C-18/88

GB-INNO-BM

OPINION OF MR ADVOCATE GENERAL DARMON delivered on 15 March 1989 *

Mr President, telephones.' The Law of 19 October 4 Members of the Court, 1930 gave the RTT the monopoly to operate the telecommunications network and provided that the RTT alone had 'the right to establish and operate telegraph and telephone lines and offices for communi­ 5 cations by the public'. Article 13 of the 6 1. It is said that no-one can be both a judge Ministerial Order of 20 September 1978 and a party. That adage would appear to provides: 'Unless authorized by the RTT in underlie the questions referred by the writing, a subscriber shall not connect President of the Tribunal de Commerce de any ... apparatus ... to the equipment Bruxelles, for the purpose of those questions which he is permitted to use'; Article 91 of is to ascertain whether Community law that Ministerial Order provides that the prohibits the delegation by a Member State RTT is to 'determine the disposition of the of the technical testing of certain products subscriber's circuits and their technical to an undertaking which is competing on characteristics'. Any equipment connected to the market in those products, when such those circuits must be 'supplied or approved' testing is a condition which must, in by the RTT. In practice the RTT authorizes practice, be satisfied in order for the the connection of equipment not supplied by products to be sold within the territory of it only where it is of a type that has been the State concerned. In other words, can the approved by the RTT. State appoint a trader to decide, by means of a technical type-approval procedure, whether products offered by other traders may compete with his own?

Practices of 14 July 1971 for the termi­ — 'clear separation of regulatory and opera­ nation of that commercial practice which tional duties, with due regard for the allegedly harmed its 'professional interests'. situation in each individual Member The arguments relied upon by GB in its State; defence in those proceedings raised the problem whether the RTT's situation was compatible with Community law. GB asserts that it cannot be criticized for offering for sale the equipment without informing potential purchasers that the equipment is — application of the relevant rules of the not of an approved type because the Treaty, notably competition rules, to conditions governing the grant of the telecommunications administrations and approval are objectively contrary to the 8 private providers'. Treaty of Rome, in particular Article 86, on the ground that the RTT is at one and the same time the holder of the power to grant approvals and a competitor on the market for the equipment that it approves. The national court has therefore made an order referring to the Court of Justice three There was an earlier Commission Directive questions on the interpretation of Article 30 of 16 May 1988 on competition in the and Article 86 of the EEC Treaty for a markets in telecommunications terminal preliminary ruling. 9 equipment. It provides that with effect from 1 July 1989, the drawing up of the 'technical specifications and type-approval procedures which are used for terminal equipment', the monitoring of their application and the grant of type-approvals is to be entrusted to a body independent of public or private undertakings offering goods and/or services in the telecommuni­ 10 cations sector. 4. Those questions have been referred at a time when the need to develop the common market in telecommunications within the Community is the focus of increasing attention, as is shown by a number of acts adopted by the Council and the Commission. Recent acts include, in 5. It is thus clear that the Community particular, the Council Resolution of institutions are examining the question of 7 30 June 1988 which states that the 'major the entity managing the national telecom­ policy goals in the telecommunications munications network acting in two capa­ policy' include that of developing a common cities, both as authority for approving market on which telecommunications terminals and as vendor of equipment. administrations and other suppliers can However, the approach adopted in 'compete on an equal footing'. That Directive 88/301 has not been taken into Resolution states that to that end the account in this case. That directive, which, following are particularly appropriate: 8 — Ibid, p. 2, objective 5. 7 — Resolution on the development of the Common Market 9 — Commission Directive 88/301/EEC (OJ 1988 L 131, for telecommunications services and equipment up to 1992 p. 73). (OJ 1988 C 257, p. 1). 10 — Articles 5 and 6.

