C-157/94

COMMISSION v NETHERLANDS

OPINION OF ADVOCATE GENERAL COSMAS delivered on 26 November 1996 *

Summary

I — Community law context I . 5703

II — Admissibility j _ 5706

III — Substance Į _ 57u

(i) Netherlands I - 5721

(«) Italy 1-5723

(iii) France I - 5724

(iv) Spain I - 5725

(cc) Do the rights at issue amount to discrimination between nationals of Member States regarding the conditions under which goods are procured and marketed? I - 5730

(1) D o the contested rights constitute quantitative restrictions or

(2) The contested rights may be justified under Article 36 of the Treaty I - 5740

(c) Conclusion I - 5748

B — Article 90(2) 1-5748

(a) Can Article 90(2) justify the derogation from the provisions of the Treaty relating to the free movement of goods? I - 5748

(b) Have the holders of exclusive rights been entrusted with the operation of services of general economic interest? If so, does the application of the rules of the Treaty relating to the free movement of goods obstruct the performance of the particular task assigned to them? I - 5751

(aa) Netherlands I - 5751

(d) Conclusion I - 5766

IV — Conclusion I - 5766

B y m e a n s of four applications, w h i c h , for natural gas) t h e defendant M e m b e r States reasons of practicality, I shall consider have failed t o fulfil their obligations u n d e r together, the C o m m i s s i o n has asked the Articles 30, 34 a n d 37 (and, in t h e case of the C o u r t t o declare that, b y granting exclusive K i n g d o m of t h e N e t h e r l a n d s , Articles 30 and rights t o i m p o r t (and, in the case of the 37) of t h e Treaty and also, in the case of the F r e n c h Republic, the K i n g d o m of Spain and K i n g d o m of Spain, u n d e r Article 48 of the t h e Italian Republic, t o export) electricity A c t c o n c e r n i n g the C o n d i t i o n s of Accession (and, in the case of t h e F r e n c h Republic, of the K i n g d o m of Spain a n d t h e P o r t u g u e s e

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Republic and the Adjustments to the Treaties I — Community law context (OJ 1985 L 302, hereinafter 'the Act of Accession').

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problems involved and to determine the monopolies for the importation and export means available to the Community institu- of electricity and natural gas. tions for resolving them.

5 — OJ 1990 L 185, p. 16. 6 — OJ 1990 L 313, p. 30. 3 — Council Resolution of 16 September 1986 concerning new 7 — OJ 1991 L 147, p. 37. Community energy policy objectives for 1995 and conver- 8 — Proposal for a Council Directive concerning common rules gence of the policies of the Member Sutes (OJ 1986 C 241, for the internal market in electricity (OJ 1992 C 65, p. 4). pl). 9 — Proposal for a Council Directive concerning common rules 4 — COM(88) 238 final. for the internal market in natural gas (OJ 1992 C 65, p. 14).

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those forms of energy to final users (distri- In accordance with the 'common position' (which was to be bution systems). The logic behind those forwarded to the European Parliament under the co-decision procedure) the main provisions of the directive proposals is clear: a right of access for pro- to be adopted would be as follows [see the Summary of the Council's 'Common Position' (established by the Council ducers, distributors and final users to the Secretariat) in EUROPE/Documcnts, N o 1993, 10 July transmission and distribution systems 1996]: (a) By the end of the period for adjusting domestic law to (without which, of course, trading in elec- the Directive, the Member Sutes must open to compe- tition the percentage of their market corresponding, on tricity and natural gas would be impossible) a Community average, to the share of electricity con- is the necessary prerequisite for the estab- sumption of customers using more than 40 GWh per

The where exclusive rights of access to transmis- operator of the transmission or distribution system sion and distribution systems have been may refuse access where he lacks the necessary capacity. established, the grant of a right of that (ii) 'Single buyer procedure': Member States will desig- nate a legal person to be the single buyer of electric kind would necessitate a review of the fun- power within the territory covered by the system. damental principles of the organization and In this case the Member Sutes must ensure that a non-discriminatory tariff for the use of the trans- functioning of the energy sector, ranging mission and distribution system is published, and that eligible customers are free, in accordance with from measures to ensure the safety of their own needs, to conclude supply contracts with systems to long-term planning of energy producers. The 'single buyer' may refuse access to the system and may refuse to purchase electricity

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COMMISSION v NETHERLANDS

defend its viewpoint. The French Republic put forward during the preceding admin- makes the following submissions: istrative procedure.

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If 8. In the present case the differences indi the reasoned opinion satisfies those require cated by the French Government between ments, the Commission's application will be the reasoned opinion and the application do admissible even though the arguments it not alter or widen the subject-matter of the contains, both factual (relating to the facts dispute as established in the preceding constituting the situation or the conduct seen administrative procedure. From both the fac by the Commission as involving a failure by tual viewpoint (retention of exclusive rights the defendant State to fulfil its obligations) of public bodies to import and export elec and legal (concerning the interpretation of tricity and gas) and the legal viewpoint the provisions of Community law which the Commission regards as having been infringed), may have been enhanced by 15 — It seems to me that this is what is implied by paragraph 14 comparison with the arguments in the rea of the judgment in Case C-57/94 Commission v Italy [1995] E C R 1-1249, in which the Court stated that, in order to soned opinion, provided that such enhance remedy a defect in the Commission's application, as found ment does not conceal an alteration or exten by the Court in an earlier judgment ruling that the applica tion was inadmissible because the pleas in law differed from those in the reasoned opinion, 'it sufficed for the Commis sion to submit an application based on the same complaints, pleas in law and arguments as the reasoned opinion .

14 — See Case 186/85 Commission v Belgium [1987] E C R 2029, used method A, and subsequently the Commission alleged paragraph 11 et seq.; Case C-198/90 Commission v Nether that the failure consisted in not using method A (on this lands [1991] ECR 1-5799, paragraph 13 et seq.; and Case point, see paragraph 16 of the Opinion of Advocate Gen C-52/90 Commission v Denmark [1992] E C R 1-2187, para eral Tesauro). graph 23 et seq.

(infringement of Articles 30, 34 and 37 of the in the reasoned opinion the Commission Treaty), the essence of France's alleged fail- merely stated that that provision did not ure is the same in the reasoned opinion and concern State measures contrary to in the application, and therefore the Member Articles 30, 34 and 37 of the Treaty, but State concerned was not deprived of the related to conduct contrary to the Treaty opportunity to submit effectively its obser- by the undertakings referred to in vations on the essential points of the dispute Article 90(1), the application adds that, during the preceding administrative pro- even assuming that Article 90(2) could cedure. The situation is as follows: justify State measures contrary to Article 30 et seq. of the Treaty, it would in any case be necessary to show, following examination of those measures in the light of the principle of proportionality, that they were necessary for perfor- mance of the particular task assigned to (a) With regard to the need to ensure sup- the undertakings for whose benefit they plies, which the French Republic relies were adopted. However, the latter argu- upon as justifying, in the light of Article ment (which, it should be noted, is by 36 of the Treaty, the grant of exclusive way of an alternative: the Commission's rights to import electricity and gas, the viewpoint given in the reasoned opinion reasoned opinion sets out clearly enough constitutes its main argument, as it does the substance of the Commission's argu- in the application, against the French ment (rejecting the French Govern- Government's submissions concerning ment's submissions and arguing that Article 90(2)) does not alter the legal or security of supply could be attained by the factual basis of the defendant State's means less restrictive of imports). In the failure to fulfil its obligations or other- application that argument is merely par- wise affect its right to a fair hearing, but ticularized, so far as electricity is con- aims precisely to refute that State's cerned, by an indication of the factors defence. Furthermore, in its reply to the which, according to the Commission, reasoned opinion, the defendant State constitute the concept of 'security of referred, at least superficially, to the supply', and the observation that none of question of the extent to which the con- those factors would be affected by with- tested exclusive rights are necessary for drawal of the contested exclusive rights performance of the particular task and, so far as gas is concerned, by the assigned to the undertakings to which provision of certain factual information they were granted, pointing out (see on the existing situation in the market in page 15 of the document in question) question. that 'the control of trade is technically and economically necessary for the per- formance of this task'. Therefore, even assuming that the Commission was not entitled to allude to that matter in the application without having previously mentioned it in the reasoned opinion, the defendant State, having considered, (b) With regard to Article 90(2) of the Treaty, upon which the French Govern- before the application was lodged, that ment seeks to rely, it is true that, whereas the question was one relevant to the case,

