C-384/93

3. At the material time in the Netherlands, 2. Alpine Investments BV, a firm established financial services were subject to the Law of in the Netherlands, provides financial ser­ 30 October 1985 concerning Securities 1 vices and specializes in commodities futures Transactions (Wet Effectenhandel, WEH). trading. It acts as 'introducing broker', that Article 6(1) of that law prohibits a person is to say, it receives orders from clients relat­ from acting as an intermediary in securities ing to transactions in the commodities transactions without a licence. Article 6(2) futures markets and passes them for execu­ and Article 6(3) lay down the conditions tion to brokers dealing in those markets which must be fulfilled in order for a person within and outside the Community. It has to obtain a licence. Article 8(1) provides that, three types of accounts with its clients: 'man­ in special circumstances, the Minister of aged accounts', 'semi-managed accounts',

1 — Stb. 1985, 570. That law was repealed on 15 June 1992 and was replaced by the Wet Toezicht Effectenverkeer (WTE), * Original language: English. Stb. 1991, 141.

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Finance ('the Minister') may grant an exemp­ That exemption was again subject to the tion from the prohibition laid down in Arti­ condition that Alpine Investments was pro­ cle 6(1). Article 8(2) states that, with a view hibited from approaching prospective clients to preventing undesirable developments in by telephone or in person unless they had securities trading, conditions may be expressly agreed in writing to be approached attached to an exemption. in such a manner. On 13 February 1992 Alpine Investments raised an adminis­ trative objection against the Minister's deci­ sion of 14 January 1992.

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OPINION OF MR JACOBS — CASE C-384/93

freedom to provide services which was not that do not apply to providers of similar justified on the grounds of public policy, services established in that other Mem­ public security or public health. As a result ber State? of those arguments the following questions have been referred to the Court:

If the answer to the second question is yes:

'(1) Must Article 59 of the EEC Treaty be interpreted as meaning that it also cov­ (3) (a) Can the concern to protect consum­ ers services which the provider offers by ers and safeguard the reputation of telephone from the Member State of his the Netherlands securities trading establishment to (potential) clients sector which underlies a provision established in another Member State aimed at combating undesirable and therefore also provides from that developments in the securities trad­ Member State? ing sector be regarded as imperative reasons of public interest justifying a hindrance such as that referred to in question (2)?

13. The objective of Council Directive 93/22/EEC on investment services in the securities field 2is to facilitate the freedom of establishment and the freedom to provide 10. Although the contested prohibition of services for investment firms. cold calling prohibits Alpine Investments from approaching clients by telephone and in person unless they have previously agreed to it in writing, it appears from the order for reference and from the first question referred that the national court is concerned espe­ cially with the prohibition of contacting cli­ ents by telephone. 14. The Directive on Investment Services, even if applicable ratione materiae, does not apply to the present case since it had not been adopted at the material time. However, it is relevant because it shows the legal framework adopted by the Community in order to facilitate the freedom of establish­ 11. It appears that Alpine Investments uses ment and the freedom to provide services for cold calling in order to market its services. In investment firms. It is notable that the direc­ particular, it telephones prospective clients in tive does not harmonize the rules of the other Member States in order to ask them if they are interested in receiving further infor­ mation or to invite them to seminars where the services which it offers are explained. It 2 — OJ 1993 L 141,p. 17.

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OPINION OF MR JACOBS — CASE C-384/93

Member States concerning the marketing of 17. Member States must draw up rules of investments. conduct which investment firms must observe at all times. The content of those rules is laid down in general terms in the 8 directive. Article 11(2) states as follows:

18. According to Article 13, the directive does not prevent investment firms autho­ rized in other Member States from advertis­ ing their services through all available means of communication in their host Member States, subject to any rules governing the 16. The home Member State is responsible form and the content of such advertising for ensuring that a firm complies at all times adopted in the interest of the general good. with the conditions which must be fulfilled in order for a firm to be granted authoriza­ 5 tion. Each home Member State must draw up prudential rules which investment firms must observe at all times. The general princi­ ples of those rules are laid down in the direc­ 6 tive. The prudential supervision of an investment firm is the responsibility of the 19. However, it is not entirely clear from the 7 home Member State. directive how responsibility is divided between the authorities of the home State and the authorities of the host State. In any event, it may not always be clear in a 3 — Article 3(1). 4 — Article 14(1) and (2). 5 — Article 8(1) and (2). 6 — Article 10. 7 — Article 8(3). 8 — Article 11(1).

