C-393/92

OPINION OF MR DARMON — CASE C-393/92

OPINION OF MR ADVOCATE GENERAL DARMON delivered on 8 February 1994 *

Mr President, 3. The main distinguishing characteristic of Members of the Court, the electricity market lies in the fact that, as with conventional vocal telephony, distribu­ tion is achieved by means of a network and fixed lines. As a result, the customers form a captive market and the sources of supply and demand are not mobile. Mobility, which enables the customer to choose his contrac­ tor, lies at the very heart of any system of 1.This reference for a preliminary ruling is, undistorted competition. The electricity net­ to my knowledge, the first case in which the work is managed in a centralized way, in Court has been asked to interpret the com­ order to ensure the existence at all times of petition rules in the EEC Treaty with regard an adequate balance between supply and to the public distribution of electric energy. demand, and thus security of supply. Can there be competition for the supply of electricity? Must access by third parties to public networks be authorized in order for there to be effective competition between electricity suppliers? As will be seen, the issue is of some importance. 4. Those exceptional economic and technical constraints have an impact on the legal framework governing the sale and purchase of electricity and on the state of integration in these matters within the Community.

2. The economic and physical characteristics of the supply of electricity are very specific. Electricity can only be conveyed by means 5. A brief summary of the way in which the of conductors. Over long distances, the relevant Community law has developed is losses are considerable. The fact that electric­ needed here. ity cannot be stored means that production must at all times keep up with consumption. At the same time, given that it has to meet all sorts of different needs, electricity is a prod­ uct of prime importance, the supply of which must be guaranteed, available to all and affordable. 6. The electricity market has for a long time remained outside the framework of Commu­ nity law. Neither the original Treaty nor the Single Act provide for any common policy * Original language: French. in this sphere.

7. There are only two provisions in the 'the establishing of the internal electricity Treaty establishing the European Commu market needs to be progressive and to be nity which have any bearing on the matter: implemented in phases in order to enable under Article 3(t), the activities of the Euro industry to adjust in a flexible and ordered 4 pean Community are to include measures in manner to its new environment'. It will be the sphere of energy. Article 129b provides noted that the Commission has not availed that the Community is to 'contribute' to the itself, as in the telecommunications field, of establishment and development of trans- its regulatory powers under Article 90(3) of European networks in the area of energy the Treaty, preferring to seek the approxima infrastructures. However, a declaration relat tion of the provisions laid down by law, ing to energy appearing in the Final Act of regulation or administrative action the Maastricht Treaty provides that the ques (Article 100a). tion of introducing into the Treaty a title relating to the sphere of energy is to be examined on the basis of a report which the Commission is to submit to the Council by 1996 at the latest.

9. At the prompting of the Commission, 2an responsible for such distribution) and a internal electricity market is being built up in regional distributor ('IJsselcentrale'). stages within the framework of Article 8a of the Treaty of Rome, as is evidenced by the Proposal for a Council Directive concerning common rules for the internal market in electricity, 3which gives third parties limited access to the network, that being a condition 12. There are in the Netherlands four pro of effective competition between suppliers: ducers, which are shareholders in a common parent company, NV Samenwerkende Elektriciteitsproduktiebedrijven (hereinafter referred to as 'SEP'). 5The electricity gener- 1 — See, for example, Council Directive 90/377/EEC of 29 June 1990 concerning a Community procedure to improve the transparency of gas and electricity prices charged to industrial end-users (OJ 1990 L 185, p. 16) and Council Directive 90/547/EEC of 29 October 1990 on the 4 — Ibid., third recital of the preamble. transit of electricity through transmission grids (OJ 1990 L 313, p. 30). 5 — SEP's objects, as laid down in its statutes, 'include in partic ular the operation of the high voltage grid, the conclusion of 2 — The Internal Energy Market (Commission Working Docu agreements with foreign electricity undertakings concerning ment) of 2 May 1988, COM(88)238. imports and exports of electricity and the use of interna 3 — 92/C 65/04 (OJ 1992 C 65, p. 4). It was not approved in that tional interconnections' (judgment in Case T-16/91 Rendo form by the Council. and Others [1992] ECR II-2417, paragraph 4).

