C-155/73

SACCHI

10. The grant of the exclusive right to undertakings enjoying such exclusive transmit television signals does not rights against nationals of Member constitute a breach of Article 7 of States by reason of their nationality the Treaty. Discrimination by is incompatible with this provision.

In Case 155/73

Reference to the Court under Article 177 of the EEC Treaty by the Tribunale of Biella for a preliminary ruling in the criminal proceedings pending before that court against

Giuseppe Sacchi

on the interpretation of Articles 2, 3, 5, 7, 37, 86 and 90 of the EEC Treaty,

The order making the reference and the Radio Audizione Italiana (hereinafter written observations submitted under called RAI), which involves on the one Article 20 of the Statute of the Court of hand the monopoly of televised the EEC may be summarized as follows: commercial advertising and on the other hand the prohibition on any other person or undertaking from receiving, I — Facts and procedure for the purpose of their retransmission, audio-visual signals transmitted either Under Italian law television is a from the national territory or from monopoly granted by the State to foreign stations.

JUDGMENT OF 30. 4.1974 — CASE 155/73

1. Whether the principle of the free capable of being broadcast by movement of goods within the television except for the Common Market and consequent purposes of the authorized prohibition against isolation of company. national markets, which would 3. Whether Article 86, taken together impede full realization of a single with Articles 2 and 3 (f) and Article market in Europe, as provided for in Articles 2 and 3 (f) of the Treaty, are 90 (1) of the Treaty, should be taken to mean that, regardless of the basic principles of the Community means employed, to establish a giving rise to subjective rights in dominant position in a substantial favour of individuals which, if part of the Common Market is infringed, even by Member States, illegal and prohibited when the can, under Article 5 of the Treaty,

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incompatible with Article 86 and is limited company on which a prohibited because, to the detriment Member State has conferred the of Community consumers who, in a exclusive right to transmit broad­ wider sense, can be also regarded as casts of any kind on its territory users in general, the exclusive right insofar'as this affects: beforementioned entails: (a) advertising programmes as (a) elimination of all competition as described in Question 2 (a) and far as it involves: (b) above, and

(e) the fullest discretionary power 9. If the answer to Question 7 and 8 in the choice and distribution are in the affirmative, whether, as for broadcasting of productions, from 1 January 1970, the exclusive such as films, documentaries and rights conferred on a limited other programmes, whose use company to transmit television broadcasts of all kinds over the may wholly depend on the authorized company's decisions. whole territory of a Member State must be regarded as having lapsed as 5. If the answer to Question 4 is in the far as advertisements, films and affirmative, whether individuals have television documentaries coming a subjective right, enforceable in the from other Member States are national courts, to have the concerned. exclusive right, whose effects were described in 4. abolished. 10. If the answer to Question 8 is in the affirmative, whether the new 6. Whether Article 37 (1) and (2) of the measures prohibited by the Treaty also applies in the case of a 'standstill' in paragraph 2 of Article

JUDGMENT OF 30. 4. 1974 — CASE 155/73

II — Observations submit­ As the Court has stated in respect or the ted under Article 20 of second paragraph of Article 5, these the Statute of the Court provisions constitute general obligations of Justice on the part of the Member States, the substance of which depends, in each particular case, on the provisions of the A — Observations of the Commission Treaty or on rules which emerge from of the European Communities its eeneral svstem.

After stating the different ways, particu­ The first question thus calls for a larly from the technical point of view, negative reply, and the second question that radio television and cable television does not arise if its form is strictly function and after pointing out the regarded, since it was raised only in the cultural, commercial and technical pros­ event of an affirmative reply to the first pects of cable television on a local basis, question. the Commission analyses the system of It follows however from the previous television and relay television and in considerations that the question as to the particular their use for commercial ad­ extent that the exclusive right granted to vertising in various member countries. In RAI and the prohibitions which flow this connexion it stresses the influence from this exclusive right or from its of relay television in particular on the exercise are incompatible with the interpenetration of markets. Treaty and whether this incompatibility It continues by noting that although in has a direct effect, depends on an the majority, if not in all Member States, analysis of the particular provisions of the television service is a State mon­ the Treaty which apply these general opoly or a delegated monopoly, the principles and in particular, according to system is however subject, to a growing the national court, of Articles 7, 37, 86

