Case C‑327/15

TDC A/S

v

Teleklagenævnet

and

Erhvervs- og Vækstministeriet

(Request for a preliminary ruling from the Østre Landsret)

Reference for a preliminary ruling — Electronic communications networks and services — Directive 2002/22/EC — Universal service — Articles 12 and 13 — Calculation of the cost of universal service obligations — Article 32 — Compensation for costs relating to additional mandatory services — Direct effect — Article 107(1) and Article 108(3) TFEU — Maritime radio safety and emergency services in Denmark and Greenland — National rules — Submission of an application for compensation for costs relating to additional mandatory services — Three-month time limit — Principles of equivalence and effectiveness)

Summary — Judgment of the Court (Second Chamber), 21 December 2016

Approximation of laws—Electronic communications networks and services—Universal service and users’ rights—Directive 2002/22—Calculation of the cost and financing of universal service obligations—Calculation on the basis of the difference between all the revenue and all the costs connected with the provision of the service—Unlawful

Approximation of laws—Electronic communications networks and services—Universal service and users’ rights—Directive 2002/22—Calculation of the cost and financing of universal service obligations—Compensation for costs relating to additional mandatory services—National legislation restricting the right to compensation to the costs regarded as an unjustified burden on the provider undertaking—Unlawful

Approximation of laws—Electronic communications networks and services—Universal service and users’ rights—Directive 2002/22—Calculation of the cost and financing of universal service obligations—Compensation for costs relating to additional mandatory services—National legislation excluding a right to compensation where profits made on services related to the universal service obligation are greater than the loss arising from the provision of the additional mandatory services—Unlawful

The provisions of Directive 2002/22/EC on universal service and users’ rights relating to electronic communications networks and services and, in particular, Article 32 thereof, must be interpreted as precluding national legislation which provides for a compensation mechanism for the provision of additional mandatory services by virtue of which an undertaking is not entitled to compensation from the Member State for the net cost of the provision of an additional mandatory service where the profits made by that undertaking on other services related to the universal service obligation are greater than the loss arising from the provision of the additional mandatory service. For the purposes of any compensation due to an undertaking designated to provide a universal service, a distinction must be drawn between the net cost of the universal service obligations and the net cost of the additional mandatory services which are not covered by Chapter II of that directive. Consequently, the compensation mechanisms provided for in Directive 2002/22 relating, firstly, to the universal service and, secondly to the additional mandatory services are independent of each other and, accordingly, the net costs incurred for each of those services must be the subject of separate accounts so as to ensure that all the revenue derived from the universal service is not included in the calculation of the net cost of the additional mandatory service and is not a condition of whether or not the compensation due for providing that service is granted. The requirement for separate accounting not only contributes to the transparency of the procedure for the funding of the universal service obligations, but also means that the method of funding of the universal service is guaranteed to be competitively neutral. Such a requirement also ensures, in accordance with recital 18 of Directive 2002/22, that the financing of universal service and additional mandatory services complies with the rules on State aid. The compensation granted by Member States for providing a service of general economic interest within the meaning of Article 106(2) TFEU, such as the universal service and the additional mandatory service, are subject to compliance with the rules laid down by the EU legislature in Articles 107 and 108 TFEU. Furthermore, fulfilling the obligation to keep separate accounts makes it possible to avoid taking account twice of the revenue earned by the undertaking under its universal service obligations, firstly, for the purposes of calculating the net cost of the universal service obligation and, consequently, the compensation granted in that regard and, secondly, for the purposes of calculating the net cost of the additional mandatory services and, consequently, the grant of compensation paid in respect of that additional mandatory service. Such a practice actually amounts to making the service-providing undertaking bear the cost of the additional mandatory service, which is contrary to the very terms of Article 32 of Directive 2002/22. (see paras 47-51, 54, 56, operative part 1)

Directive 2002/22 on universal service and users’ rights relating to electronic communications networks and services must be interpreted as precluding national legislation under which an undertaking designated as the provider of additional mandatory services is entitled to compensation from the Member State for the net cost of providing those services only if that cost constitutes an unfair burden on that undertaking. Such national legislation does not exclude that the undertaking in question must itself bear all or part of the costs of those services. Consequently, making payment of compensation by the Member State subject to the condition that the net cost of the provision of the additional mandatory services must constitute an unfair burden on the designated undertaking is contrary to Article 32 of Directive 2002/22. (see paras 62, 63, 65, operative part 2)

