61991CC0272_EN
Opinion of the Advocate-General
Opinion of the Advocate-General
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Mr President,
Members of the Court,
1. In Italy only the State may conduct lotteries. (1) In November 1990 the Italian Finance Ministry published a contract notice for the concession for the computerization of the Italian Lotto. The right to tender was reserved to bodies, companies, consortia and groupings the majority of whose capital, considered individually or in aggregate, was held by the public sector. In these proceedings the Commission has claimed that Italy thereby failed to comply with its obligations under Articles 30, 52 and 59 of the EEC Treaty and Articles 17 to 25 of Council Directive 77/62/EEC coordinating procedures for the award of public-supply contracts, (2) as amended by Council Directive 88/295/EEC. (3)
The contract notice was published only in the Italian press. On that basis the Commission has also claimed that Italy has failed to comply with its obligations under Article 9(1), (2) and (4) of Directive 77/62 by failing to publish the contract notice in the Official Journal of the European Communities and by failing to make known at the beginning of 1990 by means of an indicative notice the total procurement by product area of which the estimated value was equal to or greater than ECU 750 000 and which the Finance Ministry envisaged awarding in 1990.
2. The concession was awarded to the Lottomatica consortium by a decree of the Finance Minister of 14 June 1991 and the contract with Lottomatica was concluded on 22 November 1991. On 31 January 1992 the President of the Court of Justice made an order for interim measures under Article 186 of the Treaty requiring Italy to suspend the legal effect of the decree and performance of the contract. (4) The Italian Government has stated that in November 1992 the Finance Minister issued a decree suspending the implementation of the concession.
The Italian Lotto and the key features of the concession
3. In his Order of 31 January 1992 the President of the Court of Justice gave the following description of the Lotto and the key features of the concession. (5)
4. "It is apparent from the documents before the Court that the lottery is a game of chance operated by the Autonomous State Monopolies Administration (' the Administration' ), an administrative body attached to the Ministry of Finance. The system involves players betting on one or more numbers with a view to weekly draws. The stakes are taken at authorized collection points (in particular, tobacconists) and there is a draw every Saturday in each of the ten lottery areas (ruote) into which Italy is subdivided. A bet may be entered either in the draw for the area in which the relevant collection point is situated or in the draw for all the areas. The amount of the winnings is determined, by reference in particular to the stake, in accordance with a formula laid down by Italian legislation, and winnings are payable at the collection point or, if they exceed a certain sum, at the local offices of the Ministry of Finance.
The lottery computerization system which was the subject of the contract comprised, according to the invitation to tender, premises, supplies, equipment, maintenance, operation, transmission of data and everything else necessary for running the lottery.
The invitation to tender provided that the concession was for nine years only and that when it expired the entire computerized system, including premises, apparatus, terminals at collection points, equipment, structures, programs, records and everything else necessary for operating and managing the system was to be handed over without charge for the exclusive use of the Administration.
It specified that the concession comprised three phases: in the first phase the equipment was to be supplied, installed and tested in parallel with the manual system, at the end of which the computerized system was to become operational in one lottery area; in the second phase the system was to be extended to all the lottery areas; and finally in the third, fully operational, phase the number of collection points was to be progressively increased. Tenders had to indicate the time within which each phase would be completed.
The computerization system concessionaire would receive no remuneration during the first phase, but during the second and third phases would receive a percentage of the gross receipts from automatically recorded bets. That percentage was to be indicated in the tender.
The invitation to tender also specified economic and technical criteria for the selection of bodies or undertakings wishing to submit tenders.
The invitation reserved the right to tender to bodies, companies or consortia and groups the majority of whose capital, considered individually or in aggregate, was held by the public sector. The Ministry of Finance was to take into account the particular nature and importance of the computerized operation of the lottery which, as a State monopoly operated for maximum returns, required special guarantees and absolute reliability and security for the setting-up and operation of the system."
The infringement of Articles 52 and 59 of the Treaty
5. The Commission claims that the condition in the invitation to tender that only companies, consortia or groupings the majority of whose capital is owned by the public sector can take part in the procedure corresponds to the condition which was held to be contrary to the Treaty in the judgment of the Court of Justice of 5 December 1989 in Case C-3/88 Commission v Italy. (6)
6. In that judgment the Court ruled on the compatibility with Community law of a number of Italian legislative provisions on the introduction of electronic data-processing systems in the public administration in the fields of taxation, health, agriculture and property registers. Under those provisions, only companies in which either the whole or a majority of the shares were held directly or indirectly by the State or the public sector could conclude agreements with the Italian State for the computerization of the administration. Those provisions covered both the development of the data-processing systems, their programming and operation and the provision of the necessary equipment and supplies. The Court held that those provisions were incompatible with Articles 52 and 59 of the Treaty and stated:
"... the principle of equal treatment, of which Articles 52 and 59 of the Treaty embody specific instances, prohibits not only overt discrimination by reason of nationality but also all covert forms of discrimination which, by application of other criteria of differentiation, lead in fact to the same result ...", and
"... Although the laws and decree-laws in issue apply without distinction to all companies, whether of Italian or foreign nationality, they essentially favour Italian companies. As the Commission has pointed out, without being contradicted by the Italian Government, there are at present no data-processing companies from other Member States all or the majority of whose shares are in Italian public ownership". (7)
7. The Italian Government does not deny that the content of the condition at issue in the invitation to tender corresponds to the legislative provisions which the Court held to be contrary to the Treaty in its judgment in Case C-3/88. (8) But it contends that there is a decisive difference between the invitation to tender in question and those in Case C-3/88. It points out that these proceedings relate to a concession in which public authority is conferred on the concessionaire, namely part of the power to conduct the lottery which by statute is conferred on the Amministrazione Autonoma dei Monopoli di Stato (Autonomous State Monopolies Administration ° AAMS).
