Opinion of the Advocate-General



Opinion of the Advocate-General

I – Introduction

1. The present reference for a preliminary ruling, submitted by the Tribunale Amministrativo Regionale del Lazio (Regional Administrative Court of Latium, Italy) pursuant to Article 234 EC, concerns a subject with which the Court is already very familiar, although there are elements in this case which were not present in the other cases on which the Court has ruled. (2)

2. The Court has declared on five occasions that Directive 97/13/EC of the European Parliament and of the Council of 10 April 1997 on a common framework for general authorisations and individual licences in the field of telecommunications services (3) prohibits Member States from imposing on undertakings which hold individual licences charges not provided for in Article 11 thereof, and requires such charges to be calculated by reference to the cost of the administrative work involved in granting the licence.

3. The first occasion was in Albacom and Infostrada , (4) in which the Court was required to assist the Consiglio di Stato (Council of State) of the Italian Republic in deciding a dispute concerning a charge based on the turnover of telecommunications companies, a ruling which was reproduced in the Order of the Court 8 June 2004 in Telecom Italia Mobile and Others . (5)

4. Also against the background of the Italian legal system and again in response to the Consiglio di Stato, the Court held in Nuova Società di Telecomunicazioni (6) that Article 11 of Directive 97/13 precludes a provision which requires the holder of an individual licence for the provision of a public telecommunications network to pay an additional fee in respect of the private use of that network.

5. Subsequently, in the judgment in i-21 Germany and Arcor , (7) the Court informed the Bundesverwaltungsgericht (Federal Administrative Court) of Germany that the scheme of Directive 97/13 precludes a fee calculated by taking into account the general administrative costs of the regulatory body over a period of 30 years.

6. Eleven months previously, in ISIS Multimedia and Firma 02 , (8) the Court replied to the Bundesverwaltungsgericht that Article 11 precludes a fee applicable to new competitors for the allocation of telephone numbers which is far higher than the expense incurred in allocating those numbers, where the company which succeeded the former monopoly and holds a dominant position obtained the telephone numbers free of charge.

7. This reference for a preliminary ruling, in which, as in four of the previous ones, I have been called upon to formulate an Opinion, has arisen in a rather different context. In this case, it is necessary to determine whether, pursuant to Article 22 of Directive 97/13, Member States may extend until 1 January 1999 the obligation on former holders of exclusive licences to pay a pecuniary charge, which it is not disputed is contrary to Article 11 of Directive 97/13.

II – The legal framework

A – Community law: Directive 97/13

8. The opening up of telecommunications in the European Union took place on 1 January 1998, (9) and Directive 97/13 proved to be one of the most effective tools in that regard. That directive combined the essential requirement of state control of those resources, embodied in the authorisation procedure, with the unavoidable need to liberalise the sector in order to create the conditions in which freedom of establishment and freedom to provide services would promote the entrenchment of competition. With that aim in mind, the directive laid down a uniform framework, founded on the principles of proportionality, transparency and non-discrimination, in which the absence of restrictions constitutes the general rule for the supply of telecommunications and the operation of telecommunications networks. The Community legislature intended them to be distributed and used without hindrance or, where appropriate, in accordance with ‘general authorisations’, reducing ‘individual licences’ to the status of exceptions or additions to the universal permits. (10)

9. Articles 6 and 11 of Directive 97/13 follow the same route of promoting competition in the telecommunications market and of not imposing on undertakings more restrictions or charges than necessary, thereby complying with the principle of proportionality. (11) They are headed, respectively, ‘Fees and charges for general authorisation procedures’ and ‘Fees and charges for individual licences’.

10. Article 11 of that directive prohibits Member States from charging the holders of individual licences fees other than those which seek to cover the administrative costs incurred in the issue, management, control and enforcement of such licences (paragraph 1), without prejudice to the right, where scarce resources are to be used, to require the holders to pay non-discriminatory charges to ensure the optimal use of these resources (paragraph 2).