9. Before going on to examine the substance 10. The French Republic also expresses of the present applications, I consider it doubts as to the objectives of the action appropriate to refer very briefly to another against it. In its defence in Case C-l59/94 it question. observes that the application refers only to the exclusive rights to import and export electricity and gas, when in France those sec- tors are organized in such a way that it would be pointless to abolish those rights without removing the other exclusive rights in existence (particularly the exclusive right of transmission). In that connection, adds the The Spanish Government contends, in its French Government, it is significant that the defence in Case C-160/94, that in view of the Commission's Proposals for Council Direc- differing energy policies of the Member tives concerning common rules for the inter- States, and the diversity of the ways in which nal market in electricity and natural gas con- the sector is organized, the establishment of sider the system for importing and exporting a genuine internal market in energy (particu- those products not in isolation but in con- larly in the electricity sector) makes it neces- junction with the other parameters of the sary to harmonize or amend the legislation sectors in question. Similar reasoning is fol- governing that sector in the other Member lowed by the Italian Republic in its observa- States and to deal with the technical prob- tions concerning the intervention of the lems associated with the liberalization of United Kingdom in support of the Commis- trade in electricity. In those circumstances, sion's action against Italy. continues the Spanish Government, legisla- tive initiatives are a method of establishing the internal energy market which is far pref- erable to out-and-out, uncontrolled liberal- ization such as that which the present appli- cations seek to achieve. Furthermore, it concludes that it may be directly inferred from the preamble to the Proposal for a 11. If the abovementioned objections con- Council Directive concerning common rules cerning the appropriateness of the present for the internal market in electricity (cited in applications are intended to indicate that the latter are inadmissible, those arguments can- not be accepted. The Court has consistently held that, in the context of the balance of 16 — See Case 176/84 Commission v Greece [1987] ECR 1193, paragraph 12 et seq., in particular paragraph 20, and Case powers between the institutions laid down in 178/84 Commission v Germany [1987] ECR 1227, para- the Treaty, it is not for the Court to consider graph 13 et seq., in particular paragraph 23.

12. The term 'goods', as used in Title I of 19 — Commission v Italy [1968] ECR 618. 20 — Commission v Belgium [1992] ECR 1-4431. the Treaty, is given a broad interpretation in 21 — With particular regard to Article 37, it should be noted that, the Court's case-law. As the Court stated in as the Court has repeatedly held, it is clear from the place of that provision in the chapter of the Treaty on the elimi- nation of quantitative restrictions and from tne terminology used in that provision that it refers to trade in goods and not the supply of services (see Case 155/73 Sacchi [1974] ECR 217, paragraph 10; Case 271/81 Mialocq [1983] ECR 17 — Sec Case 415/85 Commission v Ireland [1988] ECR 3097, 2057, paragraph 8; Case 30/87 Bodson [1988] ECR 2479, paragraph 9. paragraph 10; Joined Cases C-46/90 and C-93/91 Lagauche 18 — See Case C-317/92 Commission v Germany [1994] ECR [1993] ECR 1-5267, paragraph 33, and Case C-17/94 Ger- 1-2039, paragraph 5, and Case 220/83 Commission v France vais [1995] ECR 1-4353, paragraph 35). [1986] ECR 3663, paragraph 7. 22 — Costa v Enel [1964] ECR 614.

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27 April 1994 in Case C-393/92, 23 in para- by the latter and therefore do not fall within graph 28 of which the Court observes that the ambit of the provisions relating to the 'in Community law, and indeed in the free movement of goods. The Italian Repub- national laws of the Member States, it is lic adds that the fact that it was necessary to accepted that electricity constitutes a good introduce in Italian law provisions to the within the meaning of Article 30 of the effect that electricity should, by way of a Treaty'; that is apparent, according to the legal fiction, be deemed a 'movable' shows same paragraph, from the fact that electricity precisely that the definition of electricity as is regarded as a good under the Communi- 'goods' is far from obvious. ty's tariff nomenclature.

24 — See, for example, Joined Cases 60/84 and 61/84 Cinétbèque v Fédération Nationale des Cinémas Français [1985] ECR 2605, paragraph 10, and Case C-239/90 Boscher [1991] 23 — Almelo [1994] ECR 1-1477. ECR 1-2023, paragraphs 7 to 10.

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16. Neither the Schindler judgment nor the by that undertaking) to supply television ERT judgment to which the Italian Govern- broadcasting services did not constitute a ment refers in this connection contains suffi- measure having an effect equivalent to a quan- cient particulars to detract from that conclu- titative restriction on imports unless the grant sion. The facts of the Schindler case 25 differ of the exclusive right of importation resulted, entirely from those of the present matter. In directly or indirectly, in discrimination against response to a question referred for a prelimi- imported products. However, it certainly can- nary ruling, by means of which the national not be said that that assessment (that an exclu- court asked whether lotteries fall, at least sive right to import goods which is granted in partly, within the ambit of Article 30 in so far order to facilitate the exercise of an exclusive as they entail the sending and distribution of right to supply a service is not in itself a meas- material objects to and in another Member ure having equivalent effect — and I shall State, the Court replied in the negative, revert to the exact significance of that assess- observing (paragraph 22) that the latter activi- ment in paragraph 65 below) excludes a priori ties could not be considered independently of from the ambit of the provisions concerning the lottery to which they relate, which must the free movement of goods the activity of be regarded as a 'service' activity for the pur- importing or exporting a good the purchase poses of the Treaty, since they are not ends in or transmission of which is connected with themselves and their sole purpose is to enable the supply of a service or even depends on it residents of the Member State into which where, as in the case of imports or exports of those objects are imported to participate in electricity, such purchase and transmission the lottery. 26 The differences between the are purposes which are entirely independent activity to which the Schindler judgment of the service. 29 refers and an activity consisting in importing or exporting electricity for subsequent distri- bution or consumption are, I think, clear.

Ireland claimed before the for remuneration. Finally, in paragraph 14 of Court that the contract in question did not relate to the sale of goods but to the performance of work, so that it fell under the Treaty provisions concerning the freedom to sup- ply services, and that the clauses relating to the materials to be used were completely subsidiary. That argument was not accepted by the Court, which stated (paragraph 17) that 25 — Sec Case C-275/92 H. M. Customs and Excise v Schindler 'the fact that a public works contract relates to the provi- [1994] ECR 1-1039. sion of services cannot remove a clause in an invitation to 26 — See also Case C-55/93 Van Schaik [1994] ECR 1-4837, tender restricting the material that may be used from the paragraphs 12 to 14. scope of the prohibitions set out in Article 30'.