Does the concession relate to the power to conduct the lottery?
8. The Italian Government claims that the invitation to tender in question concerns:
° a concession under which a concessionaire is entrusted with providing a service on behalf of the public administration, namely part of the lottery (that is to say that the concessionaire acts as the provider of services in the public administration' s stead,
and that accordingly, contrary to what the Commission contends, it did not relate to:
° an agreement for the provision of services for the public administration, namely the development of software and the introduction and operation of a computerized system (that is to say that the public administration is the recipient of a service) and the supply of goods to the public administration, namely the hardware and any basic software necessary for the computerization of the lottery.
9. In support of its claims the Italian Government has stated that the legal relationship envisaged by the invitation to tender is characterized by a number of features typical of a concession, namely:
° the concessionaire is to be responsible for the operation of the computerized system for a period of nine years;
° the remuneration is fixed as a percentage of the gross revenue from the lottery stakes, and
° Article 7 of the special conditions for the tender provides that everything necessary for operating the computerized system is to be handed over without charge to the State on the expiry of the nine-year concession. (9)
On that basis the Italian Government claims that the agreement in question does not relate to the transfer of goods to the public administration in return for a price corresponding to their value, nor does it relate to the carrying out of services for the public administration or for payment therefor.
10. The Italian Government is probably right in saying that the fact that the consideration is linked to the revenue from exploiting the construction or carrying out the services in question is to be regarded as a typical and possibly necessary component of a concession. (10) In other words, the decisive criterion for the existence of a concession for a public service is whether the concessionaire is given the right to exploit the computerized system to conduct lotteries and to obtain therefrom the consideration for his work. On the other hand, if it is found that the power to conduct lotteries is retained by the Italian State, the setting up and operation of the computerized system must be regarded as services provided to the Italian State in return for consideration which, irrespective of the precise way in which it is calculated, is provided by the State.
11. However the parties' differing views of how the legal relationship in question is to be characterized is not conclusive for deciding whether there has been a breach of Articles 52 and 59 of the Treaty. As far as can be seen, the Italian Government is not claiming that the invitation to tender falls outside the scope of those provisions. The explanation for that is that it regards the concession in question as a concession for provision of a public service. Whether the legal relationship is to be characterized as a concession for the provision of a public service, namely the conduct of a lottery, or as an agreement for the performance of services for the public administration, namely the setting up and operation of a computerized system, the condition contained in the invitation to tender will be incompatible with the rules of the Treaty unless that invitation is to be construed as entailing the transfer of public authority.
12. To my mind, however, a correct analysis of the legal relationship between the Italian authorities and the concessionaire shows that the view that the invitation relates to the transfer of the power to conduct a lottery is untenable. (11) Even after the introduction of the computerized system it will be the Italian State which conducts the lottery. In my view it is still the public administration which takes all the major decisions concerning the conduct of the lottery and which receives the revenue therefrom, out of which it pays the agreed consideration to the concessionaire. The invitation to tender therefore concerns not a concession of the power to conduct the lottery but an agreement to carry out services for and the supply of goods to the public administration for the purposes of the administration' s conduct of the lottery. The correctness of this view is borne out by the following analysis of the Italian Government' s arguments concerning the question whether there is a transfer of the power to exercise official authority.
Is there a transfer of the power to exercise official authority?
13. The Italian Government claims that the invitation to tender relates to the transfer of public authority and thus falls under Articles 55 and 66 of the Treaty under which the Treaty provisions on the right of establishment and free movement of services do not apply to activities which are connected, even occasionally, with the exercise of official authority.
14. In Case C-3/88 the Italian Government also maintained that the activities in connection with the operation of the data-processing systems in question were, in view of their confidential nature, connected with the exercise of official authority and thus, pursuant to Articles 55 and 66 of the Treaty, could fall outside the scope of the Treaty rules on the right of establishment and the free movement of services.
The Court rejected that argument stating that the exceptions set out in the Treaty must be restricted to activities "which in themselves involve a direct and specific connection with the exercise of official authority" and that that did not apply in that instance since the activities in question, which concerned the design, programming and operation of data-processing systems, were of a technical nature and thus unrelated to the exercise of official authority. (12)
15. The invitation to tender at issue in these proceedings concerns, as mentioned above, the setting up and operation of a system for computerizing the Italian lottery. Computerization undoubtedly entails fundamental changes to the manner in which the lottery has hitherto been conducted. According to point 1 of the technical programme forming part of the special specifications, the invitation covers: "the premises to house the processing centre in each lottery area, the area committee, the Central Processing Office, the technical and administrative management of the company; transmission lines; the terminals which are to be installed at the collection centres; the apparatus for the processing and transmission of data; software which must be developed by the company; the operation of the whole system for nine years; support in the form of materials and services for the public administration which grants the concession for everything relating to the lottery; everything else that is necessary for the conduct of the lottery".
