OPINION OF ADVOCATE GENERAL

BOT

delivered on 12 June 2014 ( 1 )

Case C‑222/13

TDC A/S

v

Erhvervsstyrelsen

(Request for a preliminary ruling from the Teleklagenævnet (Denmark))

‛Admissibility of the request for a preliminary ruling — Meaning of ‘court or tribunal of a Member State’ for the purposes of Article 267 TFEU — Independence of the body making the reference — Telecommunications sector — Universal service and users’ rights — Directive 2002/22/EC — Provision by the universal service provider of additional mandatory services within the meaning of Article 32 of the Directive — Financing of additional mandatory services — Calculation of net cost — Determination of an unfair burden’

1. By this request for a preliminary ruling, the Teleklagenævet (Telecommunications Complaints Board) (Denmark) asks the Court to clarify the arrangements for financing an additional mandatory service provided by the universal service provider under Article 32 of Directive 2002/22/EC. ( 2 )

2. The Universal Service Directive is intended to create a harmonised regulatory framework aimed at ensuring affordable access throughout the European Union to basic good-quality communications services. ( 3 ) Those services are expressly determined by the EU legislature in Chapter II of that directive. In so far as they are provided at a price which departs from that resulting from normal commercial conditions, the universal service provider is compensated by the Member State from public funds or by undertakings in the industry from a sectoral fund.

3. In accordance with the principle of subsidiarity, Member States may go beyond the restricted bounds of ‘universal service’ and its ‘additional facilities’ ( 4 ) by providing affordable access to ‘additional mandatory services’ if the market fails to meet the requirements of end-users.

4. Article 32 of the Universal Service Directive, the scope of which is to be interpreted here, thus provides as follows: ‘Member States may decide to make additional services, apart from services within the universal service obligations as defined in Chapter II, publicly available in [their] own territory but, in such circumstances, no compensation mechanism involving specific undertakings may be imposed.’

5. That provision gives the Member States extensive latitude as regards the services that may be provided in their territory in the form of ‘additional mandatory services’. In the present case, the Kingdom of Denmark thus entrusted TDC A/S (‘TDC’), the principal Danish operator in the telecommunications sector, with the task of providing maritime radio safety and emergency services in its national territory and also in Greenland. Those radio services are made available free of charge to all vessels, whatever their nationality, and enable them to request assistance when they are in distress. ( 5 )

6. However, unlike in the case of the rules governing the compensation of universal service providers, the EU legislature does not specify the conditions under which a Member State must compensate the universal service provider for providing an additional mandatory service. Although it expressly excludes sectoral financing, it does not specify the extent to which the Member States are required to grant compensation for the provision of an additional mandatory service or the way in which they are required to calculate the costs associated with the supply of such a service for the purposes of public financing.

7. In the case in the main proceedings, the competent telecommunications authority ( 6 ) thus refused to grant TDC compensation for the costs associated with providing the maritime safety and emergency services in question during 2010. It took the view that, under the national legislation applicable up until 31 March 2012, TDC was not entitled to any compensation for expenditure incurred in connection with that additional mandatory service, given that it had made an overall profit from its universal service obligations and additional mandatory services taken as a whole. ( 7 ) The order for reference shows that, in practice, the costs associated with the safety services at issue amounted to some 60000000 Danish krone (DKK) per year (that is to say, some EUR 8036000), almost half of which arose from the provision of those services in Greenland.

8. In the course of the appeal brought before it, the referring court considered the principles and rules governing the financing of that additional mandatory service within the meaning of Article 32 of the Universal Service Directive. Entertaining doubts as to the interpretation of that provision, the Teleklagenævnet decided to stay the proceedings before it and to refer the following questions to the Court of Justice for a preliminary ruling: ‘(1) Does the [Universal Service Directive], and in particular Article 32, preclude a Member State from laying down rules which do not entitle an undertaking to recover from that Member State separately the net costs of providing additional mandatory services not covered by Chapter II of that directive, where the undertaking’s profits from other services which are covered by the undertaking’s universal service obligations under Chapter II of that directive exceed the losses associated with the provision of the additional mandatory services? (2) Does the Universal Service Directive preclude a Member State from laying down rules which entitle undertakings to recover from the Member State the net costs of providing additional mandatory services which are not covered by Chapter II of that directive, only if the net costs amount to an unreasonable burden for the undertakings in question? (3) If Question 2 is answered in the negative, can the Member State decide that there is no unreasonable burden associated with the provision of additional mandatory services not covered by Chapter II of that directive, if the undertaking has, overall, achieved profits from the provision of all those services where that undertaking has a universal service obligation, in particular the provision of services which the undertaking would also have provided if it had not been a universal service operator? (4) Does the Universal Service Directive preclude a Member State from laying down rules according to which a designated undertaking’s net costs relating to its universal service obligation pursuant to Chapter II of that directive are to be calculated on the basis of all income and costs associated with the provision of the service in question, in particular that income and those costs which the undertaking would also have incurred if it had not been a universal service operator? (5) Are the answers to Questions 1 to 4 affected by the fact that the management of an additional mandatory service is to be provided in Greenland, which, by virtue of Annex II to the [FEU Treaty], is an overseas country or territory [“OCT”], if the Danish authorities entrust the management of that service to an undertaking established in Denmark and that undertaking has no other activities in Greenland? (6) Of what significance are Article 107(1), Article 108(3) TFEU and Commission Decision [2012/21/EU] of 20 December 2011 on the application of Article 106(2) [TFEU] to State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest [ ( 8 )]to the answers to Questions 1 to 5? (7) Of what significance is the principle of minimum distortion of competition in, inter alia, Article 1(2), Article 3(2) and recitals (4), (18), (23) and (26) in the preamble and Part B of Annex IV to the Universal Service Directive to the answers to Questions 1 to 5? (8) If the provisions of the Universal Service Directive preclude national schemes as referred to in Questions 1, 2 and 4, do those provisions or preclusions have direct effect?’

9. In the case under consideration, I have serious doubts in particular about whether the judgment of the members of the body making the reference is independent, to the extent that, since they are appointed and dismissed by the competent minister, they do not, for example, have any specific guarantees against dismissal other than those provided for by employment law.

I – EU law

A – The Universal Service Directive

10. In accordance with Article 1, the Universal Service Directive is intended to ensure the availability throughout the European Union of good-quality publicly available services through effective competition and choice and to deal with circumstances in which the needs of end-users are not satisfactorily met by the market. To that end, it establishes the rights of end-users and the corresponding obligations of undertakings providing publicly available electronic communications networks and services.

11. In accordance with Article 3(2) of the Universal Service Directive, Member States must determine the most efficient and appropriate approach for ensuring the implementation of universal service, whilst respecting the principles of objectivity, transparency, non-discrimination and proportionality. They must also seek to minimise market distortions, in particular the provision of services at prices or subject to other terms and conditions which depart from normal commercial conditions, whilst safeguarding the public interest.

12. The scope of universal service is defined in Articles 4 to 7 of the Universal Service Directive. It includes connection at a fixed location to a public communications network and the provision for end-users of a comprehensive telephone directory enquiry service and telephone directory. It also includes the provision of public pay telephones making it possible, inter alia, to make emergency calls, and specific measures enabling disabled users to access those services.

13. The financing of the costs associated with the provision of universal service is governed by Articles 12 to 14 of the Universal Service Directive.

14. Article 12 of the Universal Service Directive, entitled ‘Costing of universal service obligations’, provides, in paragraph 1: ‘Where national regulatory authorities [NRAs] consider that the provision of universal service as set out in Articles 3 to 10 may represent an unfair burden on undertakings designated to provide universal service, they shall calculate the net costs of its provision. For that purpose, NRAs shall: (a) calculate the net cost of the universal service obligation, taking into account any market benefit which accrues to an undertaking designated to provide universal service, in accordance with Article IV, Part A; or (b) make use of the net costs of providing universal service identified by a designation mechanism in accordance with Article 8(2).’