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particular case precisely where a particular sion of such contracts and preparatory acts service is provided. with a view to such contracts.' 4

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OPINION OF MR JACOBS — CASE C-384/93

Therefore, the proposed directive, as it 26. Since the aim of Article 59 is to abolish stands, prohibits cold calling by telephone. It restrictions on the freedom to provide ser­ appears that the proposed directive applies to vices within the Community, its application contracts concerning the supply of financial presupposes the existence of a cross-border services, including the type of services pro­ element. As the Court has stated, the services 15 vided by Alpine Investments. in question must be 'transfrontier in 16 nature'. Article 59 does not apply where all the elements of the activity in question 17 are confined within a single Member State.

23. As the Commission points out, the above survey shows that, at present, Com­ munity legislation neither prohibits cold call­ ing by telephone or in person nor prevents 27. A cross-border element exists where the Member States from prohibiting it. provider and the recipient of services are 18 established in different Member States. Where that is the case, Article 59 applies irrespective of the Member State where the services are provided. That interpretation is supported by the language of Article 59, the first paragraph of which provides for the 24. I turn now to examine the questions abolition of restrictions on the freedom to referred. provide services 'in respect of nationals of Member States who are established in a State of the Community other than that of the person for whom the services are intended'.

The first question

29. Alpine Investments states that the ser­ vices in issue in this case belong to the last 31. The Dutch Government further claims category referred to above. For the purposes that the great majority of futures transac­ of the present case, it is not necessary in my tions in the commodities markets take place view to determine precisely where the ser­ in the Chicago commodities exchange, that is vices are provided. A cross-border element to say, outside the territory of the Commu­ exists since the provider and the recipient of nity. That does not mean, however, that Arti­ the services are established in different Mem­ cle 59 is not applicable in the present case, ber States. where the use of a marketing technique within the Community is prohibited, and where a person established in one Member State is thereby prohibited from providing services to a client resident in another Mem­ ber State.

30. The Dutch Government claims that the contested prohibition of cold calling con­ cerns purely internal situations. That argu­ ment is fallacious. The present case concerns

19 — See c. g. Case 76/81 Transporoute v Minister of Public Works [1982] ECR417 . 20 — Joined Cases 286/82 and 26/83 Luisi and Carbone v Minis- tero del Tresoro [1984] ECR 377. 32. The Government of the Netherlands and 21 — Sec the cases on tourist guides: Case C-154/89 Commission the Government of the United Kingdom v France [1991] ECR 1-659; Case C-180/89 Commission v Italy [1991] ECR 1-709 and Case C-198/89 Commission v refer to the judgment in Keck and Mith- Greece, cited in note . 23 ouard and claim that the interpretation 22 — See c. g. Case C-76/90 Säger v Dennemeyer [1991] ECR I- 4221. Sec also the 'Mediawet' cases: Case C-2S8/89 Collec- tieve Antennevoorziening Gouda [1991] ECR 1-4007; Case C-353/89 Commission v Netherlands [1991] ECR I- 4069 and Case C-23/93 TVW SA v Commissariaat voor Media, judgment of 5 October 1994. 23 — Joined Cases C-267/91 and C-268/91 [ 1993 ] ECR I-6097.