16. The Italian Government has claimed that exercise of official authority is being entrusted to the concessionaire for all stages of the lottery and in support of that view it has pointed in particular to a number of components of the technical programme.
17. I do not consider that the Italian Government' s arguments are cogent. It is important to bear in mind that the fact that there is a transfer to private persons of duties which are by statute reserved to the public administration is not synonymous with the transfer of activities relating to the exercise of official authority. I consider that the tasks which are to be carried out by the concessionaire in connection with the computerization of the lottery are of a technical nature in the same way as was found in Case C-3/88.
Even if the Court were to hold that the tasks in question go further than mere activities of a technical nature, I consider that they do not in any event constitute tasks which can reasonably be described as being connected with the exercise of official authority within the meaning of the Treaty. It is appropriate to point out in this connection that the Court has held that Articles 55 and 66 are derogations from the fundamental principle in the Treaty that there should be no discrimination on grounds of nationality and they must therefore be interpreted in a manner which limits their scope to what is strictly necessary in order to safeguard the interests which they allow the Member States to protect. (13)
18. The Italian Government states first that in connection with the receipt of stake money it is the computerized system for which the concessionaire is responsible which is to receive stakes and register them. It maintains that in this stage the concessionaire has certain official supervisory powers. On the one hand the concessionaire must take steps in order to "prevent a collector from removing a certain number of registrations concerning stakes that have been accepted but not sent to the processing centres" in each lottery area (Centri di elaborazione di zona) which are centres set up and administered by the concessionaire. On the other the concessionaire must monitor, prevent and refuse stakes that would give entitlement to prizes that cannot be paid.
But it is apparent from the technical programme, in my view, that even after the installation of the computerized system it will be the individual lottery collectors (14) and not the concessionaire who are responsible for receiving stakes. The concessionaire is responsible for installing terminals for the agents and developing and installing the necessary software. On the other hand it is the lottery agents who are to operate those terminals. It is apparent from point 4.1 of the technical programme that lottery agents, by means of the data-processing equipment placed at their disposal, are to be able to monitor, correct, authorize and register stakes received and finally to issue the receipt which the machines will then produce. If the receipt is defective or the lottery agent has otherwise made a mistake, the system must be devised in such a way that the agent can cancel the stake registered and begin again from the beginning.
The concessionaire must also take steps to ensure that the system is set up and programmed in such a way that the agents cannot remove registrations of stakes that have been received before they are transmitted to the processing centres in each area (see point 4.1 of the technical programme) and that stakes that will give entitlement to prizes which cannot be paid are refused (see Article 5(3) in the implementing regulation). It is difficult to construe those provisions as giving the concessionaire the task of actually exercising supervision over the lottery agents in order to ensure that those points are carried out.
19. Secondly the Italian Government has stated that in connection with the draws and decisions on the winning coupons the concessionaire has on the one hand a public monitoring role since the Central Processing Office (Ufficio centrale di elaborazione) in Rome, which is under the authority of the concessionaire, must carry out controls on the result of the draws at the request of the Area Committees (Commissioni di zona), which are State bodies, (15) and on the other hand has a public task of verification since the concessionaire determines which are the winning coupons and in that respect is subject only to the control of the Area Committees.
I consider that the following details are apparent from closer examination of the relevant sections of the technical programme: the registrations of the stakes effected by the lottery agents are notified to the processing centres in each area. These processing centres check that the registrations received are correct and inform the Area Committee in question of the stakes that cannot be accepted. (16) The draws are carried out by the Draw Committees (Commissioni di estrazione) which are State bodies (17) and are notified to the Central Processing Office in Rome which draws up a comprehensive list of the draws in each area which it transmits to the Area Committees through the processing centres in each area which also send the list to the individual lottery agents. On the basis of the registrations of the stakes deposited and the registrations of the draws carried out the processing centres in question determine which coupons have won prizes (see point 4.6 of the technical programme). The list of the winning coupons is transmitted to the Area Commission for approval. (18) Pursuant to point 4.4 of the technical programme the Area Committee is to retain the "data-processing diskettes concerning the stakes" and on that basis, if it considers it necessary, it may request inter alia the Central Processing Office to carry out a check.
Accordingly it can be seen that it is the Area Committee in question and not the concessionaire which is primarily responsible for carrying out checks on the result of the draws and to ensure that the list of winning coupons is correct. The task of the concessionaire is to operate the computerized system on the basis of the data received and thus to provide technical assistance to the Area Committees.
20. Thirdly the Italian Government maintains that the concessionaire has a number of public powers in connection with the payment of winnings since the concessionaire must ensure that the winning coupons are genuine and certify that they are winning coupons and that the winnings have not yet been paid out. The Italian Government has stated that it is only after the concessionaire has exercised those powers to determine, confirm and certify the winning coupons that the State bodies intervene to approve payment of the winnings.