15. Annex IV, Part A, to the Universal Service Directive describes how the net cost of universal service obligations is to be calculated.

16. Article 13(1) and (2) of that directive lays down the rules governing the financing of universal service obligations. Those paragraphs provide as follows: ‘1. Where, on the basis of the net cost calculation referred to in Article 12, [NRAs] find that an undertaking is subject to an unfair burden, Member States shall, upon request from a designated undertaking, decide: (a) to introduce a mechanism to compensate that undertaking for the determined net costs under transparent conditions from public funds; and/or (b) to share the net cost of universal service obligations between providers of electronic communications networks and services. 2. Where the net cost is shared under paragraph 1(b), Member States shall establish a sharing mechanism administered by the [NRA] or a body independent from the beneficiaries under the supervision of the [NRA]. Only the net cost, as determined in accordance with Article 12, of the obligations laid down in Articles 3 to 10 may be financed.’

17. Member States may therefore compensate the service provider from public funds. They may also share the net cost of universal service obligations amongst all operators of electronic communications networks and services providing services within its territory by establishing a sectoral fund. Those rules are set out in recitals 21 to 23 in the preamble, and Part B of Annex IV, to the Universal Service Directive.

18. Lastly, Article 32 of that directive, entitled ‘Additional mandatory services’, the terms of which the Court is called upon to interpret here, provides as follows: ‘Member States may decide to make additional services, apart from services within the universal service obligations as defined in Chapter II, publicly available in its own territory but, in such circumstances, no compensation mechanism involving specific undertakings may be imposed.’

B – Directive 2002/77/EC

19. Article 6 of Directive 2002/77/EC, ( 9 ) entitled ‘Universal Service Obligations’, provides, in paragraph 1: ‘Any national scheme pursuant to Directive 2002/22/EC, serving to share the net cost of the provision of universal service obligations shall be based on objective, transparent and non-discriminatory criteria and shall be consistent with the principles of proportionality and of least market distortion. In particular, where universal service obligations are imposed in whole or in part on public undertakings providing electronic communications services, this shall be taken into consideration in calculating any contribution to the net cost of universal service obligations.’

II – My analysis concerning the Court’s jurisdiction

20. In the main proceedings, the question of the Court’s jurisdiction arises on account of the identity of the body making the reference.

21. In its order for reference, the Teleklagenævnet sets out the reasons why it considers that it fulfils all the conditions required in order to be classified as a ‘court or tribunal’ within the meaning of Article 267 TFEU and thus to be able to refer a question to the Court for a preliminary ruling.

22. The Commission, on the other hand, entertains some doubts in this regard in its observations. The Court therefore asked the Danish Government to clarify the rules governing the activities of the Teleklagenævnet and, in particular, those guaranteeing its independence and those establishing that its jurisdiction is compulsory. In the clarifications it supplied to the Court, the Danish Government submits that the Teleklagenævnet fulfils all the criteria laid down by case-law as being applicable to classification as a ‘court or tribunal’ and that the Court therefore has jurisdiction to give a ruling on the questions which that body has referred to it for a preliminary ruling.

23. It is settled case-law that the question of the status of a body making a reference is governed by EU law alone. In order to determine whether that body is a ‘court or tribunal’ for the purposes of Article 267 TFEU, the Court takes account of a number of factors, such as whether the body is established by law, whether it is permanent, whether its jurisdiction is compulsory, whether its procedure is inter partes, whether it applies rules of law and whether it is independent. ( 10 )

24. The Court therefore determines the status of that body on the basis of criteria relating both to its constitution and to its function, taking care to consider the particular legal context in which it seeks a ruling from the Court. ( 11 ) In other words, the Court determines, in the particular case in question, the specific nature of the functions performed by the body making the reference. On that basis, a single national body may be regarded partly as a court or tribunal and partly as an administrative authority, depending on whether it is performing judicial functions or exercising functions of an administrative nature in a specific case. ( 12 ) In this regard, the Court pays particular attention to whether there is a case pending before the body making the reference and whether it is called upon to give judgment in proceedings intended to lead to a decision of a judicial nature. ( 13 )

25. I shall now set out the reasons why I think that, in the case in the main proceedings, the Teleklagenævnet does not have jurisdiction to submit to the Court a request for a preliminary ruling under Article 267 TFEU.

26. The order for reference, it is true, shows that the conditions set out in the Court’s case-law with respect to whether the body making the reference is established by law, whether it is permanent, whether its procedure is inter partes and whether it applies rules of law are fulfilled.

27. After all, the Teleklagenævnet is a permanent public dispute settlement body which was set up by Article 68(1) of Law No 169 on electronic communications networks and services (lov nr. 169 om elektroniske kommunikationsnet og — tjenester) of 3 March 2011. ( 14 ) Its establishment by law cannot therefore be disputed. The rules governing its operation are laid down by Regulation No 383 on the activities of the Teleklagenævnet (bekendtgørelse nr. 383 om teleklagenævnets virksomehd) of 21 April 2011. ( 15 )

28. In addition, Article 70(1) of the Telecommunications Law states that, when giving its decisions, that body is to apply the rule of law, namely the Telecommunications Law.

29. Moreover, it appears from the order for reference that, although the procedure before the Teleklagenævnet is purely written, that body ensures that the parties are able to submit their observations in accordance with the inter partes principle.

30. The question of whether its jurisdiction is compulsory and its members are independent, on the other hand, may give rise to certain reservations.

A – Whether the Teleklagenævnet’s jurisdiction is compulsory

31. In the case which gave rise to the judgment in Dorsch Consult, EU:C:1997:413, the Court defined the meaning of compulsory jurisdiction. According to the Court, that term covers two situations. A court exercises compulsory jurisdiction, first, where the body making the reference effectively offers the only remedy available and, secondly, where its determinations are binding. ( 16 ) In that case, the Court was not called upon to give a clear and precise definition which would have made it possible to give preference to either of those potential interpretations.

32. In the case at issue, the Commission expresses doubts about whether the Teleklagenævnet’s jurisdiction is compulsory, in so far as application to that body is not the only remedy available, the operator concerned being free to bring an action directly before the ordinary courts.

33. First, on the basis of the information available, it seems that the Telecommunications Law established two alternative procedures enabling an operator which, like TDC, considers that its rights have been infringed to contest a decision given by the administrative authority responsible for supervising the telecommunications sector, namely the Erhversstyrelsen, which comes under the Ministry of Enterprise and Growth. The economic operator is free either to appeal to the Teleklagenævnet (which comes under the Ministry of Research, Innovation and Higher Education) or to bring an action directly before the courts exercising general jurisdiction. ( 17 )

34. Unlike in the case which gave rise to the judgment in Belov, EU:C:2013:48, it would seem that those two procedures are not mutually exclusive. After all, as the Danish Government stated in its written reply to the questions put by the Court, neither application to the courts exercising general jurisdiction nor even the commencement of arbitration proceedings preclude the matter from being examined by the Teleklagenævnet. ( 18 ) In those circumstances, the Danish Government points out that, in accordance with Article 345 of the Law on the administration of justice (Retsplejeloven), the court exercising general jurisdiction must then stay the proceedings pending the decision of the Teleklagenævnet.

35. In addition, the Danish Government points out that, in practice, there do not seem to have been any cases in which decisions by the Erhversstyrelsen have been directly contested before the ordinary courts without the matter having first been brought before the Teleklagenævnet.

