion, regarding security of the supply of natural gas as an objective covered by the concept of public security within the meaning of Article 36 of the Treaty.
72 The Commission is in no doubt that, in view of the Campus Oil judgment, the security of electricity supply is a ground of public security for the purpose of Article 36. Nevertheless, it observes that the Court has not given an exact definition of `security of supply' and states that, with regard to electricity, the term comprises three elements, none of which can be affected by the abolition of the contested exclusive rights.
According to the Commission, those three elements are the security of supply of the raw materials necessary for the production of electricity, a guarantee of sufficient quantities of electricity to meet demand and, finally, the security of the transmission system.
73 On the last point, the Commission contends, in particular, that the abolition of exclusive rights to import and export electricity is perfectly compatible with the establishment and maintenance of centralized control of the transmission system so as to ensure that supply exactly matches demand at all times and to avoid the technical problems which an imbalance might cause in the functioning of the system, and is also compatible with the establishment of technical standards with which the users of the system must comply to ensure the quality of the supply.
The defendant States for their part have not specifically argued that the exclusive rights in question are absolutely necessary for the security of the transmission system.
It is also significant that, as already mentioned (see footnote 56), in the Amended Proposal for a directive concerning common rules for the internal market in electricity (cited in paragraph 4), the provisions concerning access for producers and distributors to the distribution system coexist with those concerning the `transmission system operator' who will be responsible for managing energy flows on the system and will therefore retain the right to refuse requests for access to the system if certain requirements are not fulfilled.
74 Therefore the real disagreement between the Commission and the Member States turns on the question whether the abolition of the exclusive rights may adversely affect the supply of the raw materials necessary for the production of electricity or jeopardize the guaranteed supply of the necessary quantities needed to satisfy demand at any time.
75 On this point the Kingdom of the Netherlands makes the following submissions:
- To ensure that in the short and medium term the quantities of electricity available in the Netherlands exactly match demand, the EW Law cited above (paragraph 29 et seq.) lays down a planning system at national level for the generation of electricity.
Every two years SEP (which owns the exclusive right to import electricity for public distribution), in conjunction with the electricity generation undertakings and the body representing distribution undertakings, draws up an electricity plan (`E-plan') which specifies the production capacity necessary to meet the overall demand forecast for the next ten years in the Netherlands.
The E-plan, which is approved by the Minister for the Economy, imposes certain obligations on the generation and distribution undertakings, the fulfilment of which may be enforced through the courts.
For example, generation undertakings must construct the new generation units provided for by the E-plan and keep them in operation.
However, the main obligation of each generation undertaking is to supply the distribution undertaking in its region with all the electricity it requests, while each distribution undertaking in turn must in principle supply all the electricity demanded by consumers in the area which it serves.
Consequently there is close interdependence between the E-plan and the mutual obligations described above.
The distribution undertakings can only be required to supply electricity to consumers if the quantities produced by the generation undertakings are sufficient. Moreover, in compensation for the obligation to meet in full the demand from the distribution undertakings, the generation undertakings must be given guarantees with regard to absorption of the quantities generated as a whole.
- According to the Kingdom of the Netherlands, the question whether the exclusive right to import electricity for public consumption is justified under Article 36 of the Treaty (81) must be assessed by reference to the system described above in its entirety, and to the risks entailed in generating more electricity than can be absorbed.
The unrestricted import of large volumes of electricity by the distribution undertakings would lead to large surpluses, which would result in an economic burden for the generators so great that it would dangerously undermine the supply system: the costs of managing the surpluses would be passed on by the generators to the final consumers, resulting in the adoption of different tariffs for different regions. Furthermore, the unrestricted import of electricity would lead to such uncertainty regarding the data used as the basis for the E-plan that it would be impossible to impose electricity supply obligations on distributors and generators or to compel the latter to build new generation units.
76 The Italian Government maintains that the exclusive rights to import and export electricity have the object of ensuring the supply and this, in its opinion, consists by definition, firstly, in ensuring the optimum functioning of the national electricity system and, secondly, in ensuring not only an uninterrupted supply of electricity but also a supply at reasonable, stable prices.
- The Italian Government observes, firstly, that Italy traditionally imports energy: approximately 17% of its electricity requirements are covered by imported power and 65.4% by power produced by ENEL using imported hydrocarbons as raw material.
In order to cover its requirements of imported electricity and hydrocarbons, ENEL signs long-term contracts (for seven or eight years) in order to keep to a minimum the adverse effects of exchange-rate fluctuations and oil crises attributable to political developments. However, for ENEL to be able to contract with its suppliers for such long periods it must be able to determine as exactly as possible the demand it will have to meet.
An exact estimate of future demand is also necessary for the correct planning of generation and transmission capacity because, obviously, such planning must look to the long term owing to the time required to build a new generating station or transmission line (approximately seven years). The abolition of the exclusive rights in question would make it impossible to estimate future demand accurately and would jeopardize security of supply if ENEL were unable to supply the quantity of electricity which would ensure the optimum functioning of the national electricity system.
- Secondly, with regard to ensuring the supply of electricity at reasonable, stable prices, the Italian Government states that ENEL applies a single price policy for the whole country which makes it possible to offset the profits from supplying large-volume users against the high cost of supplying power to consumers in remote or inaccessible regions.
However, if the exclusive import and export rights were abolished, the large-volume consumers, most of whom are situated in regions close to the borders of Italy, would turn to foreign suppliers, thereby disturbing the functioning of the compensation mechanism described above and provoking a rise in the average price of electricity, to the detriment in particular of consumers who, either because of their low consumption or their location, could not benefit from the abolition of the exclusive rights or the opportunity to use foreign electricity suppliers.
77 According to the French Government, `security of supply' within the meaning of the Campus Oil judgment does not merely involve ensuring the supply of the energy necessary to meet demand, irrespective of price or marketing conditions, since that does no more than provide the population and the economy of a country with security in emergencies and it could lead to serious economic problems if the cost of energy rose considerably.
For this reason, the French Government considers that:
- In order to ensure the supply of a country, it is not sufficient to secure the necessary forms of primary energy, without taking account of their nature and the market price, but it is also necessary to draw up a policy concerning the kind of energy to be used, its source and the investments necessary.
- Abolition of the existing monopolies on importing and exporting electricity would make it impossible to formulate and apply a policy of that kind, and for EDF and other generators there would be total uncertainty regarding future demand.
In such circumstances, generators would prefer to make investments which would provide the quickest possible return, rather than run the risk of large investments which would take much longer to amortize. In practice that would mean, in France's case, the abandonment of nuclear power for the generation of electricity, in favour of power stations using natural gas - a dangerous course, since more than 90% of the natural gas used in the country is imported.
The French Government adds that the abolition of exclusive import and export rights would make the long-term forecasting of changes in demand for electricity impossible, thus impeding the adjustment of national production potential to the country's needs and endangering security of supply.
The only, and extremely costly, alternative would be to maintain generation capacity at a higher level, for the sake of security, than is necessary to meet actual needs.
78 With regard to natural gas, the French Government makes the following observations:
- In producer countries, production and marketing are normally controlled by national monopolies.
Only a large importer which is sure of the long-term demand which it will have to meet can negotiate with such monopolies on conditions which are satisfactory from the economic viewpoint and which will ensure security of supply.
- Only a large importer will be able to sign with producers the long-term contracts which are necessary to ensure supplies because, before such contracts are signed, producers often require participation in costly investment programmes.
- If exclusive rights to import and export natural gas were abolished, operators wishing to improve their competitiveness would turn to the markets which offer the best short-term prices.
However, the abandonment of long-term contracts and the resulting non-participation in investments in producer countries would entail a risk of interruption of supplies, which would cause consumers to lose confidence in natural gas and return to other sources of energy, mainly oil.
Therefore French energy policy would have failed in one of its main aims, namely to achieve the greatest possible diversification of energy sources.
79 Finally, the Spanish Government contends that the Spanish legislation which, according to the Commission, creates exclusive rights to import and export electricity, (82) is in any case justified under Article 36 of the Treaty because the legislation, which provides for the `unified operation' of the national electricity system by Redesa, has the object of keeping the average cost of electricity and, ultimately, the price to the consumer, as low as possible.
80 Those arguments of the defendant States raise directly a question of the greatest importance: are measures adopted by a Member State in connection with energy policy and, in particular, electricity and natural gas, to be deemed to have been imposed on grounds of `public security' for the purposes of Article 36 of the Treaty only where they have the object of ensuring the supply of the minimum quantities of electricity and natural gas without which it is impossible for the State and the economy to function and to cover the basic needs of the population, or also where such measures are designed to supply those forms of energy at the best possible price and with associated services of the highest possible quality?
In other words, may measures which have an effect equivalent to quantitative restrictions on imports and exports and are adopted in the sectors in question be deemed to have been imposed on grounds of `public security' for the purpose of Article 36 of the Treaty only where they are designed to ensure the supply of the minimum necessary quantities of electricity and natural gas, or is that also the case where they are intended to ensure supplies under the best conditions?
81 Although the central questions in Campus Oil were not in precisely those terms, the way in which the Court approached them in its judgment leaves me in no doubt as to the reply which must be given to the question I have just raised.
In paragraph 34 of Campus Oil, the Court observed that an interruption of supplies of petroleum products, with the resultant dangers for the country's existence, could seriously affect its public security, while in the next paragraph it added that the aim of ensuring at all times a minimum supply transcends purely economic considerations and may therefore be regarded as a measure relating to public security.
On that basis, the Court then (paragraphs 47 and 51) pointed out that a Member State whose supply of petroleum products is totally or almost totally dependent on imports may, in principle, rely on grounds of public security within the meaning of Article 36 for the purpose of requiring importers to cover a certain proportion of their needs by purchases from a refinery situated in its territory at prices fixed by the competent minister, although the quantities of petroleum products covered by such a system must not in any circumstances exceed the minimum supply requirement without which the operation of the essential public services and the survival of the inhabitants of the State concerned would be affected.
I think it is clear from the paragraphs I have cited that the Campus Oil judgment is a carefully considered step.
The Court accepts, on the one hand, that a measure for ensuring the supply of petroleum products may, in principle, be justified on grounds of public security, but it stresses repeatedly that the object of such a measure must be to ensure the vital minimum without which the very existence of the State would be endangered and it would be impossible to meet the basic needs of the population.
82 In my opinion, this strict approach is the only one consistent with Article 36, which provides for an exception to a fundamental principle of the Treaty.
If not only measures for ensuring the essential minimum, but also those which have the object of bringing about favourable conditions of supply from the viewpoint of cost, quality and selective management were regarded as measures designed to ensure the supply of a particular form of energy crucial to the functioning of the State and of the economy, these would be almost unlimited scope for potential exceptions to the principle of the free movement of goods.
Any measure connected directly or indirectly with the conditions for production and marketing of the form of energy concerned and, finally, any measure covered by the relevant area of the energy policy of the Member State concerned could be considered to be related to grounds of `public security'. However, in practice that would be tantamount to setting apart energy policy as a special ground which could justify derogating from Articles 30 and 34 of the Treaty.
83 When considered in that light, the defendant States' arguments that the exclusive rights in question are justified on grounds of public security should, in my opinion, be dismissed.
