C-3/88
ECLI:EU:C:1989:359
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COMMISSION v ITALY
OPINION OF MR ADVOCATE GENERAL MISCHO delivered on 4 October 1989 *
Mr President, that aspect of the Italian legislation which Members of the Court, relates to the design, programming and operation of the data-processing systems (hereinafter referred to collectively as 'software'), while that of infringement of Directive 77/62/EEC is directed at the legislation in so far as it relates to the supply 1. In the Article 169 action in Case C-3/88, of equipment (hereinafter referred to as the Commission seeks a declaration from 'hardware'). the Court that by adopting or maintaining in force legislation under which only companies in which all or a majority of the shares are directly or indirectly in public or State ownership may conclude agreements with the Italian State for the development of I — Articles 52 and 59 of the EEC Treaty data-processing systems on behalf of the public authorities, the Italian Republic has failed to fulfil its obligations under Articles 52 and 59 of the EEC Treaty and Council Directive 77 / 62 / EEC of 21 December 1976 4. In its judgment of 14 January 1988 in coordinating procedures for the award of Case 63/86 Commission v Italy [1988] ECR public supply contracts (Official Journal 29, the Court pointed out that L 13, 15.1.1977, p. 1).
'Articles 52 and 59 of the Treaty are essen 2. For a description of the Italian laws and tially intended to give effect, in the field of decree-laws in issue, reference may be made activities as self-employed persons, to the to Part II of the Report for the Hearing. principle of equal treatment enshrined in Those enactments all concern the estab Article 7 according to which "within the lishment of complete data-processing scope of application of this Treaty, and systems, from the design of the system and without prejudice to any special provisions the definition of the software (programs) to contained therein, any discrimination on their technical operation, including the grounds of nationality shall be prohibited". purchase of the equipment required for their operation.
Those two articles are thus intended to secure the benefit of national treatment for 3. The allegation of infringement of Articles a national of a Member State who wishes to 52 and 59 of the EEC Treaty is directed at pursue an activity as a self-employed person
* Original language. French
OPINION OF MR MISCHO — CASE C-3/88
in another Member State and they prohibit the Court found that the Belgian law in all discrimination on grounds of nationality issue did not prevent nationals of other resulting from national or regional legis Member States from establishing themselves lation and preventing the taking up or in Belgium and carrying out the activities in pursuit of such an activity' (paragraphs 12 question and that it thus applied without and 13). distinction to Belgian nationals and those of other Member States, and added that
5. In the present case, the Italian Government claims primarily that the laws and decree-laws in issue do not make any 'its provisions and objectives do not permit reference to the nationality of companies the conclusion that it was adopted for entitled to conclude the contracts and discriminatory purposes or that it produces agreements in question with the Italian discriminatory effects' (paragraph 11). State.
6. At a formal level, the Italian Government 9. In other, more recent, cases, the Court is undoubtedly right — the Italian legis has also indicated that the criterion of lation in issue applies without distinction to indirect discrimination on the basis of both Italian and non-Italian companies. The nationality may indeed be applied to rules criterion of distinction is not the applicable without distinction. 'nationality' of the companies, but rather whether all or a majority of the shares are in public ownership. It is not disputed that 'public ownership' here means Italian public ownership. 10. In its judgments of 7 July 1988 in Case 143/87 Stanton v Inasti and in Joined Cases 154 and 155/87 Inasti v Wolf and Others and Inasti v RSVZ 1 the Court found as 7. The Commission, in its reply (point follows : 3.2.2), counters by asserting that
'provisions which, while making no explicit 'the national legislation which gave rise to reference to nationality, in fact affect solely the main proceedings is applicable without or overwhelmingly nationals (or corpor distinction to all self-employed persons ations) of the other Member States ... are working in Belgium and does not also covered by the prohibition of discrimi discriminate according to the nationality of nation'. those persons. Although it is true that self- employed persons whose principal occu pation is employment in a Member State other than Belgium are thereby placed at a 8. That claim of indirect (or disguised) disadvantage, nothing has been submitted to discrimination on the basis of nationality the Court to show that the persons disad had already been raised by the Commission vantaged are exclusively or mainly foreign in Case 221/85 Commission v Belgium nationals'. [1987] ECR 719, to which it refers. In its judgment of 12 February 1987 in that case, 1 — [1988] ECR 3877 and 3897.
