EXCLUSIVE RIGHTS AND STATE MONOPOLIES UNDER EC LAW

Size: px

Start display at page:

Download "EXCLUSIVE RIGHTS AND STATE MONOPOLIES UNDER EC LAW"

Bartholomew Lamb
5 years ago
Views:

1 EXCLUSIVE RIGHTS AND STATE MONOPOLIES UNDER EC LAW ARTICLE 86 (FORMERLY ARTICLE 90) OF THE EC TREATY by JOSE LUIS BUENDIA SIERRA Translated from the Spanish by ANDREW READ OXTORD UNIVERSITY PRESS

2 CONTENTS Preface Table ofecjand CFI Cases Table ofacts ofthe European Commission Table ofregulations anddirectives ofthe Council and the European Parliament Table ofacts ofnon-community Institutions Table ofequivalences List ofabbreviations v xxi xxx xxxv xxxvi xxxvii xxxix PART I. THE CONCEPT OF EXCLUSIVE RIGHTS AND ITS DIFFERENTIATION FROM OTHER RELATED CONCEPTS 1. The Concept of Exclusive Rights 3 I. Defining the Concept 4 Definition of Exclusive Rights 6 II. Exclusivity 7 A. Holder's Rights: Exclusion of Third Parties 7 B. Exclusivities Granted Indirectly 7 Essential Facilities 10 C. Exclusive Rights and Dominant Position: Independent Concepts 11 D. Sole Beneficiary 12 III. The Grant ofthe Exclusive Right as a State Measure 14 A. Distinction Based on the Form ofthe Grant ofthe Exclusive Right: Whether of Public or Private Law 15 B. Distinction Based on the Substantively Regulatory or Substantively Commercial Character ofthe Grant ofthe Exclusive Right 17 C. Case Law ofthe Court of Justice 19 Presumptions Based on Formal Criteria 19 GreyArea 20 D. Indirect Concession of Exclusive Rights 23 E. Necessity ofthe Exercise of Discretionary Powers by the Member State 24 ix

3 F. The Concept of Member State Includes Public Authorities of all Levels 27 IV. The Grant to an Undertaking, Public or Private 29 A. The Concept of Undertaking 30 B. Grant of an Exclusive Right to a Private Undertaking: 'Privileged Undertakings' 33 C. Grant of an Exclusive Right to a Public Undertaking 33 The Concept of Public Undertaking 34 The Dominant Influence of Public authorities 36 Irrelevance of Legal Personality: The Direct Carrying Out of Economic Activities by a Public Authority 37 Irrelevance ofthe Public Law Status ofthe Undertaking 38 International Organizations which Carry Out Economic Activities 39 Public Undertakings with Private Law Status 39 The Decisive Point is the Existence of Control, Not its Exercise 40 Direct or Indirect State Control 4l Golden Shares in Privatized Undertakings 41 Public Undertakings Dependent on Various Public Authorities ofthe Same Member State 41 Undertakings Dependent on Different Member States 42 Economic Activities Directed at the Market: Self-supply and Diversification 42 V. The Object ofthe Exclusive Right: The Carrying Out of an Economic Activity 43 A. The Concept of Economic Activity 45 B. The Case Law ofthe Court of Justice Concerning the Concept of Economic Activity 46 The Höfner Judgment 47 The Poucet Judgment 49 The EurocontrolJudgment 50 The Cali Judgment 52 The'Protected Area'Doctrine 52 C. Criticism ofthe Criteria Contained in the Case Law and an Alternative Proposal 55 D. Exclusivity for Carrying Out Non-economic Activities 59 VI. Types of Exclusive Rights 63