If measures which do not have the particular, direct object of ensuring a minimum supply of electricity and natural gas cannot be deemed to contribute to safeguarding public security for the purposes of Article 36 of the Treaty, it is quite certain that the retention of the contested rights cannot be justified under Article 36 by the fact that their abolition would endanger the machinery for fixing tariffs which are reasonable for the average consumer or uniform throughout the country (as claimed by all the defendant States), or would endanger the `optimum functioning of the national electricity system' (as claimed by the Italian Government) or, finally, would undermine attainment of the aims of a Member State's energy policy relating to diversification of the sources of energy used in that State and the resulting investment policy (as claimed by the French Government).
84 There is likewise no foundation, in my view, for the arguments of the Netherlands Government and those of the French and Italian Governments to the effect that the exclusive import and export rights are justified under Article 36 of the Treaty because, without them, it is impossible to plan effectively the development of the production potential necessary to meet future demand.
Of course, it would be inconceivable to formulate and implement a national energy policy without a medium and long-term plan, particularly in a sector such as electricity, where those responsible for taking decisions must make allowance for the special characteristics of electricity (dependency on the grid, the security of which requires supply and demand to be absolutely matched at all times, with no possibility of storage).
I also understand the Member States' submissions that the abolition of exclusive import rights and the resultant imports by individual operators would probably lead to electricity surpluses because medium or long-term production plans would have taken account of the demand from those operators.
But neither the Netherlands Government, nor the Italian or French Governments have offered a convincing explanation of why such surpluses should endanger security of supply, that is to say, the minimum supply necessary to safeguard public security.
The submissions of the Netherlands Government on this point refer to the economic consequences of the emergence of surpluses (83) and also their negative consequences for the effectiveness of the planning system in that country, while the French Government observes that to maintain production capacity on grounds of security at a level higher than the needs it will actually be called upon to meet is a costly solution; and the Italian Government merely contends that the appearance of surpluses prevents ENEL from ensuring the `optimum functioning of the national electricity system'. (84)
Moreover, neither the Italian nor the French Government explains why the national planning system could not ensure a minimum supply of electricity (and, so far as France is concerned, of natural gas) without the import rights which exist in Italy and France.
In particular, no explanation is given as to why a secure minimum supply could not be attained by restricting or even prohibiting exports by individual operators whenever a specific export transaction would jeopardize the availability of the quantities of energy which constitute the essential minimum for safeguarding public security.
(c) Conclusion
85 Having regard to the foregoing, in my opinion it must be accepted that the exclusive right in the Netherlands to import electricity for public distribution, the exclusive rights in Italy to import and export electricity and the exclusive rights in France to import and export electricity and natural gas are measures having an effect equivalent to quantitative restrictions on imports and exports, prohibited by Articles 30 and 34 of the Treaty respectively, and as such they lead to discrimination between nationals of Member States regarding the conditions under which goods are procured and marketed, which is prohibited by Article 37(1) of the Treaty.
B - Article 90(2)
(a) Can Article 90(2) justify the derogation from the provisions of the Treaty relating to the free movement of goods?
86 In the alternative, the defendant States contend that, even assuming that the contested rights were found to be contrary to Articles 30, 34 and 37, they could nevertheless be deemed compatible with the Treaty pursuant to Article 90(2), which provides as follows: `Undertakings entrusted with the operation of services of general economic interest [...] shall be subject to the rules contained in this Treaty, in particular to the rules on competition, in so far as the application of such rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them.
The development of trade must not be affected to such an extent as would be contrary to the interests of the Community.'
The defendant States argue that the contested rights were granted to undertakings `entrusted with the operation of services of general economic interest' and that the abolition of those rights would obstruct the performance of the particular tasks assigned to those undertakings.
87 The Commission opposes those arguments on the ground that Article 90(2) cannot cover national measures contrary to the provisions on the free movement of goods.
That submission is based mainly on Campus Oil which has already been cited several times.
In that case (which concerned the interpretation of the Treaty provisions on the free movement of goods in relation to national provisions which required importers to obtain a certain percentage of their supplies from a refinery on national territory), the Greek Government contended, referring to Article 90(2), that `a refinery is an undertaking of general economic interest and that a State refinery could not, without special measures in its favour, compete with the major oil companies'.
In paragraph 19 of the judgment, the Court made the following observations on this point: `Article 90(1) provides that in the case of public undertakings and undertakings to which Member States grant special or exclusive rights, Member States are neither to enact nor to maintain in force any measure contrary to the rules contained in the Treaty. Article 90(2) is intended to define more precisely the limits within which, in particular, undertakings entrusted with the operation of services of general economic interest are to be subject to the rules contained in the Treaty. Article 90(2) does not, however, exempt a Member State which has entrusted such an operation to an undertaking from the prohibition on adopting, in favour of that undertaking and with a view to protecting its activity, measures that restrict imports from other Member States contrary to Article 30 of the Treaty.'
88 Although the position taken by the Court in the last sentence of the above paragraph from Campus Oil may be explained by the place where the relevant provision appears among the Treaty rules relating to competition, and by the Court's concern not to allow exceptions to the provisions on the free movement of goods other than those set out in Article 36, the question whether that position is compatible with the actual wording of the provision remains open.
Having laid down the principle that undertakings entrusted with the operation of services of general economic interest are to be subject to all the rules contained in the Treaty, Article 90(2) provides for the possibility of derogating from those rules, without making any distinction between them.
Moreover, it is clear from the last paragraph of the provision in question that the measures it covers may affect directly not only the principles of healthy competition but also intra-Community trade.
(85)
89 However, regardless of the foregoing considerations, the Court's position in Campus Oil was not followed in later decisions.
In France v Commission cited in footnote 64, the Court described the objectives of Article 90(2) in the following terms: `In allowing derogations to be made from the general rules of the Treaty on certain conditions, that provision seeks to reconcile the Member States' interest in using certain undertakings, in particular in the public sector, as an instrument of economic or fiscal policy with the Community's interest in ensuring compliance with the rules on competition and the preservation of the unity of the Common Market' (emphasis added).
The judgment in Merci Convenzionali Porto di Genova (86) is even clearer.
In reply to a request for a preliminary ruling as to whether a dock-work undertaking and/or company is an undertaking entrusted with the operation of services of general economic interest within the meaning of Article 90(2) of the Treaty, and whether the application to that undertaking of certain provisions of the Treaty, including Article 30, could obstruct the performance of the particular task assigned to it, the Court stated first (paragraph 27) that it did not appear from the documents supplied by the national court or from the observations submitted to the Court that dock work was of a general economic interest exhibiting special characteristics distinguishing it from other economic activities, and added that `even if it were, [...] the application of the rules of the Treaty, in particular those relating to competition and freedom of movement, would be such as to obstruct the performance of such a task' (emphasis added).
Finally, according to the judgment in Corbeau (paragraph 14), (87) Article 90(2) of the Treaty, correctly construed, `permits the Member States to confer on undertakings to which they entrust the operation of services of general economic interest exclusive rights which may hinder the application of the rules of the Treaty on competition in so far as restrictions on competition, or even the exclusion of all competition, by other economic operators are necessary to ensure the performance of the particular tasks assigned to the undertakings possessed of the exclusive rights'.
A similar point was made in paragraph 46 of the Almelo judgment (cited in footnote 23).
Nevertheless, in accepting in those judgments that the Member States may rely on Article 90(2) in order not only to impose restrictions on competition, but also in some instances to exclude all competition, the Court confirmed, in my opinion, the conclusion to which the actual wording of that provision prima facie leads, namely that Member States may in principle rely upon it in order to introduce measures which are contrary not only to the competition rules but also to the other provisions of the Treaty. (88)
90 In principle, therefore, the Member States may rely on Article 90(2) to justify the exclusive rights in question. Of course, it remains to be seen whether the requirements of that provision are fulfilled for those rights, although contrary to Articles 30, 34 and 37, to be regarded as nevertheless compatible with the general system of the Treaty. (89)
Therefore, in paragraph (b), I shall consider whether, in relation to each of the defendant States in turn, the holders of the contested rights have been entrusted by the public authorities with the operation of a service of general economic interest and, if so, whether the application of the relevant rules of the Treaty, namely Articles 30, 34 and 37, obstructs the performance of the particular task assigned to them.
Then, assuming that the derogation from the rules of the Treaty which I have just mentioned is necessary for the performance of the particular tasks in question, I shall consider, in paragraph (c), whether nevertheless such derogation cannot be accepted because it affects intra-Community trade to such an extent that the interests of the Community are damaged.
(b) Have the holders of exclusive rights been entrusted with the operation of services of general economic interest?
If so, does the application of the rules of the Treaty relating to the free movement of goods obstruct the performance of the particular task assigned to them?
(b) Have the holders of exclusive rights been entrusted with the operation of services of general economic interest?
If so, does the application of the rules of the Treaty relating to the free movement of goods obstruct the performance of the particular task assigned to them? (aa) Netherlands
91 As I have already said (see paragraph 29 of this Opinion), SEP was designated by Ministerial Order of 20 March 1990 as the only company entitled to import electricity for public distribution in the Netherlands (except with a voltage under 500 V).
Under Article 2 of the EW, the undertaking holding that exclusive right, and undertakings holding licences for the construction or operation of units producing electricity for public distribution, have `a duty in common to ensure the efficient operation of the national public electricity supply at costs which are as low as possible and in a socially responsible fashion'.
It seems to me there is no doubt that this provision confers upon SEP the operation of a service of general economic interest for the purpose of Article 90(2) of the Treaty.
Although that term must be construed strictly, given that the aforementioned provision permits derogation from the rules of the Treaty, (90) electricity is so important for the normal functioning of a modern State and economy and for the daily needs of its entire population that certain powers, such as those granted to SEP by the abovementioned provisions of the EW, must be regarded as the most typical case of a service the efficient operation of which concerns not only a particular category of individuals but also the entire population. The Almelo judgment cited above also shows (paragraph 47) that the Court considers it obvious that an undertaking responsible for ensuring the supply of electricity in part of the national territory is entrusted with the operation of services of general economic interest. (91)
92 The Commission is in no doubt that SEP has been entrusted with the operation of a service of general economic interest.
Furthermore, by Decision 91/50, (92) on a complaint presented by local Dutch electricity distribution undertakings, claiming that SEP and a regional electricity distribution undertaking had infringed Articles 85 and 86 of the Treaty, the Commission took the view (paragraph 40) that, mainly owing to Article 2 of the EW, SEP was engaged in `the operation of services of general economic interest'. (93)
However, the Commission is uncertain as to how far SEP's exclusive import right is necessary to enable it to perform the particular task assigned to it.
After observing that SEP is in any case not responsible for the distribution of electricity to final consumers, the Commission claims that the Dutch Government must show that the abolition of the abovementioned exclusive right would cause importers to concentrate on the most profitable activities, that it would endanger SEP's economic viability and, finally, that there are no other solutions which could ensure the fulfilment of SEP's public service obligations.
93 Among the Dutch Government's submissions on this question, I think the following point should be particularly borne in mind: Article 2 of the EW imposes on SEP a duty to ensure the efficient operation of the national public electricity supply at costs which are as low as possible.