36. In particular, it appears from the order for reference that the referring court seeks to 33. That reasoning seems to me to be based determine two issues. First, it seeks to know on a misunderstanding of the first question. whether the fact that the disputed prohibi­ As explained above, by that question the tion is imposed by the Member State where referring court merely asks whether Arti­ the provider of services is established may cle 59 applies to services which the provider preclude Article 59 from applying. Secondly, provides from the Member State of his estab­ it seeks to know whether that prohibition is lishment to persons resident in other Mem­ a restriction within the meaning of Arti­ ber States. It does not enquire as to whether cle 59 by reason of the fact that the same the disputed prohibition of cold calling is a prohibition is not imposed, or at least not to restriction on the freedom to provide ser­ the same extent, by the Member States where vices. That is the subject of the second ques­ the recipients of services are established on tion. It is in the context of that question that providers of services established in their ter­ the arguments of the Netherlands Govern­ ritory. ment and of the United Kingdom Govern­ ment should be examined.

37. With regard to the first issue, it should be noted that the provisions of the Treaty on the freedom to provide services impose obli­ gations not only on the Member State of destination but also on the Member State of origin. The Court has held that the freedom to provide services may be relied on by an 34. I conclude that the first question referred undertaking as against the State in which it is should be answered in the affirmative. established, if the services are provided for

38. With regard to the second issue, it should first be noted that the contested pro­ hibition is non-discriminatory. It applies 41. Alpine Investments argues that since the without discrimination to all providers of contested prohibition applies to contacting services established in the Netherlands. It prospective clients outside the Netherlands it applies irrespective of whether the prospec­ restricts its freedom to provide services. It tive clients of Alpine Investments are resi­ concludes that the second question should be dent in the Netherlands or in other Member answered to the effect that Article 59 pre­ States. Thus, it applies without discrimina­ cludes rules imposed by the Member State tion as regards the recipients of services. where the provider is established which seek to regulate the manner in which services are provided in other Member States, to the extent that those rules restrict the provision of transfrontier services.

39. The fact that different Member States may impose different restrictions does not amount to discrimination, nor does it result 42. The Government of the United King­ in a situation incompatible with the Treaty. dom argues that the disputed prohibition is The prohibition on cold calling imposed by not a restriction on the freedom to provide Dutch law, which applies equally to all per­ services because it is generally applicable, it sons subject to it, cannot be incompatible is non-discriminatory, and it does not have with the Treaty merely because other Mem­ is its object or effect the provision of an ber States may apply less strict rules to pro­ advantage for the national market over pro­ viders of services established in their terri­ 25 viders of services from other Member States, tory. rhe same reasoning is followed by the Gov- ernment of the Netherlands.

restrictions imposed by the Member State of permissible where, ... unlike the situation destination. With regard to that situation, the governed by the third paragraph of Arti­ case-law of the Court makes it clear that cle 60 of the Treaty, the service is supplied Article 59 is not concerned solely with without it being necessary for the person restrictions which are discriminatory, that is providing it to visit the territory of the to say, which discriminate against the pro­ Member State where it is provided.' vider of services on account of his national­ ity or on account of the fact that he is estab­ lished in a Member State other than the one in which the service is provided; Arti­ cle 59 also covers restrictions which are non­ discriminatory. That was made clear in the judgment in Säger v Dennemeyer, where the 27 Court stated as follows: 26 44. In Schindler the Court confirmed that Article 59 covers non-discriminatory restric­ tions.

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shown above, the case-law of the Court trade 'in order to merge the national markets makes it clear that Article 59 prohibits even into a single market bringing about condi­ non-discriminatory restrictions imposed by tions as close as possible to those of a genu­ 28 the Member State of destination. It would be ine internal market'. National rules, incongruous if the opposite view were taken whether of the 'importing' or of the 'export­ with regard to restrictions imposed by the ing' Member State, which substantially Member State of origin. So far as possible the impede the exercise of the freedom to pro­ same principles should apply to all restric­ vide services, adversely affect the establish­ tions on the provision of services, whether ment and functioning of the internal market imposed by the Member State of origin, by and therefore fall within the scope of the the Member State of the recipient of the ser­ Treaty. vice, or indeed by a third Member State which is neither that of the provider nor of the recipient of the service, if the service is provided there.

