C-118/85

1. Can a State body constitute a 'public undertaking'? In reality, the dispute thus concerns the interpretation of those two expressions.

The Italian Government states that 'in the Italian legal order, the production and According to Article 2 of Directive marketing of manufactured tobacco is one 80/723/EEC, 'public authorities' means 'the of the public and institutional responsi-

* Translated from the French.

OPINION OF MR MISCHO —CASE 118/85

bilities of the State' and that 'if the regarded as such for the purposes of monopoly administration, being a State Directive 80/723, which is based on the body, is a "public authority", it cannot at third paragraph of the same article and the same time be a "public undertaking" whose purpose is to facilitate its implemen­ within the meaning of the directive'. tation.

The Italian State obviously cannot be denied Furthermore, the fact that it is possible to the right to consider that it is in the public draw a distinction, among the activities of interest that it should itself assume the acti­ the State, between its activities as an vities in question and that it therefore also authority and its activities as an undertaking assumes a 'public service' duty in that is confirmed by the case-law of the Court. regard.

It has also been established in a line of In my opinion, the criteria for distinguishing decisions 4 that only 'posts which involve between 'public authorities' and 'public direct or indirect participation in the exercise undertakings' are not to be sought in the ofpowers conferred by public law and duties concept of public service but in the designed to safeguard the general interests industrial and commercial nature of the of the State or of other public authorities' activity of public bodies. come within the scope of the exception provided for in Article 48 (4) of the Treaty concerning freedom of movement for Italian legal writers have in fact coined a workers. term for this type of activity—'imprese- organo', meaning an unincorporated State enterprise. 1 The Court expressly wished to exclude posts which, whilst coming under the State or other bodies governed by public law, involve In Case 78/82, 2 the Italian Government responsibilities of an economic and social itself relied on Article 90 (2) of the EEC character which the public authorities Treaty in favour of the AAMS in order assume in the various Member States or to justify a measure contested by the other activities which cannot be assimilated Commission. However, that provision pres­ to the functions which are typical of the upposes the existence of an undertaking and public administration (see, in particular, I find it difficult to accept that a body which constitutes an undertaking within the 3 — Judgment of the Court of 11 July 1985 in Case 107/84 meaning of Article 90 (2) may no longer be Commission v Federal Republic of Germany [1985] ECR 2655, 2633 in particular paragraphs 14 and 15. 4 — See, in particular, the judgments of 17 December 1980 and 1 — Sec in particular B. Sibilio Parri, Motivazioni e Jarme di 26 May 1982 in Case 149/79 Commission v Belgium [1980] intervento dello Stato nell'economia delle aziende, Padova, ECR 3881 and [1982] ECR 1845; the judgment of 3 June CEDAM, 1983, p. 61. 1986 in Case 307/84 Commission v France [1986] ECR 2 — Judgment of 7 June 1983 in Case 78/82 Commission v Italy 1725; the judgment of 3 July 1986 in Case 66/85 Lawrie-BIumv Land Baden-Württemberg [1986] ECR 2121. [1983] ECR 1955.

paragraphs 10 and 11 of the judgment of commercial character' (paragraph 35). It may 17 December 1980, [1980] ECR 3900). legitimately be concluded that the commercial activities of a public body, whether autonomous or not, fall under The applicability of one or other of those Articles 85 and 86, specifically referred to in provisions is thus not established by the Article 90. mere existence of a public administration or a public body. The decisive factor is the activities carried on. Finally, in its judgment of 20 March 1985 in Case 41/83 (Italy v Commission [1985] ECR 873), the Court expressly rejected the Italian In the few rare cases in which the Court has Government's argument to the effect that been called upon to assess whether or not a 'the rule-making activities of a body body governed by public law is an 'under governed by public law may not be regarded taking', it has also been led to draw a as the activities of an undertaking for the distinction according to the nature of those purposes of Article 86' (paragraph 13) on

