EU regulatory case law: April 2014

This past April the European Court of Justice declared the Data Retention Directive (Directive 2006/24/EC on the retention of data generated or processed in connection with the provision of publicly available electronic communications services) to be invalid, with the declaration of invalidity taking effect from the date on which the directive entered into force.

Read about this extremely important judgement and about other judgements by the ECJ  in Aphaia’s latest issue of EU regulatory case law review, the April 2014 edition.

 

Information society and personal data

Joined Cases C 293/12 and C 594/12 Digital Rights Ireland and Seitlinger and Others: the Court declares Data Retention Directive invalid

In Joined Cases C‑293/12 and C‑594/12 Digital Rights Ireland and Seitlinger and Others, the Court of Justice of European Union declared invalid Directive 2006/24/EC of the European Parliament and of the Council of 15 March 2006 on the retention of data generated or processed in connection with the provision of publicly available electronic communications services or of public communications networks and amending Directive 2002/58/EC.

In the request for a preliminary ruling the referring courts asked the Court to examine the validity of Directive 2006/24 in the light of Articles 7, 8 and 11 of the Charter of Fundamental Rights of the European Union. The Court observed that the data to be retained make it possible to know the identity of the person with whom a subscriber or registered user has communicated and to identify the time of the communication, the place from which that communication took place and to know the frequency of the communications of the subscriber or registered user with certain persons during a given period. Those data may provide very precise information on the private lives of the persons whose data are retained. By requiring the retention of those data and by allowing the competent national authorities to access those data, which might be appropriate for attaining the objective pursued by Directive, namely the fight against serious crime and, ultimately, public security, the directive interferes  with the fundamental rights to respect for private life and to the protection of personal data.

The directive firstly covers all individuals, all means of electronic communication and all traffic data without any differentiation, limitation or exception being made in the light of the objective of fighting against serious crime. Secondly, the directive fails to lay down any objective criterion which would ensure that the competent national authorities have access to the data and can use them only for the purposes of prevention, detection or criminal prosecutions concerning offences that, in view of the extent and seriousness of the interference with the fundamental rights in question, may be considered to be sufficiently serious to justify such an interference. On the contrary, the directive simply refers in a general manner to ‘serious crime’ as defined by each Member State in its national law. The directive does not lay down substantive and procedural conditions under which the competent national authorities may have access to the data and subsequently use them. The access to the data is not made dependent on the prior review by a court or by an independent administrative body.  Thirdly, so far as concerns the data retention period, the directive imposes a period of at least six months, without making any distinction between the categories of data on the basis of the persons concerned or the possible usefulness of the data in relation to the objective pursued. That period is set at between a minimum of six months and a maximum of 24 months, but the directive does not state the objective criteria on the basis of which the period of retention must be determined in order to ensure that it is limited to what is strictly necessary. The Court also finds that the directive does not provide for sufficient safeguards to ensure effective protection of the data against the risk of abuse and against any unlawful access and use of the data. It notes that the directive permits service providers to have regard to economic considerations when determining the level of security which they apply (particularly as regards the costs of implementing security measures) and that it does not ensure the irreversible destruction of the data at the end of their retention period.  Lastly, the Court states that the directive does not require that the data be retained within the EU. Therefore, the directive does not fully ensure the control of compliance with the requirements of protection and security by an independent authority, as is, however, explicitly required by the Charter. Such a control, carried out on the basis of EU law, is an essential component of the protection of individuals with regard to the processing of personal data.

Case C-288/12 - Commission v Hungary on prematurely bringing to an end the term served by the supervisory authority

In Case C-288/12 – Commission v Hungary, the Court of Justice of the European Union held that Hungary has infringed EU law by prematurely bringing to an end the term served by its Data Protection Supervisor. The independence of the authorities responsible for the protection of personal data requires Member States to allow those authorities to serve their full term of office.

By its action, the European Commission asked the Court to declare that, by prematurely bringing to an end the term served by the supervisory authority for the protection of personal data, Hungary has failed to fulfil its obligations under Directive 95/46/EC on the protection of individuals with regard to the processing of personal data and on the free movement of such data. The Court pointed out that the supervisory authorities must be allowed to perform their duties free from external influence. That requirement implies that those authorities must not be bound by instructions of any kind in the performance of their duties and that their decision-taking process must be free from political influence, it being necessary to dispel even the risk of such influence. The independence of supervisory authorities covers the obligation to allow them to serve their full term of office and to cause them to vacate office before expiry of the full term only in accordance with the applicable legislation. The term served by the European Data Protection Supervisor may not be prematurely brought to an end unless there are overriding and objectively verifiable grounds for doing so.