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OPINION OF MR JACOBS — CASE C-384/93

50. The view that Article 59 covers non­ 'exporting' Member State, only discrimina­ discriminatory restrictions is consonant with tory restrictions come within the scope of the objectives of the Treaty; at the same time, the Treaty. it does not infringe the legitimate interests of the Member States since the fact that a national rule is a restriction on the freedom to provide services does not mean that it is incompatible with the Treaty. That will be the case only if it fails to satisfy certain con­ 53. It is true that the Court has interpreted ditions which, according to the case-law of the notion of restrictions on exports of the Court, are more strict in the case of dis­ goods under Article 34 of the Treaty more criminatory measures than in the case of narrowly than the notion of restrictions on non-discriminatory measures. imports under Article 30. Whereas even non­ discriminatory rules may fall within the ambit of Article 30, the application of Arti­ cle 34 requires the existence of discrimina­ tion in law or in fact. In Groenveld the 32 Court held that Article 34:

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ALPINE INVESTMENTS

held that Article 34 does not apply to 56. In any event, whatever the position rules: might be in relation to goods under Article 34, a restriction on marketing services in another Member State must be seen as a restriction on the freedom to provide ser­ vices. As stated above, in this case the con­ tested prohibition is a restriction within the scope of Article 59 because it applies not only to clients resident in the Netherlands 'which are part of economic and social pol­ but also to clients resident in other Member icy and apply by virtue of objective criteria States. to all the undertakings in a particular indus­ try which are established within the national territory, without leading to any difference in treatment whatsoever on the ground of the nationality of traders and without distin­ guishing between the domestic trade of the State in question and the export trade.'

34 — Case 155/80, cited in note 33, paragraph 16 of the judgment. 35 — Cited in note 24.

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OPINION OF MR JACOBS — CASE C-384/93

those flying the flags of other Member States regard to their subject-matter and with was discrimination prohibited by the Treaty. regard to their effects. The rules in issue in It then examined the argument that the Ital­ Peralta did not regulate either the provision ian legislation in issue gave rise to restric­ or the marketing of services. By contrast, in tions on the freedom to provide maritime this case, the contested prohibition restricts transport services to other Member States, the marketing of intra-Community services. even if that legislation could not be held to Moreover, in Peralta the effect of the rules of be discriminatory. The Court rejected that the Member State of origin on the freedom 36 argument, stating that: to provide services was so remote, tenuous and indirect as hardly to constitute a restric­ tion within the meaning of Article 59. That is not so in the present case where the con­ tested prohibition directly restricts the abil­ ity of Alpine Investments to carry on busi­ ness in other Member States.

36 — Paragraph 51 of the judgment. 37 — Cited at note 23.

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ALPINE INVESTMENTS

60. While I accept that, in general, similar the freedom to provide services nugatory. principles should apply to the interpretation Moreover those sets of rules might even of Articles 30 and 59, I do not find the reli­ impose contradictory requirements. ance on Keck of assistance in the present case. In the first place, there are difficulties in determining the effect of the Keck judgment 38 even in relation to Article 30. Moreover, even if one were to accept that some analogy with Keck might be appropriate here, there is 62. I conclude therefore that the contested a significant difference between Keck and the prohibition of cold calling is a restriction on present case. In Keck, the Court was con­ the freedom to provide services within the cerned with rules of the importing State meaning of Article 59. relating to selling arrangements for the sale of goods in the territory of that State. In the present case, the exporting State requires compliance with its own rules of marketing not only for the provision of services in its The third question territory but also in the territory of other Member States.