36. Secondly, in the event that the economic operator concerned appeals to the Teleklagenævnet, it follows from Article 71(2) of the Telecommunications Law that its decisions are binding upon the parties, unless they bring an action before the ordinary courts within eight weeks.

37. For, in accordance with Article 71(1) of the Telecommunications Law, the Teleklagenævnet’s decisions are final in administrative matters, since they cannot be contested before any other administrative authority.

38. In my view, none of the foregoing factors precludes the Teleklagenævnet from being recognised as exercising compulsory jurisdiction within the meaning of the Court’s case-law.

39. The question of whether that body is independent is an entirely different matter, and it is here, in my view, that all the difficulties lie.

B – Whether the Teleklagenævnet is independent

40. The Commission considers that the Teleklagenævnet does not offer sufficient guarantees of its independence. It points out that that body is linked to the organisational structure of the Ministry of Research, Innovation and Higher Education, which, in accordance with Article 69(2) of the Telecommunications Law, provides the Teleklagenævnet with secretariat services. That challenge is called in question by the Danish Government.

41. As the Court pointed out in Wilson, ( 19 ) the concept of independence is inherent in the task of adjudication and involves primarily an authority acting as a third party in relation to the authority which adopted the contested decision. ( 20 )

42. According to the Court’s case-law, the concept of independence has two aspects.

43. The first aspect is external. It presumes that the body making the reference is protected against external intervention or pressure liable to jeopardise the independent judgment of its members as regards proceedings before them. ( 21 ) It requires that certain guarantees be afforded to those who have the task of adjudicating in a dispute, such as the guarantee against removal from office.

44. The second aspect that the Court examines when assessing the independence of the body making a reference is internal. It is linked to impartiality and seeks to ensure a level playing field for the parties to the proceedings and their respective interests with regard to the subject-matter of those proceedings. ( 22 ) That aspect requires objectivity and the absence of any interest in the outcome of the proceedings apart from the strict application of the rule of law.

45. According to the Court, those guarantees of independence and impartiality require rules, particularly as regards the composition of the body and the appointment, length of service and the grounds for abstention, rejection and dismissal of its members. Those rules must serve to dismiss any reasonable doubt in the minds of individuals as to the imperviousness of that body to external factors and its neutrality with respect to the interests before it. In that regard, the Court considers that the condition regarding the independence of the body making the reference may be met only if dismissals of members of that body are determined by express legislative provisions. ( 23 )

46. In this instance, those conditions are not met and I must say that none of the information provided by the Danish Government in its reply to the questions put by the Court and at the hearing has dispelled my doubts as to the independent judgment of the members of the Teleklagenævnet and its imperviousness to external factors.

47. The composition of the Teleklagenævnet is governed by Article 68 of the Telecommunications Law.

48. It is apparent from paragraphs 2 and 3 of that provision that the Teleklagenævnet is composed of five to seven members. The Danish Government confirmed at the hearing that the Teleklagenævnet may therefore be composed of an even number of members, as indeed it is at present, and that, if the vote is split, the president of that body has the casting vote, in accordance with Article 5(3) of Regulation No 383.

49. According to the case-law of the European Court of Human Rights, the fact that a president may have a casting vote provides a twofold justification for an in-depth examination of his independence and his impartiality, as well as those of the panel on which he sits. ( 24 ) In its Grand Chamber judgment in Grande Stevens and Others v. Italy, the European Court of Human Rights thus took into account, in the course of that examination, the way in which the members of the body in question were appointed, their term of office, the existence of any protection against external pressures, their subjective and objective impartiality and the appearance of independence.

50. In this regard, it is apparent from the applicable legislation that the members of the Teleklagenævnet are appointed by the Minister for Enterprise and Growth. In accordance with the second sentence of Article 68(2) of the Telecommunications Law, that Minister must ensure that that body is composed not only of persons holding qualifications in the various fields of law, in particular competition law, economic law and commercial law, but also of persons with technical skills in the field of telecommunications. ( 25 ) It is none the less apparent from Article 68(4) of that law that the President of the Teleklagenævnet must be a lawyer. Under that same provision, the Minister for Enterprise and Growth may appoint a lawyer from among the members of the Teleklagenævnet to serve as Vice-President, who is able to replace the President if the latter is prevented from acting or an objection is raised against him.

51. With regard to the independence of the members of the Teleklagenævnet, the Danish Government, in its written reply to the questions put by the Court, states that, in accordance with Article 69(3) of the Telecommunications Law, the Teleklagenævnet’s activities are independent of any instructions relating to the hearing and determination of a particular case.

52. With respect in particular to the dismissal of that body’s members, the Danish Government also states that ‘the dismissal of members of the Teleklagenævnet is governed neither by the Telecommunications Law nor by Regulation [No 383]’. It none the less points out that members are appointed for a term of four years and that they are ‘protected from arbitrary and improper dismissal under the general rules of administrative law and employment law’. At the hearing, the Danish Government further submitted that the power to dismiss members lies with the same person as has the power to appoint them, namely the Minister for Enterprise and Growth. The Danish Government pointed out, however, that, to its knowledge, there had been no cases involving the dismissal of a member of the Teleklagenævnet.

53. The foregoing evidence is not enough to convince me that the independence and the impartiality of the members of the Teleklagenævnet are such as to remove them from any external pressure.

54. There is, after all, no express legislative provision determining the circumstances in which members of the Teleklagenævnet may be dismissed or their appointment cancelled. Moreover, the guarantees intended to protect the members of courts exercising general jurisdiction are not applicable to them by analogy.

55. Consequently, the members of the Teleklagenævnet, who, moreover, are appointed and dismissed by the same authority, have no specific guarantees against their dismissal other than those provided for by general administrative and employment law. That, in my view, is not sufficient for the purposes of the case-law of the Court, since provision for their dismissal must be made in specific legislation derogating from the generally applicable rules of law. Lastly, it is clear that their four-year term of office cannot guarantee that they will not be removed from office.

56. To my mind, this evidence is conclusive and precludes the Teleklagenævnet from being recognised as having the status of a ‘court or tribunal’ within the meaning of Article 267 TFEU, since all the foregoing circumstances serve to demonstrate that that body is more in the nature of an administrative authority.

57. At this stage in my analysis, it is none the less important to point out that, in accordance with Article 71(2) of the Telecommunications Law, the decisions of the Teleklagenævnet may be appealed to the ordinary courts within a period of eight weeks. The existence of that remedy therefore ensures the effectiveness of the mechanism of the request for a preliminary ruling provided for in Article 267 TFEU and the uniform interpretation of EU law and, in the present case, in particular of the Universal Service Directive, that that provision of the FEU Treaty seeks to ensure. To use the form of words employed in settled case-law, under Article 267 TFEU, such national courts have the option or, where appropriate, are required to make a request for a preliminary ruling to the Court where a decision on the interpretation or the validity of EU law is necessary to give their judgment. ( 26 )

58. Consequently, I consider that the Court does not have jurisdiction to give a ruling on the questions referred for a preliminary ruling by the Teleklagenævnet.

59. It is therefore in the alternative and in the event that the Court decides that it does have jurisdiction that I shall examine the questions referred for a preliminary ruling by that body.

III – Examination, in the alternative, of the questions referred for a preliminary ruling

60. All of the questions raised by the Teleklagenævnet seek to determine the conditions under which a Member State is required, in accordance with Article 32 of the Universal Service Directive, to pay compensation to an undertaking providing an additional mandatory service.

61. For the purposes of my analysis, I shall examine those questions in an order different from that in which they were presented by the body making the reference.

62. I shall start my analysis by examining the fifth question, which, as I see it, raises a preliminary question, that is to say what bearing the place of performance of the service at issue has on the answers to be given to the first to fourth questions.