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The Court concluded that 12. Furthermore, in its judgment of 7 June 1988 in Case 20/85 Roviello v Landes- versicherungsanstalt Schwaben, 3 the Court applied the same reasoning, this time not to 'nor, therefore, can the national legislation national legislation but to a provision of at issue be considered to result in indirect Community law in the field of social discrimination on grounds of nationality' security, and confirmed that
and that
'the principle of equal treatment prohibits not merely overt discrimination based on 'consequently, Article 7 of the Treaty nationality but all covert forms of discrimi may be dismissed from consideration' (para nation which, by applying other distin graph 9). guishing criteria, in fact achieve the same result' (paragraph 14). 4
11. In its judgment of 20 September 1988 in Case 31/87 Gebroeders Beentjes v Nether- 2 lands, the Court declared that 13. Those various recent judgments confirm the validity of the Commission's claim that provisions of national law which, while 'the obligation to employ long-term unem applicable without distinction to nationals of ployed persons could inter alia infringe the all the Member States, in fact hinder or prohibition of discrimination on grounds of disadvantage primarily nationals of other nationality laid down in the second Member States may also be covered by the paragraph of Article 7 of the Treaty if it prohibition in Anieles 52 and 59 of the became apparent that such a condition Treaty. It is, moreover, significant that the could be satisfied only by tenderers from the General Programmes for the abolition of State concerned or indeed that tenderers restrictions on freedom to provide services from other Member States would have and on freedom of establishment laid down difficulty in complying with it'. by the Council on 18 December 1961 (Official Journal, English Special Edition, Second Series IX, pp. 3 and 7), which, as 5 the Court has noted on several occasions, As the case was a reference for a provide useful guidance with a view to the preliminary ruling, it added that implementation of the relevant provisions of the Treaty, both consider that the restrictions prohibited include
'it is for the national court to determine, in 3 — [1988] ECR 2805. 4 — Sec also the judgment of 15 January 1986 in Case 41/84 the light of all the circumstances of the case, Pinna v Celine d'alloeations familiales de la Savoie [1986] whether the imposition of such a condition ECR 1, paragraphs 23 and 24.
is directly or indirectly discriminatory' 5 — See, in particular, the judgment of 14 January 1988 in Case 63/86 Conmistión v Italy, cited above, paragraph 14, and (paragraph 30). the judgment of 10 July 1986 in Case 79/85 Segers v Bestuur van de Bedrijfsvereniging voor Bank- en Verzeker- ingswezen, Groothandel en Vrije Beroepen [1986] ECR 2 — [1988] ECR 4635 2375, paragraph 15
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'any requirements imposed, pursuant to any same way, both in fact and in law, and that provision laid down by law, regulation or they merely draw a distinction between administrative action or in consequence of private undertakings and public under any administrative practice, in respect of the takings, with no reference to nationality. provision of services [or the taking up or pursuit of an activity as a self-employed person] ... where, although applicable irrespective of nationality, their effect is 17. In the present case, however, it is not exclusively or principally to hinder the appropriate to make any differentiation in provision of services [or the taking up or reasoning between private undertakings and pursuit of such activity] by foreign public undertakings. First, the Commission nationals'. is not alleging any discrimination by Italy against foreign private undertakings in relation to Italian private undertakings. Secondly, the discriminatory criterion is not 14. Moreover, in its judgments of 7 July that of public ownership, but that of Italian 1988 in the Inasti cases, cited above, the public ownership, the effect of which is that Court declared very generally that only undertakings controlled by the Italian public sector can be considered for the work in question. Those companies are, in fact, all companies which are incorporated or 'the provisions of the Treaty relating to the have their registered offices in Italy, that is free movement of persons are thus intended to say they are Italian companies. to facilitate the pursuit by Community citizens of occupational activities of all kinds throughout the Community, and preclude national legislation which might 18. Not all Italian companies are treated place Community citizens at a disadvantage more favourably than foreign companies, when they wish to extend their activities but all the companies receiving favourable beyond the territory of a single Member treatment under the legislation are Italian. State' (paragraph 13).