non-discriminatory rules of the Member 67. I do not find that argument persuasive. State where the service is provided where the It is clear that the Member State from which following conditions are satisfied: those rules the telephone call is made is better placed to are justified by imperative reasons of public regulate cold calling than the Member State interest; adequate protection of the public of destination. Even if the Member State to interest in question cannot be attained by which the telephone call is made prohibits less restrictive means; and the interest in cold calling, it is unable to stop telephone question is not protected adequately by the calls made from another Member State with­ law of the Member State where the provider out the cooperation of the regulatory author­ 40 of services is established. ities of that State. Services rendered by means of telecommunication can more readily be controlled at the Member State of exportation, where the service provider is supervised, rather than at the Member State of importation. In a case such as the present, therefore, it is not correct to say that restric­ tions imposed by the Member State where the provider is established are compatible 65. The issue whether the contested prohibi­ with the Treaty only if the public interest tion is justified by imperative reasons of which they pursue cannot be adequately public interest and whether that interest can protected by the rules of the Member State be protected adequately by less restrictive of destination. Moreover, as will appear from rules is the subject-matter of the third ques­ the answer to the third question, the former tion. The issue which must be examined at Member State may have a legitimate interest this stage is whether it can be argued that the in prohibiting the provision of services to interest in question can be adequately pro­ another Member State, independently of any tected by the law of the Member State where interest of the latter Member State. the prospective client is established.

whether the contested prohibition of cold securities and commodities markets. It is calling can be regarded as objectively neces­ generally acknowledged that investments in sary to protect investors and the integrity of those markets involve a high element of risk the financial markets and whether it can be and are susceptible to abuse. Because of the considered as proportionate to the objective nature of the investment, the investor exer­ pursued. I shall examine the two parts of the cises little or no control over its value. In third question in turn. contrast to goods, the real value of the investment does not depend on its physical characteristics. It depends rather on a series of extraneous factors which the ordinary investor may neither determine nor influ­ ence. Those considerations apply in particu­ lar to investments in the commodities mar­ 69. In my view, there can be no doubt that kets which are highly speculative and are the concern to protect consumers and the considered particularly risky for the un­ concern to safeguard the reputation of the sophisticated investor. Netherlands securities markets may justify the imposition of restrictions on the free movement of services.

70. The Court has recognized that consumer 72. An investor in securities or in commod­ protection is an overriding reason relating to ities markets is more dependent on the 41 advice of an intermediary than, say, a person the public interest. That is confirmed by Article 100a(3) of the Treaty which states who invests in real property, both as regards that, in proposals for measures which have as the choice of investment which is suitable to their object the establishment and function­ his needs and as regards the appropriate time ing of the internal market and which concern when an investment should be made. That is consumer protection, the Commission must why all countries with developed financial take as a base a high level of protection. markets have sought to regulate them by adopting rules concerning not only the issu­ ers of investments but also the financial intermediaries.

protect investors. It is a fair assumption that 76. That programme seeks to provide equiv­ if the law does not guarantee satisfactory alent standards for the protection of inves­ investor protection, investors will lose confi­ tors throughout the Community, thus facili­ dence in the financial markets and, as a tating the interpénétration of national result, they will seek alternative forms of securities markets and ultimately the estab­ 42 investment. The link between investor pro­ lishment of a European capital market. tection and the integrity of the financial mar­ Although the harmonization directives pro­ kets is well illustrated by reference to the vide minimum rules, they seek to ensure a travaux préparatoires of the WEH and the high level of investor protection. They rec­ Community harmonization programme on ognize that ensuring investor confidence in financial services. the securities markets will promote the 43 smooth operation of those markets. By providing a regulatory framework they will encourage investment, and so enable the securities markets to perform their economic function, namely the efficient allocation of 44 resources.

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78. I conclude therefore that the concern to prohibitions in force in the United Kingdom protect investors and to safeguard the integ­ and in the United States. rity of the Netherlands securities markets may justify the imposition of restrictions on the freedom to provide financial services.

82. In the United Kingdom, in particular, 79. I turn now to examine the second part of financial services are subject to the regula­ the third question in which, as we have seen, tory framework established by the Financial the referring court asks whether the con­ Services Act 1986. Under that Act, a person tested prohibition of cold calling can be may not carry on investment business unless regarded as objectively necessary to protect he has received authorization or unless he is investors and the integrity of the Nether­ an exempted person. A person may receive lands financial market and whether it can be authorization by membership of a recog­ considered proportionate to those objectives. nized self-regulating organization. One of those organizations is the Securities and Futures Authority (SFA). Alpine Investment refers to the Conduct of Business Rules of the SFA, under which a firm must establish and maintain compliance procedures 80. According to the case-law, requirements designed to ensure that all employees and imposed on providers of services must be agents of the firm comply with the rules such as to guarantee the achievement of the concerning unsolicited calls on private inves­ intended objective and must not go beyond tors. The compliance procedures must what is necessary in order to achieve that include tape recording any unsolicited calls objective. In other words, it must not be made to investors and keeping documentary possible to obtain the same result by less records of any such calls at the time when restrictive rules. 45 they are made. Alpine Investments concludes that it is possible to protect investors by tape recording the telephone calls. It refers to similar rules adopted by the National Futures Association in the United States.