63. I shall then continue my analysis by looking at the questions relating to the interpretation of the Universal Service Directive.

64. I shall turn, first, to the examination of the fourth question, concerning the method for calculating the net cost of universal service obligations.

65. Next, I shall examine the questions relating to the arrangements for financing additional mandatory services. In that context, I shall analyse the first, sixth and seventh questions together, since they each concern the basic rules applicable to the grant and calculation of the compensation due for providing such services. At that point, I shall answer the eighth question, concerning the direct effect of Article 32 of the Universal Service Directive. Lastly, I shall analyse the second and third questions, which are more concerned with the actual details of calculating that compensation.

A – Fifth question, concerning the special status of Greenland

66. By its fifth question, the Teleklagenævnet asks whether the fact that TDC provides the additional mandatory service at issue in Greenland has a bearing on the answers to be given to the first to fourth questions, concerning the interpretation of Article 32 of the Universal Service Directive.

67. The issue raised by this case therefore lies in the fact that TDC does not offer the maritime safety and emergency service exclusively within the territory of a Member State of the European Union, but also in an OCT. Consequently, the question is whether Greenland’s special status requires the Court to take an approach different from that which it would take if the operator provided that service exclusively within the territory of the Member State, in relation to the interpretation of the Universal Service Directive, on the one hand, and the application of the rules on State aid, on the other.

68. First, the fact that TDC provides the service at issue in Greenland does not, in my opinion, have any bearing on the applicability of the rules on State aid to the present case. After all, the financing in question is public financing drawn from the resources of the Kingdom of Denmark and benefiting a Danish undertaking established in national territory. This point does not therefore raise any particular difficulty.

69. The question of the applicability of the Universal Service Directive is an entirely different matter. In order to understand the implications of this question, it is appropriate to look briefly at the special situation and status of Greenland in relation to EU law.

70. The OCTs, which are referred to in Annex II to the FEU Treaty, and of which Greenland is one, are ‘territories’ linked to a Member State for historical or political reasons. They are not sovereign States with international legal personality. For its part, Greenland is an integral part of the Kingdom of Denmark. It none the less holds internal autonomy status, which it obtained on 1 May 1979, making it ‘a separate community within the Kingdom of Denmark’, and which was later reinforced by the Law on the Autonomy of Greenland adopted by the Danish Parliament on 20 June 2009.

71. As the Court held in Antillean Rice Mills and Others v Commission, ( 27 )‘although the OCTs are countries and territories which have special links with [the European Union], they do not, however, form part of the [European Union]’. ( 28 ) The Treaties, and in particular Article 52 TEU and Article 355(2) TFEU, therefore grant those territories a special status, based on special arrangements for association geared towards the economic and social development of the OCTs. Those arrangements are defined in general terms in Part Four of the TFEU, comprising Articles 198 to 204 TFEU, and, in the case of Greenland, in Protocol (No 34) on special arrangements for Greenland, annexed to the TEU and the TFEU.

72. Unfortunately, those provisions do not make it possible to determine with certainty whether the special arrangements for the association of the OCTs establish an autonomous and separate legal system in which only Articles 198 to 204 TFEU and the acts adopted on the basis of those articles would be applicable or whether those arrangements constitute a lex specialis applicable, if necessary, in place and instead of the general rules contained in the TFEU.

73. The provisions contained in Part Four of the TFEU are, after all, framed in ambiguous terms and the case-law does not provide a clear answer either. Those difficulties were neatly summarised by Advocate General Cruz Villalón in his Opinion in Prunus and Polonium. ( 29 ) After setting out the two lines of case-law established by the Court in this regard, ( 30 ) Advocate General Cruz Villalón took the view that ‘there is no categorical answer to the question whether an OCT should be categorised as a Member State or a third country, and instead the answer varies on a case-by-case basis according to the relevant legal framework and taking into careful consideration the objectives pursued by the special arrangements for association laid down in Part Four of the TFEU’. ( 31 )

74. I concur with that analysis. In my view, the provisions of the FEU Treaty and the secondary legislation derived from them should be applicable to the OCTs, unless those provisions are replaced by specific rules laid down in Articles 198 to 204 TFEU or unless they undermine the objectives pursued by the association arrangements.

75. In the case in the main proceedings, it is clear that the provision of a mandatory additional service under the conditions established in Article 32 of the Universal Service Directive pursues the same objectives as the association arrangements concluded with Greenland, since it contributes towards the economic and social development of that territory and furthers the interests of its inhabitants, in accordance with the objectives set out in Articles 198 and 199 TFEU. Moreover, there is no specific provision in Articles 198 to 203 TFEU or in Protocol (No 34) on special arrangements for Greenland, annexed to the EU and FEU Treaties, which precludes such applicability.

76. I therefore take the view that, in a situation such as that at issue in the main proceedings, the fact that the undertaking entrusted with the additional mandatory service referred to in Article 32 of the Universal Service Directive provides that service not only in the territory of the Member State but also in the territory of an OCT does not have any bearing on the interpretation to be given to the provisions of that directive or on the application of the rules on State aid.

B – Fourth question, concerning the method for calculating the net cost of universal service obligations

77. By its fourth question, the Teleklagenævnet asks the Court whether the Universal Service Directive precludes a Member State from taking into account, for the purpose of calculating the net cost borne by a universal service provider, all the revenue and expenditure associated with the provision of the service in question, and in particular the revenue and expenditure which the undertaking would have recorded if it had not been entrusted with those obligations.

78. The answer to that question can be found in the actual text of the Universal Service Directive.

79. As recital 4 in the preamble to that directive states, ensuring universal service may involve the provision of some services to end-users at prices that depart from those resulting from normal market conditions. It was for that reason that the EU legislature provided, as is clear from recital 18 in the preamble to the directive, that Member States should, where necessary, establish mechanisms for financing the net cost of universal service obligations in cases where it is demonstrated that the obligations can only be provided at a loss or at a net cost which falls outside normal commercial standards.

80. Thus, in accordance with the first subparagraph of Article 12(1) of the Universal Service Directive, where NRAs consider that the provision of universal service may represent an unfair burden on the service provider, they must calculate the net cost of its provision.

81. The EU legislature detailed the methods for calculating the net cost of universal service obligations in point (a) of the second subparagraph of Article 12(1) of the Universal Service Directive and explained them in recital 19 in the preamble and Annex IV, Part A, to that directive.

82. First, it follows from point (a) of the second subparagraph of Article 12(1) of that directive that Member States must calculate the net cost of the universal service obligation with reference to any market benefit which accrues to the service provider.

83. Next, it follows from Annex IV, Part A, to the Universal Service Directive that the net cost is to be calculated as the difference between the net cost to the undertaking of operating with the universal service obligations and operating without the universal service obligations. The EU legislature goes on to say that, in so doing, Member States must give due attention to correctly assessing the costs that the undertaking would have chosen to avoid had there been no universal service obligation.

84. Lastly, the EU legislature states that calculation of the net cost must take account not only of costs and revenues but also of the intangible benefits resulting from providing universal service. ( 32 )

85. It should also be noted that, in recital 17 in the preamble to Decision 2012/21, the Commission stated that, when compensating an undertaking entrusted with the operation of a service of general economic interest, the net cost to be taken into account should be calculated as the difference between the cost incurred in operating the service of general economic interest (‘SGEI’) and the revenue earned from that service or, alternatively, as the difference between the net cost to the undertaking of operating with the public service obligation and the net cost or profit to that same undertaking of operating without the public service obligation.

86. In the light of the foregoing, I therefore consider that point (a) of the second subparagraph of Article 12(1) of the Universal Service Directive must be interpreted as meaning that it does not preclude national legislation under which a Member State takes into account, for the purposes of calculating the net cost of universal service obligations, all the revenue and expenditure associated with the provision of that service, and in particular the revenue and expenditure which the undertaking would have recorded if it had not been the provider of that service.

