Markus Stoß (C-316/07), Avalon Service-Online-Dienste GmbH (C-409/07) and Olaf Amadeus Wilhelm Happel (C-410/07) v Wetteraukreis and Kulpa Automatenservice Asperg GmbH (C-358/07), SOBO Sport & Entertainment GmbH (C-359/07) and Andreas Kunert (C-360/07) v Land Baden-Württemberg.
Date: 2010-09-08
45. In that respect, it should be recalled that the Court may of its own motion, or on a proposal from the Advocate General, or at the request of the parties, order the reopening of the oral procedure in accordance with Article 61 of the Rules of Procedure if it considers that it lacks sufficient information, or that the case must be dealt with on the basis of an argument which has not been debated between the parties (see, inter alia, Case C-42/07 Liga Portuguesa de Futebol Profissional and Bwin International  [2009] ECR I-7633, paragraph 31 and case-law cited).
46. Moreover, in proceedings under Article 234 EC, which are based on a clear separation of functions between the national courts and tribunals and the Court of Justice, any assessment of the facts in the case is a matter for the national court or tribunal. In particular, the Court is empowered to rule only on the interpretation or the validity of Community acts on the basis of the facts placed before it by the national court or tribunal. It is for the national court or tribunal to ascertain the facts which have given rise to the dispute and to establish the consequences which they have for the judgment which it is required to deliver (see, in particular, Case C‑491/06 Danske Svineproducenter  [2008] ECR I‑3339, paragraph 23 and case-law cited).
51. In that regard, according to settled case‑law, in proceedings under Article 267 TFEU, it is solely for the national court before which the dispute has been brought, and which must assume responsibility for the subsequent judicial decision, to determine in the light of the particular circumstances of the case both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court. Consequently, where the questions submitted concern the interpretation of EU law, the Court is in principle bound to give a ruling (see, in particular, Case C‑379/98 PreussenElektra  [2001] ECR I-2099, paragraph 38, and Case C‑169/07 Hartlauer  [2009] ECR I‑1721, paragraph 24).
52. The Court may refuse to rule on a question referred for a preliminary ruling by a national court only where it is quite clear that the interpretation of EU law that is sought bears no relation to the actual facts of the main action or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it ( PreussenElektra , paragraph 39, and Hartlauer , paragraph 25).
56. In that regard, it should be noted that, according to consistent case-law, activities which consist in allowing users to participate, for remuneration, in gambling constitute ‘services’ within the meaning of Article 49 EC (see, in particular, Case C‑275/92 Schindler  [1994] ECR I‑1039, paragraph 25, and Case C‑67/98 Zenatti  [1999] ECR I‑7289, paragraph 24). The same applies to the activity of promoting and placing gambling, such an activity constituting only specific steps in the organisation or operation of the gambling to which that activity relates (see, in particular, Schindler , paragraphs 22 and 23).
57. Services such as those at issue in the main proceedings may thus fall within the scope of Article 49 EC where, as in the cases in the main proceedings, at least one of the providers is established in a Member State other than that in which the service is offered (see, in particular, Zenatti , paragraph 24), unless Article 43 EC applies.
58. As regards Article 43 EC, it should be recalled that that provision prohibits restrictions on freedom of establishment for nationals of a Member State in the territory of another Member State, including restrictions on the setting-up of agencies, branches or subsidiaries ( Gambelli and Others , paragraph 45).
59. The case-law of the Court shows in this respect that the concept of establishment is a very broad one, allowing a Community national to participate, on a stable and continuous basis, in the economic life of a Member State other than his State of origin and to profit therefrom, so contributing to economic and social interpenetration within the European Community in the sphere of activities as self-employed persons (see, in particular, Case C-55/94 Gebhard  [1995] ECR I‑4165, paragraph 25). Thus, the maintenance of a permanent presence in a Member State by an undertaking established in another Member State may fall within the provisions of the Treaty on the freedom of establishment even if that presence does not take the form of a branch or agency, but consists merely of an office managed by a person who is independent but authorised to act on a permanent basis for the undertaking, as would be the case with an agency (see Case 205/84 Commission  v Germany  [1986] ECR 3755, paragraph 21).
60. With regard to the area of games and bets, the Court of Justice held, in Gambelli and Others , that Article 43 can apply to a situation in which an undertaking established in one Member State has, in another Member State, a presence which takes the form of commercial agreements with operators or intermediaries relating to the creation of data transmission centres which make electronic means of communication available to users, collect and register intentions to bet and forward them to the said undertaking. Where an undertaking pursues the activity of collecting bets through the intermediary of an organisation of agencies established in another Member State, any restrictions on the activities of those agencies constitute obstacles to the freedom of establishment ( Gambelli and Others , paragraphs 14 and 46, and Placanica and Others , paragraph 43).
