Joined Cases C‑357/10 to C‑359/10, Duomo Gpa Srl

Concession relating to the assessment, verification and collection of taxes and other local authority revenue contrary to 49 and 56 TFEU
  
>> This reference for a preliminary ruling from Tribunale amministrativo regionale per la Lombardia concerned the question whether Arts 3 EC, 10 EC, 43 EC, 49 EC and/or 81 EC (now Arts 3 TFEU, 3a TEU, 49, 56 and 101 TFEU), must be interpreted as precluding a provision such as that at issue in the main proceedings, under which:

– economic operators, except companies in which all or a majority of the share capital was in public ownership, were required to increase, if necessary, their fully paid up capital to a minimum of EUR 10 million in order to be entitled to pursue the activities of assessment, verification and collection of taxes and other local authority revenue;

– the award of those services to operators who failed to satisfy the minimum requirement of share capital was to be null and void, and

– it was prohibited to obtain new contracts or participate in tender procedures for the operation of those services until the abovementioned requirement to adjust share capital had been met.

>> admissible with regard to Arts 43 and 49 EC despite internal situation

The Court of Justice found that to the extent that this question sought an interpretation of Arts 3 EC, 10 EC and 81 EC, it must be declared inadmissible.

 The Court held that all the facts in the main proceedings were confined within a single Member State. In those circumstances, it was necessary to ascertain whether the Court had jurisdiction in the present cases to give a ruling on those provisions (see, by analogy, Case C380/05 Centro Europa 7 [2008], and Case C245/09 Omalet [2012]).

The Court held that national legislation such as that at issue in the main proceedings which, as worded, applied to Italian operators and to operators of other Member States alike was, generally, capable of falling within the scope of the provisions on the fundamental freedoms established by the Treaty only to the extent that it applied to situations connected with trade between Member States (see Case C448/98 Guimont [2000]; Case C6/01 Anomar and Others [2003], and Joined Cases C570/07 and C571/07 Blanco Pérez and Chao Gómez [2010]).

However, the Court held that as could be seen in particular from the written submissions of the European Commission, in the present case it was far from inconceivable that companies established in Member States other than the Italian Republic had been or were interested in pursuing, in Italy, activities such as those covered by the contracts at issue in the main proceedings.

The Court found that the interpretation of Arts 43 EC and 49 EC sought by the referring court might be useful to it if its national law were to require it to grant an Italian operator the same rights as those which an operator of another Member State would derive from EU law in the same situation. The Court observed that the referring court stated in the orders for reference, as the reason why it considered it necessary to refer the questions for a preliminary ruling, that the lawfulness of the legislation at issue in the main proceedings depended on the interpretation by the Court of Arts 43 EC and 49 EC. Consequently, the Court argued ti had jurisdiction to give a ruling on the interpretation of those provisions.

>> Concession contrary to freedom to provide services and freedom of establishment

The Court held that as regards the definition of the respective scope of the principles of freedom to provide services and freedom of establishment, it was necessary to establish whether or not the economic operator was established in the Member State in which it offers the services in question (see, to that effect, Case C55/94 Gebhard [1995]). Where that operator was established in the Member State in which it offered the service, it fell within the scope of the principle of freedom of establishment, as defined in Art. 43 EC. On the other hand, where the economic operator was not established in the Member State of destination, it was a transfrontier service provider covered by the principle of freedom to provide services laid down in Art. 49 EC (see Case C171/02 Commission v Portugal [2004]).

The Court held that a provision such as that at issue in the main proceedings was, in principle, capable of falling within the scope of both Art. 43 EC and Art. 49 EC. It would be different if, as the Commission suggested, in practice the collection of local taxes could not be carried out without using a company established in the national territory of the Member State of destination. To the extent necessary, it would be for the referring court to determine whether this was the case.

The Court reiterated that Article 43 EC precluded any national measure which, even if applicable without discrimination on grounds of nationality, was liable to hinder or render less attractive the exercise by European Union nationals of the freedom of establishment guaranteed by the Treaty, and such restrictive effects might arise where, on account of national legislation, a company might be deterred from setting up subsidiary entities, such as permanent establishments, in other Member States and from carrying on its activities through such entities (see, inter alia, Case C148/10 DHL International [2011]).

The Court found that a provision such as that at issue in the main proceedings impeded or rendered less attractive, the freedom of establishment and the freedom to provide services laid down in Arts 43 EC and 49 EC respectively. It therefore examined to what extent the provision at issue in the main proceedings could be permitted by virtue of one of the reasons set out in Art. 46 EC or justified, in accordance with the case-law of the Court, by overriding reasons in the public interest (see, inter alia, by analogy, Case C167/01 Inspire Art [2003]; Case C42/07 Liga Portuguesa de Futebol Profissional and Bwin International [2009]).

>> no justification by reason in the public interest

The Court held that the only justification raised before the Court was the protection of public authorities against possible non-performance by the concession holder, in the light of the high overall value of the contracts which had been awarded to it.

The Court held that it was apparent from the submissions of the Comune di Baranzate that the concession holders first collect the tax revenue covered by the contracts at issue in the main proceedings. According to that municipality, it was not until after the deduction of a “collection charge” that the taxes must, at the end of a quarter, be paid to public authorities. The Comune di Baranzate stated that, after deduction of the collection charge, the profit of the concession holders came from financial market transactions carried out using provisionally-held funds. Accordingly, the concession holders held and deal with millions of euros which they were required to pay subsequently to public authorities.

The Court noted that even admitting that this objective might be regarded as an overriding reason in the public interest and not a reason of a purely economic nature (see, in that regard, Case C109/04 Kranemann [2005] and Joined Cases C72/10 and C77/101 Costa and Cifone [2012], according to settled case-law a restriction of the fundamental freedoms enshrined in the Treaty might be justified only if the relevant measure was appropriate for ensuring the attainment of the objective in question and did not go beyond what was necessary to attain that objective. Moreover, national legislation was appropriate for ensuring attainment of the objective pursued only if it genuinely reflected a concern to attain it in a consistent and systematic manner (Case C169/07 Hartlauer [2009]).

However, as the referring court itself found, a provision such as that at issue in the main proceedings went far beyond what was necessary to protect public authorities from non-performance by concession holders.Indeed, that court stated that some precautions taken by Italian legislation were, according to it, capable of protecting in a proportionate manner public authorities from non-performance by the concession holders. Thus, Italian legislation required, inter alia, proof of satisfaction of the general requirements for participation in the tender procedure as regards both technical and financial capacity and creditworthiness and solvency. The referring court also mentioned the application of minimum thresholds for fully paid capital of the concession holder that varied depending on the value of concessions actually awarded to it.

The Court thus concluded that a provision such as that at issue in the main proceedings contained disproportionate and therefore unjustified restrictions on the freedoms laid down in Arts 43 EC and 49 EC.