C – The first, sixth and seventh questions, concerning the rules and principles applicable to the compensation of an undertaking providing an additional mandatory service

87. The first, sixth and seventh questions ask the Court to clarify the rules and principles governing the financing by a Member State of additional mandatory services.

88. By its first question, the Teleklagenævnet asks the Court, in essence, whether Article 32 of the Universal Service Directive precludes a Member State from refusing to compensate an undertaking providing an additional mandatory service on the ground that the cost of that service is covered by the profits which that undertaking has made from its universal service obligations.

89. By its sixth question, the Teleklagenævnet asks what bearing the rules on State aid laid down not only in Article 107(1) and Article 108(3) TFEU but also in Decision 2012/12 have on the interpretation of that provision. That decision sets out the conditions under which a Member State is exempt from the requirement to give the Commission prior notification of State aid paid in the form of compensation for provision of an SGEI, where that compensation may be regarded as being compatible with Article 106(2) TFEU.

90. Similarly, by its seventh question, the Teleklagenævnet asks what bearing the principle of least market distortion, on which the EU legislature based that directive, has on the interpretation of Article 32 of the Universal Service Directive. ( 33 )

91. I shall examine those three questions together, since the rules and principles to which the Teleklagenævnet refers in its sixth and seventh questions do not have a bearing on but govern the discharge of the obligations arising from the Universal Service Directive, and in particular the compensation mechanisms which must be set up for the purpose of financing the universal service and additional mandatory services.

92. For the reasons which I shall now describe, I consider that a Member State may not, under Article 32 of the Universal Service Directive, refuse to compensate an undertaking providing an additional mandatory service where the cost of that service is covered by the profits which that undertaking has made from its universal service obligations.

93. Like the Commission, I take the view that the compensation schemes provided for by the Universal Service Directive in connection with the universal service obligation, on the one hand, and additional mandatory services, on the other, are mutually independent, and that the net costs incurred in providing 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.

94. It is true that the obligation to keep separate accounts is not expressly provided for in connection with the financing of additional mandatory services. However, that requirement flows from the principles laid down by the EU legislature in the Universal Service Directive and from the applicability of the rules on State aid.

95. First of all, the rules laid down in Article 32 of the Universal Service Directive require that an undertaking providing an additional mandatory service be compensated. It is true that the EU legislature does not set out in detail the principles applicable to that compensation. It simply prohibits the Member States from passing on the cost of that service to the electronic communications network and service operators present on the national market. ( 34 ) The EU legislature seeks to ensure in this way that contributions paid by market participants are directly linked to the provision of universal service and do not extend to related or ancillary activities. Its objective is to secure minimal market distortion while ensuring that the establishment of a sectoral fund does not impose a disproportionate burden on operators in the sector, and in particular on new entrants. ( 35 ) None of the undertakings in the sector, including the service provider, must therefore be called upon to contribute towards the financing of an additional mandatory service.

96. The wording of Article 32 of the Universal Service Directive therefore means that an undertaking providing an additional mandatory service must not be compelled to bear the cost associated with providing that service and must be able to obtain compensation for that cost from the Member State.

97. To my mind, the wording of that provision is sufficiently precise and unconditional in this regard to be directly effective.

98. In those circumstances, I consider that a Member State may not adopt national legislation which operates ultimately to deprive the provider of an additional mandatory service of compensation.

99. Secondly, the rules relating to the financing of universal service mean that separate accounts must be kept for activities forming part of universal service and those relating to other types of services, including additional mandatory services. Thus, for the purposes of calculating the compensation, Member States are required take account solely of the revenue which the universal service provider has generated from the provision of that service. ( 36 )

100. The requirement to keep separate accounts is contained in Article 13(1)(a) of Directive 2002/21. In accordance with that provision, undertakings are required to keep separate accounts so as to identify all elements of cost and revenue related to their activities associated with the provision of electronic communications networks or services where they also have special or exclusive rights for the provision of services in other sectors in the same Member State.

101. That requirement was incorporated into the Universal Service Directive in connection with the provision of universal service.

102. After all, observance of the principles referred to by the EU legislature in Articles 12 to 14 of that directive, which must be read in the light of recitals 3, 18 and 25 in the preamble, and Annex IV, to that directive means that the compensation scheme must be directly linked to the net cost generated by universal service obligations, as, moreover, the Court has confirmed in its case-law. ( 37 ) It thus follows from recitals 3 and 18 in the preamble to the Universal Service Directive that Member States are required to compensate designated undertakings for the ‘specific net cost incurred’ in providing universal service. Observance of those principles requires the NRAs to draw a distinction between the net cost associated with universal service, on the one hand, and the costs associated with the provision of services falling outside the scope of Chapter II of that directive, be these additional mandatory services or market services, on the other. Indeed, in this regard, the EU legislature provided for different financing arrangements depending on the nature of the service, thus expressly excluding sectoral financing in connection with the implementation of Article 32 of that directive. ( 38 )

103. The requirement to keep separate accounts not only lends transparency to the financing procedure, ( 39 ) it also helps ensure that universal service is financed in a competitively neutral way. ( 40 )

104. Such a requirement also ensures, in accordance with recital 18 in the preamble to the Universal Service Directive, that the financing of universal service and additional mandatory services complies with the rules on State aid. ( 41 )

105. The keeping of separate accounts is after all a condition of the grant by Member States of the compensation due for providing services of general economic interest.

106. The provision of an additional mandatory service is clearly, like universal service, a service of general economic interest within the meaning of Article 106(2) TFEU. Although additional mandatory services cannot be classified as ‘universal service’ within the meaning of the Universal Service Directive, the fact remains that, because of their nature and their purpose, they address the same concerns as are addressed by universal service and are provided under the same conditions. ( 42 ) Thus, an additional mandatory service is most commonly provided at a price that departs from that resulting from normal commercial conditions.

107. The compensation granted by Member States for providing a service of general economic interest is subject to compliance with the rules laid down by the EU legislature in Articles 107 and 108 TFEU. To prevent such compensation from being classified as ‘State aid’ incompatible with Article 107(1) TFEU, in those circumstances, the State intervention must satisfy four cumulative criteria laid down by the Court in Altmark Trans and Regierungspräsidium Magdeburg. ( 43 ) Those conditions are as follows: — first, the recipient undertaking must actually have public service obligations to discharge, and the obligations must be clearly defined; — secondly, the parameters on the basis of which the compensation is calculated must be established in advance in an objective and transparent manner, to avoid it conferring an economic advantage which may favour the recipient undertaking over competing undertakings; — thirdly, the compensation cannot exceed what is necessary to cover all or part of the costs incurred in the discharge of public service obligations, taking into account the relevant receipts and a reasonable profit; and — fourthly, the level of compensation needed must be determined on the basis of an analysis of the costs which a typical undertaking, well run and adequately provided with the necessary means, would have incurred where the undertaking was not chosen pursuant to a public procurement procedure.

108. If those criteria are not satisfied and if the general conditions for the applicability of Article 107(1) TFEU are fulfilled, the compensation paid by the Member State to the undertaking providing the service of general economic interest will then constitute State aid and will be subject to the provisions of Articles 106, 107 and 108 TFEU.

109. The Commission clarified each of those conditions in its Communication on the application of European Union State aid rules to compensation granted for the provision of services of general economic interest. ( 44 ) In the case of the principles governing the grant and calculation of compensation, the Commission was at pains to point out, in paragraph 56 of that communication, that ‘[o]nly the costs directly associated with the provision of the SGEI can be taken into account in that context’. ( 45 )

110. The Commission also pointed out, in Article 5(3) of its Decision 2012/21, that any compensation granted to an undertaking entrusted with the operation of services of general economic interest must be based on cost accounting principles that make it possible to identify each of the costs connected with the provision of the service in question.