16. Article 34 of the Law of 16 Novem­ 9 ber 1989 (the 'Elektriciteitswet') and the Ministerial Decree of 20 March 1990 provide

15. The local distributors are bound by an exclusive purchasing obligation and a ban on 6 — According to the Netherlands Government, that prohibition imports, arising from two separate agree­ is justified by the fact that imports are carried out solely on a centralized — and planned — basis by SEP (Observations ments: of the Netherlands Government, paragraph 10). 7 — General conditions for the supply of electric power to municipalities with their own distributors in the territory of IJsselcentrale's concession, drawn up at Zwolle on 17 December 1964, which came into force on 1 April 1965. 8 — 'The Municipality undertakes to obtain electric power for supply in its territory exclusively from IJsselcentrale, and to — a horizontal agreement concluded use that power only for its own consumption or for supply to third parties for consumption in the territory of the on 22 May 1986 between the electricity Municipality.' generators of the one part and SEP of the 9 — Staatsblad 535. The Law on electricity of 16 November 1989 opened up the Netherlands market, within strict limits: dis­ other part (the Overeenkomst van tribution companies can choose their Netherlands supplier Samenwerking', known as the 'coopera- (cross-shopping) and industrial consumers may import elec­ tricity for their own consumption, since it does not make use tion agreement', hereinafter referred to as of the public supply network.

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that SEP is to have the sole right to import 19. The claimants appealed to the Gerecht­ electric power with a view to public supply, shof te Arnhem, which seeks from the Court with the exception of electricity with a volt­ a preliminary ruling on the following two age below 500 volts. questions:

2. How are Articles 37 and/or 85 and/or 86 and/or 90 of the EEC Treaty to be interpreted with reference to a ban on the import of electricity for public supply purposes contained in the gen­ eral conditions of a regional electricity distributor from 1985 to 1988 inclusive, possibly in conjunction with an import 18. By an arbitration award of 12 Decem­ ban contained in an agreement made ber 1986, the local distributors' claims were between the electricity generation dismissed on the grounds that reciprocal undertakings in the Member State con­ exclusivity is needed by IJM in order to cerned?' carry out its task, that its effect on trade is minimal and that, since Article 90(2) is appli­ 20. Certain aspects of the Netherlands elec­ cable, 'the fact that the claimants are unable tricity supply system have previously been to procure electricity from third parties is examined, or are now under examination, not incompatible with Article 85 of the Trea­ both by the Commission and by the Com­ ty'. As to the equalization charge, the arbi­ munity judicature. trators did not consider that this had been shown to affect trade between Member States.

21. In parallel with the present case, certain local electricity distributors (IGMO of Mep- 10 — Sec paragraph 5.11 of the order of the national court. pel, Centraal Overijsselse Nutsbedrijven of

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Almelo, Regionaal Energiebedrijf Salland of 24. It will be noted that the Commission did Deventer and the Municipality of Hoogev- not in its decision express a view on the een) submitted to the Commission equalization charge imposed by IJM or the on 26 May 1988 a complaint against IJM for contested ban on imports applied by the dis­ infringement of Article 85 of the Treaty, with tributors responsible for public supply prior reference to 'civil proceedings concerning the to the entry into force of the Electricity Law 15 imposition by (IJM) of an import and export of 16 November 1989. ban coupled with an exclusive purchasing obligation, and the imposition of an extra 1 cost equalization charge'. 1

26. Lastly, it will be noted that on 26 November 1992 the Commission noti­ fied a reasoned opinion to the Netherlands Government: the exclusive import right con­ ferred on SEP by the 1989 Law constituted 23. The action brought against that decision an infringement of Articles 30 and 37 of the was dismissed by judgment of the Court of 13 First Instance of 18 November 1992. An appeal against that judgment is pending 14 — Point 1, penultimate paragraph. before the Court of Justice (Case 15 — Judgment in Rendo, paragraphs 58 and 61. As regards the C-19/93 P). ban on imports applied by the distributors and prohibited by Article 34 of tne 1989 Electricity Law, the Commission refrained from reaching any conclusion on the question whether that ban was justified having regard to Art­ icle 90(2) of the Treaty, anticipating that Treaty infringe­ ment proceedings would be brought in that regard 11 — See Commission Decision 91/50/EEC of 16 January 1991 (point 50 of the decision and paragraphs 46 and 47 of the relating to a proceeding under Article 85 of the EEC Treaty judgment of the Court of First Instance). (OJ 1991 L 28, p . 32, point 1). 16 — Ibid., paragraph 27. 12 — Article 1 of the operative part, emphasis added. 17 — On the ground that the letter was not in the nature of a 13 — Judgment in Rendo, cited above. decision and had no legal effect.