It is true that point 4.10, section 5, of the technical programme concerning winnings to be paid out by the Direzione Generale Monopoli di Stato (19) provides that "the company shall ensure that the coupons which are handed in for payment are genuine and certify that those coupons have won prizes and that the prizes have not yet been paid out. In this connection the Central Processing Office must be in possession of data concerning all the winning coupons and the corresponding payments".
But I consider that these requirements too merely relate to the functions that the computerized system must be capable of carrying out and which are intended to enable the concessionaire to offer assistance which is essentially of a technical nature. As the Italian Government itself has pointed out, ultimately it is still the public administration which sanctions and pays out the prizes.
21. The Italian Government has further observed that point 1 of the technical programme states that the tender also covers "everything else that is necessary for the conduct of the lottery" which in its view, indicates that the concessionaire is to be given independent powers to undertake anything he considers necessary in order to operate the concession. But I do not believe that that provision by itself can give the concessionaire the right to exercise official authority. That provision precisely just gives the concessionaire the right and obligation to undertake everything that is necessary in order to operate the concession and must therefore lie within the framework of that concession.
22. The Italian Government has further pointed out that Article 2(2) of Law No 528 regarding the various stages of the lottery refers to a "unitary system", which, it maintains, signifies that separate legal operations cannot be carried out and accordingly there must be a transfer of part of public powers. I find it difficult to see why the fact that the lottery is a unitary system in itself should show that there is a transfer of official authority. The Italian Government itself maintains precisely that the concession only entails the transfer of part of the powers to hold the lottery which are conferred by law on the AAMS and that partial transfer may, notwithstanding the unitary nature of the system, very well be confined to solely tasks of a technical nature.
23. Finally the Italian Government has stated that the purpose of the concession is to increase and maximise tax revenue from the lottery and that the transfer of a public power to conduct the lottery also relates to the levying of tax.
It should be noted in this respect that voluntary payments made by individuals in order to take part in the lottery are not the levying of tax even if the revenue from the lottery is entered in the State budget under the heading of tax revenue. No weight therefore attaches to the Italian Government' s assertion that there is on this basis exercise of official authority.
24. In the light of the foregoing I believe I may conclude that even after the computerization of the lottery it will be the public administration which conducts the lottery and thereby exploits the computerized system since the key tasks and actual responsibility for the lottery will continue to be a matter for public bodies and that the tasks that are assigned to the concessionaire are of a technical nature and appear, moreover, in all essential respects to correspond to those in Case C-3/88, namely activities "which concern the design, programming and operation of data-processing systems". Hence I conclude that the tender for the computerization of the lottery does not involve the transfer of official authority within the meaning of Articles 55 and 66 of the Treaty.
25. Against that background I would propose that the Court hold that the facts at issue constitute an infringement of Articles 52 and 59 of the Treaty.
The question of the infringement of Article 30 of the Treaty
26. The Commission has stated that the tender covers the supply of various goods that are necessary to implement the computerization of the lottery, in particular hardware and pre-existing software. (20) On that basis it claimed that the situation at issue entails serious interference in trade in those goods and therefore constitutes a measure having equivalent effect to a quantitative restriction which is prohibited under Article 30 of the Treaty.
The Commission claims in particular that the condition in dispute is a measure that confines public purchasing to national undertakings alone and it points inter alia to the fact that in each of the three consortia which met the condition at issue and were invited to tender there were member companies that themselves produced data-processing systems. The Commission considers that it may therefore be assumed that the consortium that was awarded the concession would solely use goods produced by companies within that consortium. In its view, therefore, there is also covert discrimination on grounds of nationality within the meaning of Article 30 of the Treaty. (21)
The Commission believes that its views are borne out by the judgment of the Court in Case C-21/88 Du Pont de Nemours (22) according to which Article 30 of the Treaty precludes national rules which reserve a proportion of public-supply contracts to undertakings which have production units in certain parts of national territory. (23)
27. The Italian Government denies that the condition in dispute constitutes a breach of Article 30 of the Treaty. It claims that the tender does entail the transfer of powers to a concessionaire who acts within his own autonomous area in order to achieve the result which is the object of the concession and that consequently there is no State measure within the meaning of Article 30, and that the concessionaire is at liberty to buy national or imported goods and that consequently there is no barrier to trade. It asserts that no reliance can be placed on the Commission' s arguments as to the composition of the consortium selected by the contracting authority. Finally it contends that the judgment of the Court in Du Pont de Nemours is not relevant since that case related to reserving purchases to certain national undertakings while this case relates to a condition affecting the choice of concessionaire.
28. It is not altogether easy to take a position on the Commission' s claims on this point.
29. The Commission is justified in referring to the judgment in Du Pont de Nemours in so far as it may be inferred therefrom that Article 30 applies even when the measures in question only limit the right to supply public authorities to certain ° but not all ° national undertakings. But that judgment cannot serve as a basis, as the Commission claims, for a solution of the actual problem in this case, that is whether the condition at issue entails the reservation of the supply of the necessary goods to national undertakings.
