Commission of the European Communities v Kingdom of Spain.
Date: 1998-10-29
25 The Spanish Government does not deny that its legislation impedes the exercise of the freedom of establishment, the freedom to provide services and the freedom of movement for workers within the Community.  It considers, however, that those restrictions are justified by the derogations provided for by the Treaty.
33 As far as Article 48(4) of the Treaty is concerned, it must be observed that private security undertakings do not form part of the public service and that this provision is not therefore applicable in this case.
34 As regards the exception provided for in the first paragraph of Article 55 combined, where appropriate, with Article 66 of the Treaty, it must be remembered that, as a derogation from the fundamental rule of freedom of establishment, it must be interpreted in a manner which limits its scope to what is strictly necessary for safeguarding the interests which that provision allows the Member States to protect (Case 147/86 Commission v Greece [1988] ECR 1637, paragraph 7).
35 According to established case-law, the derogation for which it provides must be restricted to activities which in themselves are directly and specifically connected with the exercise of official authority (Case 2/74 Reyners [1974] ECR 631, paragraph 45, and Case C-42/92 Thijssen [1993] ECR I-4047, paragraph 8).
37 However, the exercise of that activity does not mean that security undertakings and security staff are vested with powers of constraint.  Merely making a contribution to the maintenance of public security, which any individual may be called upon to do, does not constitute exercise of official authority.
38 Furthermore, as the Advocate General points out in paragraphs 26 and 27 of his Opinion, the Spanish legislation makes a clear distinction between tasks entrusted to security undertakings and security staff and those reserved for the public security forces.  Where in very specific situations the former are called upon to assist the latter, the functions they perform are only auxiliary functions.
39 It follows that private security undertakings and private security staff are not directly and specifically involved in the exercise of official authority and that the exception provided for in the first paragraph of Article 55 combined, where appropriate, with Article 66 of the Treaty does not apply in this case.
Articles 48(3), 56(1) and 66 of the Treaty
41 Such a general exclusion from access to certain occupations cannot be justified on the grounds of public policy, public security or public health referred to in Articles 48(3) and 56 of the Treaty.
42 The right of Member States to restrict freedom of movement for persons on grounds of public policy, public security or public health is not intended to exclude economic sectors such as the private security sector from the application of that principle, from the point of view of access to employment, but to allow Member States to refuse access to their territory or residence there to persons whose access or residence would in itself constitute a danger for public policy, public security or public health (see, as far as public health is concerned, Case 131/85 Gül [1986] ECR 1573, paragraph 17).
43 That reasoning applies a fortiori as regards the overriding reasons relating to the public interest which the Spanish Government puts forward as justification for the nationality condition.
II - The residence condition (Article 8 of the Law)
44 The rule according to which directors and managers of all security undertakings must reside in Spain constitutes an obstacle to freedom of establishment (see, in this regard, Case C-221/89 Factortame [1991] ECR I-3905, paragraph 32) and to the freedom to provide services.
45 This condition is not necessary in order to ensure public security in the Member State concerned and is not therefore covered by the derogation provided for by Article 56(1) combined, where appropriate, with Article 66 of the Treaty.
46 Recourse to this justification presupposes the existence of a genuine and sufficiently serious threat affecting one of the fundamental interests of society (see, as far as public policy is concerned, Bouchereau, cited above, paragraph 35).
47 Contrary to what the Spanish Government contends, it cannot be argued that this threat would arise from the impossibility for the Spanish authorities, if the rule in question did not exist, to monitor effectively the activities carried on by private security undertakings. Checks may be carried out and penalties may be imposed on any undertaking established in a Member State, whatever the place of residence of its directors.  Moreover, the payment of any penalty may be secured by means of a guarantee to be provided in advance (see, to this effect, Case C-350/96 Clean Car Auto Service [1998] ECR I-2521, paragraph 36).