and 90 of the Treaty, which will be commercial advertising, does not by this examined below. fact alone infringe the rules of competition. Abuse of a dominant position by a Although such a dominant position is as public undertaking (Questions 3, 4 and a structure not automatically condemned S) by the Community rules on competition, since such rules prohibit its abuse, they Article 90 of the Treaty is, in the nevertheless impose not inconsiderable Commission's view, the one primarily limits on the behaviour within the relevant to the dominant position of market of an undertaking which has RAI, since that position arises from the such a position. concession granted to it by the State, that is to say, by the measure of an Behaviour, therefore, by the holder of

exclusive rights as regards private in the opinion of the Commission undertakings, Article 90 cannot give rise provisions which are directly applicable, to liabilities greater than those arising under Article 86. individuals are given rights which the national courts must safeguard. On considering whether the extension of exclusive rights over radio television to Commercial monopolies (Questions 6 to cable television could be regarded as 10) incompatible with the prohibition on enacting measures contrary to the rules These questions relate to the of competition, the Commission interpretation of Article 37 of the Treaty concedes that Article 90 allows a State to regarding the progressive adjustment of grant exclusive rights to an undertaking monopolies of a commercial character so which would not necessarily give it a as to ensure that no discrimination exists dominant position, but it is doubtful between the nationals of Member States, whether this power can always and and the obligation on Member States to necessarily include that of enacting a refrain from introducing any new measure reinforcing the dominant measure of a discriminatory nature. position of a public undertaking, or one According to the Commission, Article 37 treated as such, so as to eliminate all applies only if three conditions are possible competition. fulfilled: there must be a State monopoly It appears from the above analysis that a or a delegated monopoly; the monopoly Member State which grants exclusive must be of a commercial character; it rights to an undertaking to make all must appreciably influence trade kinds of television transmissions, between Member States.

JUDGMENT OF 30. 4. 1974 — CASE 155/73

The Com services. mission refers in this respect to the The Commission likewise cites the arguments which it developed in Case judgment of the Court in Case 6/64 82/71 (SAIL, Rec. 1972, p. 131). (Costa-Enel, Rec. 1964, p. 1165), Taking into account the attitude it has according to which the monopolies to adopted against the assimilation of which it refers should 'relate to monopolies of services to commercial transactions concerning a commercial monopolies within the meaning of

It is necessary to assess the a way that the monopoly may no longer possibilities of discrimination inherent in give rise either actually or potentially to the monopoly in question. discrimination in trade between Member If Article 37 had to be understood as States to the detriment of imported or embracing services, there would be no exported products. Monopolies could doubt, according to the Commission, continue to exist only if they did not about the commercial nature of the hinder the functioning of the Common activity constituted by television Market, that is to say that the exclusive advertising. rights should be neutralized.

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or Community institutions. In this subject to intervention by Member States Although the principles of free respect the Commission refers to the movement of goods and free competition judgment of the Court of 16 June 1966 are fundamental to Community law, in Case 57/65 (Lütticke, Rec. 1966, p. they do not as such give rise to 294) relating to Article 95 of the Treaty. subjective rights for individuals. Such rights can arise only from definite Should, contrary to the view of the provisions of the Treaty (such as Articles Commission, Article 37 be regarded as 9 et seq., 30 et seq., 85 and 86) or of applicable to the case in question, the secondary Community law which defines exclusive right granted to a limited and puts the said principles into practice. company to make television trans missions could not be regarded as Articles 2 and 3, one of which describes abolished, and the wide interpretation of the objectives of the Treaty, the other this right could be considered as an the means to be taken to achieve them, infringement of the standstill aimed at could not, even if they were combined by Article 37 (2) only in the event that it with Article 5, give rise to a direct effect, appeared that the exclusive right in since the said Article 5 too lacks, as question or its extension in fact entailed regards the obligation which it contains, discrimination or the possibility of dis the necessary specificity for immediate crimination between nationals of Mem

This appears clearly, as Federal Republic as a public service. regards monopolies of a commercial Since freedom of information by radio, character, from the very wording of guaranteed by the Constitution, involves Article 37. The possibility that Member a free organization for radio and States may maintain and enlarge the television transmission, both as regards monopoly in radio and television the State and as regards social groups or transmission does not mean, however, private pressure groups, a monopoly has that any behaviour whatsoever on the been granted to companies subject to a part of the monopoly accords with

