Regulatory case law, October 2014: on electricity price increases and telecoms users’ rights

This past October the European Court of Justice among other ruled that consumers supplied with electricity and gas within the framework of a universal supply obligation must be informed with adequate notice before any price increase comes into effect. Read more in the detailed recap of ECJ October judgements below.

Competition

Case C-522/13 - Ministerio de Defensa and Navantia on tax exemption and state aid

The request for a preliminary ruling has been made in proceedings between, on the one hand Spanish Ministry of Defence and Navantia SA and, on the other hand, the Municipality of Ferrol concerning an exemption from property tax relating to land made available to Navantia.

The Court of Justice of the European Union held that on a proper construction of Article 107(1) TFEU, the exemption from property tax of a plot of land belonging to the State and made available to an undertaking whose capital is wholly State-owned and which produces, from that plot of land, goods and services that may be traded between Member States on markets open to competition may constitute State aid prohibited by that provision. It is for the referring court, however, to determine whether, in the light of all the relevant evidence in the dispute before it, assessed by reference to the interpretative guidance provided by the Court of Justice of the European Union, that tax exemption falls to be categorised as State aid within the meaning of that provision.

C-393/13 P - Council v Alumina on determination of the normal value and concept of ‘ordinary course of trade’ of imported zeolite, a powder originating in Bosnia and Herzegovina

The Court of Justice of the European Union dismissed the appeal, lodged by Council of the European Union, to set aside the judgment of the General Court of the European Union in Case T 304/11 Alumina v Council, by which the General Court annulled Council Implementing Regulation (EU) No 464/2011 of 11 May 2011 imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of zeolite A powder originating in Bosnia and Herzegovina in so far as it concerns Alumina.

In support of its appeal, the Council relied on a single ground, relating to the concept of sales carried out ‘in the ordinary course of trade’.  The Court of Justice of the European Union explained that the appeal concerns neither the finding of fact as such nor the General Court’s assessment of the evidence concerning the risk premium, but rather the interpretation of a provision of EU law and the application thereof to facts such as those established by the Council. Furthermore it stated that the determination of the normal value of a product constitutes one of the essential steps required to prove the existence of dumping. The price actually paid or payable in the ordinary course of trade must, as a matter of priority, be taken into consideration in principle to establish the normal value. However the price of a product is only one of the conditions of a commercial transaction.

The question whether a price is charged in the ordinary course of trade depends also on the other conditions of a transaction which are capable of affecting the prices charged, such as the volume of the transaction, the additional obligations assumed by the parties to that transaction or the delivery period. In the context of that assessment, which has to be carried out on a case-by-case basis, the institutions must take into consideration all the relevant factors and all the particular circumstances relating to the sales at issue. General Court’s finding that the premium covering the risk of non-payment artificially boosts the normal value calculated, is compatible with the Court’s existing case-law according to which the inclusion of that risk premium was such as to affect the normal character of the sales. In this regard the Court of Justice of the European Union held that the institutions must examine whether that condition of sale has been applied to all customers in general on the market of the like product or whether it was specific in the light of the situation of the customer at issue. The Court of Justice of the European Union also rejected the ground of appeal alleging that the General Court failed in its obligation to state reasons, given that the statement of reasons for the judgment under appeal sets out clearly and unequivocally the General Court’s reasoning.

Telecommunications

C-222/13 – TDC – concerning the interpretation of Universal Service Directive and definition of court or tribunal

The request for a preliminary ruling concerned the interpretation of Article 32 of Directive 2002/22/EC of the European Parliament and of the Council of 7 March 2002 on universal service and users’ rights relating to electronic communications networks and services (Universal Service Directive) (OJ 2002 L 108, p. 51), as amended by Directive 2009/136/EC of the European Parliament and of the Council of 25 November 2009 (OJ 2009 L 337, p. 11) (‘the Universal Service Directive’).

The request has been made in proceedings between TDC and the Danish Business Authority) concerning the refusal of a request for compensation for the cost of providing additional mandatory services. The Commission has expressed doubts as to whether the Teleklagenævnet is a court or tribunal for the purposes of Article 267 TFEU, stating that that body does not meet all the criteria established by the case-law of the Court for it to qualify as a court or tribunal. The Court of Justice of the European Union declared that it has no jurisdiction to answer the questions referred by the Teleklagenævnet (Denmark). It explained that it does not appear that the dismissal of members of the Teleklagenævnet is subject to specific guarantees which would dispel any reasonable doubt as to the independence of that body.

Furthermore, as is apparent from the documents before the Court, an appeal against a decision of the Teleklagenævnet may be made before the ordinary courts. If such an appeal is made, the Teleklagenævnet has the status of a defendant. That involvement of the Teleklagenævnet in proceedings challenging its own decision implies that, when it adopts that decision, the Teleklagenævnet is not acting as a third party in relation to the interests at stake and does not possess the necessary impartiality. That structuring of the legal remedies against a decision of the Teleklagenævnet thus emphasises the non-judicial nature of the decisions delivered by that body. It follows from all of the foregoing considerations that, without it being necessary to consider whether the Teleklagenævnet meets the other criteria for assessing whether that body is a court or tribunal for the purposes of Article 267 TFEU, it must be concluded that the Court does not have jurisdiction to answer the questions referred.

Energy

Judgement in Joined Cases C-359/11 and C-400/11 - Schulz and Egbringhoff

Consumers supplied with electricity and gas within the framework of a universal supply obligation must be informed, with adequate notice before any price increase comes into effect, as to the reasons and preconditions for that increase and its scope.  By not providing for such information, the German legislation at issue in the present case does not comply with the Electricity Directive and the Gas Directive.

The requests for a preliminary ruling have been made in two sets of proceedings, respectively between Ms Schulz and Technische Werke Schussental GmbH und Co. KG (‘TWS’) and between Mr Egbringhoff and Stadtwerke Ahaus GmbH (‘SA’). Those proceedings concern the use, by TWS and SA respectively, of allegedly unlawful clauses in consumer contracts covered by a universal supply obligation. The Court of Justice of the European Union ruled that on the one hand, Article 3(5) of Directive 2003/54/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in electricity and repealing Directive 96/92/EC, read in conjunction with Annex A thereto, and, on the other, Article 3(3) of Directive 2003/55/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in natural gas and repealing Directive 98/30/EC, read in conjunction with Annex A thereto, are to be interpreted as precluding national legislation, such as that at issue in the main proceedings, which determines the content of consumer contracts for the supply of electricity and gas covered by a universal supply obligation and allows the price of that supply to be adjusted, but which does not ensure that customers are to be given adequate notice, before that adjustment comes into effect, of the reasons and preconditions for the adjustment, and its scope.

The Court notes in particular that those two directives require the Member States to ensure that consumers have a high level of protection with regard to the transparency of the contractual conditions. The Court considers that in addition to the right to terminate the contract (a right laid down by the directives in the event of price adjustment), consumers must also be empowered to challenge such adjustments. In order to fully and effectively benefit from those rights and to take an informed decision whether to terminate the contract or to challenge the adjustment of the supply price, customers who are covered by a universal supply obligation must be informed, with adequate notice before any adjustment enters into effect, of the reasons and preconditions for that adjustment and its scope. In reply to the request to minimise the financial consequences of the judgment, the Court is unwilling to grant that request and, consequently, to limit its temporal effects. In that regard, the Court notes in particular that it has not been demonstrated that calling into question legal relations which have exhausted their effects in the past would retroactively cast into confusion the entire electricity and gas supply sector in Germany. Consequently, the interpretation of the Directives applies to all the price adjustments that have taken place in the period during which the directives have been applicable.

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