11. In accordance with Article 25, the Member States had to comply with the directive not later than 31 December 1997.

12. However, under the heading ‘Authorisations existing at the date of entry into force of this Directive’, Article 22 provides: (12)

‘1. Member States shall make all necessary efforts to bring authorisations in force at the date of entry of this Directive into line with its provisions before 1 January 1999.

2. Where application of the provisions of this Directive results in amendments to the terms of authorisations already in existence, Member States may extend the validity of terms, other than those giving special or exclusive rights which have been or are to be terminated under Community law, provided that this can be done without affecting the rights of other undertakings under Community law, including this Directive. In such cases, Member States shall notify the Commission of the action taken to that end and shall state the reasons therefor.

3. Without prejudice to the provisions of paragraph 2, obligations in authorisations existing at the date of entry into force of this Directive which have not been brought into line by 1 January 1999 with the provisions of this Directive shall be inoperative.

Where justified, Member States may, upon request, be granted a deferment of that date by the Commission.’

B – Italian legislation: the fee applicable to individual licences

13. The Codice postale e delle telecomunicazioni (Postal and Telecommunications Code) of 1973 (13) established that telecommunications services were reserved to the State (Article 1), while allowing them to be indirectly managed by means of concessions (Article 4). In the latter case, a concession holder was required to pay an annual fee (Article 188) proportional to the gross receipts from the service, less the amounts paid to the operator of the public network. (14)

14. After the process of liberalising the sector in the European Union had begun, Decree-Law No 545 of 23 October 1996 (15) ordered Italian legislation to be brought into line with Community law and became, with amendments, Law No 650 of 23 December 1996. (16)

15. The new legislation abolished exclusive and special rights and acknowledged the right of every undertaking to provide telecommunications services and install telecommunications networks, subject to administrative authorisations. Article 4(1) and (2) of Law No 249 of 31 July 1997 (17) on the designation of the Autorità per le garanzie nelle comunicazioni (Communications Regulatory Authority), and the establishment of rules in the telecommunications and broadcasting sector, confirmed that approach.

16. Presidential Decree No 318 of 19 September 1997 (18) made that adjustment of Italian law to the requirements imposed by Community legislation through the transposition of Directive 97/13. It fixed 1 January 1998 as the time-limit for the abolition of the former special and exclusive rights (Article 2(3)), and then went on to reproduce Article 22 of Directive 97/13 (Article 2(4) to (6)).

17. Presidential Decree No 318 further provided that the charge payable for individual licences would be used only to cover the administrative costs of issuing the licences (Article 6(20)), (19) as a result of which Article 188 of the Codice postale was rendered inoperative.

18. However, in order to ensure a smooth transition to the new system, the validity of Article 188 of the Codice postale was extended for such time as the Autorità considered necessary (Article 21(2)). That provision was repealed by Article 20(4) of Law No 448 of 23 December 1998 introducing public finance provisions for stabilisation and development (Law on budgets for 1999). (20) Article 20(3) of that law provided that Article 188 of the Codice postale would cease to be effective from 1 January 1999, from which it follows that that provision was in force during 1998.

III – The facts of the main proceedings and the question referred for a preliminary ruling

19. Telecom Italia SpA, which had had an exclusive licence to provide public telecommunications services in Italy since 1964, currently holds an individual licence for activities relating to the provision of such services and paid, for 1998, a fee of EUR 385 896 593 plus interest.

20. In order to secure the reimbursement of that sum, Telecom Italia brought an action before the Tribunale Amministrativo Regionale del Lazio, which, by order of 10 May 2006 and on the basis of the judgment in Albacom and Infostrada , asked the Court of Justice for a ruling ‘on the interpretation and scope’ of Articles 11, 22 and 25 of Directive 97/13, and, in particular, on whether Article 20(3) of Law No 448 of 1998 is consistent with those provisions.

IV – The procedure before the Court

21. The order for ref erence was received at the Court Registry on 3 July 2006. The applicant in the main proceedings, the Italian Government and the Commission lodged written observations, and oral argument was presented by their representatives at the hearing held on 4 October 2007.

V – Analysis of the question referred

A – Delimitation of the dispute

22. The Tribunale Amministrativo Regionale del Lazio frequently seeks preliminary rulings but, at the moment of truth, it is sparing with words and has submitted to the Court a question with more substance than its wording suggests.