Article 90 (2) shows that in any case any prohibition on monopolies applies to Commerical monopolies (Ouestions 6 undertakings entrusted with the and 10) operation of services of general In the view or the German Government economic interest or having the the reply to the sixth question is character of a revenue-producing negative. monopoly only to the extent that such prohibition does not obstruct the The public television service, even as performance of the particular tasks regards advertising, is not a commercial assigned to them. monopoly, but part of a monopoly of services.Moreover trade in films Further, organizations concerned with between Member States is not trade in transmitting radio and television are not in the German Government's view products but trade in services, as appears from the fact that the EEC Directive No 'undertakings' within the meaning of the 63/607 of the Council of 15 October Treaty, since they provide a public 1963 liberalizing the import, loan and service and, in accordance with the use of films (OJ No 159 of 2 November Constitution, they must have the status 1963, p. 2661) was based on Article 63 of free institutions to accomplish their (2). tasks. These organizations are therefore undertakings within the meaning of the This fact makes a reply to Questions 7, rules on competition only as regards 8, 9 and 10 unnecessary. some of their activities. In this event, however, it is Article 90 (2) which The prohibition on discrimination should apply and this is so likewise as (Question 11) regards the transmission of advertise­ ments, which forms part of 'services of The German Government considers that general economic interest'. Indeed, the the prohibition on discrimination in radio and television transmission of Article 7 of the Treaty is not infringed advertisements is possible only within when a Member State grants a the framework of more general monopoly of commercial television to a programmes whilst, on the other hand, company resident in its territory.

According to the Italian Government the consider that television services come questions raised by the Tribunale of under the scope of Article 86, for they Biella are inadmissible and unjustified. It are not an economic activity but operate is not within the spirit of Article 177 to a public service of a cultural, bring before the Court of Justice purely recreational and informative nature. The theoretical hypotheses, but questions advertising activity of television is purely the answer to which determines the utilitarian and ancillary and is intended application of internal law. There is no to meet the costs of the service whilst case for making a reference for a avoiding an increase in the licence fee. preliminary ruling if the national law Moreover Article 86 prohibits only can be applied without reference to practices that may affect trade between Community law or if the national court Member States. still has to determine the applicable As regards Article 90, the Italian internal law. In the present case the Government recalls that under Article 90 preliminary question of whether a fee is (2) the rules of competition are applied likewise due for the possession of to undertakings entrusted with the apparatus for receiving television by operation of services of general cable depends entirely on national law. economic interest only insofar as they do As to the merits the Italian Government not obstruct the performance, in law or observes that a radio and television in fact, of the particular tasks assigned to service is a natural monopoly rather them. than a legal and economic monopoly, in the sense that the object of the enterprise Commercial monopolies (Questions 6 to by its nature allows only operation by 10) one or a limited number. The law which According to the Italian Government, attributes the operation of something in when the Member States defined in the such a situation to the State does not Treaty the rules governing national therefore create the monopoly but limits monopolies having a commercial itself to reserving it to the State for the character, they did not intend to include purpose of avoiding its appropriation by in this concept television services, which private monopolies. are usually regarded as public utility organizations and which engage in The principle of the free movement of advertising activities only on a purely goods (Questions 1 and 2) utilitarian and ancillary basis.