Directive 2002/22 on universal service and users’ rights relating to electronic communications networks and services must be interpreted as precluding national legislation under which the net cost borne by an undertaking designated to fulfil a universal service obligation is the result of the difference between all the revenue and all the costs connected with the provision of the service in question, including the revenue and the costs which the undertaking would also have registered had it not been a universal service operator. It is clear from the second paragraph, (a) and (b), of Article 12(1) of and Annex IV, Part A, second paragraph to the Universal Service Directive that the net cost of universal service obligations corresponds to the difference between the net cost to a designated undertaking when providing a universal service and when not providing such a service. Consequently, the net cost of the provision of a universal service cannot be the result of the difference between all the revenue and all the costs connected with the provision of that service. (see paras 71, 72, operative part 3)

The fact that the undertaking entrusted with an additional mandatory service, within the meaning of Article 32 of Directive 2002/22 on universal service and users’ rights relating to electronic communications networks and services, provides that service not only on the territory of Denmark but also on that of Greenland does not make any difference to the interpretation of the provisions of that directive. Greenland is included in the list of the overseas countries and territories in Annex II to the FEU Treaty and, accordingly, under Article 204 TFEU, is covered by the special arrangements for association defined in Articles 198 to 203 TFEU, subject to the specific provisions for Greenland set out in the Protocol (No 34), annexed to the Treaties. The existence of the special arrangements for association between the European Union and those overseas countries and territories results in the general provisions of the FEU Treaty, namely those which are not referred to in Part Four of that treaty, not being applicable to the overseas countries and territories in the absence of an express reference. In that regard, since the legal basis of Directive 2002/22 is Article 114 TFEU, neither Part Four of the FEU Treaty nor Decision 2001/822 on the association of the overseas countries and territories with the European Community, adopted by virtue of that Part of the Treaty, makes reference to Article 114 TFEU. In those circumstances, the provisions of Directive 2002/22 are not applicable to Greenland. (see paras 75-80, 82, operative part 4)

Article 32 of Directive 2002/22 on universal service and users’ rights relating to electronic communications networks and services must be interpreted as having direct effect, inasmuch as it prohibits the Member States from making the undertaking responsible for providing an additional mandatory service bear all or part of the costs connected with the provision of that service. (para. 87, operative part 5)

The principles of good faith, equivalence and effectiveness must be interpreted as not precluding legislation which makes the submission of applications for compensation for the loss in the previous financial year by the operator responsible for a universal service subject to a time limit of three months running from the expiry of the period within which that operator is required to send an annual report to the competent national authority, provided that that time limit is no less favourable than that provided for in national law for an analogous application and that it is not such as to render impossible in practice or excessively difficult the exercise of rights conferred on undertakings by Directive 2002/22 on universal service and users’ rights relating to electronic communications networks and services, which is for the referring court to ascertain. In that regard, every case in which the question arises as to whether a national procedural provision makes the application of EU law impossible or excessively difficult must be analysed by reference to the role of that provision in the procedure, its progress and its special features, viewed as a whole, before the various national bodies. In that context, it is necessary, inter alia, to take into consideration, where relevant, the protection of the rights of the defence, the principle of legal certainty and the proper conduct of the procedure. The setting of time limits must, in principle, satisfy the requirement of effectiveness since it constitutes an application of the fundamental principle of legal certainty which protects both the person and the administration concerned. Such time limits are not, in principle, liable to make it in practice impossible or excessively difficult to exercise the rights conferred by EU law. In respect of national legislation which comes within the scope of EU law, it is for the Member States to establish those periods in the light of, inter alia, the significance for the parties concerned of the decisions to be taken, the complexities of the procedures and of the legislation to be applied, the number of persons who may be affected and any other public or private interests which must be taken into consideration. Subject to that reservation, the Member States are free to provide for longer or shorter time limits. (see paras 97, 98, 107, operative part 6)