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EEC Treaty and was justified neither by 30. In the judgment in Vaassen-Gobbels, Article 36 nor by any public interest require­ drawing inspiration from general principles 18 ments. common to the laws of the Member States, the Court held that the Community concept of a court or tribunal implied the fulfilment of a combination of criteria; it must be insti­ tuted in law, have a permanent existence, exercise binding jurisdiction, be bound by 27. Neither the Commission, in its Deci­ rules of adversary procedure and apply the sion 91/50, nor the Court of First Instance rule of law. In subsequent judgments deliv­ has examined the conformity with Commu­ ered by the Court, the principle of judicial nity competition law of the ban on imports independence has also been taken into con­ of electric power through the public distribu- sideration. 20

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33. Consequently, a national court which is 38. The Court thus held, in its judgments in instituted in law, which is permanent and Broekmeulen and Nordsee, cited above, independent, the composition of which is that 24 not left to the parties' discretion and the decision of which is binding fulfils the con­ ditions laid down by Article 177.

'Community law must be observed in its entirety throughout the territory of all the Member States; parties to a contract are not, 34. It will be noted, moreover, that the therefore, free to create exceptions to it'. 27

power vested in any ordinary court hearing an appeal against an arbitration award to make a reference for a preliminary ruling is expressly acknowledged by the judgment in 25 Nordsee. 39. Similarly, the Court has held that

35. Is that conclusion altered by the fact that that court gives judgment according to what 'national legislative or judicial practices, appears fair and reasonable ('als goede man­ even on the supposition that they are com­ nen naar billijkheid')? Can the application of mon to all the Member States, cannot prevail Community law be excluded in such a case? in the application of the competition rules 2 set out in the Treaty'. 8

46.1 do not share that view: the main pro­ ceedings concern the payment of an equal­ ization charge levied by a Netherlands regional distributor pursuant to the general 43. It will, moreover, be noted that the appli­ conditions for the supply of power. If, dur­ cation made to the national court is for a ing the period under consideration, the local 'ruling in law' ('verzoek om een verklaring distributors had been able to procure elec­ voor recht'). 32 tricity from a foreign supplier, they would possibly have been able, at least in part, to avoid having to pay that charge. They thus have an interest in seeking a ruling that the implied ban on imports by which they are affected is contrary to Community law. 44. There can thus be no doubt that Art­ icle 177 is applicable.

54. Having thus defined the second question, I will now proceed to examine in turn each 33 of the articles mentioned in it. 49. As IJM points out: 'These proceedings are concerned with the very point which the Commission, in its decision regarding IJssel- centrale, clearly wished not to have to deal with: the private law rules relating to public supply in the Netherlands electricity sector, Article 37 as applied until the entry into force of the 1989 Electricity Law'.

55. The application of Article 37 depends on three things: 50. As regards that market, it is necessary to circumscribe the scope of the question put to the Court.

— as regards the scope of the article, it refers only to trade in goods;

51. In the present case, the need for a single network is not in dispute: any advantage resulting from the introduction of competi­ tion in the conveyance of electricity would — as regards its subject-matter, it is con­ be greatly outweighed, in any event, by the cerned only with State monopolies of a inconvenience caused by a duplication of the commercial character; network.

— as regards its effects, it is aimed at the 52. Nor is there any dispute as to the need elimination of all discrimination between for a single administrative body (SEP, in the nationals of the Member States. present case) or the existence of regional dis­ tribution monopolies.

33 — Page 24 of the French translation of its observations. 56. What do these three points involve?