D — Observations of the defendant penetration and distribution which is not beyond the means of all save the large The defendant observes first of all that multinational undertakings. the activities of TELEBIELLA, of which The tact that the national court, in its he is the director, do not relate to RAI's first question, has referred to the monopoly, but are subject to the press principle of the free movement of goods laws, as constituting a network of rather than to the various articles in the information. Treaty which apply it in detail, is Passing next to an examination of the because the instances do not on their questions raised, the defendant states own reveal the whole scope of the that he would like to bring his argument principle. The principle of the free under two headings. The first relates to movement of goods must indeed be the principle of the free movement of understood and applied as one of the goods in a wide sense and likewise fundamental freedoms guaranteeing the embracing the interpretation of the functioning of the market. concept 'State monopolies of a It follows that it cannot be reduced to a commercial character' within the simple guarantee of the sale of goods meaning of Article 37 of the Treaty within the Common Market, but it must (Questions 1, 2, 6 to 10 and even 11). likewise ensure their sale with a view to The second heading concerns the consumption, so that any measure is problem of the abuse of a dominant prohibited which, outside the strict position by a public undertaking or one circumstances laid down in the Treaty, enjoying exclusive rights under the restricts the use of certain goods. The national law, which would bring into principle of free movement must there­ question the interpretation of Articles 86 fore cover everything for which different and 90 of the Treaty (Questions 3, 4 and arrangements are not expressly provided. 5). There is no doubt as to the direct effect of the fundamental rule thus recognized, The principle of the free movement of since the general principle is as precise, goods and commercial monopolies clear and free from ambiguity as the (Questions 1, 2 and 6 to 11) particular applications which the Treaty makes of it. Advertising should be regarded as an intangible asset in its own right, or at In the light of this an affirmative reply least as having, to the products to which should be given not only to the first it relates, the relationship of accessory to question relating to the direct effects of principal, and on this double basis it is the principle of free movement but also subject to the customs union and the the first two parts (a) and (b) of the principle of the free movement of goods. second question. The advertisement en­ It appears from the case law of this joys as an intangible asset the guarantee Court that intangible assets — such as of free movement. It enjoys it also in its electricity — come under the application capacity of a support and accessory for of these rules (Case 6/64 Costa/Enel, the movement of products. This free Rec. 1964, p. 1157) and all products on movement implies the free prepararion of which a monetary value can be placed, the latter for sale and the free exercise and which are as such capable of being of activities on which the movement of

ductions capable of being broadcast by discrimination, the sixth and seventh television except for the purposes of the questions rightly raise the problem of the authorized company. The reply should delimitation of the scope of the likewise be in the affirmative, since the application of Article 37 of the Treaty, objects bearing the advertisements especially as to whether it covers the televised fall without any doubt within monopoly of television. the category of 'goods'. It is essential, Although at first sight Article 37 does moreover, that once the free movement not relate to the activities of the of the advertisement televised has been 'invisible' sector, the fact must recognized, the free movement of the nervertheless be taken into account that carrier should also be recognized. the concept of 'services' in Chapter 3 of According to the defendant it is Title III of Part Two of the Treaty, as necessary to extend the examination of appears from Articles 60 and 61, has a the question raised to that of whether residual character, that is to say much the restrictions imposed on the more limited than the concept of movement of the television signal do not 'services' in national laws.

JUDGMENT OF 30. 4. 1974 — CASE 155/73

In transmission of sound and visual short there would be a monopoly programmes by cable . . . are likewise involving exclusive rights as regards deemed to constitute radio facilities . . .'. products coming from third countries The 1973 Law, moreover, attached a whilst for products coming from penal sanction to the unauthorized Member States the monopoly could not installation and operation of cable longer operate as such. Every company television, which sanction did not producing films, documentaries and previously obtain. Finally another breach advertisements should have access to the of the 'standstill' requirement arose from national market of every Member State the Presidential Decree of 15 December without being obliged to have recourse 1972 extending the exclusive rights of to a monopolistic corporation (as in RAI, which would have lapsed on 31 France or Italy) or to an oligopoly (as in December 1972, to 31 December 1973. the Federal Republic of Germany).

According to the defendant Questions 7, may be imported freely and directly. 8 and 9 do not raise only the question of Suppliers of these tobaccos shall be the breach of the standstill requirement entitled to establish their own wholesale

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There public undertaking (Questions 3, 4 and fore the activity of an undertaking 5) holding in fact and in law the position of a monopoly involving the elimination of According to the defendant it is doubtful competition in such a way that the whether RAI can be described as a strengthening of this position is not even public undertaking within the meaning necessary, is incompatible with the of Article 90, but if it could be so Treaty. Since the monopoly involves the described it is not in any event an elimination of competition, abuse of the undertaking entrusted with the operation dominant position arises from the of services of general economic interest existence of the monopoly.