30. It may be appropriate to illustrate the problem by the following hypothetical example: the authorities in a Member State issue an invitation to tender for the construction of a bridge. Under the tendering conditions, only consortia of undertakings the majority of whose capital is owned by the State in question may submit tenders. The tendering conditions do not contain any requirement that the consortium should include cement and steel producers or that cement and steel produced in the State in question must be used. Three consortia submit tenders. They all meet the condition as to majority State ownership. The contract is awarded to the only one of the tendering consortia which includes national undertakings producing cement and steel.
It is possible that it might be held in that situation that there was not merely an infringement of Article 59 of the Treaty but also an infringement of Article 30. But in that case that infringement would not be a consequence of the aforesaid restriction in the tendering conditions. On the other hand an infringement might exist if it can be established that the contracting authorities, in awarding the contract to the consortium in question, were influenced by the fact that that consortium included companies which could and perhaps even would be obliged to supply nationally produced cement and steel for the production of the bridge. A finding of such an infringement would hinge on an actual assessment of the evidence which would certainly not be altogether easy.
31. Prompted by a question from the Italian Government which found the Commission' s arguments unclear, the Commission stressed in its reply that it is claiming that the infringement of Article 30 is a consequence of the condition at issue. But as is apparent from my hypothetical example, there is no causal connection between a condition that the companies taking part must be owned by the public sector and the factual circumstance that the contract is awarded to companies which themselves produce the necessary products.
In my view, the Commission' s claim can be dismissed for that reason alone.
32. Even if the Court were to choose to rule on whether there is an infringement of Article 30 as a result of the fact that the Italian authorities were influenced by the fact that the companies taking part were themselves in a position to produce the necessary hardware and software I do not consider that the Commission' s claims can be upheld.
That is because I consider that the Commission has not established that the Italian authorities did in fact attach importance to that circumstance. As the Commission itself has pointed out, there is no requirement in the tendering documents that the tenderers should themselves be in a position to produce the products in question. The Commission was only able to state that the three consortia or groupings that were invited to tender in fact included companies which themselves produced data-processing systems. (24) But that is not in itself sufficient in order to assess the weight that might have been attached to that circumstance by the contracting authorities. We do not have comprehensive information about the consortia or groupings which applied to take part in the tendering procedure or about their ownership and inter-relationships.
33. Even if the Court were to find that the Commission has adduced sufficient proof that the Italian authorities attached importance to the companies taking part themselves being able to produce the necessary products, it is not wholly certain that those circumstances constitute an infringement of Article 30. I would merely point out in this connection that in any event the tendering conditions do not lay down any requirement that the company or companies which are awarded the contract must supply their own products. If the companies in question choose to buy in hardware and software there is nothing in the tendering documents which requires them to buy national products.
34. The Commission has further claimed that there is an infringement of Article 30 even if the consortium which was awarded the concession did not include companies which themselves produced data-processing systems. Its reasoning is that producers of data-processing systems which in those circumstances would have to supply goods for the computerization of the lottery would have to use the concessionaire as an intermediary for supplies to the public administration. That would, according to the Commission, entail a significant restriction on the producers' freedom of contract and in that situation too there would therefore be a serious disruption of trade.
The fundamental premise of the Commission' s reasoning, so far as I have understood it, is that by putting the computerization of the lottery out to tender as an overall package, the Italian authorities preclude the possibility of supply agreements being concluded directly with companies from other Member States and that that is contrary to Article 30. If my understanding is correct, that view has very wide implications. The ultimate consequence would be that it would be contrary to Article 30 for contracting authorities to conclude contracts with publicly-owned companies which could be implemented by those companies only by concluding agreements for the supply of goods from other companies. It is perhaps not altogether impossible that an in-depth analysis of the question as a whole might show that the Commission' s view is correct but on the present basis I do not consider that it is under any circumstances justifiable to follow it.
35. I therefore consider that the Court should not accept the Commission' s contention that the fact that participation in the tendering procedure for automation of the Italian lottery was confined to companies, consortia or groupings the majority of whose capital was publicly owned constitutes an infringement of Article 30 of the Treaty.
The alleged infringement of Directive 77/62
36. The Commission has stated that the invitation to tender concerns an integrated computerized system which becomes the property of the administration on the expiry of the contract and the price for which is an annual fee calculated on the basis of turnover by a process reminiscent of leasing contracts. The Commission has claimed that one of the aspects of that computerized system is the supply of hardware and pre-existing software and that Directive 77/62 on public procurement is applicable thereto. In support of that view the Commission refers to the judgment in Case C-3/88 in which the Court held that Directive 77/62 applied even though the contracts concerned largely related to the provision of services. The Court stated:
"The purchase of the equipment required for the establishment of a data-processing system can be separated from the activities involved in its design and operation. The Italian Government could have approached companies specializing in software development for the design of the data-processing systems in question and, in compliance with the directive, could have purchased hardware meeting the technical specifications laid down by such companies". (25)
37. The Italian Government has claimed that Directive 77/62 is not applicable to the invitation to tender in question. In support of that view it contends first that the invitation does not relate to a public supply contract within the meaning of the directive and second that the contract in question is not being concluded by an authority whose contracts are covered by the directive.
38. It has stated that in its view the invitation to tender concerns a concession to carry out a public service and thus not the supply of goods to the Italian contracting authorities.