62. In those circumstances, it should be remembered that, in proceedings under Article 267 TFEU, which is based on a clear separation of functions between the national courts and the Court of Justice, any assessment of the facts in the case is a matter for the national court (see, in particular, Case C‑326/00 IKA  [2003] ECR I‑1703, paragraph 27 and case-law cited).
68. By way of preliminary observation, it is common ground that legislation of a Member State such as the legislation at issue in the main proceedings constitutes a restriction on the freedom to provide services guaranteed by Article 49 EC or, alternatively, to the freedom of establishment guaranteed by Article 43 EC (see, to that effect, Liga Portuguesa de Futebol Profissional and Bwin International , paragraph 52).
69. However, it is necessary to assess in this case, having regard to the doubts thus expressed by the referring courts, whether such a restriction may be justified, in accordance with the case-law of the Court, by overriding reasons in the public interest (see, to that effect, Liga Portuguesa de Futebol Profissional and Bwin International , paragraph 55).
The absence of a study on the proportionality of public monopolies, such as those at issue in the main proceedings, prior to their establishment
71. As the Advocate General has observed in points 81 and 82 of his Opinion, that question arises from a misreading of that judgment. As is clear from paragraphs 25 and 26 of the latter and from the subsequent case-law referring thereto (see, in particular, the judgment of 13 March 2008 in Case C-227/06 Commission v Belgium  [2008] ECR I-46, paragraphs 62 and 63 and case-law cited), the Court has stated that if a Member State wishes to rely on an objective capable of justifying an obstacle to the freedom to provide services arising from a national restrictive measure, it is under a duty to supply the court called upon to rule on that question with all the evidence of such a kind as to enable the latter to be satisfied that the said measure does indeed fulfil the requirements arising from the principle of proportionality.
72. It cannot, however, be inferred from that case-law that a Member State is deprived of the possibility of establishing that an internal restrictive measure satisfies those requirements, solely on the ground that that Member State is not able to produce studies serving as the basis for the adoption of the legislation at issue.
Possible disproportionality of public monopolies, such as those at issue in the main proceedings, on the ground that a system for issuing authorisations to private operators might constitute a measure less restrictive of Community freedoms
74. In that regard, it should be recalled, by way of preliminary observation, that, with regard to the justifications which are capable of being accepted where internal measures restrict the freedom to provide services or the freedom of establishment, the Court has observed that the objectives pursued by national legislation adopted in the area of gambling and bets, considered as a whole, usually concern the protection of the recipients of the services in question and of consumers more generally, and the protection of public order. It has also held that such objectives are amongst the overriding reasons in the public interest capable of justifying obstacles to the freedom to provide services (see, in particular, Schindler , paragraph 58; Case C‑124/97 Läärä and Others  [1999] ECR I‑6067, paragraph 33; Zenatti , paragraph 31; Case C-6/01 Anomar and Others  [2003] ECR I‑8621, paragraph 73; and Placanica and Others , paragraph 46).
75. The Court has thus acknowledged in particular that, in the area of games and bets, excesses in which have damaging social consequences, national regulations seeking to prevent the stimulation of demand by limiting the human passion for gambling could be justified ( Schindler , paragraphs 57 and 58; Läärä and Others , paragraphs 32 and 33; and Zenatti , paragraphs 30 and 31).
76. In that context, the Court has, moreover, often stated that moral, religious or cultural factors, as well as the morally and financially harmful consequences for the individual and for society associated with betting and gaming, may serve to justify a margin of discretion for the national authorities, sufficient to enable them to determine, in accordance with their own scale of values, what is required in order to ensure consumer protection and the preservation of public order (see, in particular, Placanica and Others , paragraph 47 and case-law cited, and Liga Portuguesa de Futebol Profissional and Bwin International , paragraph 57).
77. However, although the Member States are free to set the objectives of their policy on betting and gaming and, where appropriate, to define in detail the level of protection sought, the restrictive measures that they impose must nevertheless satisfy the conditions laid down in the case-law of the Court as regards their proportionality ( Liga Portuguesa de Futebol Profissional and Bwin International , paragraph 59 and case-law cited).