111. I would point out that the requirement to keep separate accounts already existed under Commission Directive 2006/111/EC of 16 November 2006 on the transparency of financial relations between Member States and public undertakings as well as on financial transparency within certain undertakings. ( 46 ) In accordance with Article 4 of Directive 2006/111, any undertaking entrusted with the operation of a service of general economic interest which receives public service compensation in connection with that service and which carries on other activities has an obligation to keep separate accounts so that all revenues and costs can be assigned to the different activities concerned.

112. In this instance, in a case such as that at issue in the main proceedings, compliance with such an obligation also serves to guarantee that the undertaking providing both universal service and the additional mandatory service will not be penalised. After all, the keeping of separate accounts ensures that the revenue which the undertaking derives from its universal service obligations is not taken into account twice, first with a view to calculating the net cost of the universal service obligation, and therefore of the compensation granted for that reason, and secondly with a view to calculating the net cost of the additional mandatory service, and therefore of granting the compensation payable by reason of the additional mandatory service. Such a practice would necessarily penalise the service provider, since it would have the effect of compelling it to bear the cost of the additional mandatory service, contrary to the very terms of Article 32 of the Universal Service Directive.

113. As will become apparent from my subsequent submissions, this none the less does not mean that revenue derived from universal service obligations cannot be taken into account at a later stage, when it comes to assessing whether the burden imposed on the service provider is excessive or unfair.

114. In the light of all the foregoing, I therefore take the view that Article 32 of the Universal Service Directive must be interpreted as meaning that it precludes national legislation which permits a Member State to reject an application for compensation made by an undertaking providing an additional mandatory service on the ground that the cost of that service is covered by the profits which that undertaking has made from its universal service obligations.

115. Taking into account the answer which I propose should be given to that question, it is now appropriate to examine the eighth question raised by the Teleklagenævnet.

D – Eighth question, concerning the direct effect of Article 32 of the Universal Service Directive

116. By its eighth question, the Teleklagenævnet asks whether Article 32 of the Universal Service Directive has direct effect.

117. According to settled case-law, where a Member State fails to transpose a directive by the end of the period prescribed or fails to transpose the directive correctly, the provisions of that directive which, appear, so far as their subject-matter is concerned, to be unconditional and sufficiently precise, may be relied on by individuals against the State. ( 47 )

118. In this case, it is true that Article 32 of the Universal Service Directive does not specify the calculation rules which a Member State is required to adopt for the purposes of granting compensation to an undertaking providing an additional mandatory service. Member States therefore have some discretion in this regard, provided that they comply with the rules on State aid.

119. Article 32 of the Universal Service Directive none the less confers on an undertaking providing an additional mandatory service the right to obtain compensation for the costs associated with supplying that service. By excluding sectoral financing, the EU legislature prohibits the Member States from charging the cost of that service to undertakings in the sector, including the service provider, and requires that compensation be sourced from public funds. The terms of that provision are, in my view, sufficiently precise and unconditional to be directly effective in this regard.

120. In those circumstances, a Member State cannot adopt a method for calculating the costs associated with the provision of an additional mandatory service which has the effect of depriving the undertaking providing that service of the right to compensation.

121. In the light of the foregoing, I take the view that, inasmuch as it confers on the undertaking providing an additional mandatory service the right to obtain compensation for the costs associated with supplying that service, Article 32 of the Universal Service Directive has direct effect.

E – Second and third questions, concerning the existence of an unfair burden creating a right to compensation

122. The last two questions I shall be looking at ask the Court to specify the conditions under which Member States may take account of the existence of an unfair burden on the undertaking providing an additional mandatory service for the purposes of granting compensation.

123. By its second question, the Teleklagenævnet asks the Court first of all whether the Universal Service Directive precludes national legislation which makes the grant of such compensation subject to the existence of an unfair burden on the undertaking providing an additional mandatory service.

124. In the event that that directive does not preclude such national legislation, it asks, by its third question, whether, for the purposes of assessing whether that burden is unfair, a Member State may take account of the profits which the undertaking providing the additional mandatory service has made from its universal service obligations.

125. In my view, there is nothing to preclude such legislation.

126. After all, it follows neither from Article 32 of the Universal Service Directive nor from any other provision of that directive that the EU legislature itself intended to lay down the conditions under which the NRAs must calculate the net cost of providing an additional mandatory service and the conditions under which those authorities are moved to consider that the provision of such a service may represent an unfair burden on the service provider.

127. In those circumstances, in the absence of any specific rules, the Member States are, to my mind, at liberty to lay down the conditions under which the cost of an additional mandatory service must be calculated and the burden that service places on the service provider must be determined, provided, however, that they comply with the rules on State aid as flowing from the conditions set out by the Court in Altmark Trans and Regierungspräsidium Magdeburg, EU:C:2003:415, and in particular the principles governing the grant of public service compensation by the Member States.

128. The Member States are therefore free to examine whether the undertaking providing the additional mandatory service is indeed subject to an unfair burden before setting up a mechanism for awarding compensation for the costs borne by that undertaking.

129. That is the system which the EU legislature established for the purpose of financing universal service in Articles 12 and 13 of the Universal Service Directive.

130. After all, it follows from recital 21 in the preamble to the Universal Service Directive that the EU legislature intended to link the mechanisms for financing the net costs incurred in providing the universal service to the existence of an excessive burden on the undertaking in question.

131. In order to award compensation, Member States must therefore calculate the net cost which providing that service represents for each of the undertakings concerned, in accordance with the calculation method referred to in Article 12 of the Universal Service Directive and explained in recital 19 in the preamble, and Annex IV, Part A, to that directive. ( 48 ) Not until that net cost has been determined can the Member States assess whether the universal service provider is indeed subject to an unfair or excessive burden and, if so, decide, at the request of the undertaking concerned, to make arrangements to compensate it for that cost.

132. After all, as the Court has held, the net cost of universal service does not necessarily represent an unfair burden for all the undertakings concerned and the net cost of universal service provision does not automatically give rise to a right to compensation. ( 49 )

133. The Court has defined the concept of an excessive or unfair burden in its case-law. It is a burden which, for each undertaking concerned, is excessive in view of the undertaking’s ability to bear it, account being taken of all the undertaking’s own characteristics, in particular the quality of its equipment, its economic and financial situation and its market share. ( 50 )

134. Where a universal service obligation represents an excessive burden for an undertaking, the Member State is then authorised to compensate it by means of a mechanism for the coverage or recovery of costs. Since that compensation involves transfers of funds, Member States are required to ensure that such transfers are made in an objective and transparent manner, in compliance with the rules on State aid and in such a way as to involve the least possible distortion of competition and demand.

135. I see no reason why a Member State should not apply those provisions by analogy in order to determine the compensation payable for providing additional mandatory services. On the contrary. The purpose of the rules laid down in Articles 12 and 13 of the Universal Service Directive is to ensure compliance with the principles of transparency, objectivity, non-discrimination and proportionality, ( 51 ) on which the financing is based. They also serve to address the concerns expressed by the Court in Altmark Trans and Regierungspräsidium Magdeburg, EU:C:2003:415, and to meet the conditions, established in that judgment, under which public service compensation falls outside the scope of Article 107(1) TFEU.

136. With the exception of the rules specifically linked to the nature of the financing, it therefore seems to me to be perfectly logical that the compensation of an undertaking providing an additional mandatory service should satisfy the same requirements as are laid down in connection with universal service provision.