Case C-435/12 - ACI Adam and Others on reproduction for private use

In Case C-435/12 – ACI Adam and Others the Court of Justice of European Union held that the amount of the levy payable for making private copies of a protected work may not take unlawful reproductions into account. The fact that no applicable technological measure to combat the making of unlawful private copies exists is not capable of calling that finding into question.

The request for a preliminary ruling concerned the interpretation of Article 5(2)(b) and (5) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, and of Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights. The request has been made in proceedings between, on the one hand, ACI Adam and Others and, on the other, Thuiskopie and SONT— two foundations responsible for collecting and distributing the levy imposed on manufacturers and importers of media designed for the reproduction of literary, scientific or artistic works with a view to private use (‘the private copying levy’), and determining the amount of that levy — regarding the fact that SONT, in determining the amount of that levy, takes into account the harm resulting from copies made from an unlawful source.

In its judgment the Court held that EU law precludes national legislation, which does not distinguish the situation in which the source from which a reproduction for private use is made is lawful from that in which that source is unlawful. To accept that such private reproductions may be made from an unlawful source would encourage the circulation of counterfeited or pirated works, which would inevitably reduce the volume of sales or of lawful transactions relating to the protected works and would consequently have an adverse effect on normal exploitation of those works. The application of such national legislation may unreasonably prejudice copyright holders. National legislation which does not distinguish between lawful and unlawful private reproductions is not capable of ensuring a proper application of the private copying exception. The fact that no applicable technological measure exists to combat the making of unlawful private copies is not capable of calling that finding into question.

Directive 2004/48/EC does not apply to proceedings in which those liable for payment of the fair compensation bring an action before the referring court for a ruling against the body responsible for collecting that remuneration and distributing it to copyright holders, which defends that action. The levy system must ensure that a fair balance is maintained between the rights and interests of authors (as the recipients of the fair compensation) and those of users of protected subject-matter.  A private copying levy system, which does not, as regards the calculation of the fair compensation payable to its recipients, distinguish between the lawful or unlawful nature of the source from which a private reproduction has been made, does not respect that fair balance.  Under such a system, the harm caused, and therefore the amount of the fair compensation payable to the recipients, is calculated on the basis of the criterion of the harm caused to authors both by private reproductions which are made from a lawful source and by reproductions made from an unlawful source. The sum thus calculated is then, ultimately, passed on in the price paid by users of protected subject-matter at the time when equipment, devices and media which make it possible to create private copies are made available to them. Thus, all users are indirectly penalised since they necessarily contribute towards the compensation payable for the harm caused by private reproductions made from an unlawful source. Users consequently find themselves required to bear an additional, non-negligible cost in order to be able to make private copies.

Case C-616/11 T-Mobile Austria on concept of payment instrument

Case C-616/11 T-Mobile Austria on concept of payment instrument: the request for a preliminary ruling concerned the interpretation of Article 52(3) of Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC and 2006/48/EC and repealing Directive 97/5/EC (OJ 2007 L 319, p.1). The request has been made in proceedings between the Consumer Information Association and T-Mobile Austria concerning the latter’s pricing practice of requiring its clients to pay additional charges where payment is made through online banking or by way of paper transfer order.

T-Mobile Austria is one of the providers of mobile telephone services in Austria. In this respect, it concludes contracts for telecommunications services with consumers containing its general terms and conditions which it regularly updates. T-Mobile Austria charged an additional monthly fee of EUR 3 to consumers subscribed to the ‘Call Europe’ tariff who opted for payment other than by direct debit or credit card, which include, in particular, payment through online banking or by means of a paper transfer order. The Consumer Information Association brought an action before the first-instance court in the main proceedings claiming that T-Mobile Austria should be required to desist from, first, including that clause in the contracts it concludes with its customers and, secondly, making use of it in relation to existing contracts. The first-instance court granted the application by the Consumer Information Association in its entirety. That judgment was upheld on appeal.  T-Mobile Austria appealed on a point of law against that judgment to the referring court.

The Court ruled that interpreted Directive is applicable to the use of a payment instrument in the course of the contractual relationship between a mobile phone operator, as payee, and that operator’s customer, as payer. The procedure for ordering transfers by means of a transfer order form signed by the payer in person and the procedure for ordering transfers through online banking constitute payment instruments. Member States have the power to prohibit generally payees from levying charges on the payer for the use of any payment instrument, if the national legislation, as a whole, takes into account the need to encourage competition and the use of efficient payment instruments, which is for the referring court to ascertain.