23. The referring court is so restrained that, without being more specific, it merely asks the Court to rule on the interpretation and scope of Articles 11, 22 and 25 of Directive 97/13, with a view to comparing those provisions with Article 20(3) of Italian Law No 448 of 1998. That conciseness, rather than precision, obscures the real reasons for the reference and hinders a proper understanding of the question. In fact, the focus of the question is Article 22 of the directive, while the undeniably useful function of the other two articles is to delimit that provision.

24. The object of the main proceedings is to determine whether, in accordance with Article 22 of Directive 97/13, a fee which is contrary to Article 11 of that directive may continue to be levied until 31 December 1998, in other words beyond the time-limit set by Article 25 for the transposition of the directive (31 December 1997). (21)

25. An analysis of the conflict between the fee paid by Telecom Italia (and the national measures which provide for that fee) and the scheme of Directive 97/13, and in particular Article 11 thereof, is a premise to such a question. That task is for the national court and the Court of Justice must restrict itself to providing that court with the relevant guidelines for interpreting Community law, which it has already done in the judgments in Albacom and Infostrada , ISIS Multimedia and Firma 02 , Nuova Società di Telecomunicazioni , and i-21 Germany and Arcor .

26. In any event, it is easy to predict the outcome since, pursuant to the case-law cited, pecuniary charges which, in accordance with Article 11 of the directive, are imposed on undertakings holding individual telecommunications licences are intended to cover the administrative costs incurred in the issue and enforcement of those licences, unless they concern scarce resources, in which case a fee may be charged to ensure the optimal use of such resources. In line with that approach, the following do not comply with that scheme: a fee calculated by taking into account the forecast of the general costs, over a period of 30 years, of the body which issues the licences ( i-21 Germany and Arcor ); charges which are based on the turnover of the licence holders ( Albacom and Infostrada ); and an additional charge levied in respect of the private use of the public telecommunications network allocated to the licence holder, fixed in accordance with criteria other than those laid down in Article 11 ( Nuova Società di Telecomunicazioni ).

27. It is certain (at least in the minds of the referring court and the parties to these preliminary-ruling proceedings) that the same outcome is warranted by the charge levied on Telecom Italia for its licence in 1998, the amount of which was proportional to the gross revenue from its activity.

28. However, once that finding has been made, the question arises whether, notwithstanding that the fee is contrary to Directive 97/13, it was appropriate to extend that fee for one year pursuant to Article 22, the wording of which is anticipated in recitals 26 and 27 in the preamble to the directive.

B – The aim of Article 22 of Directive 97/13

29. The heading of that article (‘Authorisations existing at the date of entry into force of this Directive’), read in conjunction with the beginning of Recital 26, (22) provides the first indication that its aim is to protect former concessions which were still in existence under the harmonised system, in order to safeguard certain values inherent in any community governed by the rule of law, namely, the stability and continuity of legal relationships. To that end, Article 22(2) entrusts the Member States with deciding whether to extend the validity of the authorisations (23) affected by the new arrangements.

30. Nevertheless, that desire to preserve the past (24) is not without limits. At the outset, Article 22(1) lays down a time-limit, (25) requiring national legislatures to bring such authorisations into line with the provisions of the Directive before 1 January 1999, a time-limit which is repeated in the first subparagraph of Article 22(3), pursuant to which any obligations in such authorisations which have not been brought into line by that date are rendered inoperative. However, Article 22 refers also to substantive restrictions and paragraph 2 is particularly informative in that regard in that it precludes the extension of terms which confer special or exclusive rights and those which would affect third parties.

31. Article 22(2) refers to the ‘terms’ of authorisations already in existence, which could be extended unless they gave ‘special or exclusive rights’, in which case they had to be terminated on 31 December 1997. Article 22(3) refers to ‘obligations’ in such authorisations, which could remain in force until 31 December 1998. Those ‘obligations’ are a subgroup of the ‘terms’, a concept which is capable of including rights and obligations. Since Article 22(3) begins with the phrase ‘[w]ithout prejudice to the provisions of paragraph 2’, it is not appropriate to extend until 31 December 1998 ‘obligations’ linked to ‘special or exclusive rights’. That systematic approach to the wording of Article 22 undermines the argument put forward at the hearing in these preliminary ruling proceedings by the representative of the Italian Government, who proposed that the two provisions be interpreted independently of one another, as though they were watertight compartments.