137. After all, as I have already said, although additional mandatory services cannot be classified as ‘universal service’ within the meaning of the Universal Service Directive, the fact remains that, because of their nature and their purpose, they address the same concerns as are addressed by universal service and are provided under the same conditions. Thus, an additional mandatory service is most commonly provided at a price that departs from that resulting from normal commercial conditions. Under the Universal Service Directive, the EU legislature makes the provision of additional mandatory services and the provision of universal service subject to compliance with the same principles, and in particular compliance with the rules on State aid.

138. In the case of compensation for the costs associated with the provision of additional mandatory services, Member States are therefore still required to comply with the rules on State aid as flowing from the conditions set out by the Court in Altmark Trans and Regierungspräsidium Magdeburg, EU:C:2003:415, and in particular the principles governing the grant by Member States of public service compensation.

139. Member States must thus ensure that the parameters for calculating compensation do not entail any distortion of competition on the market and, consequently, do not confer any economic advantage that could favour the recipient undertaking over competing undertakings. In the Commission’s view, such compensation must not exceed what is necessary to cover all or part of the net costs specifically incurred in the discharge of public service obligations, taking into account the relevant receipts, as it may otherwise constitute State aid incompatible with the internal market. Member States are none the less also required to ensure that the service provider makes a reasonable profit. ( 52 )

140. By linking the financing of the net costs incurred in providing the service to the existence of an excessive burden on the provider undertaking, the EU legislature has, in the context of universal service, addressed all those concerns.

141. For the reasons which I have just given and because there is, to my mind, no reason to draw a distinction between the arrangements for compensating an undertaking on the basis of whether they relate to the provision of universal service or the provision of an additional mandatory service — with the exception, of course, of those relating to the nature of the financing —, I consider that a Member State may make the grant of compensation payable for providing an additional mandatory service subject to the existence of an unfair burden on the service provider.

142. Taking into account the answer which I propose should be given to that question, it is appropriate now to examine the third question which the Teleklagenævnet asks the Court.

143. The Teleklagenævnet asks whether a Member State may take account of the profit which the undertaking providing the additional mandatory service has made from its universal service obligations in order to assess whether the burden borne by that undertaking in providing the additional mandatory service represents an unfair or excessive burden.

144. I would reiterate that the Court has defined the concept of excessive or unfair burden in its case-law as being a burden which, for each undertaking concerned, is excessive in view of the undertaking’s ability to bear it, account being taken of all the undertaking’s own characteristics, in particular the quality of its equipment, its economic and financial situation and its market share. ( 53 )

145. The revenue which the undertaking derives from its universal service obligation contributes directly towards its economic and financial capacity. Consequently, it seems to me that that revenue may be taken into account not in calculating the net cost of the additional mandatory service but as part of the process of assessing whether the burden which the undertaking has to bear in providing that service is unfair or excessive.

146. In the light of all the foregoing, I consider that the Universal Service Directive does not preclude national legislation which makes the grant of compensation payable for providing an additional mandatory service subject to the existence of an unfair burden on the undertaking providing that service. In this regard, a Member State may, for the purposes of assessing whether that burden is unfair, take into account the profits which that undertaking has made from its universal service obligations.

IV – Conclusion

147. In the light of the foregoing considerations, I consider that the Court does not have jurisdiction to answer the questions referred by the Teleklagenævnet in its order for reference of 25 April 2013.

148. In the alternative, I propose that the Court should reply to the questions referred by the Teleklagenævnet as follows: (1) In a situation such as that at issue in the main proceedings, the fact that the undertaking entrusted with the additional mandatory service referred to in Article 32 of Directive 2002/22/EC of the European Parliament and of the Council of 7 March 2002 on universal service and users’ rights relating to electronic communications networks and services (Universal Service Directive), as amended by Directive 2009/136/EC of the European Parliament and of the Council, provides that service not only in the territory of the Member State but also in the territory of an overseas country or territory does not have any bearing on the interpretation to be given to the provisions of that directive or the application of the rules on State aid. (2) Point (a) of the second subparagraph of Article 12(1) of the Universal Service Directive, as amended by Directive 2009/136, must be interpreted as meaning that it does not preclude national legislation under which a Member State takes into account, for the purposes of calculating the net cost of universal service obligations, all the revenue and expenditure associated with the provision of that service, and in particular the revenue and expenditure which the undertaking would have recorded if it had not been the provider of that service. (3) Article 32 of the Universal Service Directive, as amended by Directive 2009/136, must be interpreted as meaning that it precludes national legislation which permits a Member State to reject an application for compensation made by an undertaking providing an additional mandatory service on the ground that the cost of that service is covered by the profits which that undertaking has made from its universal service obligations. (4) Article 32 of the Universal Service Directive, as amended by Directive 2009/136, inasmuch as it confers on an undertaking providing an additional mandatory service the right to obtain compensation for the costs associated with supplying that service, has direct effect. (5) The Universal Service Directive, as amended by Directive 2009/136, does not preclude national legislation which makes the grant of compensation payable for providing an additional mandatory service subject to the existence of an unfair burden on the undertaking providing that service. In this regard, a Member State may, for the purposes of assessing whether that burden is unfair, take into account the profits which that undertaking has made from its universal service obligations.

( 1 ) Original language: French.

( 2 ) Directive 2002/22/EC of the European Parliament and of the Council of 7 March 2002 on universal service and users’ rights relating to electronic communications networks and services (Universal Service Directive) (OJ 2002 L 108, p. 51), as amended by Directive 2009/136/EC of the European Parliament and of the Council of 25 November 2009 (OJ 2009 L 337, p. 11) (‘the Universal Service Directive’).

( 3 ) Article 1(1) and (2) of that directive.

( 4 ) Article 29 of the Universal Service Directive.

( 5 ) The order for reference indicates that safety services in Greenland are in practice provided by Tele Greenland A/S, an undertaking owned by the autonomous Greenland authorities, TDC’s role being confined to covering the costs associated with the provision of those services.

( 6 ) According to the order for reference, at the time of the facts in the dispute in the main proceedings, the competent telecommunications authority was Den danske telemyndighed. Since then, that body’s responsibilities have been transferred to the Erhvervsstyrelsen. This is the national regulatory authority (‘NRA’) responsible, inter alia, for supervising the sector in accordance with Article 3 of Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services (Framework Directive) (OJ 2002 L 108, p. 33).

( 7 ) According to the order for reference, following the letter of formal notice and the reasoned opinion notified by the European Commission on 27 January and 29 September 2011 respectively, the Danish Government amended its legislation to the effect that the State would defray the cost of the additional mandatory service as from 1 April 2012. However, since it considered that the previous legislation was not contrary to the Universal Service Directive, the Danish Government took the view that that amendment had no retroactive effect and did not afford coverage for costs incurred in connection with provision of the safety services at issue before 1 April 2012.

( 8 ) OJ 2012 L 7, p. 3.

( 9 ) Commission Directive 2002/77/EC of 16 September 2002 on competition in the markets for electronic communications networks and services (OJ 2002 L 249, p. 21).

( 10 ) See, in particular, Dorsch Consult, C‑54/96, EU:C:1997:413, paragraph 23; Syfait and Others, C‑53/03, EU:C:2005:333, paragraph 29; RTL Belgium, C‑517/09, EU:C:2010:821, paragraph 36; and Belov, C‑394/11, EU:C:2013:48, paragraph 38 and the case-law cited; as well as, for a more recent application [of that case-law], Merck Canada, C‑555/13, EU:C:2014:92, paragraph 16.

( 11 ) Belov, EU:C:2013:48, paragraphs 40 and 41.

( 12 ) ANAS, C‑192/98, EU:C:1999:589, paragraph 22, and RAI, C‑440/98, EU:C:1999:590, paragraph 13, concerning the Corte dei Conti (Italy).