17. Consequently electricity and natural gas ship between Article 37 and other provisions are 'goods' for the purpose of Title I of the of the Treaty. In the mid-1960s Advocate Treaty, and activities such as the import and General Gand, in his Opinion in Case export of those forms of energy fall within 20/64, 30 took the view that, to reply to the the ambit of the Treaty provisions relating to questions referred to the Court as to the free movement of goods. whether in 1959, at the material time, Articles 30, 31, 32 and 33, on the one hand, and Article 37, on the other, automatically required, in accordance with their exact meaning, the abolition of the national mea- sures falling within the ambit of those provi- (b) Does maintenance of the exclusive rights sions, it was necessary to clarify the relation- in question constitute an infringement of ship between Article 37 and the other Articles 30, 34 and 37? provisions of the chapter of the Treaty relat- ing to the elimination of quantitative restric- tions in trade between the Member States. According to the Advocate General, there were two possible solutions: either the ele- ments of the State monopolies of a commer- (aa) The relationship between Articles 30 cial character referred to by Article 37 and 34 and Article 37 should be examined on each occasion and should subsequently be assessed in the light of Articles 30 and 36, or else Article 37 was to be regarded as the only one governing the question of State monopolies of a commer- cial character. According to that Opinion, 18. As the Court is asked by the Commis- the second solution would not totally sion to declare that the defendant Member exclude the application of Articles 30 and 36, States have failed to fulfil their obligations although it would mean they would have to under Article 30 (and also Article 34 in the be applied through Article 37 to the extent to cases of France, Spain and Italy) and Article which the latter refers to the former provi- 37, the question immediately arises of the sions. The Advocate General inclined in relationship between Articles 30 and 34 on favour of the second solution, concluding the one hand and Article 37 on the other: that the quantitative restrictions on imports must the exclusive rights in question be and exports prohibited under Articles 30 and regarded as contrary both to Articles 30 and 34 were one of the forms which might be 34 and to Article 37, or should perhaps the taken by 'discrimination regarding the con- question whether those rights are compatible ditions under which goods are procured and with the Treaty be judged solely by reference marketed', such discrimination being con- to Article 37, in view of its special character? nected with the existence and operation of the State monopolies of a commercial char- acter of which Article 37 requires the aboli- tion. However, in its judgment of 4 February

1965, the Court did not give a ruling on that Advocate General took the view 32 that, in question. It found that the Treaty did not order to reply to the questions, it was not require the immediate abrogation of all the necessary to construe Article 95, observing measures for controlling imports existing that, in his opinion, 'Article 37 is the sole when it entered into force but did, on the criterion for judging monopoly charges since other hand, prohibit any new restriction or Article 37 is the lex specialis in relation to discrimination and impose the obligation Article 95', and in support of that viewpoint progressively to abolish existing restrictions he cited the judgment of 16 December 1970 and discrimination, which should disappear in the Cinzano case, 33 in which a question totally by the end of the transitional period relating to the taxation of imported goods at the latest. The Court added that there was subject to a monopoly in the importing no need, under those circumstances, to country was answered solely on the basis of decide 'whether the application of Article 37 Article 37 and the prohibition of discrimi- to State monopolies does or does not exclude nation for which it provides. Nevertheless, in the application of any other provision of the its judgment of 17 February 1976, the Court Chapter relating to the elimination of quan- took a different approach: 34 firstly, it exam- titative restrictions between Member States, ined the contested tax in the light of Article the effect of both interpretations being iden- 95 and, after finding that that provision did tical in the context of the legal information not, under certain circumstances, prohibit supplied by the Italian court'. the tax, it considered the same tax in the light of Article 37 of the Treaty, observing (para- graph 21) that 'the fact that a national meas- ure complies with the requirements of Article 95 does not imply that it is valid in relation to other provisions of the Treaty' and that therefore it was necessary to deter- mine whether the contested tax, although fulfilling the requirements of Article 95, nevertheless, constituted, for the purpose of Article 37, unfavourable discrimination 20. The opinion of Advocate General Reischl regarding the conditions under which goods in Case 45/75 31 was similar to that of the are procured and marketed, linked with the Advocate General in the Albatros case. In the existence and operation of a State monopoly later case the Court was asked to give a pre- of a commercial character. liminary ruling on various questions relating to the interpretation, in connection with a national tax on imported and domestic prod- ucts in the framework of a monopoly of a commercial character, of Article 37 of the Treaty, on the one hand, and Article 95, on the other, with regard to the prohibition on 21. The judgment in the Miritz case, 35 imposing on products imported from other which was published on the same day as that Member States internal taxation in excess of that imposed on domestic products. The

in Case 45/75, dealt with a number of pre the fundamental rule of the free movement liminary questions, the first of which con of goods, 'in particular by the abolition, in cerned the interpretation, in relation to a trade between Member States, of customs charge imposed by the Member State on duties and charges having equivalent effect', imported products, of Article 12 of the and that a charge of the type at issue in that Treaty concerning the elimination between case, which was introduced after the Treaty Member States of customs duties on imports came into force, was contrary to rule requir or exports or any charges having equivalent ing the maintenance of the status quo in effect, while the other two questions sought Article 37(2). an interpretation of Article 37 of the Treaty

ible? A first reading might lead to the oppo crimination between nationals of Member site conclusion since, in the former, the States regarding the conditions under which Court examined the charge on imported goods are procured and marketed, the prohi goods subject to a State monopoly in the bition -which it imposes is not limited to importing State, first in the light of Article imports and exports which are directly sub 95 and then by reference to Article 37, ject to the monopoly, but covers all measures whereas in the latter the charge which was which are connected with its existence and levied on the import of goods and was con affect intra-Community trade, including nected with the operation of a State therefore even charges which result in dis

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24. It seems, therefore, that in the Court's view a national measure may be contrary to 23. Nevertheless, there is no doubt that in Article 30 (and/or Article 34) as well as the later judgment of 13 March 1979, in Peu- Article 37. However, I think that the border- reux II, 37 giving a preliminary ruling on the lines between Articles 30 and/or 34, on the interpretation of Article 37 and other provi- one hand, and Article 37, on the other, are sions of the Treaty relating to the free move- such that, where a question relates to the ment of goods, although the Court con- compatibility of a national measure with firmed (paragraph 27) that Article 37 is a those provisions, it must be the subject of a special rule ('specific provision'), it ruled that

38 — Case 90/82 [1983] ECR 2011. 37 — Caie 119/78 [1979] ECR 975. 39 — Case C-347/88 [1990] ECR 1-4747.

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Article 30 and/or Article 34. O n the other with the existence of such State monopolies hand, if it were found that the requirements which constitute quantitative restrictions on for applying Article 37 were in principle sat- imports or exports, or measures having isfied, it would then be necessary to consider equivalent effect within the meaning of those whether the measure in question involved 'discrimination between nationals of the Member States regarding the conditions under which goods are procured and mar- keted', which is prohibited by the latter

nity). 25. That is precisely the dividing line With regard to Spain, Article 48 of the Act of Accession provided as follows: between the respective fields of application ' 1 . Without prejudice to paragraphs 2 and 3 of this Article, the Kingdom of Spain shall, from 1 January 1986, progres- of Article 37 on the one hand and Articles 30 sively adjust State monopolies of a commercial character and 34 on the other. The Court has repeat- within the meaning of Article 37(1) of the E E C Treaty, bearing in mind, where appropriate, Article 90(2) of the edly observed 41 that Article 37(1) has the EEC Treaty, so as to ensure that by 31 December 1991 at the latest no discrimination regarding the conditions under object, in prohibiting 'discrimination which goods are procured and marketed exists between between nationals of the Member States nationals of the Member States. [.