4 2. Differentiation Between Exclusive Rights and Other Related Concepts 64 I. Special Rights 64 A. Initial Lack of Distinction from Exclusive Rights 64 B. The Current Definition of Special Rights 65 C. 'Special Rights-limitation' 66 D. 'Special Rights-advantage' 68 II. Regulated Access Activities 69 III. Intellectual Property Rights 70 PART II. THE LIMITS TO THE CREATION AND MAINTENANCE OF EXCLUSIVE RIGHTS 3. Article 31 (formerlyarticle 37) ofthe EC Treaty and State Monopolies of a Commercial Character 75 I. Concept of State Monopolies ofa Commercial Character 79 A. The Commercial Character of State Monopolies 80 B. The Relationship between the Member State and the Undertaking 82 C. The Position ofthe Undertaking in Relation to Imports and Exports 83 Monopolies dejure 83 Article 31 Covers Only Exclusive Rights that Affect Imports or Exports 83 Other Rights that Permit Undertakings to Influence Imports or Exports. 84 Monopolies defacto 85 Situations Where Various Undertakings Influence Imports and Exports 86 The Influence Must be Appreciable 86 Monopolies of Services can in Certain Cases Influence Trade in Products 87 Res extra Commercium 88 Imports and Exports from and to Third Countries 88 D. Summary 89 II. Obligations underarticle 31 (and under former Article 37) 89 A. Obligations during the Transitional Period 90 Obligation to Adjust Progressively State Monopolies 90 Final Objective 91 The Timetable for Adjustment 91 XI

5 Manner of Adjustment 94 Content of the Obligation of Progressive Adj ustment 95 Formerly Article 37(1) as a Temporary Exception 97 Obligation not to Adopt New Restrictive Measures (Stand-still) 98 B. Obligations at the End ofthe Transitional Period 100 Does the Prohibition on Discrimination Refer to Products or Operators? 101 Regulatory Discrimination 104 Discriminatory Behaviour of a State Monopoly 106 Structural Measures which Necessarily Lead to Discrimination Exclusive Rights 109 Adjustment versus Abolition? 109 The Manghera Judgment 111 Overlapping of Article 31 (1) with Other Provisions: Monist Solutions 112 The Doctrine of Separable Measures 113 The Joint Application Doctrine 114 Article 31 (1) as a Reference Rule 116 Exclusive Rights to Import Products 118 Exclusive Rights of Marketing 119 Exclusive Rights to Export 122 Exclusive Rights ofproduction 123 Exclusive Rights to Import Raw Materials 125 C. Exceptions Article 86(1) (formerly Article 90(1)) ofthe EC Treaty 129 I. To Whom is the Provision Addressed? 131 II. Substantive Content ofthe Provision 131 III. State Measures 132 The Grant of Exclusive Rights as a State Measure 134 IV. Connection ofthe State Measure with Public or Privileged Undertakings 135 Exclusive Rights Granted to Private Undertakings 138 General Measures 139 V. Contrary to Other Treaty Provisions 140 Reference Rule 140 Relationship with Article 10 of the Treaty 141 A. Application in Conjunction with the Treaty Rules Addressed to Undertakings 143 B. Application in Conjunction with the Treaty Rules Addressed to Member States 143 XII

6 C. Application in Combination with Secondary Legislation 143 D. Application in Conjunction with the Rules ofthe ECSC and Euratom Treaties 144 VI. Direct Effect 145 VII. Scopeof Temporary Application 145 VIII. Similar Rules Contained in Agreements with Third Countries Article 86(1) (formerly Article 90(1)) in Conjunction with the Treaty Rules Addressed to Undertakings 147 I. Application in Conjunction with Article A. State Responsibility and Responsibility ofthe Undertaking 150 B. Relationship between the State Measure and the Abuse: The Behaviour Doctrine versus the Effects Doctrine 151 C. State Measures which Influence the Behaviour of Undertakings 152 Dominant Position 153 Substantial Part ofthe Common Market 156 Effect on Trade between Member States 156 Abusive Behaviour 157 State Obligation 159 D. State Measures which Affect the Structure of Competition 160 The Demand Limitation Doctrine 163 The Conflict of Interests Doctrine 165 The Port ofgenoa Judgment 166 The Extension ofthe Dominant Position Doctrine 169 The Corbeau Judgment 173 E. The La Crespelle and Banchero Judgments 176 F. Recent Commission Directives and Decisions 180 Demand Limitation Doctrine 182 Conflict of Interests Doctrine 183 Presumption based on the Structure ofthe Market 184 Extension ofthe Dominant Position Doctrine 184 G. Summary: Legal Content of Articles 86(1) and H. Criticism 187 II. Application in Combination with Article xni