34 — Case 155/73. [1974] ECR 409, paragraph 10, emphasis added. Since that judgment was delivered, the Court's case- law has been consistent: sec paragraph 8 of the judgment in 62.1 have no doubt, however, that electricity Case 271/81 Amélioration de l'Elevage [1983] ECR 2057 must be regarded as a 'good' within the and paragraph 33 of the judgment in Joined Cases C-46/90 and C-93/91 Lagauche and Evrard [1993] ECR 1-5267. meaning of the Treaty. 35 — P. Sablière: comment on the judgment of the Cour d'Appel d'Angers (Court of Appeal, Angers) of 16 December 1987, in: Cahiers juridiques ac l'électricité et du gaz, May 1988, p. 2. 36 — See paragraph 30 of the observations of the Netherlands 38 — Page 7. Government. 39 — See Article 3(t) of the EC Treaty and the declaration on 37 — Observations submitted before the question referred for a civil protection, energy and tourism annexed to the Final preliminary ruling was withdrawn. Act of the Maastricht Treaty.

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63. First, it is the subject-matter of trade and 68. If electricity constitutes a good, does that of a market which are comparable with those mean that this case concerns a commercial in respect of a 'good', and must be capable of monopoly within the meaning of Article 37? benefiting from the Community rules relat­ 40 ing to the abolition of trade barriers.

2. Does the present case concern a State monopoly of a commercial character?

64. Secondly, services form a residual cate­ gory, as is demonstrated by the wording of Article 60 of the Treaty.

43 — Case 30/87 [1988] ECR 2479, paragraph 13. 44 — As Advocate General Da Cruz Vilaça points out in his 40 — See, in that regard, U. Everling: 'Der Binnenmarkt nach der Opinion in Bodson, Article 37 does not refer to any terri­ Rechtsprechung des Gerichthofs der Europäischen torial dimension in the list of conditions for its application, Gemeinschaften', in: Ein EWG-Binnenmarkt für Elektriz- which are defined instead by reference to the effects of the ität — Realität oder Utopie, herausgegeben von Rudolf monopoly on intra-Community trade' ([1988] ECR, Lukes, 1988, p . 142. p . 2494, paragraph 41). 41 — Case 6/64 [1964] ECR 585, at p . 597. 45 — Judgment in Bodson, paragraph 13. 42 — See, for example, the judgment in Case C-347/88 Commis- 46 — See in that regard paragraph 1.1 of IJM's observations and sion v Greece [1990] ECR I-4747, concerning imports of Article 2(1) of the concession. See also Decision 91/50 of crude oil and petroleum products. the Commission, paragraph 9.

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supply of electricity which did not provide 75. It follows that, in accordance with the for any ban on imports. rule laid down by the Court's judgment in 51 Bodson, the circumstances of the case before the national court fall to be assessed in the light of the provisions of the Treaty which apply to undertakings, and not from the standpoint of the rules on State monop­ 52 72. That is laid down in the cooperation olies contained in Article 37. agreement between the electricity generators and SEP (Article 21(1] and, impliedly, by IJM's general conditions; as was correctly 48 observed in Decision 91/50 relating to the OvS, both those instruments are matters of private law.

74. Consequently, the fact that a ban on imports was imposed on the regional elec­ tricity distributors and that they imposed it 77. It follows that neither the ban on imports on their customers resulted not from the nor the exclusive purchasing obligation at actions of the national authorities but from issue fall within the scope of Article 37. those of the undertakings themselves. Consequently, there is no need to examine the third condition for the application of that article. 47 — Sec that decision and Royal Order No 54 of 13 June 1918 (Staatscourant of 15 June 1918, No 138). Sec also IJM's observations, pp. 21 and 22: the Netherlands legislation docs not prohibit imports of electricity, provided a licence is obtained. 51 — Paragraphs 14 and 15. 48 — Point 21. 52 — Sec also the judgment in Case 65/86 Bayer tinti Henneke 49 — Ibid. [1988] ECR 5249, paragraph 12. 50 — Law of 22 October 1938, Staatsblad 523. Sec the final part 53 — Sec paragraph 25 of the observations of the Netherlands of paragraph 3.2 of IJM's observations. Government.