It may also be inferred from paragraph 14 et seq. and paragraph 113 of the defence that all the provisions of the EW relating to the fixing of electricity tariffs are governed by the principle that the cost of operating the national electricity supply system must be passed on in a balanced fashion to all consumers.
To apply this principle, the EW provides for a mechanism in which the principal function is assigned to SEP.
The mechanism is as follows: 90% of the electricity generation cost of the four generating undertakings is
jointly managed by them.
They deliver to SEP all the electricity which they generate at flat-rate prices fixed by SEP by reference to the raw material used.
SEP adds to those prices its expenses for maintenance of the national transmission grid and for imported electricity, and then the electricity is returned to the generation undertakings according to the tariff resulting from the said increase, called the `basic national tariff' (`LBT').
The generators add to the LBT the 10% of the generation cost which is not jointly managed and supply the electricity to the distribution undertakings at the tariff resulting from that increase, called the `regional basic tariff' (`RBT'), which fluctuates between certain maximum limits laid down on each occasion. Finally, the distributors supply the electricity to consumers at tariffs which must not exceed certain maximum limits and which vary according to the different categories of consumers.
In this system SEP's task therefore consists in including in the price which will be paid by all final consumers, by fixing the `basic national tariff', the national generation cost, the cost of transmission through the appropriate high-voltage grid and, finally, the cost of imports, so as to achieve equal distribution, among all consumers in the country, of the burden represented by the cost of operating the national electricity supply system, which must in all cases be kept at the lowest possible level.
94 According to the Netherlands Government, this specific task of SEP could not be performed if the exclusive import right were abolished.
It points out, in paragraph 34 of the defence, that if it were abolished much of the electricity generated in the Netherlands would remain unused, which would lead ultimately (because it is obviously impossible to store surpluses for supply to consumers at a later date) (94) to a rise in the cost of generating electricity domestically, which, moreover, would be borne solely by the undertakings which continued to obtain supplies from the national grid and, ultimately, through those undertakings, by their customers (final consumers), most of whom would not be in a position, because of their low consumption, to exercise the right granted to them by the EW to import electricity from abroad solely for their own consumption.
95 The summary of the arguments on each side shows that they differ on an important point.
According to the Commission, to agree that the exclusive right in question was justified under Article 90(2), it would have to be shown in any case that its abolition would upset SEP's economic equilibrium.
According to the Netherlands Government, on the contrary, it is sufficient to show that the abolition of the exclusive right would make it impossible to observe one of the principles which govern the national electricity system and which, under the EW, must be applied by the holder of the exclusive right.
This is the essential issue between the parties, as is clear from their submissions in the reply and the rejoinder.
In its reply, the Commission, after stressing (paragraphs 35 and 36) that in its opinion, since SEP is not responsible for supplying electricity to final consumers, it does not have the obligations set out in paragraph 48 of the Almelo judgment, which relates solely to a distribution undertaking, adds (paragraphs 38 and 39) that the argument of the Netherlands Government that the exclusive right in question is necessary for SEP to perform its task, consisting in the equitable apportionment of the cost of operating the national electricity supply system, is irrelevant because the need for all electricity consumers to share in the cost of maintaining production capacity is not a reason which would justify relying on Article 90(2) of the Treaty.
In its rejoinder (paragraphs 66 and 67), the Netherlands Government for its part contends that, to justify the exclusive right by reference to Article 90(2), it is not necessary to show that its abolition would upset SEP's economic equilibrium, but it is sufficient to show that abolition would interfere with the basic principles of operation of the national electricity supply system, some of the functions of which are performed by SEP.
96 In my opinion, the Commission's argument concerning the reasons which may justify derogation from the Treaty under Article 90(2) is too narrow.
Of course, I do not underestimate the fact that the exceptional nature of this provision demands particular care in construing and applying it.
Nevertheless, I think that since Article 90(2) permits derogation from the Treaty to the extent necessary for the performance of the particular task assigned to an undertaking entrusted with the operation of services of general economic interest, Article 90(2) must be regarded as intended to ensure not only the economic equilibrium of the latter undertaking, (95) where such equilibrium is the minimum requirement for the performance of the particular task, but also to ensure all the other conditions necessary for that task.
It is sufficient if that task does not go beyond the powers and responsibilities reasonably regarded as associated with the operation of a `service of general economic interest' within the meaning of that term in Community law.
Of course, on this question the Court of Justice always has the last word.
97 In view of what has been said, can SEP's exclusive import right be justified in the light of Article 90(2) of the Treaty?
I think the reply must be in the affirmative. Keeping the cost of generating electricity at the lowest possible level and sharing among consumers the generation cost and generally the overall cost of operating the electricity supply system are, in my opinion, principles imposed by the very logic governing the operation of a `service of general economic interest'.
An economic activity the results of which by definition affect every individual (particularly in the case of the supply of electricity) or, at least, wide sectors of the population, must be carried out with particular regard to, inter alia, the need to contain the cost (96) and to ensure certain basic forms of solidarity between those who do or may benefit (97) from that activity.
In the present case, SEP, the holder of the exclusive right in question, is responsible for meeting the aforementioned needs, and the Dutch Government claims - in my opinion, convincingly - that the abolition of that right, although not threatening SEP's economic equilibrium, would obstruct the performance of that `particular task' for the reasons stated above (paragraph 94).
98 However, could fulfilment of this task perhaps be ensured by other means?
The Commission believes it could, citing (see paragraph 40 of the reply) as possible alternative solutions the establishment of a `fund for financing the fulfilment of public service obligations', `public service contracts' or a charge for access to the grid.
It seems to me that the first two proposals are in such general terms that it is impossible to determine whether they would actually ensure the complete fulfilment of SEP's obligations in relation to ensuring the lowest possible cost of generation and uniform distribution of the cost of operating the national electricity supply system. With regard to the third proposal, I would point out that the desired alternative must be less restrictive of trade in the Community than the exclusive right in question. However, if the charge for use of the national transmission system is set at such a level that the importer of electricity for public distribution bears a cost for generating national electricity which is exactly equal to that borne by a distributor who continues to obtain supplies in the Netherlands, the potential competitive advantage of electricity generated outside the Netherlands, because of its lower price, will be completely neutralized and the objective of removing obstacles to the free movement of the product in question will not have been attained.
99 In conclusion, I consider that, even if the exclusive right to import electricity for public distribution is a measure having equivalent effect to a quantitative restriction on imports and constitutes a form of prohibited discrimination between nationals of Member States regarding the conditions under which goods are procured and marketed, the grant of such a right to SEP is justified by the need for it to perform the particular task assigned to it in operating a service of general economic interest.
(bb) Italy
100 I have already mentioned (see paragraph 36) that Law No 1643 of 16 December 1962 assigned to ENEL the functions of the generation, importation and export, transmission, transformation, distribution and sale of electricity throughout Italy, irrespective of its source.
Consequently there is no doubt that ENEL is entrusted with the operation of a service of general economic interest within the meaning of Article 90(2) of the Treaty.
This is not directly called into question by the Commission, but it claims that the Italian Government has not shown that ENEL's exclusive rights to import and export electricity are necessary for fulfilling its specific obligations in the performance of its task.
101 The Italian Government contends in reply that the abolition of those rights would make it impossible for ENEL to perform its task and, in particular, its obligation to supply electricity to consumers at low, stable prices in order to ensure the balanced national development.
In its reply (paragraphs 8 and 9), the Italian Government adds that ENEL's obligation under Article 1 of the abovementioned Law No 1643 of 1963, as construed by the Corte Constituzionale (Italian Constitutional Court), is fulfilled by means of setting up and operating an integrated electricity distribution system through which it is possible to make up for losses in certain sectors with profits in others.
However, according to the Italian Government, the abolition of ENEL's exclusive rights would result in most large-volume consumers turning to foreign suppliers (since most such consumers are located in regions of northern Italy, which makes it easier to use other suppliers, as those regions are not far from Italy's land borders), thus depriving ENEL of its main means of offsetting the cost of distributing electricity, which is increased by the need to ensure a regular supply to each and every consumer, including those in remote areas or areas to which access is difficult.
The need to make up for those losses would mean increasing the average price of electricity, to the detriment of those consumers who, either because of their low consumption or because they are located in regions from which access to foreign suppliers is impossible or not economically worthwhile, have no alternative but to obtain supplies from ENEL (see paragraph 8 of the reply and paragraph 6 of the rejoinder).
102 In my opinion, the Italian Government's argument is persuasive in so far as it seeks to justify the maintenance of exclusive rights to import electricity.
As repeatedly stated in Corbeau (paragraph 15 et seq.) and Almelo (paragraphs 48 and 49) cited above, the objective, in the context of a service of general economic interest, of applying uniform tariffs so far as possible throughout a country `irrespective of the specific situations or the degree of economic profitability of each individual operation', (98) may require the establishment of a mechanism making it possible `to offset less profitable sectors against the profitable sectors', (99) so that the need for profitable operation may in turn justify derogating from the rules of the Treaty pursuant to Article 90(2).
However, the abolition of ENEL's exclusive right of importation may, for the reasons stated by the Italian Government, in the normal course of events interfere with the compensatory mechanism whereby ENEL sets off the results of unprofitable sectors against those of the profitable ones.
This possibility is sufficient, in my opinion, to justify the failure to comply with the Treaty by retaining that right.
Furthermore, the Commission's claim that ENEL's particular task described above could be performed by other means cannot be accepted, primarily because the alternatives suggested by the Commission are described in such general terms (economic aid to consumers in a disadvantageous situation, constitution of a `National Support Fund') that it is impossible to determine whether they would ensure the performance of the said task fully.
103 On the other hand, the Italian Government has not put forward any convincing reasons why the abolition of the exclusive right to export electricity should impede the abovementioned task or any other particular task of ENEL. (100)
104 In conclusion, although ENEL's exclusive right to import electricity is a prohibited measure having an effect equivalent to a quantitative restriction on imports and also a form of prohibited discrimination between nationals of Member States regarding the conditions under which goods are procured and marketed, the maintenance of that right is justified by the need to ensure the performance of ENEL's particular task in operating a service of general economic interest.
On the other hand, that consideration cannot justify the maintenance of ENEL's exclusive right to export electricity, which infringes Articles 34 and 37.
(cc) France
(i) Exclusive rights relating to electricity
105 EDF, which was made responsible, under Law No 46-628 of 9 April 1946, for the management of the nationalized electricity undertakings, is clearly an undertaking entrusted with the operation of a service of general economic interest.
The parties are not in agreement regarding the exact nature of its obligations in performing that function.
Among all the arguments of both parties on this question, the only ones relevant to the outcome of the present action are those concerning the legal basis and the scope of the obligations of EDF whose performance would be impeded, according to the French Government, if the exclusive rights to import and export electricity were abolished.
106 According to the French Government's submissions in its defence and rejoinder, the abolition of those rights would make it impossible for EDF to fulfil the following obligations: (1) the obligation to observe the principle of the equal treatment of customers; (2) the obligation to supply electricity at the lowest possible prices; (3) the obligation to conduct its operations with the smallest possible impact on the environment, and (4) the obligation to assist in the implementation of national policy on town and country planning. (101)
107 According to the French Government, EDF's obligation to observe the principle of equal treatment for customers is laid down by Article 24 of the General Conditions which, after being approved by means of a decree, were appended to the concession agreement signed by the State and EDF on 27 November 1958 (see Annex 4 to the defence).