7 6. Article 86(1) (formerly Article 90(1)) in Conjunction with the Treaty Rules Addressed to Member States 191 I. The Dual Legal Nature of Article 86(1) in Conjunction with the Treaty Rules Addressed to Member States 192 A. LiftingtheVeil 192 B. Article 86(1) as a Reminder of Prohibition 194 II. Application in Conjunction with the Rules Relating to the Free Movement of Goods 195 A. Measures ofequivalent Effect 196 B. Exclusive Rights: From Article 31 to Article C. The Theoretical Debate Concerning Article 30 (now Article 28) 202 D. The Keck Judgment 205 E. Exclusive Rights after Keck 208 The Ligur G?r«/Judgment 209 The La Crespelle Judgment 210 Article 28 Continues to Apply to Exclusive Rights 211 F. Exclusive Rights of Distribution and Other'Monopolies' 212 G. Mandatory Requirements and Exceptions Contained in the Treaty 216 H. The Return of Article III. Application in Combination with Rules Governing the Free Provision of Services 220 A. Article 49 as a Prohibition of Discrimination 221 B. The Wide Interpretation ofthe Notion of Discrimination 223 The Bond Van AdverteerdersJudgment 224 The Data Processing Systems and Italian Lotteryjudgments 225 The Mediawet /Judgment 226 The Eß/Judgment 227 C. Application of Article 49 to Non-discriminatory Restrictions 228 The Mediawet /Judgment 228 The Säger Judgment 231 D. Impact ofthe Keck Judgment on Services 232 E. Mandatory Requirements and Exceptions Contained in the Treaty 237 F. Requirement of a Transfrontier Element 239 Exclusion of Reverse Discrimination 239 The Doctrine of the Evasion of National Legislation 241 Limits to the Free Provision of Services in Practice 243 Nationais of Third Countries 243 xiv

8 The Impact of Article 86(3) on the Requirement of a Transfrontier Element 243 IV. Application in Conjunction with Regulations on the Freedom of Establishment 245 A. The Wide Interpretation ofthe Concept of Discrimination 247 The Data Processing Systems and Italian Lottery Judgments 247 Exclusive Rights in Favour of Foreign Undertakings 249 B. The Application of Article 43 to Non-discriminatory Restrictions 251 C. Requirement ofa Transfrontier Element 253 Exclusion of Reverse Discrimination 253 Nationais of Third Countries 254 The Impact of Article 86(3) on the Requirement ofa Transfrontier Element 255 D. Mandatory Requirements and Exceptions Provided for in the Treaty 256 E. The Choice of Title Holder ofthe Exclusive Right The Connection Between the Different Community Provisions Applicable to Exclusive Rights 257 I. Principles of Connection in Community Law 257 II. The Relationship Between Articles 31 and III. The Relationship Between Articles 86, 31 and the Fundamental Freedoms 260 IV. The Relationship Between Articles 86 and 31 and Articles 3,10, 81 and PART III. THE JUSTIFICATION OF CERTAIN EXCLUSIVE RIGHTS FOR REASONS OF GENERAL INTEREST 8. The Exception Contained in Article 86(2) (formerly Article 90(2)) ofthe EC Treaty 271 I. The Undertakings to which Article 86(2) Applies 275 A. The Carrying Out of Economic Activities 275 B. Undertakings Entrusted with the Operation of Services of General Economic Interest 276 Services of General Economic Interest 277 xv