32. Accordingly, the Member States were obliged to bring their rules into line with Directive 97/13 before 31 December 1997, although it was possible to extend for one year existing authorisations which were contrary to the directive, provided that those authorisations did not grant exclusive rights or prejudice the legal rights of third parties, in which case 31 December 1998 was the absolute time-limit.

33. That view is confirmed by Recital 26 in the preamble to the directive, which states that ‘clauses in such authorisations contrary to Community law, in particular those conferring on the licensees special or exclusive rights, are … inoperative from the date indicated in the relevant Community measures; … regarding other rights which do not affect the interests of other undertakings …, Member States could extend their validity in order to avoid claims for compensation’.

34. Therefore, as the representative of Telecom Italia has suggested, it is clear that the legislature wished to set a longer time-limit for bringing into line with Community law concessions and authorisations which, since they did not jeopardise the objectives of harmonisation in the Community, were not detrimental to freedom of competition.

C – The cost of the former concession

35. An examination of the fee paid by Telecom Italia, of which it claims reimbursement in the main proceedings, is the next step in the analysis since, if it were concluded that it created special or exclusive rights or that its continuation prejudiced the interests of third parties, the fee should not have continued to be imposed during 1998.

36. First of all, the second possibility should be discounted because, far from ‘affecting the rights of other undertakings’, the temporary extension of the payment by the former monopoly assists the activities of such undertakings because it imposes an additional charge on the former concession holder.

37. It might be argued that the first possibility should also be discounted because the contested measure does not give ‘special or exclusive rights’ but merely provides for payment in respect of such rights. However, it would be absurd to conclude the analysis at that point since the payment is closely linked to that situation of privilege which the new legislation abolishes. In other words, Article 22 prohibits the extension, after 31 December 1997, of the provision of telecommunications services by a single undertaking or by a number of undertakings with special rights, and that prohibition automatically affects the fees paid in those circumstances.

38. Therefore, Telecom Italia is right to assert that, since it ceased to be the sole provider of telecommunications services in Italy on 1 January 1998, its obligation to pay the licence fee to the Italian Treasury ended on that date, and there are no grounds de lege lata or de lege ferenda which would justify the extension of that fee. Neither the wording nor the spirit of the provision support any exemptions.

39. Directive 97/13 forms part of the Community’s efforts to liberalise the market for electronic communications, through the promotion of competition by means of not imposing on operators more restrictions or charges than are necessary, (26) thereby limiting the power of the Member States to impose financial charges and prohibiting them from levying fees other than the ones provided for by the Community legislature. (27) For the purposes of ensuring, in accordance with the principles of transparency, non-discrimination and proportionality, that all competitors were treated equally in the most sensitive stage, that is, at the time they entered the sector, and with a view to overturning the status quo inherited from the past, (28) it would have been possible to impose on Telecom Italia in 1998 the fee corresponding to the former concession only if it enjoyed an advantage which needed to be counteracted and that payment was the only method capable of offsetting it.

40. Although it is a point which the referring court must clarify, it has not been proved that, at the relevant time (1 January 1998), the undertaking which held the former Italian monopoly enjoyed a position of superiority vis-à-vis its competitors. Furthermore, in my opinion, if that were the case, the most appropriate method of ensuring that competitors are on an equal footing at the outset would not be to retain one of the elements (the payment of a fee) of an institution (the exclusive concession) which the Community legislation abolishes (29) but rather to rely on other methods created by that legislation to achieve equality, by imposing specific (‘asymmetrical’ to quote the representative of Italia Telecom at the hearing in the present proceedings) obligations on dominant undertakings. One useful example is Article 4a of Directive 90/388, inserted by Directive 96/19, which requires the Member States to ensure that undertakings which hold special or exclusive rights provide interconnection to their public network and their voice telephony services to other undertakings authorised to provide such networks or services. (30)