19. The defendant claims, however, that the 15. Applied to the present case, that Italian State or public sector has acquired approach implies that the Italian legislation majority holdings in a number of foreign in issue, while not preventing companies companies, including an American company from other Member States from establishing specialized in data processing. themselves in Italy or engaging in the acti vities in question, is incompatible with Articles 52 and 59 of the Treaty in so far as its effect is to prevent non-Italian companies 20. In that connection, it must be from concluding the contracts in question. acknowledged that a company having the nationality of another Member State, provided that all or a majority of its shares were in Italian public ownership, would 16. In its rejoinder (p. 5), however, the meet the conditions laid down by the laws Italian Government objects that the disputed in question. But even if some such company rules treat Italian private undertakings and were to exist, the Italian legislation, while foreign private undertakings in exactly the not affording favourable treatment exclu-
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sively to Italian companies, would still 24. Finally, the State can undoubtedly afford such treatment mainly to those guard against any unwelcome use of the companies, and would still be incompatible data in question by having recourse to other with the Treaty. measures which are less restrictive of freedom of establishment and freedom to provide services, such as a duty of official secrecy laid on the staff of the companies concerned. Furthermore, Decree-Law No 688 of 30 September 1982, providing for 21. The Commission has nevertheless emergency measures to counteract tax pointed out, without being contradicted, evasion, extends the general duty of official that there are at present no data-processing secrecy, which applies under the Italian companies having the nationality of another Penal Code to public officials and those Member State all or a majority of whose responsible for public services, to 'employees shares are in Italian public ownership, and and staff of companies awarded contracts that the agreements concluded under the who are involved in any manner in the contested rules have in fact been concluded operations provided for in the contracts'. with Italian companies. There is no reason to suppose that compliance with that duty would necessarily be less strict or less complete in the case of staff of companies none of whose shares were in Italian State ownership than in the case of staff of those some of whose shares were in Italian State ownership. 22. In its rejoinder (pp. 5 and 6), the Italian Government also maintains that the criterion of Italian public ownership is justified by the type of services which the companies in question are called upon to provide, and in particular by the fact that their task may involve the operation of data-processing systems in strategic sectors 25. Similar considerations may be advanced such as taxation, organized crime, public in relation to the Italian Government's alter health, etc. native argument that Articles 52 and 59 cannot be applied in any event because of the exceptions provided for in Articles 55, 56(1) and 66 of the Treaty.
23. In that connection, it must be noted that a number of the laws in question provide only that the task of operating the data-processing systems may, if appropriate, be temporarily entrusted to the companies 26. With regard to the exception for acti which developed those systems. Those vities involving the exercise of official provisions refer, moreover, to the technical authority provided for in Article 55, it mi st operation of the systems, and that operation first be emphasized, as the Court reiterated is to remain under the direction and super in its judgment of 15 March 1988 in Case vision of the administrative authorities, so 147/86 Commission v Greece 6that that it does not necessarily involve access to 'strategic' data by the operators. 6 — [1988] ECR 1637
OPINION OF MR MISCHO — CASE C-3/88
'since it derogates from the fundamental activities referred to in Article 52 which in rule of freedom of establishment [and, themselves involve a direct and specific through Article 66, from that of freedom to connection with the exercise of official provide services] Article 55 of the Treaty authority'. must be interpreted in a manner which limits its scope to what is strictly necessary in order to safeguard the interests which it allows the Member States to protect' (paragraph 7). It follows from that judgment that even if certain activities are performed by virtue of a legal duty or monopoly, they are not necessarily connected with the exercise of The Court added, moreover, that official authority.