. .] 40 — See Case 120/78 Rewe-Zentrale [1979] ECR 321, paragraph The Kingdom of Spain shall increase the quota volumes in 7; Case 86/78 Peureux I [1979] ECR 897, paragraph 35; the manner set out in the annex referred to in the first sub- Case 118/86 Nertsvoederfabriek Nederland [1987] ECR paragraph. [. . .] 3883, paragraph 7; Joined Cases C-78/90 to C-83/90 4. [.·.]' Compagnie Commerciale de l'Ouest and Others [1992] Electricity is not included in the list of products in Annex ECR 1-1847, paragraph 36; and Case C-387/93 Banchero II V to which Article 48(3) refers. [1995] ECR 1-4663, paragraph 29. 41 — See Manghera, cited in footnote 36 (paragraph 9), and 43 — See Manghera, cited in footnote 36 (paragraph 9), Rewe- Miritz, cited in footnote 35 (paragraph 8), and Case 91/78 Zentrale des Lebensmittel-Großhandels, cited in footnote Hansen II [1979] ECR 935, paragraph 13; Case 78/82 Com- 31 (paragraph 26), Peureux I, cited in footnote 40 (para- mission v Italy [1983] ECR 1955, paragraph 11; Commission graph 30), Commission v Italy, cited in footnote 41 (para- v Greece, cited in footnote 39 (paragraph 42), and Banchero graph 11), and Commission v Greece, cited in footnote 39 II, cited in the preceding footnote (paragraph 27). (paragraph 42).

44 — To say that measures constituting quantitative restrictions or measures having equivalent effect within the meaning of those terms in Articles 30 and 34 necessarily amount to 'discrimination regarding the conditions under which goods are procured and marketed' for the purpose of Article 37(1) 26. There is only one way of ensuring that a appears obvious with regard to measures which distinguish directly between imported and national products. Does the measure of that kind does not thus automati- same apply Ín relation to measures which, although cover- cally fall within the prohibition laid down by ing imported and national products alike, are considered, in accordance with paragraph 5 of the judgment in Case 8/74 Article 37(1), and that is to show that the Dassonville [1974] ECR 411, as measures having an effect equivalent to quantitative restrictions on imports because measure is justified on one of the grounds set they are capable of hindering, although only indirectly or potentially, intra-Community trade?

Other- pose of Article 37(1), which is intended, as I have said in the main body of this opinion, to ensure observance of the wise, a national measure which, despite being basic rule of the free movement of goods by eliminating all a quantitative restriction or measure having obstacles connected with the operation of national monopolies of a commercial character. From that view- equivalent effect, could be based on one of point, it is noteworthy that in Commission v Italy, cited in footnote 41, which was given on an application by the the grounds set out in Article 36, would Commission seeking a declaration that the retention of a infringe the Treaty merely because it was national measure was contrary to Article 37, the Court, after showing that the measure in question applied without connected with the operation of a State distinction to imported and national products, went on to consider (paragraph 12 et seq.) not only whether the meas- monopoly. However, no possible interpreta- ure could, in spite of its said character, entail discrimination, but also whether, in general, it could 'distort competition tion can serve as a basis for the view that by restricting imports of [.

State monopoly. I believe that my view also ments cited in point 19 et seq. of this opinion show, the conforms with the Court's case-law. In the prohibition may extend to measures (provided that they are intrinsically connected with the specific operation of a Commission v Greece judgment cited above national monopoly of a commercial character) such as the (footnote 39), the declaration that Greece imposition of customs duties or charges within the meaning of Article 12 (see the Moritz judgment, cited in footnote 35) had failed to fulfil its obligations under or the introduction of fiscal discrimination within the meaning of Article 95 of the Treaty (see Peureux /, cited in Article 37(1) (paragraph 50) followed the footnote 40) and any other national measure, although it Court's rejection (paragraphs 47 to 49) of the may not fall within the ambit of another provision of the Treaty (see Rewe-Zentrale des Lebensmittel-Großhandels, defendant State's argument that the mainte- cited in footnote 31, in particular paragraph 21). Therefore, Article 37(1) performs two functions: firstly, it nance of the measure in question (which, as makes it clear beyond doubt that the prohibitions laid down in the fundamental provisions of the Treaty, such as is clear from paragraphs 42 to 46, was, in the Articles 12, 30, 34 and 95, apply even to measures con- Court's view, also contrary to Article 30) nected with the operation of national monopolies and, sec- ondly, it imposes a general prohibition on all discrimination was justified on grounds of public security, which may arise from the operation of such monopolies. that is to say, grounds included in the list in

Article 36. 4 5 Nevertheless, in my opinion, (bb) Are the rights at issue connected with the latter article should not be relied upon to the specific operation of State monopolies of justify 'discrimination regarding the condi- a commercial character? tions under which goods are procured and marketed' if such discrimination does not involve a quantitative restriction or measure having equivalent effect for the purpose of Articles 30 and 34. ^ To take the opposite approach would conflict with the need, which is repeatedly confirmed by the case- law, to construe strictly Article 36 which, by laying down exceptions to the fundamental rule of the free movement of goods, cannot

27. Taking the approach outlined above, I shall consider firstly whether the exclusive rights at issue are inseparably connected with the operation of State monopolies of a com- mercial character (see section (bb) below) and then whether such rights constitute dis- crimination between nationals of Member States regarding the conditions under which (a) an organic element, which may consist goods are procured and marketed (see sec- either in the constitution, by a sovereign tion (cc) below). At that second stage I shall State measure and in any legal form, 49 of deal firstly (see section (cc)(l)) with the an ad hoc 'body' with monopoly rights question whether such exclusive rights which most typically take the form of amount to quantitative restrictions or mea- various exclusive rights, 5 0 or in the grant sures having equivalent effect and then (see section (cc)(2)) with the question whether such measures may be justified on the basis 48 — See Case 30/87 Bodson [1988] ECR 2479, paragraph 13; of Article 36 of the Treaty.

ing footnote). 32/80 Kortmann [1981] ECR 251, paragraph 11; Case 29/87 Dansk Denkamt [1988] ECR 2965, paragraph 32; and 50 — With regard to the nature of exclusive rights such as, first Case C - l l l / 8 9 Bakker Hillegom [1990] ECR 1-1735, para- and foremost, monopoly rights, see Rewe-Zentrale, cited in graph 8. footnote 40, paragraph 7.

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30. The Commission infers from the above- that such consumers may, subject to certain mentioned provisions that SEP's exclusive conditions, transmit imported electricity right, to which the application against the through the existing grids which are in prin- Kingdom of the Netherlands refers, to ciple intended for the public distribution ser- import electricity for public distribution vice. However, that does not mean that constitutes a State monopoly of a commer- SEP's exclusive right is not a monopoly. The cial character for the purpose of Article 37(1) other undertakings, except SEP (and mainly of the Treaty. the existing electricity distribution undertak- ings, of which there are approximately 40, according to the defence), have no right •whatever to engage in a specific economic activity, that is to say, no right to import electricity for distribution to final 31. The Netherlands Government contends, consumers. on the contrary, that there is no question of Article 37 of the Treaty being applied since:

'The contested exclusive right is not a monopoly because, as Article 34(1) in con- 33. Even if it were accepted that the import junction with Article 37(1) of the EW makes of electricity into the Netherlands should be clear, final consumers also have the right to considered as a whole, without taking import electricity, provided that the electric- account of whether imported electricity is ity which they import is intended solely for intended for the importer's own consump- their own needs. tion or for distribution to final consumers, in any event SEP's exclusive right, because of its subject-matter, has such a decisive effect on imports that, even if that interpretation is accepted, it must be considered a monopoly.