It in other words it is not necessary in the volves, in the light of the Europemballage case of a public undertaking, as it is Corporation judgment, an infringement under Article 86 in respect of a private of the standstill obligation on undertaking, to find that there is an undertakings in a dominant position abuse of a dominant position; Article 90 prohibiting them from strengthening this is infringed as soon as legislative position to the extent of impairing an measures of a Member State aim at effective competition structure. allowing a public undertaking to achieve At the hearing on 19 February 1974 the a result which undertakings are pro defendant, represented by G. M. hibited from obtaining. Ubertazzi and F. Capelli of the Milan

The Commission and the German and Government consider that the prohibi­ Italian Governments do not think that tion derives from the exclusive rights such an assimilation can be made. The which the concessionary of the television Commission considers that the free service enjoys, to which must be added movement of television advertisements the State monopoly as regards telecommunications. In the Italian comes mainly under the freedom to Government's view restrictions on the provide services. It observes nevertheless that certain aspects of copyright and setting up and operation of telecommunications services come under kindred rights likewise come under the free movement of goods, as the Court the exclusive and sovereign competence found in its judgment of 8 June 1971 of the State and do not prevent the free movement of the films televised. (Case 78/70, Deutsche Grammophon v Metro, Rec. 1970, p. 487). In the defendant s view restrictions on

even be necessary, for the number of advertising both by radio and by cable, channels which a cable makes available the Commission states: would enable several cable companies to 1. It is not ruled out that radio and use it simultaneously without risk of television organizations must be interference. The German and Italian regarded as undertakings, even as far Governments consider that the as their transmissions which do not monopoly constitutes the most have an advertising character are economically rational method of concerned. operation. The Italian Government observes that a monopoly of the means 2. These organizations cannot be of diffusion does not necessarily imply a regarded as entrusted with the monopoly in the free provision of operations of 'services of general services. economic interest' within the meaning of Article 90 (2), at least as regards (d) Questioned on the reasons which their advertising activity. led the legislature to extend the 3. Even if the applicability of Article 90 monopoly of Hertzian television to cable (2) to television organizations had to television, the Italian Government be admitted, the Commission does observes that there has not been any not see how the setting up of cable extension, since cable television has television stations and the import of always come under the sphere which the programmes from abroad which Italian State has reserved to itself as would result could provide any regards telecommunication. There was obstacle to the performance of the nothing to show that the new law on tasks entrusted in the form of television broadcasts established for exclusive rights to the existing cable boradcasts too a new management television undertakings. monopoly in favour of RAI or any other organization. (g) A final question invited the Commission to take up a position on the (e) A question addressed to the applicability of the Commission Commission invited it to state its point Directive No 70/50/EEC of 22 December of view on televised commercial 1969 to television advertising both by advertising in relation to the principle of radio and by cable. freedom to provide services. The Basing itself on the wording of Article 2 Commission replies that freedom to (3) (m) and Article 3 of the Directive, the provide services must be understood as Commission points out that measures meaning that an advertiser in a Member are prohibited which prohibit or limit State could not be prevented from advertising and which make imports contracting with a television establish­ more difficult without this being ment in another Member State with a necessary to attain an objective view to screening advertisements in this remaining within the framework of the latter State. power which the Treaty leaves to Member States of adopting regulations, (f) Invited to take up a position on the or when the effects of the restrictive argument developed by the Italian and measures are out of proportion to their German Governments relating to the purpose.

A — The competence of the Court

2 The Italian Government has cast doubt on the admissibility of the reference for a preliminary ruling by alleging that an answer to the questions raised was not necessary to enable the court to determine the proceedings with which it is concerned.

3 Article 177, which is based on a clear separation of functions between the national courts and this Court, does not allow this Court to judge the grounds for the request for interpretation.

The objection therefore cannot be upheld.

B — Questions 1, 2, 6, 7, 8 and 9

4 The first two questions basically ask whether the principle of the free movement of goods within the Common Market applies to television signals, in particular in their commercial aspects, and whether the exclusive right granted by a Member State to a limited company to make all kinds of television transmissions, even for commercial advertising purposes, constitutes a breach of the said principle.

As a result, although the existence of a monopoly with regard to television advertising is not in itself contrary to the principle of free movement of goods, such a monopoly would contravene this principle if it discriminated in favour of national material and products.