That agreement granted EDF the right to operate the general electricity power supply, that is to say, the high-voltage grid which links all the points where electricity is generated (including the international interconnections through which electricity is imported) with the low-tension grids through which distribution services and undertakings supply electricity to final consumers, and with consumers who obtain their supplies direct from the high-voltage grid.
The abovementioned Article 24 (which is described by the French Government as a particular manifestation of the principle of equality which, according to the case-law of the Conseil Constitutionnel, is a constitutional principle and, according to the settled case-law of the Conseil d'État, binds all public services), requires EDF, as the concession-holder for the general supply system, to treat all its customers on a basis of strict equality.
108 The Commission does not doubt that EDF is under such an obligation.
However, it does not consider that the General Conditions appended to the concession agreement of 27 November 1958 or any other document show that EDF has a particular obligation to supply electricity at the lowest possible prices.
On this point the French Government nevertheless seeks to rely on Articles 20 and 22 of the General Conditions, entitled `Fixing of maximum tariffs' and `Review of maximum tariffs' respectively.
Although those provisions do not expressly require EDF to adjust its tariffs to the lowest possible level, in my opinion they are as a whole inspired by that principle in determining the conditions under which EDF's tariffs for supplying electricity may be increased. (102)
Consequently the Commission's argument that EDF does not have the obligation in question here cannot be accepted.
109 Finally, I cannot agree with the Commission in questioning whether EDF has a `particular task' within the meaning of Article 90(2) of the Treaty in relation to the protection of the environment and town and country planning.
It is true that the French Government does not refer, in its defence, to the legal basis of EDF's obligations in those two spheres.
However, the rejoinder (paragraph 35) mentions the provisions of the `contrat de plan' signed by the State and EDF for 1993-96 (see footnote 102), (103) by means of which EDF was given certain specific obligations relating to protection of the environment (Article 6) and town and country planning (Article 11). (104)
110 What reasons are put forward by the French Government to show why the abolition of the exclusive rights in question would prevent the fulfilment of the abovementioned obligations of EDF?
With regard to the obligation to ensure equal treatment for EDF's customers and the obligation to supply electricity at the lowest possible price, the French Government contends that, if the exclusive import right were abolished, EDF's customers (and, what is more, those who are the biggest consumers) would turn to foreign sources of supply, which would necessarily offer more competitive prices than those of EDF, and the resulting exclusion of the latter from using those sources would lead to an increase in the average price of electricity supplied by EDF, since the basis of the mechanism for setting tariffs is the fixing by EDF of a `single price' for electricity, by reference to the average total cost of supplying it, regardless of whether it is generated in France or imported.
Also, with regard to EDF's obligations in relation to the protection of the environment and town and country planning, the French Government claims that the loss of customers to foreign suppliers would deprive EDF of the economic resources necessary for the fulfilment of those obligations.
111 I find the French Government's arguments persuasive with regard to the impossibility of EDF fulfilling its obligations to supply electricity at the lowest possible cost and to ensure the equal treatment of customers if the exclusive right to import it were abolished.
For the reasons given by the French Government, removal of that right might, in the ordinary course of events, lead to an increase in the average price of electricity, which would be borne precisely by those consumers who continued to obtain their supplies from EDF (unless its tariffs remain unchanged, which might endanger its financial equilibrium) while, at the same time, consumers who used foreign suppliers for the most part would always be able to turn to the national market, in reliance on the principle of universal public service, whenever foreign prices ceased to be advantageous.
Furthermore, the Commission's claim that the consumers who would probably use foreign suppliers are precisely those who, because of their size, already enjoy special tariffs lower than those applied to other consumers, is not relevant.
Special tariffs for certain categories of consumers, which are granted on the basis of objective criteria and after weighing up the consequences for EDF's economic equilibrium, represent a lawful exception to the principle of equal treatment which, however, cannot be permitted if certain consumers, taking their own needs as the sole criterion, resort to foreign suppliers, thus rendering inevitable an increase in the price paid by the rest.
112 On the other hand, I do not consider that the French Government has shown that abolition of the exclusive import right would affect EDF's obligations in relation to protection of the environment and town and country planning to such an extent that maintenance of the right would be justified under Article 90(2) of the Treaty.
The loss of customers to foreign suppliers cannot, in my opinion, be regarded as directly and inevitably making it impossible for EDF to fulfil its obligations in the areas mentioned above.
113 Finally, the French Government has not put forward any specific argument relating to EDF's exclusive export right to show why the abolition of that right would prevent fulfilment of the obligations just mentioned or the others listed in paragraph 36 of the French Government's rejoinder.
114 In conclusion, although EDF's exclusive right to import electricity is a prohibited measure having an effect equivalent to a quantitative restriction on imports and also constitutes a form of prohibited discrimination between nationals of Member States regarding the conditions under which goods are procured and marketed, the maintenance of that right is justified by the need for the fulfilment of EDF's particular task in operating a service of general economic interest.
On the other hand, that consideration cannot justify the maintenance of EDF's exclusive right to export electricity, which infringes Articles 34 and 37.
(ii) Exclusive rights relating to natural gas
115 The Commission does not question that GDF is an undertaking entrusted with the operation of a service of general economic interest.
However, it has doubts as to the exact nature of GDF's specific obligations in operating that service and doubts whether it is necessary for GDF to retain its exclusive import and export rights in order to fulfil those obligations.
116 The French Government observes, firstly (see paragraph 20 of its defence), that not only does GDF hold the exclusive rights in question, but it has also been entrusted with a function in the transmission and distribution of natural gas.
The transmission of natural gas through the high-pressure system for delivery to distributors and to industrial undertakings which obtain supplies direct from that system is the subject of a State concession.
There are three concession-holders, GDF and two other companies, one of which serves 12 départements and the other provides a special service.
Distribution to final consumers through the low-pressure system is the subject of concessions by local government authorities. The principal concession-holder is GDF, but 4% of distribution is handled by 15 other public undertakings.
117 The French Government adds that GDF's obligations are set out in the General Conditions appended to the concession agreement.
In particular, the standard conditions relating to the concession of the transmission service, which were approved by decree of the Conseil d'État and accompany each concession agreement (see Annex VIII to the rejoinder), with any modifications necessary in each case, require the concession-holder to provide a continuous supply of natural gas (Article 19) and to treat all its customers equally (Article 23). (105)
The standard conditions for the distribution service, which were approved by decree and accompany each individual concession agreement (see Annex IX to the rejoinder), require that natural gas be supplied to any person requesting it (Article 17), oblige the concession-holder to ensure continuity of supply (Article 19) and require it to treat all its customers in exactly the same way in every respect, no matter who they may be (Article 21). (106)
118 As regards the effect which abolition of the contested rights might have on the fulfilment of GDF's obligations, the French Government contends, referring to the submissions concerning the application of Article 36 of the Treaty (see paragraph 78 supra) that as, in the countries which produce natural gas, production and marketing are normally controlled by State monopolies, GDF is compelled, in order to ensure the fulfilment of its obligation to provide a continuous supply, to sign contracts for exceptionally large quantities of gas which often contain onerous long-term obligations (`take or pay' clauses, contribution to costly investment programmes).
If the exclusive import right were abolished, the only way in which GDF would be able to make up for the loss of customers, who, by signing short-term contracts with foreign suppliers, would be able to obtain better prices than those offered by GDF (unless tariffs remained unchanged, at the risk of upsetting GDF's financial equilibrium), would be to increase the tariffs for consumers who remain its customers.
Although the French Government puts forward those arguments to show that the abolition of the exclusive rights would make it impossible for GDF to fulfil its continuous supply obligation, they seem to me to prove that GDF would find it impossible to fulfil another obligation, that of the equal treatment of customers, (107) if the exclusive import rights were abolished, having regard also to the fact that customers of GDF who might use foreign suppliers in order to obtain better prices than those of domestic suppliers would always retain the right to return to GDF if and when they found it necessary, in reliance on the principle of universal public service.
119 On the other hand, the French Government's submissions make no specific, sufficiently explicit mention of the potential impact of the abolition of the exclusive right to export natural gas on the fulfilment of GDF's obligations.
120 In conclusion, the maintenance of GDF's exclusive right to import natural gas, despite being a prohibited measure having an effect equivalent to a quantitative restriction on imports and also constituting a form of prohibited discrimination between nationals of Member States regarding the conditions under which goods are procured and marketed, is justified by the need to ensure fulfilment of GDF's particular task in operating a service of general economic interest.
On the other hand, that consideration cannot justify the maintenance of GDF's exclusive right to export natural gas, which infringes Articles 34 and 37.
(dd) Spain
121 For the sake of completeness, I shall now consider whether, assuming that the Spanish legislation to which the Commission refers creates exclusive rights to import and export electricity, (108) such rights could be deemed necessary for the performance of the particular task assigned to the public corporation Redesa.
122 It is clear that Redesa, which is responsible for unified `operation' of the national electricity system, has been entrusted with the operation of a service of general economic interest for the purposes of Article 90(2) of the Treaty.
However, the Commission doubts whether the exclusive rights which, in its opinion, have been conferred upon Redesa are necessary for the performance of its particular task.
123 The Spanish Government contends in its defence (page 32) that (1) pursuant to Article 2(1) of Law 49/84 on the unified operation of the national electricity system, Redesa has an obligation, in operating a service of general economic interest, to ensure that the national market is supplied with electricity at the lowest possible cost and in such a way that security and quality of supply are ensured, and (2) the liberalization of international trading in electricity `would affect' security of supply and `would impede' supply of the national market at the lowest possible cost, as it would only result in `upward pressure on prices'.
However, no explanation is given as to why the abolition of the exclusive rights referred to in the Commission's application would have the consequences mentioned.
124 In view of this uncertainty in the Spanish Government's submissions concerning fulfilment of the requirements for the application of Article 90(2) of the Treaty, the exclusive rights which, according to the Commission, have been granted to Redesa cannot be justified in any way by reference to that article.
(c) Does the maintenance of exclusive rights affect the development of trade to such an extent as would be contrary to the interests of the Community?
(c) Does the maintenance of exclusive rights affect the development of trade to such an extent as would be contrary to the interests of the Community?125 One final question remains: are the exclusive import
rights existing in the Netherlands, Italy and France which, as we have seen, are justified by the need to ensure performance of the particular task assigned to the holders of those rights, nevertheless incompatible with the Treaty because they do not fulfil the requirement laid down in the second sentence of Article 90(2), that is to say because they affect the development of trade to such an extent as would be contrary to the interests of the Community?
126 The actual wording of that sentence (particularly the use of the phrase `development of trade' and the verb `be affected') is, in my opinion, conducive to the conclusion that the draftsmen of the Treaty intended using that provision to exclude the application of the derogation provided for in Article 90(2) in relation to measures which, in addition to potentially restricting trade in the Community, have in practice done so, the restrictive effects being so great that intra-Community trade in the sector in question is practically non-existent. (109)
127 I do not think the evidence presented to the Court in these cases shows that the exclusive rights in question affect intra-Community trade in electricity and natural gas to such an extent in practice.