34. Furthermore, the Netherlands Govern- 36. In Italy the electricity industry was ment's argument that SEP does not operate nationalized by means of Law N o 1643 of 6 in accordance with commercial criteria has December 1962 (GURI N o 316, 12 Decem- absolutely no bearing on the finding that the ber 1962), which established the Ente Nazio- State monopoly in question is commercial. nale per l'Energia Elettrica ('ENEL'), a pub- This finding is sufficiently justified (see para- lic undertaking to which the industrial graph 28 above) by the fact that because the undertakings in the electricity sector were subject-matter of SEP's monopoly is the transferred. Article 1(1) of Law N o 1643 importation of a good such as electricity, that assigned to ENEL the functions of the gen- monopoly makes it possible to influence eration, import and export, transmission, appreciably the intra-Community trade in transformation, distribution and sale of elec- question. tricity throughout Italy, irrespective of its source.

N o 1775 of 11 December 1933, as amended electricity and natural gas QORF, 9 April by Law N o 127 of 26 January 1942, and Law- 1946, 'the 1946 Law') provides as follows: N o 606 of 19 July 1959) require an authori- zation to be obtained to import or export electricity. The authorization is granted by the Ministry of Public Works after it has been shown that several requirements have been satisfied (including, in the case of 'From the publication of this Law, the fol- imports, a shortfall in national production lowing shall be nationalized: and, in the case of exports, a surplus in national production). The Commission states in its application (relying on figures said to have been supplied by the Italian Govern- ment) that, when the application was lodged, E N E L had the right, under the authorization 1. the generation, transmission, distribution, which was granted in 1989 and is due to import and export of electricity; expire on 31 December 1997, to import or export annually, from and to European countries bordering on Italy, up to 30 000 TWh (1 TWh (terawatt-hour) = 1 000 mil- lion KWh), subject to a tolerance of +20%.

2. the production, transmission, distribution, import and export of natural fuel gas.'

38. In those circumstances, ENEL's exclu- sive rights to import and export electricity, at issue in the action brought by the Commis- Articles 2 and 3 of the Law entrust manage- sion against the Italian Republic are the sub- ment of the nationalized electricity and natu- ject of a State monopoly of a commercial ral gas undertakings to public bodies of an character for the purposes of Article 37 of industrial and commercial nature called Elec- the Treaty. The national authorities may, tricité de France (EDF), Service National, through the undertaking constituted by law and Gaz de France (GDF), Service National and enjoying those exclusive rights, control (hereinafter ' E D F ' and ' G D F ' respectively). imports and exports of electricity from and to other Member States.

41. In Spain, Article 1(1) of Law 49/84, of 26 December 1984, on the unified operation of the national electricity system (BOE Nos These functions and activities were assigned 311 and 312, p. 5466, 'the 1984 Law') pro- to a State corporation called Red Electrica de vides as follows: España ('Redesa') by Royal Decree 91/85, of 23 January 1985 (BOE N o 24, p. 448, 'the 1985 Royal Decree'), adopted pursuant to the 1984 Law. 54 'The unified operation of the national elec- tricity system over the high-voltage net- works is a public State service, the purpose of which is to optimise the system as a whole on the basis of the functions and activities set out in Article 2 of this Law. The service shall 42. According to the Commission, it is quite be managed by a State company in accord- clear from the abovementioned provisions of ance with the present Law and the provi- the 1984 Law that in Spain there is a State sions adopted for its implementation.' monopoly of a commercial character for the purposes of Article 37 of the Treaty because, under those provisions, the import and export of electricity are the subject of exclu- Article 2(1) of the Law specifies the func- sive rights granted to the State corporation tions and activities comprising the public ser- Redesa, through which the national authori- vice, which include: ties control intra-Community trade in elec- tricity.

43. In reply, the Kingdom of Spain contends the defendant State refers in detail, the that the present action for a declaration that legislature did not intend, in enacting that the exclusive rights in Spain to import and measure, to entrust to one State corpora- export electricity are contrary to Articles 30, tion all the activities which until then had 34 and 37 of the Treaty, and to Article 48 of been carried on by the private undertak- the Act of Accession, is based in its entirety ings generating and distributing electric- on a false assumption, since the provisions ity. The intention was, without affecting referred to by the Commission do not confer the system of ownership of the latter or upon Redesa exclusive rights to import and their freedom to use and manage their export electricity. In particular, the defendant installations, only to establish a system State makes the following submissions: whereby each and every one of them would interact with the State corporation in order that, through the introduction of unified criteria of economic efficiency and management of the generation and distribution cycle, it would be possible to ensure the best method of supply and the — The Royal Decree of 12 December 1924 success of the energy policy of each Gov- laid down that the supply of electricity ernment. should be deemed a public service. The only consequence of this which is still in effect is that electricity tariffs are deter- mined by the State authorities, as pro- vided for by the Royal Decree. Further- more, neither the generation nor the distribution of electricity was brought within the exclusive remit of the State. — For the purpose of the 'unified operation' They are still activities carried on by system, various powers were conferred numerous undertakings subject to a sys- upon the abovementioned State corpora- tem of administrative authorization. tion, including:

Those transactions may consist in 44. Indeed, I find the Commission's argu- imports and exports of electricity by ments on this point unconvincing. Redesa itself, where this is consid- ered conducive to ensuring supply or to reducing production costs of elec- tricity at national level, or in the allo- cation, on grounds of national inter- est, of the precise share of each undertaking in international trade, and also in supervising the imple- 45. The Commission's claim that Redesa has mentation of decisions in that area. exclusive rights to import and export elec- According to the Spanish Govern- tricity, although there is no provision ment, Redesa's power to import and expressly conferring such rights upon the export electricity, if it sees fit, does State corporation, is based mainly on the fact not affect the right of private under- that, firstly, Redesa manages the 'unified takings to do the same: their right operation' of the national electricity system, can only be limited on 'grounds of which is described as a public service and, national interest', when the State cor- secondly, that it operates the country's high- poration allocates the share of each voltage grid, including all the international undertaking in international trade in connection facilities of the grid. However, I electricity. Nevertheless, the Spanish do not think that either of those factors suf- Government adds that an implied ficiently supports the conclusion that Redesa requirement, for private undertak- has exclusive rights to import and export ings to be able to exercise such right, electricity, having regard in particular to the is that in each case fulfilment of the defendant State's clarification of the exact technical prerequisites must be veri- meaning of the term 'unified operation' and fied so as to ensure that the electric- to the underlying objective of the 1984 Law. ity import or export transaction con- cerned (which can only be carried out through the international inter- connection equipment of the high- voltage grid, for the operation of which Redesa is responsible under the 1984 Law) does not endanger the 46. As the Spanish Government points out operation of the electricity system. (without being challenged by the Commis-

47. Secondly, the fact that the operation and maintenance of the international connection 48. To show the existence of the exclusive facilities of the national transmission system rights in question, the Commission also were entrusted to Redesa alone is not suffi- alleges that the Spanish Government has not cient to conclude necessarily that it was cited a single specific case of a private under- granted exclusive rights to import and export taking which has imported or exported elec- electricity, because the aforementioned task tricity to or from Spain and adds that, does not make it technically impossible for according to the information it has obtained, other undertakings to import and export there is no undertaking, save Redesa, which imports or exports electricity.