VI – Conclusion

41. In the light of the foregoing considerations, I propose that the Court of Justice replies to the Tribunale Amministrativo Regionale del Lazio as follows:

Directive 97/13/EC of the European Parliament and of the Council of 10 April 1997 on a common framework for general authorisations and individual licences in the field of telecommunications services, and specifically Articles 11, 22 and 25 thereof, preclude Member States from requiring a former holder of an exclusive concession or a holder of special rights which have been terminated, which currently has an individual licence, to pay, until 31 December 1998, fees and charges other than those provided for in Article 11.

(1) .

(2) – An advocate general, required over the years to interpret Community provisions as a result of references for preliminary rulings with very diverse origins and factual backgrounds, is like a painter who has already given shape to an image on the canvas but then portrays it again using different outlines and shades because the light has changed, the surroundings have altered or his mood has shifted. Francisco de Goya and his ‘majas’, one dressed and the other nude, provide a good example. Leaving aside that more obvious difference, the brushstrokes in the Clothed Maja, which is smaller in size, are rich and thick, as though there had been an urgency to apply the paint to the canvas, which is far from the academic perfection of the Nude Maja, whose execution with painstaking care and the delicacy required by the particular time is visible in the strokes used for the couch, the pillow and the sheet, undoubtedly reflecting the artist’s passion for Cayetana de Silva y Álvarez de Toledo, 13 th Duchess of Alba.

(3) – OJ 1997 L 117, p. 15.

(4) – Joined Cases C-291/01 and C-293/01 [2003] ECR I-9499.

(5) – Joined Cases C-250/02 to C-253/02 and C-256/02. The Order was not published in the European Court Reports.

(6) – Case C-339/04 [2006] ECR I-6917.

(7) – Joined Cases C-392/04 and C-422/04 [2006] ECR I-8559.

(8) – Joined Cases C-327/03 and C-328/03 [2005] ECR I-8877.

(9) – For a more detailed analysis of the development of that market in the Community, I refer to my Opinions in ISIS Multimedia and Firma 02 , points 3 to 5, and Nuova Società di Telecomunicazioni , points 3 to 6; also, to my Opinions in Case C-64/06 Telefonica 02 Czech Republic [2007] ECR I-4887, points 4 to 7, and Case C‑262/06 Deutsche Telekom [2007] ECR I-0000, points 5 and 6.

(10) – Opinions in Albacom and Infostrada , points 2 to 4; Nuova Società di Telecomunicazioni , points 7 to 10; ISIS Multimedia and Firma 02 , points 7 to 8; and i-21 Germany and Arcor , points 6 to 9.

(11) – Point 5 of the Opinion in Albacom and Infostrada ; point 9 of the Opinion in ISIS Multimedia and Firma 02 ; point 11 of the Opinion in Nuova Società di Telecomunicazioni ; and points 10 and 11 of the Opinion in i-21 Germany and Arcor .

(12) – Footnote not relevant to the English-language version.

(13) – Approved by Presidential Decree No 156 of 29 March 1973 (Ordinary Supplement to Gazzeta Ufficiale della Repubblica Italiana (‘GURI’) No 113 of 3 May 1973, p. 2).

(14) – The information about the calculation of the fee is set out in the order for reference (pp. 6 and 7).

(15) – Disposizioni urgenti per l’esercizio dell’attività radiotelevisiva (GURI No 249 of 23 October 1996, p. 33).

(16) – GURI No 300 of 23 December 1996, p. 16.

(17) – Istituzione dell’Autorità per le Garanzie nelle Comunicazioni e norme sui sistemi delle telecomunicazioni e radiotelevisivo (Ordinary Supplement to GURI No 177 of 31 July 1997, p. 5).

(18) – Regolamento per l’attuazione di direttive comunitarie nel settore delle telecomunicazioni (Ordinary Supplement to GURI No 221 of 22 September 1997, p. 5).