implementation of contracts concluded by may be affected by Article 37. In the the RTT and in conformity with general Court's judgment in Case 41/83 Italy v conditions setting out the RTT's technical Commission, 14 the activity consisting of requirements. Those telephones are supplied managing public telecommunications instal­ to the RTT and are exclusively distributed lations and making them available to users by the RTT to its subscribers. As regards upon payment of rental was expressly the first telephone, therefore, there is no classified as the provision of services. In the competition and the RTT has a monopoly. judgments in Sacchi 15 and Amélioration de On the other hand, for other telephones, l'Elevage 16 it was held that Article 37 there is in principle a free market. There is applies to trade in goods and does not cover no commercial monopoly. As well as the a monopoly for the provision of services. RTT, any other company can, therefore, But according to the same judgments an offer telephones for sale on that market. undertaking having a monopoly for the Thus it is for such second telephones that provision of certain services may contravene the question as to the need for approval arises in the main action. 13 — The abovcmcntioncd Law of 13 October 1930, Article I 14 — Case 41/83 [1985] ECR 873. 11 — Case 202/88 France v Commmton 15 — Case 155/73 [1974) ECR 409. 12 — U Mondeofi January 1989. 16 — Case 271/81 [1983] ECR 2057

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its very existence have a restrictive effect on cations must meet certain 'essential imports because equipment sold in one requirements' which, according to Article Member State cannot in practice be sold on 2(17) are 'at present': the territory of the State where approval is required if such approval is not obtained. Second, it is obvious that in the present state of the technical diversity of public telecom­ munications networks set up in the Member — user safety; States, the need to preserve the proper operation of a national network may justify, in those States, checks on whether other equipment offered to the public is suitable to be connected to the network without any adverse effects for the network itself, its — safety of employees of network users and the employees responsible for its operators; maintenance. This is certainly an imperative requirement in the public interest that may be related in particular to the protection of users as consumers of services, but which to my mind also and primarily reflects a — protection of public telecommunications concern to protect the telecommunications networks from harm; network itself, because of the multiplicity of interests regarding matters of strategy, public policy, public safety and public health which depend on its proper operation.

— interworking of terminal equipment 'in justified cases'.

RTT are necessary, differences have 17. At first sight, the legal aspects of the emerged between the RTT's analysis and procedure for type-approval applied by the the view put forward by the Commission. RTT would not appear to be subject to the The RTT believes that the arrangements prohibition laid down in Article 30. If safe under that procedure are strictly geared to guarding the functioning of the network is safeguarding the interests in question. The accepted as an imperative requirement, it Commission, however, takes the view that does not appear unreasonable to give the certain aspects of the procedure go too far entity responsible for operating the network, and are disproportionate to what is and hence for its proper functioning, the necessary for the actual protection of the task of laying down the technical specifi aforementioned interests. cations that must be met in order for a telephone to be regarded as compatible, and also the task of applying those specifications by means of the type-approval procedure. Nor does it seem disproportionate to require that any costs incurred by reason of damage caused to the network as a result of the connection of any non-approved equipment must be borne by the subscriber

The national within the prohibition under Article 30, it is court has not asked this Court to undertake difficult to see how the allocation of that such an examination. It would appear that power to one entity rather than another, the national court has asked questions not without any change in those procedural regarding the content of the technical speci arrangements, should in itself cause fications applied by the RTT, but regarding that prohibition to apply. It is hard to the legal situation resulting from the fact see because I cannot discern what real, that the Belgian legislation leaves to the identifiable intensification of barriers to discretion of that entity both the formu imports results merely from the choice of lation of those specifications and the the holder of that power. ensuring of compliance therewith.

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that certain interests are worthy of hinder imports, in that instance repeated protection, and that certain specific legal unjustified refusals to grant approval. measures are suited to that protection, the sole factor of the legal or economic status of the entity responsible for implementing those legal measures cannot, in principle, lead to the conclusion that the measures are measures having equivalent effect. It is not possible, without proceeding on the basis of a presumption, to hold that the identity of the holder of a legal power, regardless of the manner in which that power is 20. It is thus not the allocation of the power exercised, is on its own constitutive of a of approval to the RTT which appears to measure having equivalent effect. In the me capable of falling under Article 30 but Court's case-law on measures having equi­ perhaps the exercise of that power. While valent effect, a finding of the existence of the fact that the RTT itself lays down the restrictions on imports is not made on the technical specifications to which approval is basis of presumptions but on the basis of subject is not in itself contrary to Article 30, measures, acts and conduct. the fact that the content of the specifications actually laid down was not strictly aimed at ensuring compatibility with the network means that it is no longer possible to rely on an imperative requirement. The same applies if it were to appear that approval was refused for reasons other than non-compliance with appropriate technical specifications.