Firstly, the defendant States have produced figures (the veracity of which is not questioned by the Commission) from which it is clear that, in spite of the exclusive rights in question, the volumes imported by the holders of those rights are by no means insignificant.
Thus:-
- In the last few years, the holder of the exclusive right in question in the Netherlands imported 15% of the total volume of electricity available through the public distribution system (see paragraphs 26 and 123 of the defence lodged by the Netherlands Government);
- In 1993 the electricity imported by Italy (whose energy dependence accounts for about 80.5% of its total needs) rose by 11.6% as against 1992, being approximately 40 000 million KWh, which, according to the Italian Government, is equivalent to the entire output of a country such as Austria (see paragraph 1 of the defence lodged by the Italian Government; in paragraph 4 of its rejoinder it adds that in 1994 17% of its total electricity requirements were met by imports);
- According to the French Government (see paragraph 13 of its defence), trade in electricity accounted for almost 10% of total consumption of the Community of the Twelve;
- With regard to natural gas, the French Government claims that 90% of French needs are met by imports and that in 1992 14% of the country's natural gas supplies were met by imports from the Netherlands (see paragraphs 24 and 27 of its defence).
128 Furthermore, irrespective of those figures, the fact that the existence of the exclusive rights in question in the Netherlands, Italy and France has not affected the development of trade to such an extent as would be contrary to the interests of the Community is also clear from the preambles to Council Directives 90/547/EEC and 91/296/EEC on the transit of electricity and natural gas through transmission grids. (110)
The sixth recital in the preamble to the directive relating to electricity states that `there is increasing trade in electricity each year between high-voltage electricity grids in Europe'.
There is a similar observation in the eighth recital in the preamble to the directive relating to natural gas. (111)
(d)
Conclusion
129 In view of all the foregoing, maintenance of the exclusive rights to import electricity and natural gas existing in the Netherlands, Italy and France is compatible with the scheme of the Treaty, in accordance with Article 90(2).
On the other hand, the maintenance of exclusive rights to export electricity and natural gas existing in Italy and France is contrary to Articles 34 and 37 of the Treaty.
IV - Conclusion
Having regard to the foregoing observations, I propose that the Court give judgment as follows in the
present actions:
(1) In Case C-157/94 Commission v Netherlands:
- dismiss the application;
- order the Commission to pay the costs of the Kingdom of the Netherlands;
- order the French Republic, Ireland and the United Kingdom to bear their own costs.
(2) In Case C-158/94 Commission v Italy:
- declare that, by maintaining exclusive rights to export electricity, the Italian Republic has failed to fulfil its obligations under Articles 34 and 37 of the Treaty;
- dismiss the application in all other respects;
- order each party to bear its own costs.
(3) In Case C-159/94 Commission v France:
- declare that, by maintaining exclusive rights to export electricity and natural gas, the French Republic has failed to fulfil its obligations under Articles 34 and 37 of the Treaty;
- dismiss the application in all other respects;
- order each party to bear its own costs.
(4) Case C-160/94 Commission v Spain:
- dismiss the application;
- order the Commission to pay the costs of the Kingdom of Spain;
- order the French Republic, Ireland and the United Kingdom to bear their own costs.
(1) - Since the Treaty on European Union came into force, the Treaty establishing the European Community now contains two provisions concerning the energy sector: under Article 3(t) the activities of the Community for achieving its purposes are to include, inter alia, the adoption of measures in the sphere of energy and, under Article 129b(1), the Community is to contribute to the establishment and development of trans-European networks in the areas of, inter alia, energy infrastructures.
It should be observed that, according to the declaration annexed to the Final Act of the European Union Treaty, the question of introducing into the Treaty a Title relating to the energy sector will be examined on the basis of a report which the Commission will submit to the Council by 1996 at the latest.
(2) - Protocol of Agreement on energy problems reached between the Governments of the Member States of the European Communities, on the occasion of the 94th session of the Special Council of Ministers of the European Coal and Steel Community, held on 21 April 1964 in Luxembourg (JO 30 April 1964, p. 1099).
(3) - Council Resolution of 16 September 1986 concerning new Community energy policy objectives for 1995 and convergence of the policies of the Member States (OJ 1986 C 241, p. 1).
(4) - COM(88) 238 final.
(5) - OJ 1990 L 185, p. 16.
(6) - OJ 1990 L 313, p. 30.
(7) - OJ 1991 L 147, p. 37.
(8) - Proposal for a Council Directive concerning common rules for the internal market in electricity (OJ 1992 C 65, p. 4).
(9) - Proposal for a Council Directive concerning common rules for the internal market in natural gas (OJ 1992 C 65, p. 14).
(10) - OJ 1994 C 123, pp. 1 and 26.
(11) - After the oral stage of the procedure was concluded, the pace of the negotiations accelerated considerably with the adoption by the Energy Council, meeting in Luxembourg on 20 June 1996, of a `common position' on the principles and conditions for the gradual establishment of the single electricity market.
The Council reserved for a later meeting the question of the liberalization of the national markets in the natural gas sector. In accordance with the `common position' (which was to be forwarded to the European Parliament under the co-decision procedure) the main provisions of the directive to be adopted would be as follows [see the Summary of the Council's `Common Position' (established by the Council Secretariat) in EUROPE/Documents, No 1993, 10 July 1996]:
(a) By the end of the period for adjusting domestic law to the Directive, the Member States must open to competition the percentage of their market corresponding, on a Community average, to the share of electricity consumption of customers using more than 40 GWh per year.
This share is estimated to be 22.66% (weighted Community average) of the national markets.
From 1 January 2000 this threshold will be reduced from 40 GWh to 20 GWh, and from 1 January 2003 it will be reduced to 9 GWh.
(b) For the organization of access to the transmission and distribution system, the Member States may choose between two procedures as follows:
(i) `Negotiated access procedure': producers and certain consumers (determined by reference to the criteria laid down by the Member States) will negotiate access to the system with the operator so as to conclude supply agreements with each other.
The operator of the transmission or distribution system may refuse access where he lacks the necessary capacity.
(ii) `Single buyer procedure': Member States will designate a legal person to be the single buyer of electric power within the territory covered by the system.
In this case the Member States must ensure that a non-discriminatory tariff for the use of the transmission and distribution system is published, and that eligible customers are free, in accordance with their own needs, to conclude supply contracts with producers.
The `single buyer' may refuse access to the system and may refuse to purchase electricity where he lacks the necessary transmission or distribution capacity.
(c) The customers who may conclude electricity supply contracts under one of the two procedures adopted (who, moreover, are those who will benefit in practice from the opening up of national markets to competition) must include, in any event, those whose annual consumption exceeds 100 GWh.
(d) In order to avoid disequilibrium in the opening up of the electricity markets, a special provision will be included in the Directive, to be effective for a limited period, under which the conclusion of electricity supply contracts with a customer who is entitled to conclude such contracts in another Member State may not be prohibited if that consumer meets the relevant criteria laid down in both Member States in question; in the event of its not being possible to execute the contract owning to differences in the manner in which such criteria are arrived at in the two Member States, the Commission may, in certain circumstances, require the contract to be executed.
(e) Member States may impose on undertakings operating in the electricity sector public service obligations which may relate to security of supply, regularity, quality and price of supplies and to environmental protection.
(12) - See for example the order of 11 July 1995 in Case C-266/94 Commission v Spain [1995] ECR I-1975, paragraph 16, and the judgments in Case C-289/94 Commission v Italy [1996] ECR I-4405,
paragraph 15; Case 293/85 Commission v Belgium [1988] ECR 305, paragraph 13; and Case 74/82 Commission v Ireland [1984] ECR 317, paragraph 13.
(13) - See Case 124/81 Commission v United Kingdom [1983] ECR 203, paragraph 5 et seq.; Case 51/83 Commission v Italy [1984] ECR 2793, paragraph 5 et seq.; Case 298/86 Commission v Belgium [1988] ECR 4343, paragraph 9 et seq.; and Case C-296/92 Commission v Italy [1994] ECR I-1, paragraph 11 et seq.
(14) - See Case 186/85 Commission v Belgium [1987] ECR 2029, paragraph 11 et seq.; Case C-198/90 Commission v Netherlands [1991] ECR I-5799, paragraph 13 et seq.; and Case C-52/90 Commission v Denmark [1992] ECR I-2187, paragraph 23 et seq.
(15) - It seems to me that this is what is implied by paragraph 14 of the judgment in Case C-57/94 Commission v Italy [1995] ECR I-1249, in which the Court stated that, in order to remedy a defect in the Commission's application, as found by the Court in an earlier judgment ruling that the application was inadmissible because the pleas in law differed from those in the reasoned opinion, `it sufficed for the Commission to submit an application based on the same complaints, pleas in law and arguments as the reasoned opinion ...' (emphasis added).
See also Case C-375/90 Commission v Greece [1993] ECR I-2055.
In that case the Commission had alleged, in the course of the preceding administrative procedure, that the Greek authorities had infringed Community law by inspecting a consignment of meat by means of method A, which showed that the meat fulfilled the health requirements of the regulation in question and, subsequently, carrying out a second inspection using method B, which was provided for by the regulation only when the method A inspection was inappropriate or showed that the products inspected did not meet the health requirements of the regulation.
The Hellenic Republic stated during the preceding administrative procedure and before the Court that it had used method B only.
The Commission did not challenge this assertion but argued, for the first time before the Court, that the Greek authorities had an obligation in any case to apply method A initially.
The Court found that it could not take that `allegation' into account because it had not been made during the written stage either before the Court or in the course of the preceding administrative procedure.
In my opinion, that `allegation' changed the subject-matter of the dispute entirely: in principle it was alleged that Greece had used method B when it had already used method A, and subsequently the Commission alleged that the failure consisted in not using method A (on this point, see paragraph 16 of the Opinion of Advocate General Tesauro).
(16) - See Case 176/84 Commission v Greece [1987] ECR 1193, paragraph 12 et seq., in particular paragraph 20, and Case 178/84 Commission v Germany [1987] ECR 1227, paragraph 13 et seq., in particular paragraph 23.
(17) - See Case 415/85 Commission v Ireland [1988] ECR 3097, paragraph 9.
(18) - See Case C-317/92 Commission v Germany [1994] ECR I-2039, paragraph 5, and Case 220/83 Commission v France [1986] ECR 3663, paragraph 7.
(19) - Commission v Italy [1968] ECR 618.
(20) - Commission v Belgium [1992] ECR I-4431.
(21) - With particular regard to Article 37, it should be noted that, as the Court has repeatedly held, it is clear from the place of that provision in the chapter of the Treaty on the elimination of quantitative restrictions and from the terminology used in that provision that it refers to trade in goods and not the supply of services (see Case 155/73 Sacchi [1974] ECR 217, paragraph 10; Case 271/81 Mialocq [1983] ECR 2057, paragraph 8; Case 30/87 Bodson [1988] ECR 2479, paragraph 10; Joined Cases C-46/90 and C-93/91 Lagauche [1993] ECR I-5267, paragraph 33, and Case C-17/94 Gervais [1995] ECR I-4353, paragraph 35).