9 Service 277 Economic 277 General 279 A National or a Community Concept? 279 Dynamic Notion 283 Entrusted 284 C. Undertakings having the Character ofa Revenueproducing Monopoly 286 II. Article 86(2): An Exception Applicable to the Behaviour of Undertakings and to State Measures 288 A. Article 86(2): An Exception Applicable to the Behaviour of Undertakings 288 Undertakings Covered by Article 86(2) are in Principle Subject to the Competition Rules 289 Liability of the Undertaking and of the Member State 290 Exception to the Prohibition Contained in Article Exception to the Prohibition Contained in Article Exception to Other Obligations Directed at Undertakings 292 B. Article 86(2): An Exception Applicable to State Measures 292 Arguments in Favour ofthe Application ofthe Exception Contained in Article 86(2) to Rules Directed at Member States 293 Recent Case Law 294 C. The Same Test for Undertakings and Member States? 298 III. The Conditions Necessary for the Application of Article 86(2) 299 A. The Principle of Proportionali ty 300 The Functioning ofthe Proportionality Test 301 The Supposed Economic Nature ofthe Objectives 301 The Traditional Interpretation of Proportionality 303 Proportionality and Exclusive Rights 304 Universal Service as a Justification for Exclusive Rights 305 The Commission's Approach in the Postal Sector 306 The Commission's Approach in the Telecommunications sector 309 The Commission's Approach in the Air Transport Sector 314 Early Case Law ofthe Court of Justice 315 The Corbeau Judgment 316 The Almelo Judgment 320 The Gas andelectricity MonopoliesJudgments 323 xvi

10 Judgment ofthe Court of First Instance: Eurovision 325 Judgment ofthe Court of First Instance: La Poste 326 Judgment ofthe Court of First Instance: Air-Inter 327 The Treaty of Amsterdam 329 A Proposal 334 Other Justifications of Exclusive Rights 337 Natural Monopolies 339 B. The Interest ofthe Community 341 The Direct Effect of Article 86(2) 341 The Interest ofthe Community as an Additional Condition 341 Content of'interests ofthe Community' 342 Connection with the First Sentence of Article 86(2) 344 Theory ofthe Two Independent Conditions 344 Theory ofthe Exception to the Exception 345 The 'Interests ofthe Community' as an Element ofa Single Condition 345 The Approach ofthe Commission and the Case Law 346 Current Interpretation ofthe Second Sentence of Article 86(2) 352 IV. Invocation of Article 86(2) by the Member State or by the Beneficiary Undertaking 352 The Bürden of Proof 354 V. Connection between Article 86(2) and the Other Exceptions 355 A. Mandatory Requirements in the Context of Article 86(1) and (2) 356 B. Connection between Article 86 and Other Exceptions which can be Invoked by Member States 358 C. Connection between Article 86(2) and Article 81 (3) 358 PART IV. THE CHOICE OF THE HOLDER OF THE EXCLUSIVE RIGHT 9. The Selection ofthe Identity ofthe Monopolist and Article 43 (formerly Article 52) ofthe EC Treaty 363 I. Obligation of Non-discrimination in the Grant of Exclusive Rights 365 A. Distinction between the Creation of an Exclusive Right and its Grant to a Given Operator 365 B. Application ofthe Freedom of Establishment 365 xvn