Competition

Joined Cases C-231/11P, C-232/11 P and C-233/11 P and in Joined Cases C-247/11 P and C-253/11 P Commission v Siemens Österreich and Others, Siemens Transmission & Distribution v Commission, Siemens Transmission & Distribution and Nouva Magrini Galileo v Commission, Areva v Commission, and Alstom and Others v Commission on agreements, decisions and concerted practices on market in gas insulated switchgear projects

In Joined Cases C-231/11P, C-232/11 P and C-233/11 P and in Joined Cases C-247/11 P and C-253/11 P Commission v Siemens Österreich and Others, Siemens Transmission & Distribution v Commission, Siemens Transmission & Distribution and Nouva Magrini Galileo v Commission, Areva v Commission, and Alstom and Others v Commission the Court in part allowed the appeals. Cases concern the cartel on the gas insulated switchgear market. The Court restored the fine originally imposed by the Commission on Schneider, SEHV and Magrini and altered the allocation of the fines for which Areva T & D SA and its successive parent companies were held jointly and severally liable. The Court imposed a fine of €27.79 million on Alstom, jointly and severally with Areva T & D SA5, and a fine of €20.4 million on Areva, Areva T & D Holding6 and Areva T & D AG7, jointly and severally with Areva T & D SA.

 

In its judgment concerning the Siemens cases (Joined cases T-122/07 to T-124/07 Siemens and Others v Commission under appeal), the Court observed that, the Commission has the possibility of holding jointly and severally liable for payment of a fine a number of legal persons forming part of one and the same undertaking that is responsible for the infringement. But it is for the national courts and not the Commission to determine shares of the fine to be paid by those liable, in a manner consistent with EU law, by applying the national law concerned. The Court therefore decided to set aside that part of the judgment while the amount of the fines have not  been changed.

As regards the SEHV and Magrini cases, the General Court varied the fine imposed by Commission jointly and severally on SEHV, Magrini and Schneider, increasing it from €4.5 million to €8.1 million. The Court observed in that regard that Schneider did not bring an action for annulment before the General Court, so the Commission’s decision had become final in that part. The General Court exceeded its powers by varying the fine, since that variation might have been to SEHV’s and Magrini’s disadvantage. The original fine imposed jointly and severally by the Commission on those three companies (namely €4.5 million) therefore remained unchanged.

With regard to the Areva cases, the Court upholded in part the appeals lodged by Areva and Alstom. It considered that the definition of joint and several liability constitutes an infringement of the principle of legal certainty and the principle that the penalty must be specific. Joint and several liability cannot be used to force one company to bear the risk of the insolvency of another company where those companies have never formed part of the same undertaking. Where the Commission intends to make a subsidiary, which has committed an infringement, jointly and severally liable with each of the parent companies with which it has, in succession, formed a separate undertaking during the infringement period, it must fix separately for each of the undertakings involved the amount of the fine for which the companies forming part of the undertaking are jointly and severally liable, according to the gravity of the infringement for which each of the undertakings concerned is individually responsible and the duration of that infringement. The Court also pointed out that the total amount which the successive parent companies may be required to pay cannot be greater than the amount which the subsidiary must pay.

State aid

Case C-224/12 P Commission v Kingdom of the Netherlands and ING Groep NV, the Court confirmed the partial annulment of the Commission’s decision relating to aid granted to ING because of the financial crisis

The Court of Justice of the European Union in Case C-224/12 P  Commission v Kingdom of the Netherlands and ING Groep NV, confirmed the partial annulment of the Commission’s decision relating to aid granted to ING because of the financial crisis.

Because of global financial crisis in 2007 Netherlands adopted aid measures in favour of financial institution ING. In that context, ING’s capital was increased through the creation of one billion securities which allowed ING to increase its base capital by €10 billion. As a second aid measure, a cash flow swap was applied, to the impaired assets of a portfolio of securities backed by residential mortgages granted in the United States, the value of which had declined significantly.  The Commission adopted the contested decision in 2009. Although the Commission took the view that the amendment to the repayment terms led to ‘additional aid of approximately €2 billion’, it declared the restructuring plan compatible with the common market.   The General Court partially annulled the contested decision, so the Commission brought an appeal, which was dismissed  by the Court.