78. It is thus necessary for the national courts to examine whether a restriction decided upon by a Member State is suitable for achieving the objective or objectives invoked by the Member State concerned, at the level of protection which it seeks, and whether it does not go beyond what is necessary in order to achieve those objectives (see, to that effect, Liga Portuguesa de Futebol Profissional and Bwin International , paragraph 60).
79. As regards, more particularly, the establishment of public monopolies, the Court has previously acknowledged that a national system providing for limited authorisation of gambling on the basis of special or exclusive rights granted or assigned to certain bodies, which has the advantage of confining the desire to gamble and the exploitation of gambling within controlled channels, was capable of falling within the pursuit of the abovementioned public interest objectives of protecting the consumer and public order (see, in particular, Zenatti , paragraph 35, and Anomar and Others , paragraph 74). It has also held that the question whether, in order to achieve those objectives, it would be preferable, rather than granting an exclusive operating right to a licensed public body, to adopt regulations imposing the necessary code of conduct on the operators concerned is a matter to be assessed by the Member States, subject however to the proviso that the choice made in that regard must not be disproportionate to the aim pursued ( Läärä and Others , paragraph 39).
81. Having regard to the above, it must be acknowledged that the public authorities of a Member State may be entitled to take the view, within the margin of discretion which they have in that respect, that granting exclusive rights to a public body whose management is subject to direct State supervision or to a private operator over whose activities the public authorities are able to exercise tight control is likely to enable them to tackle the risks connected with the gambling sector and pursue the legitimate objective of preventing incitement to squander money on gambling and combating addiction to gambling more effectively than would be the case with a system authorising the business of operators which would be permitted to carry on their business in the context of a non-exclusive legislative framework (see, to that effect, Läärä and Others , paragraphs 40 to 42; Liga Portuguesa de Futebol Profissional and Bwi n International , paragraphs 66 and 67; and Case C‑203/08 Sporting Exchange  [2010] ECR I-0000, paragraph 59).
82. The said authorities may indeed legitimately consider that the fact that, in their capacity as controller of the body holding the monopoly, they will have additional means of influencing the latter’s conduct outside the statutory regulating and surveillance mechanisms is likely to secure for them a better command over the supply of games of chance and better guarantees that implementation of their policy will be effective than in the case where those activities are carried on by private operators in a situation of competition, even if the latter are subject to a system of authorisation and a regime of supervision and penalties.
83. The fact remains, however, that the establishment of a measure as restrictive as a monopoly, which can be justified only in order to ensure a particularly high level of consumer protection, must be accompanied by a legislative framework suitable for ensuring that the holder of the said monopoly will in fact be able to pursue, in a consistent and systematic manner, the objective thus determined by means of a supply that is quantitatively measured and qualitatively planned by reference to the said objective and subject to strict control by the public authorities.
The alleged ineffectiveness of monopolies such as those at issue in the main proceedings having regard to the transnational environment generated by the internet
88. As a preliminary observation, it should be noted that, in paragraph 67 of the judgment in Gambelli and Others , after stating that restrictions on gaming activities might be justified by imperative requirements in the public interest, such as consumer protection and the prevention of both fraud and incitement to squander money on gambling, the Court held that that applied only in so far as such restrictions, based on such grounds and on the need to preserve public order, were suitable for achieving those objectives, inasmuch as they must serve to limit betting activities in a consistent and systematic manner.
91. In that regard, it should be recalled that the Court has previously held that it is for each Member State to assess whether, in the context of the legitimate aims which it pursues, it is necessary wholly or partially to prohibit activities of that nature, or only to restrict them and to lay down more or less strict supervisory rules for that purpose, the need for and proportionality of the measures thus adopted having to be assessed solely in relation to the objectives thus pursued and the level of protection which the national authorities concerned seek to ensure (see, in particular, Läärä and Others , paragraphs 35 and 36; Zenatti , paragraphs 33 and 34; and Liga Portuguesa de Futebol Profissional and Bwin International , paragraph 58).
92. It has also held that, in the context of legislation which is compatible with the Treaty, the choice of methods for organising and controlling the operation and playing of games of chance or gambling, such as the conclusion with the State of an administrative licensing contract or the restriction of the operation and playing of certain games to places duly licensed for that purpose, falls within the margin of discretion which the national authorities enjoy ( Anomar and Others , paragraph 88).
93. The Court has also held that, in the matter of games of chance, it is in principle necessary to examine separately for each of the restrictions imposed by the national legislation whether, in particular, it is suitable for achieving the objective or objectives invoked by the Member State concerned and whether it does not go beyond what is necessary in order to achieve those objectives ( Placanica and Others , paragraph 49).
