The Queen, on the application of Vodafone Ltd and Others v Secretary of State for Business, Enterprise and Regulatory Reform.
Date: 2010-06-08
32. According to consistent case-law the object of measures adopted on the basis of Article 95(1) EC must genuinely be to improve the conditions for the establishment and functioning of the internal market (Case C‑491/01 British American Tobacco (Investments) and Imperial Tobacco  [2002] ECR I-11453, paragraph 60, and Case C-217/04 United Kingdom  v Parliament and Council  [2006] ECR I‑3771, paragraph 42). While a mere finding of disparities between national rules and the abstract risk of infringements of fundamental freedoms or distortion of competition is not sufficient to justify the choice of Article 95 EC as a legal basis, the Community legislature may have recourse to it in particular where there are differences between national rules which are such as to obstruct the fundamental freedoms and thus have a direct effect on the functioning of the internal market (Case C‑380/03 Germany  v Parliament and Council  [2006] ECR I‑11573, paragraph 37 and the case-law cited) or to cause significant distortions of competition (Case C‑376/98 Germany  v Parliament and Council [2000] ECR I‑8419, paragraphs 84 and 106).
33. Recourse to that provision is also possible if the aim is to prevent the emergence of such obstacles to trade resulting from the divergent development of national laws. However, the emergence of such obstacles must be likely and the measure in question must be designed to prevent them ( Germany  v Parliament and Council , paragraph 38 and the case-law cited, and Case C‑301/06 Ireland  v Parliament and Council  [2009] ECR I-593, paragraph 64; see also, to that effect, United Kingdom  v Parliament and Council , paragraphs 60 to 64).
34. Where an act based on Article 95 EC has already removed any obstacle to trade in the area that it harmonises, the Community legislature cannot be denied the possibility of adapting that act to any change in circumstances or development of knowledge having regard to its task of safeguarding the general interests recognised by the Treaty (see, to that effect, British American Tobacco (Investments) and Imperial Tobacco , paragraphs 77 and 78).
35. In that respect, the Court held, in paragraph 43 of United Kingdom  v Parliament and Council , that by using the expression ‘measures for the approximation’ in Article 95 EC the authors of the Treaty intended to confer on the Community legislature a discretion, depending on the general context and the specific circumstances of the matter to be harmonised, as regards the method of approximation most appropriate for achieving the desired result, in particular in fields with complex technical features.
36. Moreover, provided that the conditions for recourse to Article 95 EC as a legal basis are fulfilled, the Community legislature cannot be prevented from relying on that legal basis on the ground that consumer protection is a decisive factor in the choices to be made (see, regarding public health protection, Germany  v Parliament and Council , paragraph 88; British American Tobacco (Investments) and Imperial Tobacco , paragraph 62; and Joined Cases C‑154/04 and C-155/04 Alliance for Natural Health and Others  [2005] ECR I-6451, paragraph 30).
39. As is clear, in particular, from recital 1 in the preamble to Regulation No 717/2007 and point 1 of the explanatory memorandum to the proposal for a regulation, the level of retail charges for international roaming services, at the time of adoption of that regulation, was high and the relationship between costs and prices was not such as would prevail in fully competitive markets. Thus, the excessive retail charges resulted both from wholesale charges levied by the foreign host network operator and, in many cases, from high retail mark-ups charged by the home provider.
41. In particular, the regulatory framework resulting from the rules applicable at the time Regulation No 717/2007 was adopted had not, as recitals 6 and 8 in the preamble to that regulation indicate, provided NRAs with sufficient tools to take effective and decisive action with regard, in particular, to the high level of wholesale prices for the services concerned, on which retail charges depend, because of the special circumstances of the wholesale market for roaming services and the cross-border nature of those services. In that respect, the Community legislature found that, on the one hand, NRAs had difficulty in identifying undertakings with significant market power and, on the other hand, they could not control the behaviour of visited network operators in other Member States, on whom customers depend when they use Community-wide roaming services.
51. According to settled case-law, the principle of proportionality is one of the general principles of Community law and requires that measures implemented through Community law provisions be appropriate for attaining the legitimate objectives pursued by the legislation at issue and must not go beyond what is necessary to achieve them (Joined Cases C‑453/03, C‑11/04, C‑12/04 and C‑194/04 ABNA and Others  [2005] ECR I‑10423, paragraph 68 and the case-law cited).
52. With regard to judicial review of compliance with those conditions the Court has accepted that in the exercise of the powers conferred on it the Community legislature must be allowed a broad discretion in areas in which its action involves political, economic and social choices and in which it is called upon to undertake complex assessments and evaluations. Thus the criterion to be applied is not whether a measure adopted in such an area was the only or the best possible measure, since its legality can be affected only if the measure is manifestly inappropriate having regard to the objective which the competent institution is seeking to pursue (see, to that effect, Case C‑189/01 Jippes and Others  [2001] ECR I‑5689, paragraphs 82 and 83; British American Tobacco (Investments) and Imperial Tobacco , paragraph 123; Alliance for Natural Health and Others , paragraph 52; and Case C‑558/07 S.P.C.M. and Others  [2009] ECR I-0000, paragraph 42).
53. However, even though it has a broad discretion, the Community legislature must base its choice on objective criteria. Furthermore, in assessing the burdens associated with various possible measures, it must examine whether objectives pursued by the measure chosen are such as to justify even substantial negative economic consequences for certain operators (see, to that effect, Joined Cases C‑96/03 and C‑97/03 Tempelman and van Schaijk  [2005] ECR I‑1895, paragraph 48; Case C‑86/03 Greece  v Commission  [2005] ECR I‑10979, paragraph 96; and Case C‑504/04 Agrarproduktion Staebelow  [2006] ECR I‑679, paragraph 37).
69. Finally, in the light of the importance of the objective of consumer protection within the context of Article 95(3) EC, intervention that is limited in time in a market that is subject to competition, which makes it possible, in the immediate future, to protect consumers against excessive prices, such as that at issue, even if it might have negative economic consequences for certain operators, is proportionate to the aim pursued.
72. It is appropriate to recall that the principle of subsidiarity is referred to in the second paragraph of Article 5 EC – and given actual definition by the Protocol on the application of the principles of subsidiarity and proportionality, annexed to the Treaty –, which provides that the Community, in areas which do not fall within its exclusive competence, is to take action only if and insofar as the objectives of the proposed action cannot be sufficiently achieved by the Member States and can therefore, by reason of the scale or effects of the proposed action, be better achieved by the Community. That protocol, in paragraph 5, also lays down guidelines for the purposes of determining whether those conditions are met.
75. As regards Article 95 EC, the Court has held that the principle of subsidiarity applies where the Community legislature uses it as a legal basis, inasmuch as that provision does not give it exclusive competence to regulate economic activity on the internal market ( British American Tobacco (Investments) and Imperial Tobacco , paragraph 179).
78. That interdependence means that the Community legislature could legitimately take the view that it had to intervene at the level of retail charges as well. Thus, by reason of the effects of the common approach laid down in Regulation No 717/2007, the objective pursued by that regulation could best be achieved at Community level.