( 13 ) See, in particular, Belov, EU:C:2013:48, paragraph 39 and the case-law cited.

( 14 ) ‘The Telecommunications Law’.

( 15 ) ‘Regulation No 383’.

( 16 ) Paragraphs 28 and 29.

( 17 ) That freedom is not enjoyed by the Erhvervsstyrelsen, which, in accordance with national case-law, cannot contest ‘before the courts decisions directed against it other than in entirely exceptional circumstances’ (paragraph 21 of the Danish Government’s response to the questions put by the Court).

( 18 ) The Danish Government refers to Article 2(6) of Regulation No 383.

( 19 ) C‑506/04, EU:C:2006:587.

( 20 ) Paragraph 49 and the case-law cited.

( 21 ) See, inter alia, Wilson, EU:C:2006:587, paragraphs 50 and 51 and the case-law cited; Pilato, C‑109/07, EU:C:2008:274, paragraph 23; and RTL Belgium, EU:C:2010:821, paragraph 39.

( 22 ) Wilson, EU:C:2006:587, paragraph 52 and the case-law cited, and RTL Belgium, EU:C:2010:821, paragraph 40.

( 23 ) Pilato, EU:C:2008:274, paragraph 24 and the case-law cited.

( 24 ) The criteria for assessing the independence of a court or tribunal have been extensively developed by the case-law of the European Court of Human Rights (ECtHR) and were recently reiterated in its judgment in Grande Stevens and Others v. Italy (nos 18640/10, 18647/10, 18663/10, 18668/10 and 18698/10, § 132 et seq., 4 March 2014). See also the judgment of the ECtHR in Georgian Labour Party v. Georgia (no. 9103/04, ECHR 2008), in which the Court held, in relation to Georgian electoral commissions, that the fact that 7 out of the 15 members of each of those commissions, including the presidents, who had a casting vote, were appointed by the President of Georgia and his party, was liable to call into question the impartiality and independence of the body called upon to settle a dispute (§ 106). The ECtHR pointed out that the composition of the electoral commissions lacked sufficient checks and balances against the President’s power and that those commissions lacked the required independence, but it did not conclude that there had been a violation of Article 3 of Additional Protocol No 1 to the European Convention for the Protection of Human Rights and Fundamental Freedoms, signed in Paris on 20 March 1952, on account of the absence of any proof of particular acts of abuse of power (§§ 110 and 111).

( 25 ) In point 33 of his Opinion in Syfair and Others, EU:C:2004:673, Advocate General Jacobs took the view that the limited number of places reserved for lawyers on the Greek Competition Commission was not sufficient to rule out its judicial status, since that body was charged with operating in a complex technical field where there is a need for economic and technical expertise alongside legal qualifications.

( 26 ) Belov, EU:C:2013:48, paragraph 52.

( 27 ) C‑390/95 P, EU:C:1999:66.

( 28 ) Paragraph 36.

( 29 ) C‑384/09, EU:C:2010:759, points 23 to 40.

( 30 ) See points 37 to 39 of the Opinion. Advocate General Cruz Villalón refers, on the one hand, to Eman and Sevinger, C‑300/04, EU:C:2006:545, in which the Court held that a national of a Member State whose place of residence is in an OCT is entitled to rely on the rights of citizenship of the Union laid down in Article 18 et seq. TFEU, thereby extending the right to vote in elections to the European Parliament to individuals residing in an OCT in the same way as if the latter were a Member State (paragraph 29). Advocate General Cruz Villalón explains that cases such as this concern situations in which the FEU Treaty did not in fact clearly state the extent of its application. He refers, on the other hand, to van der Kooy, C‑181/97, EU:C:1999:32, in which, conversely, the Court held that OCTs warranted treatment equivalent to that afforded to a third country (points 34 to 39). Reference should also be made to Opinions 1/78, EU:C:1979:224 and 1/94, EU:C:1994:384, in which the Court held that the OCTs remain outside the sphere of application of EU law and are therefore, as regards the European Union, in the same situation as non-member countries (paragraphs 61 and 62 and paragraph 17 respectively).

( 31 ) Point 39 of his Opinion.

( 32 ) Those benefits consist, for example, in the technical and commercial benefits arising from the extent of the service provider’s network as compared with that of a provider operating under normal market conditions, or from the brand image associated with the status of universal service operator.

( 33 ) The EU legislature defines the principle of least market distortion in recital 23 in the preamble to the Universal Service Directive. It states that respect for that principle requires that contributions be recovered in a way that as far as possible minimises the impact of the financial burden falling on end-users, for example by spreading contributions as widely as possible.

( 34 ) See in this regard recital 21 in the preamble to the Universal Service Directive, in which the EU legislature states that ‘[a]ny funding mechanisms should ensure that market participants only contribute to the financing of universal service obligations and not to other activities which are not directly linked to the provision of the universal service obligations’ (emphasis added). See also recital 25 in the preamble to that directive, in which it adds that, although individual Member States remain free to impose special measures outside the scope of universal service obligations, they must nevertheless provide for a financing mechanism that is in conformity with EU law and not by means of contributions from market players.

( 35 ) See paragraph 2.5 of the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — A Quality Framework for Services of General Interest in Europe [COM(2011) 900 final].

( 36 ) See, in that regard, recital 19 in the preamble to the Universal Service Directive, which provides that ‘[a]ny calculation of the net cost of universal service should take due account of costs and revenues, as well as the intangible benefits resulting from providing universal service’ (emphasis added).

( 37 ) Commission v Belgium, C‑222/08, EU:C:2010:583, paragraphs 49 to 52.

( 38 ) For the purposes of financing of universal service obligations, most Member States have opted for sectoral funding. In 2011, only the Czech Republic, the Republic of Finland and the Kingdom of Sweden made provision for those costs to be covered by public financing alone, while the Republic of Malta and the Republic of Portugal provided for mixed public and private financing (see in this regard the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — Universal service in e-communications: report on the outcome of the public consultation and the third periodic review of the scope in accordance with Article 15 of Directive 2002/22/EC [COM(2011) 795 final, p. 13.]).

( 39 ) Recital 19 in the preamble to the Universal Service Directive provides that ‘[a]ny net costs of universal service obligations should be calculated on the basis of transparent procedures’ (emphasis added).

( 40 ) See Article 1(3) and Article 3(2) of the Universal Service Directive and also Commission v France, C‑220/07, EU:C:2008:354, paragraph 29.

( 41 ) See also recital 3 in the preamble to the Universal Service Directive and Article 6 of Directive 2002/77. See also Commission v France, EU:C:2008:354, paragraph 30.

( 42 ) In this regard, the Erhvervsstyrelsen’s website shows that provision of the services at issue has been incorporated into the universal service obligations.

( 43 ) C‑280/00, EU:C:2003:415, paragraphs 88 to 94.

( 44 ) OJ 2012, C 8, p. 4.

( 45 ) Emphasis added.

( 46 ) OJ 2006 L 318, p. 17.

( 47 ) See to that effect El Dridi, C‑61/11 PPU, EU:C:2011:268, paragraph 46.

( 48 ) I explained this calculation method in points 81 to 84 of this Opinion.

( 49 ) Commission v Belgium, EU:C:2010:583, paragraph 49.

( 50 ) Ibid.

( 51 ) See Commission v France, EU:C:2008:354, paragraph 29, and Article 6 of Directive 2002/77.

( 52 ) See recital 3 in the preamble to the Universal Service Directive, sections 3.4 and 3.5 of the Communication from the Commission referred to in point 109 of this Opinion and also recital 15 in the preamble to Decision 2012/21.

( 53 ) Commission v Belgium, EU:C:2010:583, paragraph 49.