vities. ations of public interest, of a non-economic nature, has conferred an exclusive right to conduct radio and television transmissions on one or more establishments, for the Returning to Directive 80/723, I would performance of their tasks, these estab point out that in the abovementioned lishments 'to the extent that this judgment in Joined Cases 188 to 190/80, performance comprises activities of un- the Court decided that the directive was economic nature, fall under the provisions valid. referred to in Article 90 relating to public undertakings and undertakings to which Member States grant special or exclusive The purpose of that directive, according to rights' (paragraph 14). the sixth recital in the preamble thereto, is to 'enable a clear distinction to be made between the role of the State as public Similarly, in its judgment of 18 June 1975 in authority and its role as proprietor'. Case 94/74 IGAV v ENCC [1975] ECR 699, the Court stated that 'the activities of an institution of a public nature, even if I do not therefore see on the basis of what autonomous, fall under the provisions line of reasoning it is possible to arrive at referred to [concerning interference by the the conclusion that 'the directive does not Member States with the normal functioning make it possible to distinguish, in regard to of competition] and not under Articles 85 public authorities, between public authority and 86, even if its interventions take place in activities and entrepreneurial activities' the public interest and are devoid of a (defence, first paragraph on page 8).

It does not therefore seem excessive to It is certainly true that in the context of the conclude that, having regard to the criteria ECSC Treaty the Court.began by defining laid down in the second paragraph of that the term 'undertaking' in relation to the article, the 'imprese-organo directly concept of legal personality 5and it is that managed by the State' (reply to the letter definition which is traditionally cited by requesting observations, page 4) constitute legal writers. 6 However, the Court has the highest form of public undertakings 7 increasingly qualified that position. referred to by the directive in question. 5 — Judgment of 22 March 1961 ¡n Joined Cases 42 and 49/59 Snupat v High Authority [1961] ECR 53 (in particular pp. 80 and 81); judgment of 13 July 1962 in Joined Cases 17 2. Must a public undertaking necessarily and 20/61 Klöckner and Hösé v High Authority [1962] ECR 325 (in particular p. 341); judgment of 13 July 1962 have legal personality distinct from that of in Case 19/61 Mannemann v High Authority [1962] ECR the State? 357 (in particular pp. 371 and 372). 6 — See H. Schröter, in Groeben, Boeckh, Thiesing, Ehlermann: Kommentar zum EWG-Vertrag, Third Edition, p. 885; R. Franceschelli, R. Plaisant, J. Lassier: Droit européen de îa concurrence, 1978, p. 219; J. Schapira, G. Le According to the Italian Government, 'in Tallec, J.-B. Blaise: Droit européen des affaires, 1984, p. order for the public authorities to be able to 231; J. A. Van Damme: La politique de la concurrence dans le CEE, 1979, p. 113 et seg. exercise their influence over a public under­ 7 — Judgment of 16 December 1963 in Case 36/62 Société des taking, the two entities should be legally aciéries du Temple v High Authority [1963] ECR 289; judgment of 16 June 1966 in Case 50/65 Acciaierie e separate'. fernere di Solbiate v High Authority [1966] ECR 147.

In the context of the EEC Treaty, the Court determining its course of action in the has only recently deemed it necessary to market' (paragraphs 132 and 134). define the term 'undertaking', namely in its judgment of 12 July 1984 in Case 170/83 Hydrotherm v Compact [1984] ECR 2999, in which it decided that 'in competition law, the term "undertaking" must be understood Although it is true that those judgments as designating an economic unit for the were based essentially on the consideration purpose of the subject-matter of the that competition between companies econ agreement in question even if in law that omically dependent on each other is economic unit consists of several persons, impossible and, rather than providing a defi natural or legal' (paragraph 11). nition of the term 'undertaking', accept the principle that the acts of subsidiaries may be imputed to the parent company, it is clear from them that in competition law legal personality is not the decisive factor for the purposes of the application of Articles 85 to I note that the Court has thus merely drawn 90 of the Treaty to undertakings.