(22) - Costa v Enel [1964] ECR 614.
(23) - Almelo [1994] ECR I-1477.
(24) - See, for example, Joined Cases 60/84 and 61/84 Cinéthèque v Fédération Nationale des Cinémas Français [1985] ECR 2605, paragraph 10, and Case C-239/90 Boscher [1991] ECR I-2023, paragraphs 7 to 10.
(25) - See Case C-275/92 H.M. Customs and Excise v Schindler [1994] ECR I-1039.
(26) - See also Case C-55/93 Van Schaik [1994] ECR I-4837, paragraphs 12 to 14.
(27) - See Case C-260/89 ERT v DEP and Others [1991] ECR 2925.
(28) - Cited above (footnote 21).
(29) - See Case 45/87 Commission v Ireland [1988] ECR 4929. In that case the Commission asked the Court to declare that, by allowing the inclusion, in an invitation to tender for a public works contract, of a clause providing that certain materials to be used in the performance of the contract were to be certified as complying with the Irish technical specifications, Ireland had failed to fulfil its obligations under Article 30 of the Treaty.
Ireland claimed before the Court that the contract in question did not relate to the sale of goods but to the performance of work, so that it fell under the Treaty provisions concerning the freedom to supply services, and that the clauses relating to the materials to be used were completely subsidiary.
That argument was not accepted by the Court, which stated (paragraph 17) that `the fact that a public works contract relates to the provision of services cannot remove a clause in an invitation to tender restricting the material that may be used from the scope of the prohibitions set out in Article 30'.
(30) - Case 20/64 Albatros [1965] ECR 40.
(31) - Rewe-Zentrale des Lebensmittel-Großhandels [1976] ECR 181.
(32) -
See the Opinion cited above, p. 106 et seq.
(33) - Case 13/70 [1970] ECR 1089.
(34) - See in particular paragraph 19 et seq.
(35) - Case 91/75 [1976] ECR 113.
(36) - Case 59/75 Manghera [1976] ECR 91, in which a national measure relating to the grant of a monopoly of the exclusive right to import a particular product was assessed solely in the light of Article 37, with no express reference to Article 30 of the Treaty, did not adopt a similar approach to that taken in the Miritz judgment, mainly because the question submitted for a preliminary ruling in that case related only to the interpretation of Article 37.
(37) - Case 119/78 [1979] ECR 975.
(38) - Case 90/82 [1983] ECR 2011.
(39) - Case C-347/88 [1990] ECR I-4747.
(40) - See Case 120/78 Rewe-Zentrale [1979] ECR 321, paragraph 7; Case 86/78 Peureux I [1979] ECR 897, paragraph 35; Case 118/86 Nertsvoederfabriek Nederland [1987] ECR 3883, paragraph 7; Joined Cases C-78/90 to C-83/90 Compagnie Commerciale de l'Ouest and Others [1992] ECR I-1847, paragraph 36; and Case C-387/93 Banchero II [1995] ECR I-4663, paragraph 29.
(41) - See Manghera, cited in footnote 36 (paragraph 9), and Miritz, cited in footnote 35 (paragraph 8), and Case 91/78 Hansen II [1979] ECR 935, paragraph 13; Case 78/82 Commission v Italy [1983] ECR 1955, paragraph 11; Commission v Greece, cited in footnote 39 (paragraph 42), and Banchero II, cited in the preceding footnote (paragraph 27).
(42) - As the Court observed in Hansen II, cited in footnote 41 (paragraph 8), Article 37 did not cease to be operative at the end of the transitional period within which the progressive adjustment of national monopolies of a commercial character was to be carried out, but continues to be, even after that period, the sedes materiae in relation to the prohibition on retaining or introducing measures, inherent in those monopolies, which constitute `discrimination regarding the conditions under which goods are procured and marketed'. So far as the French Republic, the Italian Republic and the Kingdom of the Netherlands are concerned, the transitional period ended on 31 December 1969 (Article 8 of the Treaty establishing the European Economic Community, now Article 7 of the Treaty establishing the European Community). With regard to Spain, Article 48 of the Act of Accession provided as follows:
`1. Without prejudice to paragraphs 2 and 3 of this Article, the Kingdom of Spain shall, from 1 January 1986, progressively adjust State monopolies of a commercial character within the meaning of Article 37(1) of the EEC Treaty, bearing in mind, where appropriate, Article 90(2) of the EEC Treaty, so as to ensure that by 31 December 1991 at the latest no discrimination regarding the conditions under which goods are procured and marketed exists between nationals of the Member States.
[...]
2. The Kingdom of Spain shall, from 1 January 1986, abolish all exclusive export rights.
3. With regard to products indicated in the list appearing in Annex V, the exclusive import rights shall be abolished not later than 31 December 1991.
The abolition of these exclusive rights shall be made by progressively opening, from 1 January 1986, import quotas for products from the present Member States. [...] The Kingdom of Spain shall increase the quota volumes in the manner set out in the annex referred to in the first subparagraph.
[...]
4. [...]' Electricity is not included in the list of products in Annex V to which Article 48(3) refers.
(43) - See Manghera, cited in footnote 36 (paragraph 9), Rewe-Zentrale des Lebensmittel-Großhandels, cited in footnote 31 (paragraph 26), Peureux I, cited in footnote 40 (paragraph 30), Commission v Italy, cited in footnote 41 (paragraph 11), and Commission v Greece, cited in footnote 39 (paragraph 42).
(44) - To say that measures constituting quantitative restrictions or measures having equivalent effect within the meaning of those terms in Articles 30 and 34 necessarily amount to `discrimination regarding the conditions under which goods are procured and marketed' for the purpose of Article 37(1) appears obvious with regard to measures which distinguish directly between imported and national products.
Does the same apply in relation to measures which, although covering imported and national products alike, are considered, in accordance with paragraph 5 of the judgment in Case 8/74 Dassonville [1974] ECR 411, as measures having an effect equivalent to quantitative restrictions on imports because they are capable of hindering, although only indirectly or potentially, intra-Community trade? An affirmative reply to that question is supported not only by Article 37(2) and (3), which show that there is a direct connection between the prohibition of `discrimination regarding the conditions under which goods are procured and marketed' and all the prohibitions imposed by Articles 30 and 34, but is also the only reply which fulfils the purpose of Article 37(1), which is intended, as I have said in the main body of this opinion, to ensure observance of the basic rule of the free movement of goods by eliminating all obstacles connected with the operation of national monopolies of a commercial character.
From that viewpoint, it is noteworthy that in Commission v Italy, cited in footnote 41, which was given on an application by the Commission seeking a declaration that the retention of a national measure was contrary to Article 37, the Court, after showing that the measure in question applied without distinction to imported and national products, went on to consider (paragraph 12 et seq.) not only whether the measure could, in spite of its said character, entail discrimination, but also whether, in general, it could `distort competition by restricting imports of [...] products, thereby impeding trade within the Community': see paragraph IIIB of the opinion of Advocate General Rozès in that case. However, quantitative restrictions and measures having equivalent effect are not the only `discrimination regarding the conditions under which goods are procured and marketed', prohibited by Article 37(1).
As the series of judgments cited in point 19 et seq. of this opinion show, the prohibition may extend to measures (provided that they are intrinsically connected with the specific operation of a national monopoly of a commercial character) such as the imposition of customs duties or charges within the meaning of Article 12 (see the Miritz judgment, cited in footnote 35) or the introduction of fiscal discrimination within the meaning of Article 95 of the Treaty (see Peureux I, cited in footnote 40) and any other national measure, although it may not fall within the ambit of another provision of the Treaty (see Rewe-Zentrale des Lebensmittel-Großhandels, cited in footnote 31, in particular paragraph 21). Therefore, Article 37(1) performs two functions: firstly, it makes it clear
beyond doubt that the prohibitions laid down in the fundamental provisions of the Treaty, such as Articles 12, 30, 34 and 95, apply even to measures connected with the operation of national monopolies and, secondly, it imposes a general prohibition on all discrimination which may arise from the operation of such monopolies.
(45) - See point 5 of the Opinion of Advocate General Roemer in Case 82/71 SAIL [1972] ECR 119.
(46) - See examples of such measures in footnote 44.
(47) - See Case 46/76 Bauhuis [1977] ECR 1, paragraph 12; Case 32/80 Kortmann [1981] ECR 251, paragraph 11; Case 29/87 Dansk Denkavit [1988] ECR 2965, paragraph 32; and Case C-111/89 Bakker Hillegom [1990] ECR I-1735, paragraph 8.
(48) - See Case 30/87 Bodson [1988] ECR 2479, paragraph 13; Almelo (cited in footnote 23), paragraph 29, and Banchero II (cited in footnote 40), paragraph 26.
(49) - The very general nature of the term `body' shows that Article 37(1) must be construed in such a way as to cover all the organizational forms of State monopolies in the Member States, irrespective of the legal form conferred upon them by national law (see the Opinion of Advocate General Lagrange in Costa v ENEL, cited in footnote 22, and paragraphs 32 and 33 of the Opinion of Advocate General Da Cruz Vilaça in the Bodson case, cited in the preceding footnote).
(50) - With regard to the nature of exclusive rights such as, first and foremost, monopoly rights, see Rewe-Zentrale, cited in footnote 40, paragraph 7.
(51) - See Bodson, cited in footnote 48, paragraph 13.
(52) - The Netherlands Government appears to agree.
In the defence submitted to the Court, in which it argued that the abolition of the contested exclusive right would result in an increase in the cost of electricity generated in the Netherlands, which would be passed on to the distribution undertakings and, through them, to final consumers, it indicated that, in spite of their statutory right to generate or import electricity direct, most consumers `have no alternative with regard to the source of supply because of their low consumption'.
(53) - See Commission v Greece, cited in footnote 39, in which the Court observed (paragraph 41) that a Member State's exclusive right to import and market a quantity of petroleum products corresponding to 65% of the requirements of the domestic market gave that State power to exert an appreciable influence on imports of petroleum products by virtue of its right with regard to the importation and its right with regard to the marketing of such products and therefore it was a State monopoly within the meaning of Article 37.
(54) - As the Commission observes in its reply, Law No 40/94 of 30 December 1994, regulating the National Electricity System (BOE No 313, 31 December 1994) was published after the Commission brought this action against the Kingdom of Spain.
That Law, which came into force on 20 January 1995, repealed the 1984 Law.
Clearly the new measure has no effect on the present action, which has been brought under Article 169 of the Treaty and seeks a declaration that the State in question has failed to fulfil its obligations and had not remedied that situation within the time-limit allowed by the Commission in the reasoned opinion.
Therefore, when examining the Commission's present application against the Kingdom of Spain, regard must be had to the national legal system in force when the period allowed to the defendant State to comply with the reasoned opinion expired (see Commission v Greece (cited in footnote 39), paragraph 40, and Case C-105/91 Commission v Greece [1992] ECR I-5871, paragraph 21).
(55) - As the Spanish Government observes in its defence, the Council of State (which, pursuant to Article 107 of the Spanish Constitution, is the Government's supreme advisory body), in an opinion given at the request of the Spanish Government for the purposes of its reply to the Commission's reasoned opinion, adopted the position that, in the absence of an express statutory provision, the 1984 Law could not be construed as conferring exclusive rights to import and export electricity.