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Article 85 82. Article 85 and the following articles must therefore apply to agreements relating to the generation and supply of electricity, just as, according to the Court's case-law, Article 90 applies to rules concerning the supply of 57 petroleum products in Ireland. 78. A preliminary point needs to be consid­ ered: do Articles 85 to 90 of the Treaty apply to the supply of electricity?

79. The Court's case-law on the point is con­ sistent: '... where the Treaty intended to 83. Between 1985 and 1988, the electricity remove certain activities from the ambit of supply system in the Netherlands was gov­ the competition rules, it made an express erned by a series of legal relationships the 54 derogation to that effect'. The exceptions scheme of which may be presented as fol­ 55 to that principle are applied restrictively. lows:

85. They are both contained in agreements between undertakings. Although it was held in paragraph 18 of the Bodson judgment that 89. There is considerable trade between Article 85 does not apply to contracts for interconnected networks, and in 1988 nearly concessions concluded between communes one tenth of the requirements of the Nether­ acting in their capacity as public authorities 62 lands were met by imports. and undertakings entrusted with the oper­ ation of a public service, it will be noted that IJM does not contract solely with municipal­ 58 ities but also with private companies. 90. The Community is seeking to promote this type of trade, as is demonstrated by

59 — Judgment in Case C-234/89 Delimitis [1991] ECR I-935, 86. In order to assess the effects of such paragraph 14. agreements from the standpoint of the Com­ 60 — The term used is that applied by J. L. de Guièze in his com­ mentary on Commission Decision 91/50 in: Cahiers munity competition rules, it is necessary to juridiques de l'électricité et du gaz , January 1992, p. 34. 61 — Decision 91/50, point 11. 62 — Ibid., point 12. According to the Commission Working Document on the energy market, the EEC has 'one of the most fully integrated international high-voltage networks in 58 — Paragraph 1.2 of IJM's observations. the world' (p. 69, footnote 2 above).

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Directive 90/547 on the transit of electricity in the context of supply contracts between through transmission grids. users (or local electricity distributors) and generators, irrespective of whether the latter are established in the same State or in another Member State.

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98. Local distributors are obliged by the GC icle 2(2) of the GC can also have a similar to obtain supplies exclusively from regional effect on the relationship between regional distributors; that exclusive purchasing obli­ and local distributors. gation applies for an indeterminate period of time terminable on three years' notice (Art­ icle 17(2)).

103. Local distributors are precluded from obtaining supplies from any other regional distributors or from generators established in 99. The effect of the reciprocal nature of that other Member States. exclusivity is to make it completely impossi­ ble to have access to the market in question, which is thus closed to potential competitors of both generators and distributors. This results in the formation of 'a coherent whole', 68 leading to a channelling of the 104. If such exclusivity were confined to a market such as to preclude all independent sparsely populated region of a Member State, generators from gaining access to it. It is thus there might be some doubt as to whether it clear that such agreements have a restrictive had an appreciable effect. However, since the 71 effect on competition. 69 Court's judgments in Brasserie de Haecht and Delimitis, cited above, it is established that such an agreement has to be assessed in its economic and legal context and that, where it is combined with other exclusivity 100. Do those agreements have an apprecia­ agreements, its possible cumulative effect on 72 ble effect, however, on trade between Mem­ competition must be taken into account. ber States?

106. In my view, therefore, agreements of the type under consideration may be such that it is possible, as the Court has consistently held, 'to foresee with a sufficient degree of probability ... that (they) may have an influ­ Article 86 ence, direct or indirect, actual or potential, on the pattern of trade between Member States, such as might prejudice the realization of the aim of a single market in all the Mem­ 75 ber States'.

109. As regards the question of any abuse of a dominant position, the parties' submissions have been concerned with IJM only, and not with any possible infringement of Article 86 by SEP. In any event, that undertaking is not 107. It follows that such a ban on imports a party to the main proceedings. I will restrict my analysis, therefore, to an exam­ ination of the situation in relation to IJM.