As I have explained above, I do not believe that the invitation to tender at issue concerns the concession for the provision of a public service since the company or companies which are awarded the contract in question are not assigned the power to conduct the lottery but are only given the task of carrying out the activities of a technical nature relating to the establishment and operation of the computerized system. Accordingly, even after the introduction of the computerized system it will still be the public administration which is in fact responsible for the provision of the public service constituted in the Italian Government' s view by the conduct of the lottery. I therefore consider that it may be presumed that the invitation to tender concerns on the one hand the provision of services for the public administration and on the other the supply of certain goods for the latter.
39. But, as the Italian Government rightly points out, the characteristic of this tendering procedure is that ownership of the goods in question passes to the public administration only after the expiry of the nine-year operating period and that the consideration for those goods is part of the percentage of the revenue from the lottery which constitutes the consideration for the contract as a whole. It must therefore be examined whether a contract having such a content meets the conditions to be a public supply contract within the meaning of Directive 77/62.
40. Article 1 of Directive 77/62 was amended by Directive 88/295 with the result that public-supply contracts no longer cover only contracts "for delivery of the products" but are contracts "involving the purchase, lease, rental or hire purchase with or without option to buy, of products".
The effect of the amendment is that a number of contracts whereby products are provided for the public administration fall within the scope of the directive whether or not they involve a purchase in the narrow sense. According to the preamble to the amending directive it is necessary to make possible stricter enforcement of the prohibition of restrictions on the free movement of goods and to develop the conditions of effective competition for public-supply contracts. It may be presumed that the object of the aforesaid extension of the scope of the directive is inter alia to ensure that the contracting authorities cannot avoid the duty to comply with the rules under the directive by making the content of contracts giving the public administration the right to make use of certain products such that they cannot be defined as supply contracts in the traditional sense.
Clearly, following the amendment of the directive the question whether the public administration acquires the right of ownership of the goods in question is no longer conclusive for the existence of a supply contract within the meaning of the directive. Thus agreements for rental of goods, with or without option to buy, will fall within the scope of the directive. The fact that ownership of the products covered by the invitation to tender in question does not pass to the public administration until after the nine-year operating period is not of conclusive significance.
It is also plain that the question whether there is a close connection between the consideration and the value of the products in question is not conclusive for the existence of a supply contract. Thus even in the case of contracts involving leasing or rental, with or without an option to buy, it will be necessary to determine an abstract consideration and, for the purposes of appraising whether the threshold values set out in the directive are reached, it will be necessary to make an assessment of the total consideration. (26) I therefore consider that conclusive significance cannot attach to the fact that the consideration for the use of the products necessary for computerizing the lottery was fixed in the aforesaid manner.
The actual situation under the invitation to tender at issue is, in my view, that the public administration has placed at its disposal the necessary hardware and any basic software for the purposes of computerization with a view to the conduct of the lottery. I consider that a contract of that nature does fall within the scope of Directive 77/62 as that scope is defined following the adoption of Directive 88/295. That result is not affected, in my view, by the fact that the award relates at the same time to the service of developing special software and commissioning and operating over a nine-year period the whole computerized system, including the servicing and operation of the aforesaid products.
I would finally point out in this connection that the practical significance of the present issues has diminished somewhat as from 1 July 1993 which was the time-limit for the implementation by the Member States of Council Directive 92/50/EEC of 18 June 1992 relating to the coordination of procedures for the award of public service contracts. (27) Article 2 thereof provides that the directive applies to public contracts covering both products and services "if the value of the services in question exceeds that of the products covered by the contract".
41. In the alternative the Italian Government claims that in any event it is only Article 2(3) of Directive 77/62 which applies to the invitation to tender in question. Article 2(3) provides:
"When the State ... grants to a body other than the contracting body ... special or exclusive rights to engage in a public service activity, the instrument granting this right shall stipulate that the body in question must observe the principle of non-discrimination by nationality when awarding public-supply contracts to third parties".
In support of its view the Italian Government further states that the invitation to tender concerns the grant to a concessionaire of a special right to provide services, namely part of the power to conduct a lottery. That view is untenable. The provisions of Directive 77/62 to which the Commission' s claim relates are applicable to this invitation to tender for the computerization of the lottery because the legal relationship between the contracting authorities and the concessionaire does not involve the transfer of the power to conduct a lottery but ° in addition to the provision of services ° the supply of products to the public authority which does conduct the lottery.
42. The Italian Government has further claimed that pursuant to the decree on the award of the concession for the computerization of the lottery the contract is to be concluded by the AAMS and that contracts concluded by that authority are not covered by the directive. In this connection it points out that:
° AAMS is not included in the list of contracting authorities referred to in Article 1(1) of Directive 80/767/EEC of 22 July 1980 adapting and supplementing in respect of certain contracting authorities Directive 77/62, (28) and
° Footnote 2 to the aforesaid list, which shows that the Italian Finance Ministry is included amongst the purchasing institutions except as regards purchases made by the tobacco and salt monopolies, is intended to exclude all contracts concluded by the AAMS since the only reason why the lottery is not expressly mentioned is that at the time when that directive was adopted the lottery was not administered by the AAMS.