prohibition imposed by Article 85 (1) of the Treaty merely because the concession Since, like Articles 85 and 86, Article 90 is granted under that agreement has been contained in Part 3, Title I, Chapter 1, transferred from a parent company to its Section 1 of the Treaty, entitled 'Rules subsidiary, which, although having a applying to undertakings', and since, subject separate legal personality, enjoys no economic to paragraph 2 thereof, it makes public independence' (summary, paragraph 1). undertakings subject to all the rules laid down in the Treaty which apply also to private undertakings (judgment of 6 July 1982 in Joined Cases 188 to 190/80, cited above, paragraph 12), it may logically be concluded that the term 'undertaking' has Similarly, in its judgment of 14 July 1972 in the same meaning, independently of Case 48/69 (ICI vCommission [1972] ECR whether the undertaking concerned is 619), it rejected the applicants' argument to private or public. 9 the effect that possible infringements of Article 85 (1) could only be imputed to their subsidiaries on the ground that 'the fact that a subsidiary has separate legal personality is not sufficient to exclude the possibility of I have stated that in the judgments imputing its conduct to the parent concerning Article 90, cited in Section 1 company', which is the case 'where a above, the Court in fact adopted the same subsidiary does not enjoy real autonomy in

OPINION OF MR MISCHO — CASE 118/85

economic and functional approach, even if account' ('conto economico') for each of the question of legal personality was not the 'aziende' (tobacco, salt, quinine) and a directly at issue in those cases. general statement of account ('riassunto') for the whole administration.

3. Are financial relations possible only between separate legal persons? The industrial and commercial receipts of the AAMS are entered in the budget of the The Italian Government states that 'it can autonomous administration (Article 4). Only be seen from the very nature of the financial the fiscal receipts are entered directly in the relations whose transparency must be budget of the State. ensured (Article 3 of the directive) that such relations exist and must exist between separate legal persons' or that 'financial Finally and most importantly, the budget of relations cannot exist within the same legal the autonomous administration also person'. In that regard, I would like to provides for a series of transfers between make the following observations. that administration and the State 10 Treasury. It cannot be denied that it is not possible to speak of 'financial relations' unless a suffi­ ciently clear distinction can be drawn Thus, Item No 169 of the budget concerns between the source of the finance and the the 'sums paid by the Treasury for the recipient. repayment of advances made by the deposit and loan bank to cover administrative deficits'. In this instance, that seems to me to be the case. Although the existence of a separate budget must not necessarily be regarded as an essential condition for the existence of That item could possibly constitute one of 'financial relations', it is certain that in the the 'financial relations' referred to by Article instant case, an 'autonomous administration' 3 of Directive 80/723, namely 'the with a separate and distinct budget does setting-off of operating losses'. exist.

accounting service working at the AAMS', It seems to me that two conclusions may be Item No 129 the 'reimbursement to the drawn from Annex I. Treasury of the AAMS share of the funding of the "Guardia di Finanza'" and Item No 137 'taxes and other charges payable on immovable properly owned by the AAMS'. The first is that the AAMS is an adjunct of the Ministry of Finance, as the Italian Government rightly points out. However, it has also been seen that the AAMS, as its It thus seems to me that it may be name indicates, enjoys a large measure of concluded that 'financial relations' do exist autonomy and has a budget separate from between the autonomous administration on that of the Ministry. the one hand and the Italian State as such (through the Treasury) on the other. Directive 80/723 must therefore apply to those relations since I have found in another The second conclusion which may be drawn connection that the AAMS may be regarded from that list is that contracts entered into as a 'public undertaking'. by the AAMS are not of the same type as those entered into by the Ministry of Finance itself because if they were, they would not be excluded. That tends to prove The final objection raised by the Italian that the AAMS pursues activities which Government must now be considered. differ in nature from the traditional acti­ vities of the Ministries. Having regard to what is known above on the status and acti­ It contends that it follows from Annex I to vities of the AAMS, it may be concluded Council Directive 80/767/EEC of 22 July that the contracts it enters into are of the 1980 adapting and supplementing in respect same type as those awarded by a private of certain contracting authorities Directive industrial or commercial undertaking. 77/62/EEC coordinating procedures for the award of public supply contracts (Official Journal, L 215, p. 1) that 'the tobacco monopoly is an organ of the Italian 4. Consequences of the proposition that the Ministry of Finance' (page 4 of the directive is inapplicable defence).