import and export electricity. It appears indirectly from the posal for a directive concerning common rules for the inter- Commission's application (see paragraph 36) that the nal market in electricity (cited in footnote 10) Article 21, Council of State's opinion seems to be based on the prin- which relates to the free access of electricity producers and ciple of interpretation that a statutory provision must be transmitters to the distribution system, coexists with construed, if the wording so permits, in a manner compat- Article 9, which relates to the 'transmission system opera- ible with the formal provision of higher status regulating tor' who, under the latter provision, will not only 'be

hibition*.

justify the presumption that exclusive rights soned opinion, stated that the Draft Law, exist. 58 which was then being debated (and which subsequently replaced the 1984 Law after the present action was brought: see footnote 54), expressly provided that undertakings other than Redesa could import and export elec- tricity, subject to certain requirements and Furthermore, if, with regard to the lack of restrictions. The Commission's reasoning information, the Commission is in reality here seems to me to be particularly weak. alleging that, although there is no express The fact that a subsequent provision provision in the 1984 Law granting Redesa expressly confers a right to pursue an econ- exclusive rights to import and export elec- omic activity, at the same time laying down tricity, in the present case the requirements the requirements for that activity, does not for applying Article 37 of the Treaty are ful- justify the contrary inference that under the filled because the State authorities are in a previous system that activity was entirely position, through the State corporation, to prohibited when, as in this case, that conclu- control de facto the intra-Community trade sion is not supported by other evidence. in question, the Commission's argument would be untenable even on that basis. I think that, to show de facto control by the Spanish authorities of imports and exports of "electricity for the purposes of the second subparagraph of Article 37(1) of the Treaty, it is not sufficient for the Commission (which bears the burden of proof) to rely on the mere lack of information concerning trade in electricity: it would be necessary to adduce evidence to show at least that the rel- evant provisions of the 1984 Law have been 50. In view of the foregoing, I consider that used as a basis for measures (for example, the the Commission has not shown that in Spain refusal of requests) by means of which there are exclusive rights to import and undertakings other than Redesa have simply export electricity. Mainly on that ground, been prevented from importing or exporting therefore, the application for a declaration electricity. that, by introducing such rights, the King- dom of Spain has failed to fulfil its obliga- tions under certain articles of the Treaty and Article 48 of the Act of Accession should be dismissed in its entirety. 59

51. For the reasons I have already given (see paragraph 24 et seq. above), I shall now con- — they prevent producers in other Member sider whether the exclusive rights in question States from selling electricity or natural constitute quantitative restrictions or mea- gas to persons in the defendant States sures having equivalent effect to restrictions other than those vested with the con- on imports (see section 1 below) and then tested rights, and whether such rights may be justified on the basis of Article 36 of the Treaty (see section 2 below).

— they prevent undertakings in the defen- dant States (for example, distributors) and (in the case of Italy, France and (1) Do the contested rights constitute quan- Spain) consumers from choosing a sup- titative restrictions or measures having plier of electricity or natural gas who is equivalent effect? established in another Member State.

(i) Exclusive import rights

53. I think there is firm support in the Court's case-law for the Commission's view.

52. According to the Commission, the exclusive rights in the defendant States 60 to import electricity and (in the case of France)

60 — It should be observed that, for the reasons given in point 41 54. The earliest of those cases is Manghera et seq., in my opinion exclusive rights to import and export (cited in footnote 36). That judgment gave a electricity do not exist in Spain. However, in the following discussion, for the sake of completeness, I shall assume that preliminary ruling on certain questions, the the exclusive rights referred to by the Commission's appli- cation actually exist in all the defendant States. first of which was whether, in connection

with the 'adjustment' of State monopolies of with regard to the definition of 'measure a commercial character, required by Article having equivalent effect'. 62 37(1) of the Treaty, exclusive rights to import from other Member States should be abol- ished. The Court replied in the affirmative (paragraph 13), after observing that the object of Article 37(1) is to ensure compli- ance with the fundamental rule of the free movement of goods throughout the common market, 'in particular by the abolition of quantitative restrictions and measures having equivalent effect in trade between Member States' (paragraph 9), that 'this object would not be attained if, in a Member State where a commercial monopoly exists, the free move- ment of goods from other Member States similar to those goods with which the national monopoly is concerned were not ensured' (paragraph 10), and that, accord- ingly, an exclusive right to import manufac- tured goods granted to a monopoly of a commercial character constitutes, in respect 55. If the precise meaning of the Manghera of Community exporters, discrimination judgment is that exclusive import rights are prohibited by Article 37(1) of the Treaty measures having an effect equivalent to

. .]' (emphasis added). mity with Dassonville (cited in footnote 44) 63 — See the general wording of the judgment in Case 104/75 De Peiįper [1976] ECR 613, paragraph 13. Sec also Case 94/79 Vriend [1980] ECR 327, in particular paragraph 10, to the effect that national rules whereby a Member State, directly or through the intermediary of bodies established or approved Dy an official authority, prohibits, inter alia, the 61 — It seems to me that Advocate General Rozès construed in importation of certain products by persons not belonging the same way the relevant paragraphs of Manghera in her to one of the said bodies are incompatible with Article 30 Opinion in Commission v Italy (cited in footnote 41). of the Treaty.

56. Nevertheless, it could be argued that adopted under Article 90(3) of the Treaty. the conclusion reached by the Court in The provisions in question included Article 2 Manghera is connected with the fact that the of the Directive, whereby Member States holder of the exclusive right to import which have granted special or exclusive tobacco, which was the subject of the rights to undertakings for, inter alia, the question before the Court, had also been import of telecommunications terminal given the exclusive right to manufacture equipment are to 'ensure that those rights are the same product in the Member State in withdrawn'. It is clear from the preamble to question. Therefore the adverse effect of the the directive that Article 2 was adopted exclusive import right on trade in the because, according to the Commission, the Community was attributable, from that retention of such rights would be inconsis- viewpoint, to the 'natural' tendency of the tent with, inter alia, Article 30 of the Treaty holder of exclusive rights to promote trade since it 'can, and often does, lead to restric- in his own products rather than in imported tions on imports from other Member States'

57. In any case, in my opinion, there has models available on the market, inform cus- been no justification for such doubts since tomers about the state and operation of all the judgment in France v Commission. M The the terminals and guarantee their quality' French Republic brought an action for the (paragraph 35). The Court thus recognized annulment of certain provisions of Commis- that the exclusive rights in question sion Directive 88/301/EEC, 6 5 which was (which included exclusive import rights) restricted intra-Community trade, without taking any account of the fact that the hold- ers of the exclusive rights in question also 64 — Case C-202/88 [1991] ECR 1-1223. manufactured the products concerned.

I - 5732

COMMISSION v NETHERLANDS

supply side, such rights prevent traders from offer the aforementioned products to all offering their products to all consumers potential customers in the defendant States without exception and, on the demand side, and by preventing those potential customers such rights deny consumers access to the full (simply the other side of the coin) from range of products available on the market in obtaining the products in question from the question. undertaking of their choice, such rights may adversely affect trade in the Community by restricting the category of persons who can take part in that trade.