43. I do not believe that we can be swayed by those arguments. The Commission has claimed, and this has apparently not been disputed by the Italian Government, that the AAMS is merely an administrative body under the authority of the Finance Ministry and acts that are formally attributable to the AAMS are therefore in reality within the ambit of that Ministry. Moreover, Article 4(4) of the Law on the lottery itself designates the Finance Ministry as the contracting authority. (29)
The derogation in Footnote 2 as regards the tobacco and salt monopoly cannot be extended to the lottery. There is nothing to suggest that the intention of the Community legislature was that all areas administered by the AAMS should be excluded from the scope of the directive. On the contrary, as the Commission has emphasized, there are grounds for assuming that that footnote serves a particular purpose linked to the special circumstances of the tobacco and salt sector. To hold the contrary would moreover signify that activities could be kept outside the scope of the directive merely by entrusting the administration thereof to the AAMS. Furthermore, Italy itself mentioned the AAMS on the lists sent to the Commission and GATT of public institutions which are referred to in the directives.
44. On the basis of the foregoing I consider that Directive 77/62 is applicable to the invitation to tender in question. The condition at issue whereby participation in the tendering procedure is actually confined to Italian undertakings is undoubtedly contrary to Articles 17 to 25 of the directive which lay down rules on participation and criteria for qualitative selection. (30) However, I consider it questionable whether it serves any reasonable purpose to find that the condition entailing discrimination on grounds of nationality at issue, apart from being contrary to Articles 52 and 59 of the Treaty, is also contrary to Articles 17 to 25 of the directive.
The Italian Government has also not disputed that it failed to publish in the Official Journal of the European Communities on the one hand an indicative notice concerning the total procurement of a certain value within each product area which the Finance Ministry intended awarding during 1990 and on the other the actual notice of invitation to tender.
45. I shall therefore propose that the Court hold that Italy has failed to fulfil its obligations under Article 9(1), (2) and (4) and Articles 17 to 25 of Directive 77/62.
Conclusion
46. In the light of the foregoing I propose that the Court:
(1) declare that the Italian Republic has failed to fulfil the obligations incumbent upon it pursuant to Articles 52 and 59 of the EEC Treaty and Articles 17 to 25 of Council Directive 77/62/EEC of 21 December 1976 coordinating procedures for the award of public-supply contracts, as amended by Council Directive 88/295/EEC, by providing, in connection with a tendering procedure for a system for computerizing the Italian lottery, that only bodies, companies, consortia and groupings the majority of whose capital, considered individually or collectively, was publicly owned, could take part in the tendering procedure;
(2) declare that the Italian Republic has failed to comply with the obligations incumbent upon it pursuant to Article 9 of Directive 77/62, as amended by Directive 88/295, by failing, at the beginning of 1990, to make known, by means of an indicative notice, the total procurement by product area of which the estimated value was equal to or greater than ECU 750 000 and which the Finance Ministry envisaged awarding during 1990 and by failing to publish in November 1990 a notice of invitation to tender in the Supplement to the Official Journal of the European Communities for a system for computerizing the lottery;
(3) for the rest, dismiss the proceedings against the Italian Republic; and
(4) order the Italian Republic to bear the costs.
(*) Original language: Danish.
(1) - The game of Lotto in Italy is regulated by Law No 528 of 2 August 1982, Ordinamento del gioco del lotto e misure per il personale del lotto, as amended by Law No 85 of 19 April 1990, and by implementing regulations adopted in Decree No 303 of the President of the Italian Republic of 7 August 1990.
(2) - Council Directive of 21 December 1976, OJ 1977 L 13, p. 1.
(3) - Council Directive of 22 March 1988, OJ 1988 L 127, p. 1.
(4) - Order in Case C-272/91R Commission v Italy 1992 ECR I-457.
(5) - See paragraphs 7 to 13.
(6) - Case C-3/88 Commission v Italy [1989] ECR 4035.
(7) - See paragraphs 8 and 9.
(8) - By application lodged at the Court on 2 December 1991 the Commission brought proceedings against Italy for the latter' s failure to implement the judgment of the Court in Case C-3/88. The Italian Government subsequently stated that the legislative provisions that were contrary to Community law were abrogated by Article 15 of Law No 142 of 19 February 1992 whereupon the Commission withdrew its application.
(9) - The Italian Government has pointed out that the invitation to tender, the decree regarding the award of the concession and the special conditions for the tender all refer to a concession and that the Tribunale Amministrativo Regionale of Lazio has recognized in a decision of 8 July 1991 that the agreement in question relates to a concession for the provision of a public service and has stated in that connection inter alia that the key component of the agreement is the operation of the computerized system while the provision of supplies is of only secondary importance.
(10) - See in this context Council Directive 71/305/EEC of 26 July 1971 concerning the coordination of procedures for the award of public works contracts (OJ, English Special Edition 1971 (II), p. 682), as amended by Council Directive 89/440/EEC of 18 July 1989 (OJ 1989 L 210, p. 1), Article 1(d) of which provides public works concession is a contract of the same type as [public works contracts] except for the fact that the consideration for the works to be carried out consists either solely in the right to exploit the construction or in this right together with payment .