Secondly, it would call into question the For the same reason, the Deutsche uniform application of Directive 80/723 in Bundespost (German Federal Post Office) all the Member States. would not be subject to the directive whereas the Régie des postes and the Régie des télégraphes et des téléphones in Belgium, established as State bodies with legal personality but subject to the super­ It can be seen from a comparative analysis vision of the Ministry concerned, would of the actual situation in the various come within the scope of the directive. Member States that the legal forms in which Furthermore, it is interesting to note in this the public authorities, that is to say, the connection that, until the beginning of the State or local authorities, carry out 1970s, the Belgian postal administration was economic activities are very varied. They regarded as a State undertaking and, for vary from one Member State to another and that reason, although carrying out exactly within each Member State, and also vary in the same activities and also coming under time, in accordance with prevailing national the authority of the Minister concerned, did legislation and policies. The choice of one not have its own legal personality. form or another does not necessarily reflect objective criteria but is often a function of political or historical considerations or even of simple expediency or convenience of management. It is also interesting to note that in Belgium, gas and electricity are sometimes distributed at the municipal level through municipal bodies established under local government law and managed separately from the By making possession of a separate legal general services of the municipality without, personality a necessary criterion for the however, having separate legal personality. existence of a public undertaking, the At the intermunicipal level, the same AAMS would be excluded from the scope services are provided by public law associ­ of Directive 80/723 but the 'Service ations which do have legal personality. d'exploitation industrielle des tabacs et des allumettes' (Seita), which exercises a similar activity in France, would continue to come within the scope of that directive. In Italy, differences appear to exist even within the category of 'Amministrazioni autonome' of the State. Certain have legal personality while others, such as the AAMS The Danish railways, which constitute a 1 do not. One writer 2also indicates that the Directorate-General of a Ministry, would be latter could be transformed into a 'ente subject to the directive whereas the pubblico di gestione', a category having Deutsche Bundesbahn (German Federal legal personality. Railways), established in the form of a 'special fund' 'Sondervermögen' and enjoying a certain autonomy of manage­ ment without having legal personality, 1 would not be affected. 1 Those examples clearly emphasize that at the Community level the expression 'public 11 — Directive 85/413 of 24 July 1985 amending Directive 80/723 (Official Journal, L 229, p. 20) extended the scope of the latter, in particular, to the sectors of transport, posts 12 — Ruju, in the section 'Monopoli Fiscale' in Enciclopedia del and telecommunications, water and energy. diritto, Milan, 1976, p. 853.

However, as we have seen, the Italian 'In view of the diverse forms of public Government states that 'in order for the undertakings in the various Member States public authorities to be able to exercise and the ramifications of their activities, it is influence over a public undertaking, both inevitable that their financial relations with must have a distinct legal personality' and public authorities should themselves be very that 'it can be seen from the very nature of diverse, often complex and therefore the financial relations the transparency of difficult to supervise, even with the which must be ensured that such relations assistance of the sources of published infor­ exist and must exist between separate legal mation to which the applicant governments persons'. have referred. In those circumstances there

OPINION OF MR MISCHO — CASE 118/85

is an undeniable need for the Commission For the reasons explained above, I am of the to seek additional information on those opinion that the expression 'all the under­ relations by establishing common criteria for takings in question' also includes public all the Member States and for all the under­ undertakings which are State bodies and takings in question' (paragraph 18). which do not have legal personality.

Conclusion

I therefore propose that the Commission's application should be granted and that the Court should:

Declare that by refusing to supply the information requested by the Commission concerning the Amministrazione Autonoma dei Monopoli di Stato, the Italian Republic has failed to fulfil its obligations under Article 5 (2) of Commission Directive 80/723 of 25 June 1980 on the transparency of financial relations between Member States and public undertakings;