before the courts an unjustified failure to 22. It therefore seems to me that the Court grant authorization' to use certain could rule that the legislation of a Member 21 State which allocates to the public entity additives. operating the telecommunications network and selling equipment the power to grant approval to telephones which it has not supplied which would enable them to be connected to the network and which provides that the costs entailed by the connection of a non-approved appliance are That view, expressed regarding the to be borne by the person who made that implementation of the principle of the free connection is not contrary to the Treaty movement of goods, is to be compared with provisions on the free movement of goods the judgment in Heylens in which the Court where that legislation makes provision for stated : an appeal to the courts against a decision refusing approval for equipment imported from another Member State in so far as that appeal allows for a review of the compati­ bility with Community law of the reasons for the refusal notified to the trader concerned. 'where in a Member State access to an occupation as an employed person is dependent upon the possession of a national diploma or a foreign diploma recognized as equivalent thereto, the principle of the free movement of workers laid down in Article 48 of the Treaty requires that it must be possible for a decision refusing to recognize the equivalence of a diploma granted to a 23. Such a reply would not, it seems, lead worker who is a national of another to disruption for the legal systems of the Member State by that Member State to be Member States. While in most of them the made the subject of judicial proceedings in situation regarding the approval of tele­ which its legality under Community law can phones is similar to that in Belgium in so far be reviewed, and for the person concerned as the entity holding the power of approval 22 to ascertain the reasons for the decision'. is not truly distinct from the body holding the monopoly for operating the telecommu­ nications network, most of them also allow for a review of the legality of refusal of approval which includes a check on reasons related to non-compliance with technical specifications which may include the commissioning of experts' reports. New I consider that in a situation where the measures will have to be introduced only in practical effect of the refusal of approval is Member States where review of legality to deny access to the domestic market to does not extend to the merits of reasons telephones imported from another Member relating to technical assessments, that is to State, Article 30 entails requirements similar say, apparently, Italy, Ireland and to those referred to in that judgment. Luxembourg. It may be assumed that recourse to experts would enable the 21 — Paragraph 46. national courts concerned to extend their 22 — Case 222/86 [1987] ECR 4097, paragraph 17.

24. In its written observations the 25. The Commission refers to the Court's Commission suggested the inclusion case-law on the direct effect of directives amongst the relevant materials for the and on the notification of State aid projects analysis of Community law in replying to and states that technical regulations laid the national court's questions, certain down in a Member State after the expiry of provisions of Council Directive the period referred to in Article 12 of the 83/189/EEC of 28 March 1983 laying directive, without compliance with the prior down a procedure for the provision of notification procedure under the directive, information in the field of technical cannot be relied on in a dispute between standards and regulations. 23It pointed out that State and an individual. that the technical specifications currently applied by RTT for the approval of tele­ phones, laid down on 21 April 1987, had not been communicated in advance as provided for by Article 8(1) of that directive under which the Member States must 26. The RTT does not deny that it failed to communicate to the Commission 'any draft communicate its draft technical specifi­ technical regulation, except where such cations to the Commission in advance. But technical regulation merely transposes the at the hearing it pointed out that the failure full text of an international or European to notify the draft should not render those standard'; they must also let the specifications inapplicable in so far as the Commission have 'a brief statement of the directive does not lay down any substantive grounds which make the enactment of such rules but only procedural rules and the a technical regulation necessary'. The non-compliance with those rules does not Commission is immediately to notify the constitute a breach of a substantive rule of other Member States of any draft it receives. Community law. It is only the actual Under Article 8(2), the Member State content of those specifications that might forwarding the draft must 'take . .. into constitute such a breach. account as far as possible' any comments by the Commission and the other Member States. Moreover, under Article 9(1) the Member State concerned must postpone for six months the adoption of the draft technical regulation if the Commission or 27. I would merely observe in this respect another Member State delivers 'a detailed that that directive was not in any way raised opinion ... to the effect that the measure before the national court and that the envisaged must be amended in order to latter's questions make no mention of it, eliminate or reduce any barriers which it referring solely to Articles 30 and 86 of the might create to the free movement of Treaty. I am therefore somewhat hesitant with regard to the need for the Court in the 23 — OJ 1983 L 109, p. 8. context of these proceedings, to rule on the