8 In the same way, the fact that an undertaking of a Member State has an exclusive right to transmit advertisements by television is not as such incompatible with the free movement of products, the marketing of which such advertisements are intended to promote. It would however be different if the exclusive right were used to favour, within the Community, particular trade channels or particular commercial operators in relation to others.

As is stressed by Article 3 of the Commission Directive of 22 December 1969 on the abolition of measures having an effect equivalent to quantitative restrictions on imports and are not covered by other provisions adopted in pursuance of the EEC Treaty (OJ L 13/29 of 19 January 1970), measures governing the marketing of products where the restrictive effect exceeds the effects intrinsic to trade rules are capable of constituting measures having an effect equivalent to quantitative restrictions.

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Such is the case, in particular, where the restrictive effects are out of proportion to their purpose, in the present case the organization, according to the law of a Member State, of television as a service in the public interest.

9 Since the sixth question relates to the interpretation of Article 37 of the Treaty, it is fitting to examine it in conjunction with the problems raised by the provisions relating to the free movement of goods, among which this article is placed.

12 Questions 3, 4 and 5 relate to whether exclusive rights granted by a Member State to a limited company in relation to television broadcasts, and the exercise of such rights, are compatible with the competition rules of the Treaty.

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The third question inquires whether Articles 86 and 90 of the Treaty taken together should be interpreted as meaning that an undertaking referred to in Article 90 (1) is prohibited from acquiring a dominant position, even as a result of an act of the national authorities, when the effect is to eliminate all forms of competition in the field in which it operates over the whole territorial area of the Member State.

If the answer to the third question is in the affirmative, the fourth question enquires whether a limited company on which a Member State has conferred by law the exclusive right to carry out television broadcasts of all kinds including those transmitted by cable, and those for commercial advertising purposes, holds a dominant position which is incompatible with Article 86, or at least abuses its dominant position by engaging in certain practices tending to eliminate competition and which are particularized by the national court.

If this question is answered in the affirmative, the fifth question asks whether the prohibitions referred to in the previous questions have a direct effect and confer rights on individuals which the national courts must safeguard.

13 The Italian and German Governments have suggested that since television undertakings fulfil a task which concerns the public and is of a cultural and informative nature, they are not 'undertakings' within the meaning of the provisions of the Treaty.

It is therefore the same as regards an extension of exclusive rights following a new intervention by this State.

15 Moreover, if certain Member States treat undertakings entrusted with the operation of television, even as regards their commercial activities, in particular advertising, as undertakings entrusted with the operation of services of general economic interest, the same prohibitions apply, as regards their behaviour within the market, by reason of Article 90 (2), so long as it is not shown that the said prohibitions are incompatible with the performance of their tasks.

16 In the fourth question the national court has cited a certain number of acts capable of amounting to abuse within the meaning of Article 86.

17 Such would certainly be the case with an undertaking possessing a monopoly of television advertising, if it imposed unfair charges or conditions on users of its services or if it discriminated between commercial operators or national products on the one hand, and those of other Member States on the other, as regards access to television advertising.

18 The national court has in each case to ascertain the existence of such abuse

and the Commission has to remedy it within the limits of its powers.

21 The costs incurred by the Commission of the European Communities and by the Italian and German Governments, who have submitted observations to the Court, are not recoverable, and as these proceedings are, insofar as the parties to the main action are concerned, a step in the action pending before a national court, the decision on costs is a matter for that court.

THE COURT

in answer to the questions referred to it by the Tribunale of Biella by order of 6 July 1973, hereby rules:

1. The transmission of television signals, including those in the nature of advertisements, comes, as such, within the rules of the Treaty relating to services. However, trade in material, sound recordings, films, apparatus and other products used for the diffusion of television signals is subject to the rules relating to freedom of movement for goods.

2. The fact that an undertaking of a Member State has the exclusive right to transmit advertisements by television is not as such incompatible with the free movement of products, the marketing of which such advertisements are intended to promote. It would however be different if the exclusive rights were used to favour,

OPINION OF MR REISCHL — CASE 155/73

Pescatore Kutscher Ó Dálaigh Mackenzie Stuart

Delivered in open court at Luxembourg on 30 April 1974

A. Van Houtte R. Lecourt

Registrar President

OPINION OF MR ADVOCATE-GENERAL REISCHL

DELIVERED ON 20 MARCH 1974 1