94. In paragraphs 50 to 52 of its judgment in Schindler , delivered in relation to legislation of a Member State prohibiting lotteries, the Court observed, in particular, that other games for money, such as football pools or ‘bingo’, which remained authorised in that Member State, whilst they might give rise to stakes comparable to those of lotteries, and involved a significant element of chance, differed in their object, rules and methods of organisation from large-scale lotteries established in other Member States. Those other games were therefore not in a comparable situation to that of lotteries prohibited by the legislation of that Member State and could not be assimilated to them.
97. However, as has been recalled in paragraph 88 of this judgment, the case-law of the Court of Justice also shows that the establishment, by a Member State, of a restriction on the freedom to provide services and the freedom of establishment on the grounds of such an objective is capable of being justified only on condition that the said restrictive measure is suitable for ensuring the achievement of the said objective by contributing to limiting betting activities in a consistent and systematic manner.
98. The Court has, similarly, held that it is for the national courts to ensure, having regard in particular to the actual rules for applying the restrictive legislation concerned, that the latter genuinely meets the concern to reduce opportunities for gambling and to limit activities in that area in a consistent and systematic manner (see to that effect, in particular, Zenatti , paragraphs 36 and 37, and Placanica and Others , paragraphs 52 and 53).
99. As the Court has already held in those various respects, in Gambelli and Others , paragraphs 7, 8 and 69, in so far as the authorities of a Member State incite and encourage consumers to participate in lotteries, games of chance or betting to the financial benefit of the public purse, the authorities of that State cannot invoke public order concerns relating to the need to reduce opportunities for gambling in order to justify restrictive measures, even if, as in that case, the latter relate exclusively to betting activities.
101. In that regard, it should be remembered that, giving its view in relation to the objective pursued by a national legislature consisting in preventing exploitation of gaming activities for criminal or fraudulent purposes, the Court has held that a policy of controlled expansion of the said activities may be consistent with the objective of channelling them into controllable circuits by drawing players away from clandestine, prohibited betting and gaming to activities which are authorised and regulated. In order to achieve that objective, authorised operators must represent a reliable, but at the same time attractive, alternative to a prohibited activity. This may as such necessitate the offer of an extensive range of games, advertising on a certain scale and the use of new distribution techniques (see Placanica and Others , paragraph 55).
102. As the Advocate General has observed in point 61 of his Opinion, such considerations may, in principle, also apply where restrictive internal measures pursue an objective of protecting consumers, preventing incitement to squander money on gambling and combating addiction to the latter, in that, in particular, a certain amount of advertising may, without prejudice to the requirements referred to in paragraphs 97 to 99 of this judgment, contribute in certain cases to directing consumers towards the offer emanating from the holder of the public monopoly, that offer being deemed to have been established and conceived precisely in order better to pursue the said objective.
103. However, as the Advocate General has also stated in point 61 of his Opinion, it is important, in that respect, that any advertising issued by the holder of a public monopoly remain measured and strictly limited to what is necessary in order thus to channel consumers towards authorised gaming networks. Such advertising cannot, however, in particular, aim to encourage consumers’ natural propensity to gamble by stimulating their active participation in it, such as by trivialising gambling or giving it a positive image due to the fact that revenues derived from it are used for activities in the public interest, or by increasing the attractiveness of gambling by means of enticing advertising messages depicting major winnings in glowing colours.
104. As for the fact that advertising campaigns conducted by the holder of the monopoly with regard to lottery products thus lay emphasis on the fact that revenue from the marketing of the latter is used to finance activities which are non-profit-making or in the public interest, it should also be recalled, first, that, according to settled case-law, although it is a relevant factor that games played for money may contribute significantly to the financing of such activities, such a ground cannot in itself be regarded as an objective justification for restrictions on the freedom to provide services. The latter are permissible only on condition, in particular, that the financing of such social activities constitutes an ancillary beneficial consequence of, and not the substantive justification for, the restrictive policy established, which it is for the national court to ascertain (see, to that effect, Zenatti , paragraphs 36 and 37).