I - 5733

OPINION OF MR COSMAS — CASE C-157/94

I - 5734

COMMISSION v NETHERLANDS

under which trade is carried on in the imported products and in the domestic prod- 62. There is likewise no foundation for the claim (raised, with certain variations, by all the defendant States) that the exclusive rights in question to import electricity do not restrict intra-Community trade in that sector because the bodies vested with the rights, being under an obligation to ensure the sup- ply of electricity under the best possible economic conditions, import electricity 68 — Among the judgments subsequent to Keck and Mitkouard, whenever the need to do so is apparent from see Case C-249/92 Commission v ludy [1994] ECR 1-4311, a comparison of the prices offered by foreign in which a national provision requiring prior authorization for all imports of certain goods was found contrary to producers or distributors with the produc-

imports. Since that requirement applies at the stage imme- that right when no other operator or con- diately following importation ana imposes an economic burden on importers, it is liable to restrict the volume of sumer 69 can make direct contact with opera- imports'. In my opinion, this is also the logic behind the tors in other Member States in order to judgment in Joined Cases C-277/91, C-318/91 and C-319/91 Ligur Carni and Others [1993] ECR 1-6621, decide, by reference to his own needs and paragraphs 35 to 38, in which the Court, again referrine to Dassonville, stated that a national provision which requires capacity, whether it would be advantageous operators importing fresh meat into the area of a municipal authority to use the municipal slaughterhouse for the trans- to import electricity. port and delivery of the goods to the final destination of the premises of a local undertaking, may impede intra- Community trade and therefore constitutes a measure hav- ing equivalent effect. The fact that the said national provi- sion also refers to goods brought into the municipal area from other parts of the same Member State does not, in my 69 — As mentioned in point 29 et seq., in the Netherlands other opinion, mean that it ceases to be a measure 'designed to consumers have a right to import electricity direct provided regulate trade in goods between Member States' as it refers that it is intended solely for their own needs. SEP's exclu- directly to the conditions under which goods could be sive right of importation, with regard to electricity intended imported into the municipality from other Member States. for public distribution, deprives the distribution undertak- ings of the opportunity to import electricity direct.

65. Does the ERT judgment have the impli- 64. The Italian Government also contends cations attributed to it by the Italian and the that, as the Court observed in ERT (cited in French Governments? It finds, firstly (para- footnote 27), in order for an exclusive right graph 12), that Community law does not to import a product the movement of which prevent the granting, as such, of a television is closely connected with the supply of a ser- monopoly for considerations relating to the vice to fall within the ambit of Article 30 of public interest, although the manner in which the monopoly is organized or exer- cised must not infringe the rules of the Treaty. O n the question whether a television 70 — The Court has consistently held that, to determine whether a measure has an effect equivalent to a quantitative restric- monopoly is contrary to the provisions of tion on imports, 'it is not necessary to prove that the mea- sures in question actually restrict imports of the products in the Treaty relating to the free movement of question' (see Case 124/85 Commission v Greece [1986] goods, the Court held, as I have already said ECR 3948, paragraph 7; Case 12/74 Commission v Ger- many [1975] ECR 87, paragraph 14; Case 249/82 Commis- (paragraph 16), that the grant of an exclusive sion v Ireland [1982] ECR 4005, paragraph 25; and Case 16/83 Pronti [1984] ECR 1299, paragraph 20). right to import (hire or distribute) material

I - 5736

COMMISSION v N E T H E R L A N D S

ment). In my view, what the ERT judgment really means is that granting to the holder of an exclusive right to supply a service (which is not in itself contrary to Community law) an exclusive right to import goods necessary for that service is not, in principle, a measure which can have an adverse effect on the trade of the State in question with other Member (ii) Exclusive export rights States because in any case the activity for which those products must be imported is carried on by only one person (and, I repeat, without infringing Community law).

exist. However, the evidence produced by the Commission exclusive right of importation referred to in to show that those provisions are still applied (existence of a specific measure adopted in 1989 and remaining in force the ERT judgment not endangering intra- until 1997, whereby the quantities of electricity which E N E L may import and export annually arc restricted) has Community trade are not fulfilled. By not been refuted by the Italian Government with detailed excluding contact between operators in other submissions. The defence merely claims that, for the grant of an authorization to import a particular volume of elec- Member States and their numerous potential tricity, it is sufficient for E N E L to lodge an application for that purpose.

below.

— measures which refer directly to condi­ 75 — See Joined Cases 51/71 and 54/71 International Fruit Com­ tions and requirements for exports, with­ pany and Others [1971] ECR 1107, paragraphs 8 and 9 out expressly imposing quantitative (requirement, though purely formal, to obtain export licences or to follow a similar procedure); Case 53/76 Bou- restrictions: although the judgments con­ helier [1977] ECR 197, paragraph 16 (requirement, only for the export of certain products, of a licence or certificate of cerning their compatibility with the conformity with certain specifications); Case 68/76 Com­ Treaty do not set out a general criterion mission v France [1977] ECR 515, paragraphs 14 and 15 (requirement, for exporting certain producta, of a special on this point, I think it may easily be export declaration); Vriend, cited in footnote 63, paragraph 10; Case 29/82 Van Lutpen [1983] ECR 151, paragraph 9 inferred from the decided cases as a (right to export certain products recognized only for opera­ tors registered with a named body constituted or controlled whole that such measures are regarded as by State authorities); Case C-110/89 Commission v Greece [1991] ECR 1-2659, paragraph 24 (obstacles and restric­ tions, by means of various measures, on exports of a par­ ticular product by operators other than a body controlled by the Sute authorities); and, finally, Case C-426/92 Deut­ sches Milch-Kontor [1994] ECR 1-2757, paragraph 42 (sys­ 73 — It will be remembered that, according to the Commission, tematic frontier inspections for checking the composiuon in Italy and Spain there are exclusive rights to export elec­ and quality of a particular exported product). In my opin­ tricity, and in France exclusive rights to export electricity ion, it is significant that in two of those judgments, namely and natural gas. In the action against the Netherlands the Bouhelier and Vriend (in paragraphs 8 and 16 respectively), question of exclusive export rights does not arise. the Court cited the classic formulation of the Dassonville 74 — See Case C-5/94 Hedley Lomas [1996] ECR 1-2553, para­ judgment in relation to the national measures in question. graph 17 (refusal by a Member State to issue an export Učence), and Case 7/78 Thomson [1978] ECR 681 (prohibi­ 76 — Sec the judgment in Case 15/79 Groenveld [1979] E C R 649, tion of exports). paragraph 7.

without differentiation to products for relate directly to the export trade. Therefore, export and those for the domestic mar- where it is shown that the contested mea- ket, establish implicit prohibitions or sures, which grant export rights to only one restrictions on exports have been organization, prevent operators or consum- declared contrary to Article 34 of the ers in other Member States from contacting Treaty. 77 other entities in order to obtain supplies, in my opinion such measures, which may, at least potentially, adversely affect intra- Community trade, may justly be regarded as having an effect equivalent to quantitative restrictions on exports for the purposes of Article 34 of the Treaty, 78 and it is not nec- essary, as the Spanish Government seems to argue, to examine in addition the conditions under which trade in the products concerned takes place within the defendant States. Sec- ondly, I cannot accept the Italian Govern- ment's argument that, as Italy has an electric- ity shortage, ENEL's exclusive right to export does not in practice affect Italian exports. The rights at issue fall within the ambit of Article 34 if it is shown that they may impede trade in the Community, and it is unnecessary to prove that they actually 68. The exclusive rights at issue, which refer restrict exports. 79 Finally, for the same rea- direcdy to the conditions for exporting elec- son the French Government's submissions tricity and gas, clearly belong to the second that the export of electricity, which began in of the abovementioned categories. Therefore 1981, amounted in 1993 to approximately the question whether such rights are compat- 12% of national production, and that French ible with Article 34 of the Treaty must be production of natural gas is in any case neg- answered in conformity with the reasoning ligible and in constant decline, are irrelevant. of the judgments cited in footnote 75 and Furthermore, the French Government itself not, as the Commission appears to suggest, states that the electricity and natural gas pro- the line of cases starting with Groenveld duced in France are primarily intended for (cited in footnote 76) which, I repeat, in my consumers in that country, for which reason view refer to national measures which do not — and also because E D F and GDF, the undertakings with exclusive rights, have an