'the possible application of restrictions on freedom of establishment provided for by Article 55(1) must be appraised separately in 29. Furthermore, in its judgment of 15 respect of each Member State. However, March 1988 in Commission v Greece, cited that appraisal must take account of the above, concerning activities which although Community character of the limits set by engaged in by private individuals fell within Article 55 to the exceptions which are the field of education, where it is for each permitted to the principle of freedom of Member State to determine the role and establishment, in order to prevent the effec responsibilities of the official authorities, the tiveness of the Treaty in this area from Court held that the exception in Article 55 being undermined by unilateral provisions was not applicable because those activities adopted by the Member States' remained subject to supervision by the (paragraph 8). official authorities, which had at their disposal appropriate means for ensuring in all circumstances the protection of the interests entrusted to them, and there was 27. However, the Court has never, in its no need to restrict freedom of establishment decisions, given a definition in general and for that purpose. abstract terms of what is meant by 'activities which ... are connected, even occasionally, with the exercise of official authority'.
30. In my view, the Court has thus given 28. In its judgment of 21 June 1974 in Case the concept of 'connection with the exercise 2/74 Reyners v Belgium [1974] ECR 631, it of official authority' a narrower interpre did, however, declare that the most typical tation than that which it has given to the activities of the profession of avocat cannot concept of 'employment in the public be considered to be connected with the service' contained in Article 48(4) of the exercise of that authority, and ruled that Treaty, which, according to the Court's decisions, includes not only those posts which involve direct participation but also those which involve indirect participation in 'the exception to freedom of establishment the exercise of powers conferred by public provided for by the first paragraph of law and even in the discharge of functions Article 55 must be restricted to those of the whose purpose is to safeguard merely the
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general interests of the State or of other the relevant rules themselves but in the public authorities. reasons for which they impose restrictions on foreign nationals. The Italian Government's argument that it is, in estab lishing these data-processing systems, pursuing aims which are not solely 31. In view of the foregoing, I do not feel economic but also involve the public that it is possible to consider that companies interest, including counteracting tax awarded contracts for the development and evasion, fighting organized crime, providing technical operation of data-processing therapeutic measures for drug-addiction and systems on behalf of the public authorities counteracting fraud in the pharmaceutical are 'directly and specifically' involved in the and agricultural sectors, is therefore not exercise of official authority. As we have relevant for the purpose of justifying the seen, moreover, the services to be provided restrictions imposed on foreign companies. by those companies are to remain under the To give an example, the mere fact that one direction and supervision of the public auth of the data-processing systems in question is orities, which thereby retain control. intended to meet the requirements of national health planning and supervision of the national health fund does not mean that any participation of foreign companies in its establishment and operation would 8 endanger public health in Italy. 32. Finally, in so far as the development and technical operation of data-processing systems may unavoidably involve access to data of a confidential nature and of public importance, Member States have, in the duty of official secrecy, a sufficiently effective means of guarding against 34. The only reasons of public policy or disclosure without there being any need to public security which might justify the restrict freedom of establishment or freedom exclusion of foreign companies therefore lie to provide services for that purpose. in the protection of the data processed by the systems in question. According to the Italian Government,
33. With regard to the exception contained in Article 56(1), to which Article 66 also refers, and which makes it permissible to 'that information has undeniable public maintain national rules providing for special implication; it cannot be allowed to fall into treatment for foreign nationals on grounds unauthorized hands and must not be used in of public policy, public security or public any manner which is improper or actually health, it should first be pointed out that the grounds on which the exercise of certain 8 — context,, see the Court's Įudgment of 7 May 1986 in In that context activities may be exempted from the Case 131 /85 Gill v Regicrtmgipmndent Dimddorf [1986 131/ ] 1986] prohibitions contained in Articles 52 and 59 1573,, paragraph 17 ECR 1573 17:: 'The right to restrict freedom of movement on grounds of are to be found not in the aims specific to public health is intended not to exclude the public health sector,, as a sector of economic activity and from the point sector employment,, from the application of of view of access to employment 7 — For a definition of 'employment in the public service' service',, sec the principles of freedom of movement but to permit in particular the judgment of 3 July 1986 in Case 66 66/ / 85 Member States to refuse access to (heir territory or Lawne-Blmnv Land Badai- Württemberg [ 1986 1986]] ECR 2121 2121,, residence there to persons whose access or residence would paragraph 2727.. in itself constitute a danger for public health '
OPINION OF MR MISCHO — CASE C-3/88
contrary to the interests of the State' (end II — Council Directive 77/62/EEC of point II, 2.(b) of the rejoinder).
