European Commission v Kingdom of Belgium.
Date: 2010-10-06
35. As regards the Commission’s argument that the Belgian legislation fails to provide for any examination as to whether the burden resulting from the universal service obligations is unfair, the Kingdom of Belgium submits that the legislature considered the burden to be unfair where a net cost has to be borne and an application for financing is made. Any other assessment of the unfair nature of the burden would result, in the context of the Belgian system, in a distortion of competition between the undertakings concerned, since, whilst they are all subject to the same obligations, only some of them would be entitled to apply for compensation.
37. As regards the requirement for transparency in Article 12(2) of Directive 2002/22, the Kingdom of Belgium draws attention to the fact that the final decision concerning the calculation of the net cost was published on 18 May 2005 on the Institute’s web-site.
40. As a preliminary point, it should be recalled that Directive 2002/22 is intended to create a harmonised regulatory framework which secures, in the electronic communications sector, the delivery of universal service, that is to say, of a defined minimum set of services to all end-users at an affordable price. According to Article 1(1) of Directive 2002/22, one of the objectives of the directive is to ensure the availability, throughout the European Community, of good quality, publicly available services through effective competition and choice ( Commission  v France , paragraph 28).
41. Under Article 3(2) of Directive 2002/22, Member States are to 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 and they are to seek to minimise market distortions, whilst safeguarding the public interest ( Commission  v France , paragraph 29).
42. As recital 4 to Directive 2002/22 states, ensuring universal service may involve the provision of some services to some end-users at prices that depart from those resulting from normal market conditions. The Community legislature therefore provided – as is clear from recital 18 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 be provided only at a loss or at a net cost which falls outside normal commercial standards.
43. Accordingly, under the first subparagraph of Article 12(1) of Directive 2002/22, where national regulatory authorities consider that the provision of universal service, as set out in Articles 3 to 10 of the directive, may represent an unfair burden on undertakings designated to provide universal service, they must calculate the net costs of its provision.
49. In that regard, it is apparent from recital 21 to Directive 2002/22 that the Community legislature intended to link the mechanisms for the recovery of net costs which an undertaking may incur as a result of the provision of universal service to the existence of an unfair burden on that undertaking. In that context, in concluding that the net cost of universal service does not necessarily represent an unfair burden for all the undertakings concerned, it intended to exclude the possibility that any net costs of universal service provision automatically give rise to a right to compensation. In those circumstances, the unfair burden which must be found to exist by the national regulatory authority before any compensation is paid 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. In the absence of any specific provision in this regard in Directive 2002/22, it falls to the national regulatory authority to lay down general and objective criteria which make it possible to determine the thresholds beyond which – taking account of the characteristics mentioned in the preceding paragraph – a burden may be regarded as unfair. However, the fact remains that the authority cannot find that the burden of providing universal service is unfair, for the purpose of Article 13 of the directive, unless it carries out an individual assessment of the situation of each undertaking concerned in the light of those criteria.