(19) – By order of 5 February 1998 (GURI No 63 of 17 March 1998, p. 27), the Minister for the Treasury, Budgets and Economic Planning, on the basis of Article 6 of Presidential Decree No 318 of 1997, required a holder of an individual licence to pay the Treasury: (a) a charge in respect of the costs of issuing and granting the licence, to be paid at the time of the application (Article 3); (b) an annual fee for monitoring and inspection (Article 4); (c) another annual fee for the use of scarce resources (Article 5); and (d) an annual charge for the allocation of the numbers required to operate the service (Article 6).

(20) – Misure di finanza pubblica per la stabilizzazione e lo sviluppo (Ordinary Supplement to GURI No 302 of 29 December 1998, p. 5).

(21) – That date is consistent with the aim of the Community legislature to complete the liberalisation of the telecommunications market by 1 January 1998, as set out in Article 2 of Commission Directive 90/388/EEC of 28 June 1990 on competition in the markets for telecommunications services (OJ 1990 L 192, p. 10), in the version of Commission Directive 96/19/EC of 13 March 1996 (OJ 1996 L 74, p. 13). Recital 1 in the preamble to Directive 97/13 reflects that objective, to which the Court (judgment in Albacom and Infostrada , paragraph 35) and I myself (Opinion in Nuova Società di Telecomunicazioni , points 45 and 46) have also drawn attention.

(22) – ‘… this Directive applies to both existing and future authorisations; … certain licences have been granted for periods which go beyond 1 January 1999 …’

(23) – Article 2(1)(a) of Directive 97/13 defines authorisations as ‘any permission setting out rights and obligations specific to the telecommunications sector and allowing undertakings to provide telecommunications services and, where applicable, to establish and/or operate telecommunications networks for the provision of such services, in the form of a “general authorisation” or “individual licence” …’.

(24) – That yearning for times past reminds me of the sentence with which Thomas Mann opens his monumental tetralogy Joseph and His Brothers : ‘Deep is the well of the past. Indeed, we could call it bottomless … when our attention is directed solely and exclusively towards the past of humankind, that enigmatic creature and receptacle of our existence that is at once natural and joyful, supernatural and wretched, whose mystery is the centre around which our words revolve, and which gives urgency and passion to what we say and emphasis to all our questions’.

(25) – Which may be deferred pursuant to the second subparagraph of Article 22(3).

(26) – Opinions in Nuova Società di Telecomunicazioni (point 11), ISIS Multimedia and Firma 02 (point 9), and i-21 Germany and Arcor (point 10).

(27) – Paragraph 38 of the judgment in Albacom and Infostrada and point 52 of my Opinion in that case.

(28) – Points 25 and 26 of the Opinion in ISIS Multimedia and Firma 02 .

(29) – For that reason, the Commission’s concerns are unnecessary, since it argues in favour of disregarding cases where the national court finds that an undertaking which enjoyed special or exclusive rights before Directive 97/13 now has a dominant position. The judgment in Joined Cases C-544/03 and C-545/03 Mobistar and Belgacom Mobile [2005] ECR I‑7723 is irrelevant in that connection, since it concerned a communal tax on telecommunications infrastructure (pylons, masts and transmission antennae for mobile telephones) which was lawful in principle but liable, in certain circumstances, to affect competition and, therefore, to infringe Article 3c of Directive 90/388, inserted by Commission Directive 96/2/EC of 16 January 1996 (OJ 1996 L 20, p. 59), whereas, in the present case, the Court must give a ruling on a fee which is manifestly contrary to the law of the European Union.

(30) – The so-called ‘new regulatory framework’ for telecommunications in the Community (Directives of the European Parliament and of the Council 2002/19/EC on access to, and interconnection of, electronic communications networks and associated facilities (Access Directive); 2002/20/EC on the authorisation of electronic communications networks and services (Authorisation Directive); 2002/21/EC on a common regulatory framework for electronic communications networks and services (Framework Directive); and 2002/22/EC on universal service and users’ rights relating to electronic communications networks and services (Universal Service Directive), all adopted on 7 March 2002 (OJ 2002 L 108, pp. 7, 21, 33 and 51) imposes special obligations on undertakings which dominate the market, including the successors to the former monopolies.