38. In its second head of claim, the Commission seeks a declaration that the Italian legislation in issue authorizes, with 35. What is true for measures adopted regard to the purchase of the hardware under Article 56 is also true for any measure required for the establishment of the data- providing for special treatment for foreign processing systems in question, procedures nationals, whether based on objective for the award of public supply contracts criteria of general interest or on Article 55; which are incompatible with the principles that is to say, they must not be dispropor of Council Directive 77 / 62 / EEC , and in tionate to the aim they seek to achieve. As particular that the advertising rules the Court pointed out in its judgment of 26 contained in Article 9 of that directive, April 1988 in Case 352/85 Bond van Adver- which require appropriate notices to be teeders and Others v Netherlands [1988] ECR published in the Official Journal of the 2085, European Communities, have never been observed.
39. The Italian Government argues 'as an exception to a fundamental principle primarily that the directive does not apply of the Treaty, Article 56 of the Treaty must to the contracts and agreements in issue. A be interpreted in such a way that its effects data-processing system forms a whole from are limited to that which is necessary in which the hardware cannot be separated order to protect the interests which it seeks and of which it is merely a secondary, to safeguard' (paragraph 36). ancillary constituent. As complex assemb lages comprising, in addition to the hard ware, software-related operations and services (design, maintenance, commis sioning and sometimes operation), data-pro cessing systems such as those defined 36. It is also impossible, for the reasons in the legislation in question cannot be re outlined in those contexts, to justify the garded as constituting 'products' within the exclusion of companies other than those in meaning of Article 1(a) of the directive. which all or a majority of the shares are in Italian public ownership on grounds of public policy or public security within the meaning of Article 56 of the Treaty. 40. That argument advanced by the Italian government cannot, in my opinion, be accepted.
37. In conclusion, the Commission's 41. It is true that there can be no doubt, application should be upheld in so far as it and the Commission is in full agreement is based on an infringement of Articles 52 with the Italian Government on this point, and 59 of the EEC Treaty. that
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'following the necessary design state, opposite: Article 1(a) provides that the hardware and software are the indispensable delivery of products covered by public and inseparable elements acquired for the supply contracts within the meaning of the establishment of a data-processing system' directive 'may in addition include siting and (reply, p. 2). installation operations'. It is obviously out of the question to conclude that in the field of data-processing software is secondary to hardware and must be treated in the same way. I feel, however, that it may justifiably be considered that if the Council had 42. But that does not mean that they cannot intended to allow hardware not to be made be purchased separately. subject to the directive on the ground that it is ancillary to software, then it would have said so explicitly.