The Court pointed out that the private investor test is one of the factors which the Commission is required to take into account for the purposes of establishing the existence of aid. Consequently, where it appears that the private investor test may be applicable, the Commission is under a duty to ask the Member State concerned to provide it with all relevant information enabling it to determine whether the conditions governing the applicability and the application of that test are met.  Decisive is whether the amendment to the repayment terms of the capital injection satisfies an economic rationality test, so that a private investor might also be in a position to accept such an amendment, in particular by increasing the prospects of obtaining the repayment of that injection.  The Court rejected the argument of the Commission that annulment infringes the principle of proportionality while the General Court was correct in holding that the additional aid, that is to say, the aid corresponding to the amendment to the repayment terms, is a constituent element of the ‘restructuring aid’. The Court rejected all the other grounds of appeal put forward by the Commission, inter alia, the grounds relating to the factual analysis made by the General Court, the claim that the Commission was not in a position to affect the commitments offered by the Netherlands and ING and the claim that the General Court unlawfully expanded the scope of the action brought before it.

Case C-559/12 P - France v Commission the Court held that unlimited guarantee granted by French State in favour of La Poste as a result of its status as a publicly-owned establishment constitutes unlawful State aid

In case C-559/12 P – France v Commission the Court of Justice of the European Union held that unlimited guarantee granted by French State in favour of La Poste as a result of its status as a publicly-owned establishment constitutes unlawful State aid.  A presumption exists that the grant of such guarantee involves an improvement in the financial position of the undertaking through a reduction of charges which encumber its budget.

By its appeal, the French Republic requested the Court to set aside the judgment of the General Court in Case T‑154/10 France v Commission, by which the General Court dismissed its action against Commission Decision on State aid granted by France to La Poste (‘the contested decision’). The Court observes that the General Court did not validate any use of negative presumptions or any reversal of the burden of proof by the Commission. The Court considers that the Commission made a positive finding as to the existence of an unlimited State guarantee in favour of La Poste by taking account of several concordant facts enabling the grant of such a guarantee to be established. Likewise the Commission may, in order to prove the existence of an implied guarantee, rely on the method of a firm, precise and consistent body of evidence to determine whether the State is required under domestic law to use its own resources to cover losses of an establishment of an industrial and commercial character in default and therefore, a sufficiently concrete economic risk of burdens on the State budget. the Court states that a simple presumption exists that the grant of an implied and unlimited State guarantee in favour of an undertaking which is not subject to the ordinary compulsory administration and winding-up procedures results in an improvement in its financial position through a reduction of charges which would normally encumber its budget. Such a State guarantee grants an immediate advantage to that undertaking and constitutes State aid, in so far as it is granted without something in return and allows better financial terms for a loan to be obtained than those normally available on the financial markets. Accordingly, to prove the advantage obtained by such a guarantee to the recipient undertaking, it is sufficient for the Commission to establish the mere existence of that guarantee, without having to show the actual effects produced by it from the time that it is granted. Therefore the General Court was right to consider that the Commission observed the burden and the level of proof necessary to establish the advantage granted by the implied and unlimited State guarantee, specifying that such a guarantee enables the borrower ‘to enjoy a lower interest rate or provide a lower level of security.’

Joined cases C 516/12 to C 518/12 CTP on right to compensation in respect of the financial burdens resulting from the performance of a public service obligation

The Court of Justice of the European Union in joined cases C‑516/12 to C‑518/12 CTP on right to compensation in respect of the financial burdens resulting from the performance of a public service obligation.

Requests for a preliminary ruling concerned the interpretation of Regulation (EEC) No 1191/69 of the Council of 26 June 1969 on action by Member States concerning the obligations inherent in the concept of a public service in transport by rail, road and inland waterway, as amended by Council Regulation (EEC) No 1893/91 of 20 June 1991. The requests have been made in proceedings between CTP and (i) the Campania Region (Cases C‑516/12 to C‑518/12) and (ii) the Province of Naples (Cases C‑516/12 and C‑518/12), concerning Campania Region and Province of Naples’ refusal to grant CTP compensation in respect of financial burdens resulting from the provision of local public transport services.

CTP provides local public transport services in the province of Naples. In this regard, it submitted several applications to the Campania Region and Province of Naples, which rejected them, seeking compensation in respect of the economic disadvantage which it claimed to have suffered as a result of the provision of those services. CTP sought annulment of those administrative decisions before the Regional Administrative Court, Campania. That court considered that the right to compensation in respect of such an economic disadvantage can arise only where a transport undertaking has previously made an application for termination of the public service obligation to which it is subject, and only where the competent authorities reject that application. Since it found that CTP had not brought such an application for termination, the Regional Administrative Court, Campania adopted three judgments rejecting CTP’s actions. CTP appealed to the referring court against the three judgments. The referring court asked the question ‘Does the right to compensation arise, for the purposes of Article 4 of [Regulation No 1191/69], only where, following the submission of an appropriate application, the competent authorities have not terminated the public service obligation which imposes an economic disadvantage on the transport undertaking, or does that provision apply only to service obligations that are to be terminated and may not be maintained under the regulation?