It appears indirectly from the Commission's application (see paragraph 36) that the Council of State's opinion seems to be based on the principle of interpretation that a statutory provision must be construed, if the wording so permits, in a manner compatible with the formal provision of higher status regulating the matter in question.
In this case, the Council of State (according to the Commission's application) seems to have accepted that, according to the Spanish Constitution, in particular Article 38 (which recognizes freedom of enterprise) and Article 128 (which provides for the power to reserve certain activities for the public sector, provided that this is done by statute), the grant of exclusive rights, which interferes with the abovementioned constitutional freedom and with the reservation of an activity for the public sector, cannot be inferred by means of interpretation, in the absence of an express statutory provision.
On this point the Commission repeats its argument that, although the 1984 Law made no express reference to the abovementioned exclusive rights, it reserved the import and export of electricity for the public sector (namely, Redesa).
(56) - In particular, it should be stressed that in the amended proposal for a directive concerning common rules for the internal market in electricity (cited in footnote 10) Article 21, which relates to the free access of electricity producers and transmitters to the distribution system, coexists with Article 9, which relates to the `transmission system operator' who, under the latter provision, will not only `be responsible for managing energy flows on the system' and `maintain a secure, reliable and efficient electricity system', but may also refuse access to the system if the requirements of Article 21(3) are not fulfilled. Furthermore, it is significant that, in the action against the French Republic, the Commission recognizes the need for centralized supervision of the national electricity system and adds that `the abolition of exclusive import and export rights would not prevent the Member States from entrusting to the system operator certain functions of centralized supervision' (see paragraph 29 of the application in that case).
(57) - On the other hand, see Case 173/83 Commission v France [1985] ECR 491, paragraph 7, where the Court found that the national provision laid down `an implicit yet clear prohibition'.
(58) - As has been said [see Case C-62/89 Commission v France
[1990] ECR I-925, paragraph 37], `in proceedings brought under Article 169 of the Treaty the Commission is required to prove the allegation that the obligation has not been fulfilled and may not rely on any presumption in order to show that a Member State has failed to fulfil its obligation under Community law'.
(59) - The question whether Article 2(1)(i) of the 1984 Law contains a measure having an effect equivalent to a quantitative restriction on imports and exports, in so far as it enables Redesa, subject to certain conditions, to allocate the exact share of each undertaking in international trade in electricity, cannot be examined in the present proceedings, which have the object of ascertaining how far the Kingdom of Spain has failed to fulfil its obligations by introducing exclusive rights to import and export electricity.
Examination of that question would amount to an inadmissible alteration of the factual basis of the infringement alleged against the defendant State, as set out in the reasoned opinion (see the case-law cited in footnote 13).
(60) - It should be observed that, for the reasons given in point 41 et seq., in my opinion exclusive rights to import and export electricity do not exist in Spain.
However, in the following discussion, for the sake of completeness, I shall assume that the exclusive rights referred to by the Commission's application actually exist in all the defendant States.
(61) - It seems to me that Advocate General Rozès construed in the same way the relevant paragraphs of Manghera in her Opinion in Commission v Italy (cited in footnote 41).
(62) - The important question on which a preliminary ruling was given in Manghera was whether, in accordance with Article 37 of the Treaty, `the trade monopoly should have been reorganized in such a way as to eliminate even the possibility of any discrimination being practised against Community exporters, with the consequential extinction of the exclusive right to import [...]' (emphasis added).
(63) - See the general wording of the judgment in Case 104/75 De Peijper [1976] ECR 613, paragraph 13.
See also Case 94/79 Vriend [1980] ECR 327, in particular paragraph 10, to the effect that national rules whereby a Member State, directly or through the intermediary of bodies established or approved by an official authority, prohibits, inter alia, the importation of certain products by persons not belonging to one of the said bodies are incompatible with Article 30 of the Treaty.
(64) - Case C-202/88 [1991] ECR I-1223.
(65) - Commission Directive 88/301/EEC of 16 May 1988 on competition in the markets in telecommunications terminal equipment (OJ 1988 L 131, p. 73).
(66) - As the documents in the file show, Redesa (the holder of the exclusive rights which, according to the Commission, exist in Spain) does not generate
electricity. In the Netherlands, on the other hand, SEP, which has the exclusive right of importation in the Netherlands, may be regarded as an electricity generator, as appears from the pleadings of both parties (see paragraph 9 of the reply and paragraph 44 of the rejoinder).
However, subject to certain conditions, distribution undertakings and individuals have a right to generate electricity.
In Italy, the abovementioned provision of the 1962 Law on the nationalization of the electricity sector gave ENEL responsibility for, inter alia, the generation of electricity.
Nevertheless, other entities (municipal undertakings, undertakings generating electricity for their own use) are entitled to generate electricity.
Finally, in France EDF generates electricity, but other entities may also do so (power stations with a capacity not exceeding 8 000 kVa, generation controlled by local administrative authorities using urban waste water as raw material, etc.). GDF does not produce natural gas.
(67) - Joined Cases C-267/91 and C-268/91 [1993] ECR I-6097, paragraph 16.
(68) - Among the judgments subsequent to Keck and Mithouard, see Case C-249/92 Commission v Italy [1994] ECR I-4311, in which a national provision requiring prior authorization for all imports of certain goods was found contrary to Article 30 of the Treaty (paragraph 28).
More important is Case C-323/93 Centre d'Insemination de la Crespelle [1994] ECR I-5077, in which the Court, referring to Dassonville, stated (paragraph 29) that `rules of a Member State which require private economic operators importing into its territory quantities of bovine semen from another Member State to store it, subject to a charge, in an authorized centre which enjoys an exclusive concession with regard to storage of the semen and insemination constitute such a barrier to imports.
Since that requirement applies at the stage immediately following importation and imposes an economic burden on importers, it is liable to restrict the volume of imports'.
In my opinion, this is also the logic behind the judgment in Joined Cases C-277/91, C-318/91 and C-319/91 Ligur Carni and Others [1993] ECR I-6621, paragraphs 35 to 38, in which the Court, again referring to Dassonville, stated that a national provision which requires operators importing fresh meat into the area of a municipal authority to use the municipal slaughterhouse for the transport and delivery of the goods to the final destination of the premises of a local undertaking, may impede intra-Community trade and therefore constitutes a measure having equivalent effect. The fact that the said national provision also refers to goods brought into the municipal area from other parts of the same Member State does not, in my opinion, mean that it ceases to be a measure `designed to regulate trade in goods between Member States' as it refers directly to the conditions under which goods could be imported into the municipality from other Member States.
(69) - As mentioned in point 29 et seq., in the Netherlands other consumers have a right to import electricity direct provided that it is intended solely for their own needs. SEP's exclusive right of importation, with regard to electricity intended for public distribution, deprives the distribution undertakings of the opportunity to import electricity direct.
(70) - The Court has consistently held that, to determine whether a measure has an effect equivalent to a quantitative restriction on imports, `it is not necessary to prove that the measures in question actually restrict imports of the products in question' (see Case 124/85 Commission v Greece [1986] ECR 3948, paragraph 7; Case 12/74 Commission v Germany [1975] ECR 87, paragraph 14; Case 249/82 Commission v Ireland [1982] ECR 4005, paragraph 25; and Case 16/83 Prantl [1984] ECR 1299, paragraph 20).
(71) - The observation that the exclusive right of importation existing in Italy is a measure having an effect equivalent to a quantitative restriction on imports disposes of the Italian Government's argument that Consolidated Enactment No 1775 of 14 December 1933, to which the Commission refers in its application (see paragraph 37 above), has had no purpose since the formation of ENEL and that, therefore, the quantitative restrictions arising from that measure no longer exist.
However, the evidence produced by the Commission to show that those provisions are still applied (existence of a specific measure adopted in 1989 and remaining in force until 1997, whereby the quantities of electricity which ENEL may import and export annually are restricted) has not been refuted by the Italian Government with detailed submissions.
The defence merely claims that, for the grant of an authorization to import a particular volume of electricity, it is sufficient for ENEL to lodge an application for that purpose.
However, the Court has consistently held (see Case 124/81 Commission v United Kingdom [1983] ECR 203, paragraph 9) that Article 30 precludes the application to intra-Community trade of national provisions which require, even as a pure formality, import licences or any other similar procedure.
(72) - Whether the nature and scope of this connection may justify, for the purpose of Article 36 of the Treaty, the creation of the exclusive rights concerned is, of course, an entirely different question, which will be examined in section 2 below.
(73) - It will be remembered that, according to the Commission, in Italy and Spain there are exclusive rights to export electricity, and in France exclusive rights to export electricity and natural gas.
In the action against the Netherlands the question of exclusive export rights does not arise.
(74) - See Case C-5/94 Hedley Lomas [1996] ECR I-2553, paragraph 17 (refusal by a Member State to issue an export licence), and Case 7/78 Thomson [1978] ECR 681 (prohibition of exports).
(75) - See Joined Cases 51/71 and 54/71 International Fruit Company and Others [1971] ECR 1107, paragraphs 8 and 9 (requirement, though purely formal, to obtain export licences or to follow a similar procedure); Case 53/76 Bouhelier [1977] ECR 197, paragraph 16 (requirement, only for the export of certain products, of a licence or certificate of conformity with certain specifications); Case 68/76 Commission v France [1977] ECR 515, paragraphs 14 and 15 (requirement, for exporting certain products, of a special export declaration); Vriend, cited in footnote 63, paragraph 10; Case 29/82 Van Luipen [1983] ECR 151, paragraph 9 (right to export certain products recognized only for operators registered with a named body constituted or controlled by State authorities); Case C-110/89 Commission v Greece [1991] ECR I-2659, paragraph 24 (obstacles and restrictions, by means of various measures, on exports of a particular product by operators other than a body controlled by the State authorities); and, finally, Case C-426/92 Deutsches Milch-Kontor [1994] ECR I-2757, paragraph 42 (systematic frontier inspections for checking the composition and quality of a particular exported product).
In my opinion, it is significant that in two of those judgments, namely Bouhelier and Vriend (in paragraphs 8 and 16 respectively), the Court cited the classic formulation of the Dassonville judgment in relation to the national measures in question.
(76) - See the judgment in Case 15/79 Groenveld [1979] ECR 649, paragraph 7.
(77) - See the judgments in Case 172/82 Inter-Huiles [1983] ECR 555; Case 295/82 Rhône-Alpes Huiles [1984] ECR 575; and Case 173/83 Commission v France, cited in footnote 57 (organisation in a Member State of a system for the collection and disposal of waste oil in such a way that there was an implicit prohibition on exporting such products to another Member State); Case 118/86 Nertsvoederfabriek Nederland [1987] ECR 3883 (national provisions which, by requiring producers of poultry offal to dispose of it to licensed processors, created an implicit prohibition on exports); and Case C-47/90 Delhaize [1992] ECR I-3669 (national rules applying to wines with a designation of origin which, by imposing an obligation to bottle the wine in the area of production, led indirectly to limiting the quantity which may be exported in bulk to other Member States).