43. The Italian Government could first have approached a company specializing in software for the design of the system. Such a company could have produced a very detailed description of the technical 46. It is, moreover, significant to note that requirements for the most appropriate although the Council, in Article 6(l)(h), machines. The government could then have authorized Member States not to apply the purchased those machines by following a prescribed procedures 'for equipment supply procedure complying with the rules laid contracts in the field of data-processing', down in Directive 77/62/EEC. It was in that exception was available only until 1 fact confirmed at the hearing that the Italian January 1981, in the absence of any decision Government has finally become the owner to modify that date, and was subject to the of the equipment chosen and purchased on Council's right to exclude certain categories its behalf by the companies with which the of material from its scope. That explicit contracts were concluded. exception shows, by contrary inference, that data-processing hardware is, in principle, a product within the meaning of the directive. It cannot be deduced from the scope or wording of either Council Decision 79/783/EEC of 11 September 1979 44. The question whether the hardware and adopting a multiannual programme software, taken together, constitute a (1979-83) in the field of data processing 'product' within tne meaning of Article 1 of (Official Journal L 231, 13.9.1979, p. 23) the directive does not, therefore, arise. or Council Decision 84/559/EEC of 22 November 1984 amending that decision in respect of general measures in the field of data processing (Official Journal L 308, 27.11.1984, p. 49) that those decisions may 45. In any event, the directive does not have extended, even implicitly, the period of contain any provision which would allow validity of that exception. The directive has certain deliveries of products to be excluded therefore been applicable to equipment from its scope of application on the ground supply contracts in the field of data that they were merely ancillary to more processing since 1 January 1981. (It may be extensive operations or services. It does, pointed out, in passing, that the current text however, to a limited extent, provide the of the directive, as amended by Council
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Directive 88 / 295 / EEC of 22 March 1988, on the general character of the prohibitions no longer contains the exception in laid down by Article 30 in dismissing the question.) Irish Government's argument that they should not apply to imports of materials ancillary to a public works contract. The Court held that the provisions of the Treaty 47. That conclusion cannot be impugned by relating to the freedom to provide services the observation that the value of the did not lay down any specific rule relating software is generally greater than that of the to particular barriers to the free movement hardware in the establishment of data- of goods, and explicitly declared that processing systems. The directive merely fixes a lower limit below which the prescribed procedures need not be applied to public supply contracts, and that limit is expressed in absolute terms: Article 5(1)(a) 'the fact that a public works contract relates sets it at 200 000 European units of account, to the provision of services cannot remove a now ECU 200 000. The Italian Govern clause in an invitation to tender restricting ment's answer to the question put by the the materials that may be used from the Court shows that in the present case that scope of the prohibitions set out in Article limit was exceeded with respect to the 30' (see paragraphs 14 to 17). hardware — indeed, the Italian Government has never claimed otherwise.
50. That reasoning is also applicable in the present case, inasmuch as the fact that a 48. It should also be pointed out that the delivery of goods falls within the framework purpose of Directive 77/62/EEC, as stated of activities carried out under either Article in the first two recitals in its preamble, is 52 or Article 59 of the Treaty does not merely to supplement, by the coordination exempt those goods from the prohibitions of the procedures relating to public supply contained in Article 30. contracts, the prohibition of restrictions on the free movement of goods in that field already contained in Articles 30 et seq. of the EEC Treaty. None of those provisions envisages any exemption from that 51. It was therefore wrong not to provide, prohibition in cases where the goods in the three Italian enactments in issue, for involved are to be delivered within the the application of the procedures prescribed wider framework of operations which also, in Directive 77/62/EEC in relation to the or principally, comprise the performance of purchase of the hardware required for the work or the provision of services. establishment of the data-processing systems in question.
49. Furthermore, in its judgment of 22 September 1988 in Case 45/87 Commission 52. With regard to the Italian Government's v Ireland [19SS] ECR 4929, the Court relied alternative submission that the public supply contracts in issue are covered by one or 9 — Council Directive 88/295/EEC of 22 March 1988 amending Directive 77/62/EEC relating to the coordi more of the derogations provided for in the nation of procedures on the award of public supply directive, I agree with the Commission in contracts and repealing certain provisions of Directive 80/767/EEC (OJ L 127, 20.5.1988, p. 1). considering that none of those derogations
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is applicable in this case. Since I am in full set out in Part IV.2 of the Report for the agreement with the arguments advanced by Hearing, I shall merely refer to that the Commission in that regard, as they are document.
Conclusion
53. For all the above reasons, I propose that the Commission's application should be allowed in its entirety, and that the Italian Republic should be ordered to pay the costs.