Joined Cases C-338/04, C-359/04, C-360/04, Placanica

>> Grand Chamber holds that criminal penalties for collecting of bets by intermediaries acting on behalf of foreign companies infringe freedom of establishment and freedom to provide services.

Italian legislation provided that the organising of games of chance or the collecting of bets was subject to possession of a licence and a police authorisation.

In 1999, following calls for tenders, the competent Italian authorities awarded or renewed 2000 licences. The calls for tender excluded in particular operators in the form of companies whose shares were quoted on the regulated markets. Stanley International Betting, a UK licenced bookmaker, was one such company.

Three Italian operators of Stanley - Placanica, Palazzese and Sorricchio - were charged in Italian courts with pursuing organised bet-collection activity without the required police authorisation.

The referring courts essentially asked the Court of Justice whether the Italian legislation was compatible with the freedom of establishment and the freedom to provide services.

The Court held that National legislation which prohibited the pursuit of the activities of collecting, taking, booking and forwarding offers of bets, in particular bets on sporting events, without a licence or a police authorisation issued by the Member State concerned, infringed Articles 43 and 49 EC.

The fact that a particular number of licences was considered on the basis of a specific assessment to be ‘sufficient’ for the whole of the national territory could not of itself justify the obstacles to the freedom of establishment and the freedom to provide services brought about by that limitation.

It was for the referring courts to determine whether, in limiting the number of operators active in the betting and gaming sector, the national legislation genuinely contributed to the objective invoked by the Italian Government, namely, that of preventing the exploitation of activities in that sector for criminal or fraudulent purposes.

The Court held that, although in principle criminal legislation was a matter for which the Member States were responsible, Community law set certain limits to their power, and such legislation might not restrict the fundamental freedoms guaranteed by Community law (see also
Case C-348/96 Calfa (1999)).

The Court added that a Member State might not apply a criminal penalty for failure to complete an administrative formality where such completion had been refused or rendered impossible by the Member State concerned, in infringement of Community law (see also
Case 5/83 Rienks (1983)).

The defendants in the main proceedings had no way of being able to obtain the licences or police authorisation required under Italian legislation because, contrary to Community law, Italy made the grant of police authorisations subject to possession of a licence.

In consequence, Italy could not apply criminal penalties to persons such as the defendants in the main proceedings for pursuing the organised activity of collecting bets without a licence or a police authorisation.

It followed that Articles 43 EC and 49 EC must be interpreted as precluding national legislation which imposed a criminal penalty on persons for pursuing the organised activity of collecting bets without a licence or a police authorisation as required under the national legislation, where those persons were unable to obtain licences or authorisations because that Member State, in violation of Community law, refused to grant licences or authorisations to such persons.

Text of Judgment