inapplicability of technical rules which were 29. The next point is the discussion not notified in the manner prescribed by the concerning the compatibility of the RTT's directive. The Commission's argument that position as holder of the power of approval technical rules which had not been notified with Article 86 of the Treaty. The national in advance are inapplicable seems to me court's question on this point asks, in debatable. Such inapplicability is not spe­ essence, whether the grant by a Member cifically provided for in the directive which State to the holder of a monopoly for the merely requires draft rules not to be operation of the telecommunications implemented before the expiry of certain network of the exclusive right to give the periods. There is a marked contrast between necessary approval to telephones which it that and the rules on notification of aid has not supplied for such telephones to be projects under Article 93(3) of the Treaty connected to the network to be authorized which expressly provides that aid projects and to lay down the technical specifications cannot be implemented before a decision is to which approval is subject is contrary to adopted pursuant to Article 93(2) by the Article 86 in so far as the holder of that Commission or, where appropriate, the monopoly is also a seller on the market of Council. It should moreover be noted that the telephones subject to its approval. State aid is in principle, pursuant to Article 92 of the Treaty, incompatible with the common market subject to derogations provided for by the Treaty itself. In the field of the technical regulations covered by the directive, such technical rules are not in principle incompatible with Community law. Any incompatibility is bound up with the 30. As was quite rightly pointed out by the substance of those rules. Commission, assessment of compatibility with Article 86 of State measures will make it necessary to widen the legal scope of the analysis. Article 86 is addressed to under­ takings and not to States and cannot apply directly to these measures. It is therefore on the basis of the Court's case-law on the interpretation of Article 90 of the Treaty in conjunction with Article 86 that some basis for a reply must be sought. In the judgment in Inno v ATAB the Court held that:

'Article 90 provides that, in the case of public undertakings and undertakings to That means that the grant of an exclusive which Member States grant special or right to a public undertaking is not, as a exclusive rights, Member States shall neither matter of principle, a measure contrary to enact nor maintain in force any measure Article 86 within the meaning of the contrary inter alia to the rules provided for decision in Inno. Such an allocation could 25 in Articles 85 to 94'. be regarded as a measure contrary to Article 86 only in so far as it was directly and actually linked to an abuse of a dominant position. According to the judgment in the 27 Nouvelles Frontières case it would be contrary to a Member State's obligation not to adopt or maintain in force any measure 31. Those dicta are relevant in the present which would deprive Article 85 of the case in so far as the RTT is undeniably a Treaty of its effectiveness if it were to public undertaking holding, by virtue of the require or favour the adoption of will of the State, certain exclusive rights. Its agreements, decisions or concerted practices rights include those which form part of its contrary to Article 85 or to reinforce the monopoly for the operation of the telecom­ effects thereof. It seems to me that those munications network. The exclusive rights words may be transposed to the field of granted to the RTT include precisely the Article 86 in the sense that Member States power of approval of telephones not cannot, by granting an exclusive right, supplied by it. require or favour an abuse of a dominant position or reinforce the effects thereof.

34. It is, therefore, now necessary to technical inspection of vehicles before they ascertain whether the grant of an exclusive are used on the public highway, when right such as that at issue is liable to require combined with the freedom of the manu­ or to favour an abuse of a dominant facturer or agent to fix the price for its position or to reinforce the effects thereof. service, leads to the creation of a dominant The Commission and Inno consider that the position. Similarly in the judgment in the 29 answer to that question must be affirmative. British Leyland case the Court held that I do not agree. a manufacturer which, in a Member State, enjoys a monopoly as a result of the applicable rules for the issue of the certificates of conformity which are required for the registration of vehicles bearing its trademark must, having regard to the position of economic dependence in which retailers are thus placed, be regarded as occupying a dominant position in the market of services indispensable for those retailers. 35. The first remark prompted by the Commission's view may appear to be based on a somewhat formal concern for legal logic but in fact it seeks to clarify some confusion in the reference to the concept of abuse of a dominant position. Is the Commission not putting forward an 36. If it is considered that the requirement argument where the grant of an exclusive of type-approval for telephones leads to the right such as that at issue here constitutes at existence of a market for services which are one and the same time a component of the in fact indispensable to traders interested in dominant position and an abuse of that marketing telephones, it seems fairly clear position. It is true that the Commission does to me that the grant to the public under­ not formally found the dominant position of taking holding the monopoly for the an undertaking such as the RTT on the operation of the telecommunications allocation of the power of approval. It relies network of the exclusive legal power to on other factors, namely the fact of holding grant approval may confer on it a dominant a monopoly for the operation of the position on that market. But I also consider national public telephone network and, that by virtue of its position as a seller of consecutively, preferential access to all users telephones, the exclusive right of that public of the public network. It thus avoids relying undertaking to grant approval might twice in its arguments on the power of contribute to conferring on it a dominant approval. On the basis of the Court's position on another market directly relevant case-law, however, I consider that such a here, namely that for the sale of telephones. power cannot be precluded as a constituent element of a dominant position. In the Court's judgment in the General Motors 28 case it was held that the delegation by a Member State to a vehicle manufacturer or its authorized agent in the form of a legal monopoly of the duty governed by public 37. From such a finding, it becomes clear law which consists in carrying out the that if the Commission's analysis of the