(1) does not affect trade in electricity between large public supply networks,

110. Taken in isolation, an undertaking whose dealings are limited to a sparsely pop­ ulated area of a Member State does not ex (2) but may affect trade in electricity between hypothesi occupy a dominant position within Member States in so far as that trade nec­ a substantial part of the common market. essarily involves the use of the public supply network at regional and local lev­ els. 76 — See Commission Decision 91/50, point 53, in relation to the OvS. 77 — Commission Regulation (EEC) No 1983/83 of 22 June 1983 on the application of Article 85(3) of the Treaty to categories of exclusive distribution agreements 75 — Judgment in Case 42/84 Remia and Others v Commission (OJ 1983 L 173, p. 1) is inapplicable to the GC, by virtue of [1985] ECR 2545, paragraph 22. Article 3(c) thereof.

78 — Judgment in Case C-260/89 ERT [1991] ECR 1-2925, para­ 80 — Joined Cases T-68/89, T-77/89 and T-78/89 [1992] ECR graph 31. II-1403, paragraph 357 et seq. 79 — Judgment in Bodson, cited above, paragraph 35. 81 — Paragraph 358, emphasis added.

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local distributors by the same type of con- Article 90(2) tract.

123. Can the existence of agreements or 119. Is there, however, an abuse? practices between undertakings which are contrary to Articles 85 or 86 be justified by the tasks entrusted to them? Are the electric­ ity distributors in the present case to be regarded as entrusted with the operation of a service of general economic interest? 120. The Court has held on a number of occasions that 'if an undertaking having a dominant position on the market ties buyers — even if it does so at their request — by an obligation or promise on their part to obtain all or most of their requirements from that 124. Before those questions are considered, it undertaking, this constitutes an abuse of a is necessary to consider whether or not Art­ dominant position within the meaning of icle 90(2) has direct effect. Article 86 of the Treaty, whether the obliga­ tion in question is stipulated without further qualification or whether it is undertaken in 83 consideration of the grant of a rebate'. 125. In its judgment in the Tort of Mertért' 84 case, the Court held categorically that it has no such effect. Clearly, however, the Court has since taken the view that Art­ icle 90(2) is directly applicable, even though 121. Thus, even where a regional distributor it has not expressly ruled to that effect. is bound by an unconditional supply obliga­ tion, the exclusive purchase obligation which it imposes on its customers constitutes an insurmountable barrier to the entry of third parties into the market. 126. Thus, the Court initially held that any derogation from the competition rules had first to be authorized by a decision of the Commission taken pursuant to Art­ 85 icle 90(3). 122. In the circumstances set out above, therefore, Article 86 is applicable.

87 128. The judgment in Ahmed Saeed marks a turning point in the case-law: according to that judgment, national courts have compe­ 94 130. The judgment in Corbeau constitutes tence analogous to that of the Commission the latest stage reached to date in the devel­ in the interpretation and application of Art­ opment of the relevant case-law: even though icle 90(2). As Professor Berlin has noted: '... if it is for the national court to determine the national court is able to undertake that whether an undertaking is covered by Art­ assessment, it is because that provision has icle 90(2), that determination is subject to the been invoked before it for the purposes of application of certain conditions — laid the application. It is thus implicit that it can 88 down by the Court — governing derogation be invoked'. It is for the national court (1) from the competition rules. to establish whether the undertaking invok­ ing Article 90(2) is in fact entrusted with the operation of a service of general economic 89 interest, and (2) to determine its require­ ments for the purposes of performing the 131. Thus, the operator of a service of gen­ task of general interest in question and the eral economic interest, such as the national impact of those requirements on the applica­ 90 postal service, must be able to ensure the tion of the competition rules ('It is for the economic stability of its operations by means national court to make the necessary findings 95 9 of profitable fields of activity. On the of fact in that connection'). 1 other hand, the exclusion of competition may not extend to 'specific services, inextri­ cably linked to the service of general interest, 86 — Judgment in Case 127/73 BRT [1974] ECR 313, para­ which meet the particular needs of economic graphs 19 to 23. See also the judgment in Case C-I79/90 Merci Convenzionali Porto di Genova [1991] ECR 1-5889, paragraph 27. 87 — Case 66/86 [1989] ECR 803. 88 — 'L'application du droit communautaire de la concurrence 92 — Cited in footnote 78 above. See also paragraph 99 of the par les autorités françaises', RTDE, 1991, p. 1, 5. judgment of 18 November 1992 in Rendo, cited above. 89 — Paragraph 55 of the judgment in Ahned Saeed, cited above. 93 — Paragraph 34. 90 — Paragraph 56. 94 — Case C-320/91 [1993] ECR 1-2533. 91 — Paragraph 57. 95 — Paragraph 17.