105. Since the Verwaltungsgericht Stuttgart has also indicated that, after the deduction, provided for by the legislation at issue in the main proceedings in favour of eligible non-profit-making activities, has been made, the surplus revenue is paid into the public purse, and in so far as it is not possible to exclude the possibility that the financial support given to bodies recognised as being in the public interest permits the latter to develop activities in the public interest which the State might normally be called upon to undertake, thereby leading to a reduction in the State’s expenses, it should, secondly, be recalled that neither is the need to prevent the reduction of tax revenues among the overriding reasons in the public interest capable of justifying a restriction on a freedom instituted by the Treaty (see, to that effect, Case C‑318/07 Persche  [2009] ECR I‑359, paragraphs 45 and 46 and case-law cited).
107. The answer to the first question in each of the cases must therefore be that, on a proper interpretation of Articles 43 EC and 49 EC:
(i) in order to justify a public monopoly on bets on sporting competitions and lotteries, such as those at issue in the cases in the main proceedings, by an objective of preventing incitement to squander money on gambling and combating addiction to the latter, the national authorities concerned do not necessarily have to be able to produce a study establishing the proportionality of the said measure which is prior to the adoption of the latter;
(ii) a Member State’s choice to use such a monopoly rather than a system authorising the business of private operators which would be permitted to carry on their business in the context of a non-exclusive legislative framework is capable of satisfying the requirement of proportionality, in so far as, as regards the objective concerning a high level of consumer protection, the establishment of the said monopoly is accompanied by a legislative framework suitable for ensuring that the holder of the said monopoly will in fact be able to pursue, in a consistent and systematic manner, such an objective by means of a supply that is quantitatively measured and qualitatively planned by reference to the said objective and subject to strict control by the public authorities;
(iii) the fact that the competent authorities of a Member State might be confronted with certain difficulties in ensuring compliance with such a monopoly by organisers of games and bets established outside that Member State, who, via the internet and in breach of the said monopoly, conclude bets with persons within the territorial area of the said authorities, is not capable, as such, of affecting the potential conformity of such a monopoly with the said provisions of the Treaty;
(iv) in a situation where a national court finds, at the same time:
– that advertising measures emanating from the holder of such a monopoly and relating to other types of games of chance which it also offers are not limited to what is necessary in order to channel consumers towards the offer emanating from that holder by turning them away from other channels of unauthorised games, but are designed to encourage the propensity of consumers to gamble and to stimulate their active participation in the latter for purposes of maximising the anticipated revenue from such activities,
– that other types of games of chance may be exploited by private operators holding an authorisation, and
– that, in relation to other types of games of chance not covered by the said monopoly, and which, moreover, present a higher potential risk of addiction than the games subject to that monopoly, the competent authorities are conducting or tolerating policies of expanding supply, of such a kind as to develop and stimulate gaming activities, in particular with a view to maximising revenue from the latter,
the said national court may legitimately be led to consider that such a monopoly is not suitable for guaranteeing achievement of the objective for which it was established, of preventing incitement to squander money on gambling and combating addiction to the latter, by contributing to reducing opportunities for gambling and limiting activities in that area in a consistent and systematic manner.
The second question referred in each of the cases
111. In that respect, it should however be noted that, having regard to the discretion, referred to in paragraph 76 of this judgment, which Member States have in determining, according to their own scale of values, the level of protection which they intend to ensure and the requirements which that protection entails, the Cour had regularly held that assessment of the proportionality of the system of protection established by a Member State cannot, in particular, be influenced by the fact that another Member State has chosen a different system of protection (see to that effect, in particular, Liga Portuguesa de Futebol Profissional and Bwin International , paragraph 58).
112. Having regard to that margin of discretion and the absence of any Community harmonisation in the matter, a duty mutually to recognise authorisations issued by the various Member States cannot exist having regard to the current state of EU law.
113. It follows in particular that each Member State retains the right to require any operator wishing to offer games of chance to consumers in its territory to hold an authorisation issued by its competent authorities, without the fact that a particular operator already holds an authorisation issued in another Member State being capable of constituting an obstacle.
114. In order to be justified under Articles 43 EC and 49 EC, it is also necessary, having regard to the obstacles which it creates in relation to the right to the freedom to provide services or the freedom of establishment, that such an authorisation system should satisfy the requirements which follow in that respect from the case-law, particularly as to its non-discriminatory character and its proportionality ( Placanica and Others , paragraphs 48 and 49).
115. Having regard to the information provided by the Verwaltungsgericht Gießen and set out in paragraph 19 of this judgment, it should also be noted that, according to consistent case-law, a Member State may not apply a criminal penalty for failure to complete an administrative formality where such completion has been refused or rendered impossible by the Member State concerned, in infringement of EU law ( Placanica and Others , paragraph 69).