The Court of Justice of the European Union ruled that, for public service obligations that came into existence before the entry into force of the interpreted regulation, acquisition of a right to compensation in respect of the financial burdens resulting from the performance of such an obligation is subject to the submission of an application for termination of that obligation by the undertaking concerned and to a decision to maintain the obligation or to terminate it at the end of a specified period being made by the competent authorities. By contrast, as regards public service obligations that came into existence after that date, acquisition of such a right to compensation is not subject to those conditions.

Environment

C-225/13 - Ville d'Ottignies-Louvain-la-Neuve and Others on concept of waste management plan

C-225/13 – Ville d’Ottignies-Louvain-la-Neuve and Others on concept of waste management plan: the dispute in main proceedings concerned the operation and conditioning permit of a landfill for non-hazardous household and industrial waste, in operation since 1958 at ‘Les trois burettes’ in Mont‑Saint-Guibert (Belgium). In 2003, the company Page, now Shanks SA, applied for a ‘single permit’ in order both to continue the activity and to carry out various conditioning operations at that landfill. A permit was issued by the local authority of Mont-Saint-Guibert and subsequently confirmed by the Walloon Government, with some amendments, by a Ministerial Order, against which an action for annulment has been brought before the referring court. In support of that action, the applicants in the main proceedings disputed the conformity of the1996 Decree, on the basis of which that permit was granted, with EU law.  Referring court asked Court of Justice of the European Union whether a ‘plan’ or ‘programme’ means that landfills authorised before the waste management plan entered into force may, after such entry into force, be granted new permits in respect of the plots covered by the authorisation and whether it means that no landfills may be authorised except on the sites provided for in the waste management plan. If so, the referring court asked whether such a plan or programme satisfies the environmental requirements laid down in directives.

The Court ruled that Article 7(1) of Council Directive 75/442/EEC of 15 July 1975 on waste, as amended by Commission Decision 96/350/EC of 24 May 1996, must be interpreted as meaning that a national legislative provision, which provides that, in derogation from the rule that no landfills may be authorised except on the sites provided for in the waste management plan, landfills authorised before that waste management plan entered into force may, after such entry into force, be granted new permits in respect of the plots covered by the authorisation, does not constitute a ‘waste management plan’ within the meaning of that provision of Directive 2001/42, as amended by Decision 96/350.  Article 8 of Council Directive 1999/31/EC of 26 April 1999 on the landfill of waste, as amended by Council Directive 2011/97/EU of 5 December 2011, does not, however, preclude such a national legislative provision which may be based on Article 14 of that directive and apply to landfills which have been granted a permit or which are already in operation at the date of the transposition thereof, provided that the other conditions set out in Article 14 are met, which it is for the referring court to ascertain.

Case C-301/12 - Cascina Tre Pini the declassification of a site of Community importance

In Case C-301/12 – Cascina Tre Pini the Court of Justice of the Erupean Union ruled that Member states are required to propose to the Commission the declassification of a site of Community importance when the site has become irretrievably unsuitable to achieve the objectives of the Habitats Directive, because continuing to restrict the use of that site might be an infringement of the right to property.

Articles 4(1), 9 and 11 of Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora, as amended by the Act concerning the conditions of accession, must be interpreted as meaning that the competent authorities of the Member States are required to propose to the European Commission the declassification of a site on the list of sites of Community importance, where those authorities have received a request from the owner of land included in that site, alleging an environmental degradation of the site, provided that that request is based on the fact that, despite compliance with the provisions of Article 6(2) to (4) of that directive, that site can definitively no longer contribute to the conservation of natural habitats and of the wild fauna and flora or the setting up of the Natura 2000 network.

Articles 4(1), 9 and 11 of Directive 92/43, as amended by the Act concerning the conditions of accession, must be interpreted as not precluding national legislation under which a power is conferred on the regional and local authorities alone to propose the adaptation of the list of the sites of Community importance, but not on the State, even to act in lieu of the regional or local authorities in the event that they fail to act, provided that that allocation of power does not prevent the proper application of the provisions of that directive.

 

Ines Grah

Ines Grah

Ines Grah, Aphaia’s guest blogger, holds a law degree in state aid and is currently writing a thesis on individuals’ access to the EU Court of Justice as part of the doctoral programme of the Faculty of Law at the University of Ljubljana.
Ines Grah