96 — Paragraph 19. 97 — Case C-202/88 [1991] ECR I-1223. 98 — Joined Cases C-271/90, C-281/90 and C-289/90 [1992] 100 — See Notice 93/C 39/05 on cooperation between national ECR I-5833. courts and the Commission in applying Articles 85 and 86 99 — Paragraph 55 of the judgment in France v Commission and of the Treaty (OJ 1993 C 39, p . 6). paragraph 24 of the judgment in Spain and Others v Com- 101 — See the judgment in BRT II, cited above, paragraph 19. mission. The Court held that Article 90(2) applies not only to undertakings but also to States which derive from it the 102 — Paragraph 27 of the Opinion of Advocate General Van power to confer on undertakings entrusted by them with Gerven in Merci Convenzionali Porto di Genova (cited in the operation of services of general economic interest exclu­ footnote 86 above). sive rights which hinder the application of the competition 103 — Judgments in Italy v Commission (cited in footnote 85 rules (judgment in Corbeau, cited above, paragraph 14). above, paragraphs 28 to 33) and Case C-18/88 This demonstrates the practical importance of that provi­ GB-Inno-BM [1991] ECR I-5941, paragraph 16. sion. 104 — Judgment in Corbeau, cited above, paragraph 15.

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139. The Commission considered in its Deci­ the conditions needing to be fulfilled in sion 91/50 that SEP — and the participating order to satisfy the proportionality rule laid generators — provide services of general down by that provision? economic interest, since (i) 'SEP's main task is to ensure the reliable and efficient opera­ tion of the national public electricity sup­ 105 ply' and (ii) that task has been assigned to the generators by the grant of a concession 143. The Court's interpretation in that 106 regard has traditionally been restrictive. It in the form of an act of public law. has stated that

'(Article 90(2)) permits ... Member States to grant to undertakings entrusted by them with the operation of services of general econ­ 142. On the basis that Article 90(2) is omic interest exclusive rights which may directly applicable and that an undertaking obstruct the application of the rules on com­ of that kind falls within its scope, what are petition contained in the Treaty, in so far as it is necessary to impose restrictions on com­ petition, or even to exclude all competi- 105 — Point 40. 106 — Point 41. 107 — Relating to a proceeding under Article 85 of the EEC Treaty and Article 65 of the ECSC Treaty (jahrhun­ 110 — Paragraph 33 of the judgment in ERT, cited above, dertvertrag) (OJ 1993 L 50, p. 14). emphasis added. Sec also the judgment in Sacchi (cited 108 — Point 28. above, paragraph 15) and those in Case 311/84 CBEM 109 — As in the case of IJM, the holder of a concession granted [1985] ECR 3261, paragraph 17, and Case C-41/90 Hofncr by the State. and Eher [1991] ECR I-1979, paragraph 24.

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tion, 11on the part of other economic oper­ those fields is therefore permissible, since ators in order to ensure the performance of undertakings in the private sector do not 115 the particular task which has been entrusted have to offset such losses. to the undertakings holding the exclusive 112 rights'.

148. However, 'specific services, inextricably 145. The Court has stated that, in order for linked to the service of general interest, an undertaking holding an exclusive right to which meet the particular needs of economic perform its task of general interest, it must in operators and which call for the provision of particular be able to operate on the basis of certain additional services not offered by the 1 'economically acceptable conditions' 13or traditional postal service' must be open to 114 'conditions ensuring economic stability'. competition, since they 'do not involve the economic stability of the service of general 116 economic interest'.