(78) - Regarding measures which have been found to fall within the ambit of Article 34 because they restrict the category of persons with the right to export, see Vriend, Van Luipen and Commission v Greece, cited in footnote 75.
(79) - See the cases cited in footnote 70 concerning measures within the ambit of Article 30.
(80) - Case 72/83 [1984] ECR 2727.
(81) - In any case the argument of the Kingdom of the Netherlands that the exclusive right in question may be justified by `imperative requirements' within the meaning of Cassis de Dijon is untenable.
As the Commission rightly observes, such `imperative requirements' can be relied upon only in relation to measures which apply without distinction to both national and imported products (see Joined Cases C-1/90 and C-176/90 Aragonesa de Publicidad and Publivía [1991] ECR I-4151, paragraph 13; and Case C-2/90 Commission v Belgium [1992] ECR I-4431, paragraph 34).
In the latter case, the exclusive import rights related by virtue of their objective and nature, only to imported electricity, as I have already said (paragraph 61).
For the same reason, the Spanish Government's arguments on the same point likewise cannot be accepted.
(82) - It will be remembered that, in my opinion, the legislation does not create such rights (see paragraph 41 et seq. above).
(83) - According to Campus Oil (paragraph 36), if it is shown that
certain national rules are justified by objective circumstances corresponding to the needs of public security, `the fact that the rules are of such a nature as to make it possible to achieve, in addition to the objectives covered by the concept of public security, other objectives of an economic nature which the Member State may also seek to achieve, does not exclude the application of Article 36'.
However, in the present case to plead the strictly economic consequences of abolishing the exclusive rights is certainly not sufficient to deem them compatible with the Treaty if it is not shown that they are justified on grounds of public security, within the meaning of the term as used in this Opinion.
(84) - For those reasons, mutatis mutandis, I am not persuaded by the arguments of the Italian and French Governments that the abolition of the exclusive rights would deprive ENEL and GDF respectively of the opportunity to prepare a correct estimate of the demand which it will be necessary to meet and would therefore also deprive them of the opportunity to negotiate, from an advantageous position, for the importation of large volumes of electricity (in Italy's case) and natural gas (in the case of France).
No reason is given as to why the import, on the basis of `large contracts', of quantities which may be shown to exceed the demand originally anticipated should directly jeopardize the minimum supply.
(85) - As to whether a Member State is entitled to rely on Article 90(2) to justify a measure contrary to Article 37 of the Treaty, see point VI of the opinion of Advocate General Rozès in Commission v Italy cited in footnote 41.
(86) - Case C-179/90 [1991] ECR I-5889.
(87) - Case C-320/91 [1993] ECR I-2533.
(88) - That is the meaning which Advocate General Darmon also gives to paragraph 14 of the Corbeau judgment.
In his Opinion relating to the Almelo case, cited in footnote 23, he observes (footnote 111) that the Court, in acknowledging that Member States may rely on Article 90(2) of the Treaty in order to adopt measures excluding all competition, `reappraised' the position it took in paragraph 19 of Campus Oil.
(89) - For a list of the conditions under which it is possible, by virtue of Article 90(2), to disapply Treaty provisions, see paragraph 26 of Merci Convenzionali Porto di Genova, cited in footnote 86.
(90) - See Case 127/73 BRT [1974] ECR 157, paragraph 19.
(91) - The Almelo judgment concerned certain questions from a Dutch court which, in the context of an arbitration procedure, had to consider the validity of contracts signed by regional and local electricity distribution undertakings which imposed on the latter a prohibition on importing electricity for public distribution even before the EW took effect.
(92) - Commission Decision 91/50/EEC of 16 January 1991 relating to a proceeding under Article 85 of the EEC Treaty ( IV/32.732 - IJsselcentrale and Others, OJ 1991 L 28, p. 32.
(93) - The complaint which led to Decision 91/50 referred to a clause of an agreement signed in 1986 (that is to say, before the EW entered into force) by the electricity generation undertakings and SEP.
The clause granted SEP an exclusive right to import and export electricity and imposed on the parties an obligation to stipulate, in supply contracts with electricity distribution undertakings, that the latter should neither import nor export electricity.
The Commission ruled that the clause infringed Article 85(1) of the Treaty in so far as it had the object or effect of restricting imports and exports of private industrial consumers.
Nevertheless, no ruling was given on the question whether the same clause was compatible with the Treaty in so far as it prohibited distribution undertakings from importing electricity for public distribution.
After observing that the ban on imports was laid down in Article 34 of the EW, after that Law came into force, the Commission stated (see paragraph 50 of Decision 91/50) that it would not `pass judgment here on the question whether such restriction of imports is justified for the purposes of Article 90(2) of the Treaty' because `to do so would be to anticipate the question whether the new Law is itself compatible with the Treaty'. The action brought against Decision 91/50 was dismissed by the judgment of 18 November 1992 of the Court of First Instance, T-16/91 Rendo and Others v Commission [1992] ECR II-2417, which was partly set aside by the judgment of 19 October 1995 of the Court of Justice, C-19/93 P Rendo and Others v Commission [1995] ECR I-3319.
(94) - With regard to this particular characteristic of electricity, which is of fundamental importance for an understanding of the problems of generating and marketing it, see Annex IV (p. 68, paragraph A.2) of the Commission working document of 2 May 1988 cited above (see point 2 above), entitled `The Internal Energy Market' [COM(88) 238 final].
See also paragraph 2 of the Opinion of Advocate General Darmon in Almelo.
(95) - Article 90(2) was examined from this angle in Corbeau (cited in
footnote 87, see paragraph 16 et seq.) and Almelo (cited in footnote 23, see paragraph 49).
(96) - Therefore the appearance of electricity surpluses which, for the reasons given above (paragraph 84), do not endanger the security of the supply and cannot therefore be a ground of `public security' for the purpose of Article 36 of the Treaty, nevertheless becomes important owing to the adverse effect which they may have on the cost of generating electricity, if the question is considered in the light of Article 90(2).
(97) - It must not be forgotten that undertakings with the right to import electricity for public distribution should, in view of the fundamental principle of universal service governing operators of services of general economic interest (see Corbeau and Almelo, paragraphs 15 and 48 respectively), retain intact their right to use the national supply system to meet their needs when they consider it necessary.
(98) - See Corbeau, paragraph 15, and Almelo, paragraphs 48 and 49.
(99) - See Corbeau, paragraph 17, and Almelo, paragraph 49.
(100) - According to the Italian Government, apart from the particular task referred to at length in the body of this Opinion, ENEL has all the obligations, as stated in paragraph 48 of the Almelo judgment, of operators responsible for supplying electricity throughout the national territory, the obligation to encourage the selective use of energy, and certain special obligations relating to protection of the environment.
However, the Italian Government has made no detailed submissions to show why the abolition of the exclusive right to import and/or export electricity would prevent the fulfilment of those obligations. In any case, the Italian Government's claim that the rights in question are supported by Articles 130a and 130b of the Treaty is unfounded.
Those provisions, which require the Community (in formulating and implementing its policies and developing the internal market) and the Member States (in conducting their economic policies) to take account of the need to promote the economic and social cohesion of the Community, cannot be seen as a basis for the adoption by Member States of measures which infringe fundamental provisions of the Treaty, such as those relating to the free movement of goods.
(101) - In its rejoinder (paragraph 38) the French Government, in response to the arguments in the Commission's reply, appears to claim that the abolition of the exclusive rights in question would make it impossible for EDF to fulfil its universal service obligation. However, the French Government gives no specific, detailed reasons as to why it considers that the removal of the exclusive rights would prevent fulfilment of the latter obligation.
(102) - The French Government also refers to the `contrat de plan' signed by the State and EDF for the period 1993-96, Article 2 of which provides that EDF and the public authorities undertake to reduce the existing tariff levels by 1.25%.
I think this `contrat de plan' may be taken into account in the present case as it had taken effect on the date which, as the Court has consistently held (see Case C-105/91 Commission v Greece, cited in footnote 54, paragraph 21, and Case C-123/94 Commission v Greece [1995] ECR I-1457, paragraph 7), must be taken into account by the Court in order to determine whether the failure alleged by the Commission exists.
Clearly the `contrat de plan' for 1993-96 has been in force since 1 January 1993, and the two-month period allowed to the French Republic in the Commission's reasoned opinion of 26 November 1992 had not expired by that date.
(103) - Regarding the question whether the `contrat de plan' can be taken into account in these proceedings, see footnote 102.
(104) - According to the case-law, in order for the question of the application of Article 90(2) of the Treaty to arise, the operation of a service of general economic interest must have been entrusted to a particular undertaking by `a measure adopted by the public authorities' (see BRT, cited in footnote 90, paragraph 20; Case 172/80 Züchner [1981] ECR 2021, paragraph 7, and Case 66/86 Ahmed Saeed Flugreisen [1989] ECR 803, paragraph 55). As I see it, not only a unilateral declaration of intent in the form of a legislative or regulatory measure of a body exercising official authority, but also a declaration of intention of the same body in the context of a contractual relationship may be regarded as `a measure adopted by the public authorities' in the sense indicated, whereby the operation of a service of general economic interest is entrusted to a particular undertaking or the obligations of that undertaking for that purpose are specified.
(105) - It should be observed that the provision referred to in the rejoinder as `Article 23' of the standard conditions for the concession of the natural gas transmission service is not the same as that shown as Article 23 in the copy of those conditions forming Annex VIII to the rejoinder.
The latter Article 23 does not expressly impose an obligation of equal treatment of customers by the concession-holder.
(106) - In its defence the French Government contends that GDF also has an obligation to ensure the supply of natural gas at the lowest possible price, but does not refer to a specific legal basis for it. The French Government adds that GDF has specific obligations in relation to protection of the environment and town and country planning.
However,
it specifies as the legal basis for those obligations provisions which cannot be taken into account in the present action, either because they post-date the time-limit allowed to the French Republic in the reasoned opinion of 26 November 1992 (see footnote 102), or because it is unclear whether they were adopted prior to that date. In particular, Article 10 of the `new standard conditions' for the concession of the natural gas distribution service is given as the legal basis for the environmental obligations, but the date on which those conditions took effect does not appear from the rejoinder (see paragraph 41) or from the actual text of the `new' conditions (see Annex X to the rejoinder).
Likewise with regard to the legal basis for GDF's obligations concerning town and country planning, the French Government refers to measures (Joint Ministerial Circular of 17 February 1993, as amended by Ministerial Circular of 5 May 1995, and the `contrat de plan' signed by the State and GDF for 1994-96) which were adopted after the abovementioned cut-off date for the purposes of the present action.
(107) - For the reasons given in footnote 105, I consider that only Article 21 of the standard conditions for the concession of the natural gas distribution service imposes on GDF an obligation to ensure equal treatment of customers - Article 23 of the standard conditions for the transmission concession does not.
(108) - It will be remembered that, in my opinion, that is not the case (see point 41 et seq. above).
(109) - See to that effect Part C of the Opinion of Advocate General Rozès in Case 78/82 Commission v Italy, cited in footnote 41.
(110) - Cited in paragraph 3.
(111) - With regard to the volume of trade in electricity through the major interconnected grids, see also the Opinion of Advocate General Darmon in Almelo, points 87 et seq. and 170 et seq.