86. Nor is it correct to say that the prohibi­ tion of cold calling is disproportionate from the point of view of its effects. Alpine 84. I do not find those arguments persua­ Investments is by no means prohibited from sive. The reasons which led the Minister to marketing its services. It is merely prohibited impose the contested prohibition are from contacting prospective clients by tele­ explained in the order for reference. During phone or in person without their prior 1991 the Minister received many complaints express agreement in writing. That is not an from people who, as a result of cold calling, unduly restrictive obligation. First, it affects had entered into transactions which they only new clients of Alpine Investments, since later regretted. As a consequence, the Minis­ established clients will obviously have the ter took the view that cold calling was unde­ opportunity to give their written consent to sirable and decided as a matter of policy to future approaches. Secondly, as I understand ban it. In accordance with that policy, any it, all that Alpine Investments has to do is to exemptions issued under Article 8 of the contact prospective clients by post asking WEH after October 1991 were accompanied them to respond in writing if they wish to be by a prohibition similar to that imposed on contacted in the future. That seems to me to Alpine Investments. be a marketing technique which is, on the one hand, inexpensive for the service pro­ vider and, on the other hand, unintrusive and simple for the prospective client.

88. Nor do I find persuasive Alpine Invest­ ments' argument that the Conduct of Busi­ ness Rules of the SFA in the United King­ dom impose a less strict prohibition. The fact 90. It is clear therefore that, in the absence that another Member State imposes less strict of harmonization rules, each Member State rules does not mean that the rules of the enjoys some discretion in determining the Netherlands infringe the principle of propor­ level of investor protection in its territory. tionality. That is made clear by the fact that Otherwise, it would follow that, in the harmonization directives in the field of con­ absence of harmonization rules, Member sumer protection usually permit Member States would need to align their legislation States to impose stricter or additional with that of the Member State which requirements. A fortiori, where no harmoni­ imposed the least onerous requirements. zation measures have been introduced, the That might have the effect of undermining, rules of a Member State cannot be held con­ rather than promoting, investor confidence. trary to the principle of proportionality merely because another Member State applies less strict rules. That is confirmed by 46 the judgment in Oosthoek. In that case Netherlands law prohibited the giving of free gifts as a means of sales promotion unless the consumption or use of the free gift was related to the product in respect of the pur­ chase of which it was given. The Court found that, although the requirement of 91. Whether restrictions imposed by related consumption or use had not been national law on the use of a marketing tech­ incorporated in the laws of other Member nique satisfy the test of proportionality States, it did not exceed what was necessary should be assessed inter alia by reference to for the attainment of the objectives pursued. the conditions prevailing in the national mar­ ket and the reasons which led to its adop­ tion. In my view, the contested prohibition

(1) Article 59 of the Treaty must be interpreted as meaning that it applies where a person established in one Member State offers by telephone to potential clients in another Member State to provide services to them.

(2) Legislation of a Member State which prohibits persons established in its terri­ tory from making unsolicited telephone calls to potential clients in other Member States with a view to marketing their services is a restriction on the freedom to provide services.

(3) (a) The concern to protect investors and to safeguard the integrity of the financial markets may justify the imposition of restrictions on the freedom to provide services.

(3) (b) Article 59 does not preclude legislation which, in order to prevent abuses likely to harm investors, prohibits the practice of making unsolicited tele­ phone calls to potential clients resident in other Member States with a view to offering them services related to investment in securities and commod­ ities.

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