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151. What constitute 'economically accept­ 155. The new rules applying in the United able' conditions for the supply of electricity Kingdom are illuminating in that regard. It is by a local distributor? Or, to adopt the term significant that, although the United King­ used in the Court's judgment in GB-Inno- dom has an electricity supply system which 118 BM, what are the 'essential requirements' is more open to competition than in any of that supply? other Member State, electricity generators established in other Member States and wishing to export to the United Kingdom may only do so through the intermediary of the pool administered by the National Grid Company, the owner and operator of the high-voltage network. It is not possible to 152. In line with the judgment in Corbeau, use the network in order to transmit supplies the Court should define for the national 121 direct to a local distribution company. court the criteria which will enable that court to assess whether the facts presented to it are such as to justify a restriction of the competition rules, such as a ban on imports.

156. As has been noted, the proposal submit­ ted by the Commission for a directive con­ cerning common rules for the internal mar­ ket in electricity seeks to eliminate barriers 153. Rather than prohibiting regional or local to the supply of electricity by producers to distributors from importing electricity their customers and establishes limited access through the public supply network, should to the network by third parties. the generators allow third parties to have access to that network, albeit perhaps subject to restrictive conditions?

161. The proposal for a directive, which was 158. It states that 'eligible' companies should rejected in that form by the Council, is now 12 be allowed access to the transmission and being examined by the Parliament. 6What­ distribution systems, 'subject to the availabil­ ever the final outcome may be, it is clear ity of capacity and in return for reasonable that, in order to achieve the elimination of all 123 remuneration'. That liberalization mea­ restrictions on relations between electricity sure relates to large industrial consumers and generators and their customers, particularly distribution companies. The use of the net­ those located in another Member State, it work is made subject to the grant of autho­ will be necessary to overcome a series of rization by the system operator, who may obstacles — which have not, incidentally, refuse it 'if such use would prejudice the dis­ been overlooked by the Commission — aris­ tribution of electricity in fulfilment of any ing from the use of the public supply net­ statutory obligation or of contractual com­ work. 124 mitments'.

162. In my view, the opening up of the elec­ tricity supply market must, given the special characteristics of that sector, which is a ser­ vice of general economic interest, be subject to the fulfilment of four essential criteria, as 159. The proposal for a directive, whilst follows: advocating the establishment at Community level of a framework of general principles, leaves the Member States free, 'in accordance with the principle of subsidiarity', to deter­ mine 'the extent and nature of distribution — the obligation to provide an uninter­ companies' rights ... and of their public ser­ rupted supply to all users; vice obligations', particularly as regards the security of the system, the meeting of demand and a tariff structure ensuring equal 125 treatment of customers. — equal treatment of those users;

165. Thirdly, the opening up of the electric­ ity supply market presupposes that produc­ 168. Nevertheless, is such a monopoly essen- ers are placed on an equal footing as regards tial in order to ensure the fulfilment of the the conditions under which they compete. four criteria mentioned above? Is it not pos­ But how can a national producer which has sible for the same objectives to be achieved to pay the cost of providing a national ser­ by means of agreements — or legislation — involving a lesser degree of interference with the normal operation of the competition 127 — Paragraph 15 of the judgment in Corbeau. rules?

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OPINION OF MR DARMON — CASE C-393/92

169. It is for an operator who seeks to within the meaning of Article 90(2). My view invoke the exception contained in Art­ appears to be supported by the Commis­ icle 90(2) to justify the application of that sion's operational proposals concerning exception. Consequently, it is for IJM to trans-European networks in the energy sec­ demonstrate to the national court that the tor, which provide for the development of fulfilment of the four criteria mentioned interconnections between the Member 128 above can be ensured only by means of the States. ban on imports and the exclusive purchasing obligation which are at issue in this case.

171. One last observation: the very great 170. I would point out that there already diversity of the Member States' energy poli- exists some interdependence between net­ cies is such that there is a need for Commu- works in the Community. I conclude from nity rules allowing third parties, by means of this that, in the present state of Community harmonization measures, to have access to development, the retention of import the network. This appears to be confirmed monopolies does not affect trade to an extent by the role conferred on the Community in contrary to the interests of the Community the matter by Article 129b.

provided that it is established before the national court that such measures constitute the only means of ensuring:

— an uninterrupted supply to all users;

— equal treatment of those users;

— the prevention of distortions of competition between producers;

— the effective protection of the environment.

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