11 C. Grant of Exclusive Rights and Privatization as Alternative Techniques 365 D. Non-discrimination and Discretionality 366 E. Making the Tendering Process Objective 367 F. The Current Status Quo 368 II. Does an Obligation to Grant Exclusive Rights Exist? 370 A. The Obligation of Non-discrimination between Public and Private Operators and its Possible Consequences 370 B. Member States' Degree of Power to Reserve to Themselves Exclusive Rights 373 PART V. THE INSTITUTIONAL DIMENSION OF THE RULES RELATING TO EXCLUSIVE RIGHTS IN THE EC TREATY 10. Institutional and Procedural Questions Article 86(3) (formerly Article 90(3)) ofthe EC Treaty 377 I. Procedures for the Application ofthe Community Rules 378 A. Procedure Regarding the Behaviour of Undertakings 378 B. Procedures Regarding State Measures 380 Application by the National Courts and Preliminary Rulings (Article 234 of the EC Treaty) 380 Proceedings for Failure to Fulfil an Obligation (Article 226 ofthe EC Treaty) 381 Proceedings for Failure to Fulfil an Obligation ofthe ECSC Treaty 382 Special Procedures ofthe EC Treaty 383 Special Procedure Regarding State Aids (Article 88(2) ofthe EC Treaty) 383 Special Procedure Relating to Exclusive Rights and other State Measures Concerning Public or Privileged Undertakings (Article 86(3) ofthe EC Treaty) 384 II. Decisions under Article 86(3) ofthe EC Treaty 385 A. General Points 385 Application to the Grant or Maintenance of Exclusive Rights 385 Justification for a Special Procedure 387 Procedural Sources 388 CompetentAuthority 388 The Discretionary Nature ofthe Decision to Initiate Infringement Proceedings 388 xvin

12 Optional Nature ofthe Procedure under Article 86(3) 389 Commencing Proceedings ex ofßcio 389 B. The Processing of Complaints and 'Own Initiative' Proceedings 389 Commencing Proceedings on the Basis ofa Complaint 389 The Processing of Complaints 390 Processing' Own Initiative' Cases 391 Dismissal of Complaints or Inactivity ofthe Commission 391 C. Infringement Proceedings 395 Commencement of Infringement Proceedings 395 Interim Measures 395 The Letter of Formal Notice 395 The Rights ofthe Member State, the Beneficiary Undertaking and the Complainant 397 The Termination of Proceedings without a Final Decision Being Given 397 D. The Formal Decision and its Effects 398 Formal Decisions under Article 86(3) 398 The Obligatory Nature of Article 86(3) Decisions 398 Proceedings for Annulment against a Formal Decision under Article 86(3) 400 Proceedings in the Event of Non-compliance with the Decision by the Member State 401 Liability of Member States for Failure to Fulfil their Community Obligations 401 III. Directives under Article 86(3) ofthe EC Treaty 402 A. Functionsof Directives under Article 86(3) 402 Directives Adopted on the Basis of Article 86(3) 405 Preventive Function of Directives under Article 86(3) 405 The 'Transparency' Directive and the Creation of Additional Accessory Obligations through Directives under Article 86(3) 406 The Telecommunications Terminals Directive and the Specification of Treaty Obligations through Directives under Article 86(3) 410 B. The Rules Concerning Directives under Article 86(3) 412 Preparation of Article 86(3) Directives 413 Adoption of the Directive 414 xix

13 Limits on the Rule-making Power ofthe Commission 414 Article 86(3) Directives and the Behaviour of Undertakings 415 Clear and Obscure Acts 416 How Specific can Directives under Article 86(3) Be? 417 Directives under Article 86(3) are not a Repressive Instrument of Specific Infringements 419 The Principles of'necessity' and 'Proportionality' 420 Form of Directives under Article 86(3) 420 Reasons for Adopting Directives under Article 86(3) 421 Publication and Entering into Force of Directives under Article 86(3) 422 Binding Nature of Directives under Article 86(3) 423 Direct Effect of Article 86(3) Directives 423 C. Relation between Directives under Article 86(3) and Harmonization Directives 425 Bibliography 431 Index 453

(Non-legislative acts) REGULATIONS

EN 27.8.2011 Official Journal of the European Union L 222/1 II (Non-legislative acts) REGULATIONS COMMISSION IMPLEMENTING REGULATION (EU) No 842/2011 of 19 August 2011 establishing standard forms for the