(11) - This view signifies inter alia that it is not necessary in these proceedings for the Court to rule on whether the conduct of a lottery can be characterized as the provision of services within the meaning of Article 59 of the Treaty. That question is the subject of proceedings currently pending for a preliminary ruling in Case C-275/92 Schindler in which the Court has been asked to rule whether a lottery is to be defined as trade in goods within the meaning of Article 30 of the Treaty or provision of services within the meaning of Articles 59 and 60 of the Treaty.
(12) - See paragraph 13.
(13) - See judgment in Case 147/86 Commission v Greece [1988] ECR 1637, paragraph 7, and judgment in Case 2/74 Reyners [1974] ECR 631, paragraph 43.
(14) - The Commission has stated that at the moment the registration points for the lottery ... are located at certain selling points under a form of monopoly (tobacconists) and at the offices of approved lottery collectors which ... are operated by private concessionaires (emphasis added).
(15) - Under Article 5(2) of Law No 528, the Area Committee is appointed by the intendente di finanza (director of the office of the Finance Ministry in the province in question) and consists of a representative of the Amministrazione finanziaria, who acts as president, and two officials from the Ministero del Tesoro and from the Amministrazione autonoma dei monopoli di stato ... .
(16) - Under Article 6(3) of Law No 528, the Area Commission shall decide on the coupons to be excluded from the draw by decisions that are published in the Bollettino ufficiale in the area in question. Stakes made against coupons which are excluded from participation in the draw shall be forfeit unless reimbursement is sought within one month of such publication .
(17) - Under Article 7 of Law No 528, as amended by Law No 85, draws are to be carried out once a week by the department of the Finance Ministry in each of the provincial capitals which are designated as places for draws in Article 2(1) by a committee consisting of the intendente di finanza or his representative, who shall preside, an official from the Ministero di Tesoro and an official from the Amministrazione autonoma dei monopoli di Stato.
(18) - Under Article 11 of Law No 528, the Area Committee referred to in Article 5 carries out a check of the coupons and confirms the winning coupons in accordance with the lists supplied by the processing centre ...
Any player in possession of a coupon taking part in the draw in the area in question may submit a complaint against the decision of the Area Committee ...
The Committee shall take decisions concerning complaints ... .
Proceedings against decisions of the Area Committees may be brought ... before the Central Lottery Committee ... .
The Central Committee shall be designated by a decree of the Minister of Finance and shall consist of the Director-General of the Direzione generale delle entrate speciali (Director-General for Special Revenue), who shall preside, two officials from the same directorate-general, one official from the Ministero de Tesoro and one official from the Amministrazione Autonoma dei Monopoli di Stato ... .
(19) - Winnings of less than LIT 1 250 000 are to be paid by the lottery agent who received the stake. Point 4.8 of the technical programme sets out a number of circumstances which that agent must check before paying out winnings and in this connection also details certain functions that must be carried out by the automated system. For winnings in excess of that amount, requests for payment are to be submitted to the Intendenza di Finanza, which is the representative of the Finance Ministry in the various provinces or the Ispettorato Compartimentale dei Monopoli di Stato, which is a local body under the authority of the AAMS and are subsequently forwarded to the Direzione Generale Monopoli di Stato, which is also subject to the AAMS.
(20) - The Commission is probably right in pointing out that the development of new software must be regarded as the provision of services.
(21) - In this connection the Commission has stated that it is clear from the Court' s case-law that measures which are potentially such as to hinder trade between Member States are incompatible with Article 30 of the Treaty and it is not necessary for the measures to have an appreciable effect on trade between the Member States. In support of that view it referred inter alia to the judgments in Case 8/74 Dassonville [1974] ECR 837, Case 16/83 Prantl [1984] ECR 1299 and Case 124/85 Commission v Greece [1986] ECR 3935.
(22) - Case C-21/88 Du Pont de Nemours [1990] ECR I-889.
(23) - The Commission states that the reason why it did not assert an infringement of Article 30 of the Treaty in Case C-3/88 was that the judgment in Du Pont de Nemours was not given until after it had initiated the proceedings in Case C-3/88.
(24) - It has been stated in these proceedings that two of the three tenderers selected were Italian subsidiaries of foreign producers of data-processing systems while the Lottomatica consortium includes on the one hand Ing. C. Olivetti & C. SpA which produces both hardware and software, and on the other Sogei SpA which develops software specifically designed for computerization within the public sector.
(25) - Paragraph 19.
(26) - For the sake of completeness it should be noted that the Italian Government has not claimed that the threshold values set out in the directive were not reached. It seems to me clear, therefore, that they were reached.
(27) - OJ 1992 L 209, p. 1.
(28) - OJ 1980 L 215, p. 1.
(29) - Article 4(4) of Law No 528 of 2 August 1982, as amended by Law No 85 of 19 April 1990, provides: The Finance Ministry shall establish ... after hearing the Amministrazione Autonoma dei Monopoli di Stato, by means of an invitation to tender (appalto-concorso), a system for computerizing the lottery ... .
(30) - For a more detailed consideration of those provisions see my Opinion of 30 June 1993 in Case C-71/92 Commission v Spain, points 63 to 67 (not yet published in the ECR).