'enables it to prevent effective competition being maintained on the relevant market by affording it the power to behave to an appreciable extent independently of its competitors, its customers and ultimately of 39. Academic writers are also, in their 30 the consumers'. analysis of the legal rules regarding abuse of a dominant position, at pains to point out that under those rules it is not the dominant position as such which is prohibited but its abuse. Mr Stoufflet and Mr Chaput have written: 'the fact that an undertaking In that same judgment the Court defined occupies a dominant position is abuse of a dominant position as: not ... unlawful in itself. Article 86 prohibits 32 only the abuse of such a situation'. That distinction between the dominant position and its abuse is drawn more clearly in the case-law of the Court in so far as it has held 'an objective concept relating to the that a requirement for the existence of an behaviour of an undertaking in a dominant abuse is abusive conduct by the undertaking position which is such as to influence the in question, actions, substantive deeds or structure of a market where, as a result of legal acts. On the other hand the aptitude to the very presence of the undertaking in have a certain conduct or to commit acts question, the degree of competition is constituting an abuse is not itself an abuse. weakened and which, through recourse to 31 — Paragraph 91. 32 — Junsclasseur de droit international public, Communauté 30 — Case 85/76 [1979] ECR 461, paragraph 38 économique européenne, fascicule 164 G, No 198.

41. Guidance is also to be found in the 43. It must certainly be recognized that in a judgment in the Nouvelles Frontières case situation where the power of approval in even though that case related to the question is granted to a public undertaking compatibility of a procedure laid down which itself competes on the market for under national legislation with Article 85, telephones, the chances, as it were, of not Article 86. The Court held that a misuse of that power of approval may decision taken by the State on the approval apparently increase. But must it auto­ of air tariffs could be contrary to the Treaty matically be concluded that by virtue of that in so far as the tariffs thus approved were increase the very grant of that power 'the result of an agreement, a decision by an becomes an abuse of a dominant position? I association of undertakings or a concerted do not think so because it seems to me practice contrary to Article 85'; 34 that important that the distinction between the meant, once again, that it was not the dominant position and abuse thereof be approval procedure as such which raised a preserved and in that respect the concept of problem of compatibility with the Treaty abuse of a dominant position covers only conduct or positive action without embracing the mere possibility of such 33 — Case 26/75 and Case 226/84, cited above. 34 — Joined Cases 209 to 213/84, cited above, paragraph 77. conduct or such action.

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46. In conclusion I propose that the Court rule as follows:

(1) The legislation of a Member State which grants to a public undertaking which operates the national telecommunications network and sells equipment an exclusive right which consists of a power to grant approval to equipment not supplied or sold by it in order to check, on the basis of technical specifications drawn up by it, whether that equipment can be connected to the network and provides that the costs caused by the connection of non-approved equipment

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are to be borne by the person who carried out that connection is not contrary to the provisions of the EEC Treaty on the free movement of goods in so far as it provides for the possibility of appeal to the courts against a decision refusing approval of equipment from another Member State and that appeal makes it possible to check, from the point of view of Community law, the reasons for the refusal notified to the trader concerned.

(2) Such legislation is also not contrary to Articles 90 and 86 of the EEC Treaty but the exercise by the public undertaking of the power of approval for a purpose other than that of checking the technical compatibility of the equipment with the network may result in an abuse of dominant position prohibited by Article 86 if all the conditions laid down by that article are met; it is for the national court before which an allegation of such an abuse is made to assess, on the basis of all the facts, including the possibly inappropriate nature of the technical specifications and the possibly unjustified nature of decisions refusing approvals, whether there is an abuse.