obligation to provide an uninterrupted sup- of Ireland requested a preliminary ruling ply of electricity and gas — 'it is possible on various questions relating to the that the principle laid down in Article 34 of interpretation of Articles 30, 31 and 36 of the Treaty is not observed in every case'. the Treaty in order to ascertain whether national provisions requiring importers of petroleum products to obtain their supplies, up to a certain percentage, from a State corporation operating a refinery in Ireland, at prices fixed by the competent Ministry, were compatible with the Treaty. After finding that the national rules constituted a measure having an effect (2) The contested rights may be justified equivalent to a quantitative restriction on under Article 36 of the Treaty imports (paragraph 20), the Court went on to consider whether the reasons for the rules constituted grounds of 'public security' for the purposes of Article 36 of the Treaty. The Court accepted (paragraph 34) that 'petroleum products ... are of fundamental importance for a country's existence since not only its economy but above all its institutions, its essential public services 69. The defendant States contend that, and even the survival of its inhabitants assuming that the exclusive rights in question depend on them', and 'an interruption of are measures having an effect equivalent to supplies of petroleum products, with the quantitative restrictions on imports and resultant dangers for the country's existence, exports, they are nevertheless justified under could therefore seriously affect the Article 36 and are therefore compatible with public security that Article 36 allows States the Treaty. The arguments they put forward to protect'. The Court added (paragraph 35): reflect, of course, the conditions prevailing in 'It is true that ... Article 36 refers to matters each country, but they all centre around the of a non-economic nature. A Member State idea that the contested rights are justified on cannot be allowed to avoid the effects of grounds of 'public security' for the purposes measures provided for in the Treaty by of Article 36 of the Treaty, as their purpose is pleading the economic difficulties caused to ensure the supply of electricity and natu- by the elimination of barriers to intra- ral gas in all the defendant States. Community trade. However, in the light of the seriousness of the consequences that an interruption in supplies of petroleum products may have for a country's existence, the aim of ensuring a minimum supply of petroleum products at all times is to be regarded as transcending purely economic considerations and thus as capable of 70. These arguments are no doubt based on constituting an objective covered by the Campus Oil. 80 In that case the High Court concept of public security.'

71. There can be no doubt that the observa- According to the Commission, those three tions underlying the paragraphs cited above elements are the security of supply of the from Campus Oil apply equally to electric- raw materials necessary for the production ity. A modern State or economy could not of electricity, a guarantee of sufficient quanti- conceivably function without a continuous, ties of electricity to meet demand and, uninterrupted supply of electricity, which is finally, the security of the transmission sys- also essential for meeting the basic daily tem. needs of the population. Although less obvi- ously, natural gas is of similar importance in the functioning of the State, society and the economy, at least in France, the only Mem- ber State which has introduced exclusive rights to import and export natural gas. It appears from France's defence that in 1990 13% of that country's primary energy requirements was met by natural gas. Apart from the fact that, as is also indicated in the defence, experts agree that in the next 20 years the consumption of natural gas will 73. O n the last point, the Commission con- rise by up to 50%, the mere fact that natural tends, in particular, that the abolition of gas is already being used in France as a pri- exclusive rights to import and export elec- mary energy source in the abovementioned tricity is perfectly compatible with the estab- proportion justifies, in my opinion, regard- lishment and maintenance of centralized ing security of the supply of natural gas as an control of the transmission system so as to objective covered by the concept of public ensure that supply exactly matches demand security within the meaning of Article 36 of at all times and to avoid the technical prob- the Treaty. lems which an imbalance might cause in the functioning of the system, and is also com- patible with the establishment of technical standards with which the users of the system must comply to ensure the quality of the supply. The defendant States for their part have not specifically argued that the exclu- sive rights in question are absolutely neces- sary for the security of the transmission sys- tem. It is also significant that, as already mentioned (see footnote 56), in the Amended Proposal for a directive concerning common 72. The Commission is in no doubt that, in rules for the internal market in electricity view of the Campus Oil judgment, the secu- (cited in paragraph 4), the provisions con- rity of electricity supply is a ground of pub- cerning access for producers and distributors lic security for the purpose of Article 36. to the distribution system coexist with those Nevertheless, it observes that the Court has concerning the 'transmission system opera- not given an exact definition of 'security of tor' who will be responsible for managing supply' and states that, with regard to elec- energy flows on the system and will there- tricity, the term comprises three elements, fore retain the right to refuse requests for none of which can be affected by the aboli- access to the system if certain requirements tion of the contested exclusive rights. are not fulfilled.

— To ensure that in the short and medium term the quantities of electricity available in the Netherlands exacdy match demand, the EW Law cited above (para- graph 29 et seq.) lays down a planning system at national level for the generation of electricity. Every two years SEP (which owns the exclusive right to — According to the Kingdom of the Neth- import electricity for public distribution), erlands, the question whether the exclu- in conjunction with the electricity gen- sive right to import electricity for public eration undertakings and the body repre- consumption is justified under Article 36 senting distribution undertakings, draws of the Treaty 81 must be assessed by refer- up an electricity plan ('E-plan') which ence to the system described above in its specifies the production capacity neces- sary to meet the overall demand forecast for the next ten years in the Netherlands. The E-plan, which is approved by the 81 — In any case the argument of the Kingdom of the Nether- lands that the exclusive right in question mav be justified Minister for the Economy, imposes cer- by 'imperative requirements' within the meaning of Cassis de Dijon is untenable. As the Commission rightly observes, tain obligations on the generation and such 'imperative requirements' can be reliedupon only in relation to measures which apply without distinction to distribution undertakings, the fulfilment both national and imported products (see Joined Cases of which may be enforced through the C-l/90 and C-176/90 Aragonesa de Publicidad and Pith- livia [1991] ECR 1-4151, paragraph 13; and Case C-2/90 courts. For example, generation under- Commission v Belgium [1992] ECR 1-4431, paragraph 34). In the latter case, tne exclusive import rights related Dy vir- takings must construct the new genera- tue of their objective and nature, only to imported electric- tion units provided for by the E-plan and ity, as I have already said (paragraph 61). For the same rea- son, the Spanish Government's arguments on the same keep them in operation. However, the point likewise cannot be accepted.

76. The Italian Government maintains that the exclusive rights to import and export electricity have the object of ensuring the supply and this, in its opinion, consists by definition, firstly, in ensuring the optimum functioning of the national electricity system and, secondly, in ensuring not only an unin- terrupted supply of electricity but also a sup- ply at reasonable, stable prices.

— Secondly, with regard to ensuring the supply of electricity at reasonable, stable prices, the Italian Government states that ENEL applies a single price policy for the whole country which makes it pos- — The Italian Government observes, firstly, sible to offset the profits from supplying that Italy traditionally imports energy: large-volume users against the high cost approximately 17% of its electricity of supplying power to consumers in requirements are covered by imported remote or inaccessible regions. However, power and 65.4% by power produced by if the exclusive import and export rights

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OPINION OF MR COSMAS — CASE C-157/94

The French Government adds that the aboli- tion of exclusive import and export rights would make the long-term forecasting of changes in demand for electricity impossible, — In order to ensure the supply of a coun- thus impeding the adjustment of national try, it is not sufficient to secure the neces- production potential to the country's needs sary forms of primary energy, without and endangering security of supply. The taking account of their nature and the only, and extremely costly, alternative would market price, but it is also necessary to be to maintain generation capacity at a

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COMMISSION v NETHERLANDS

higher level, for the sake of security, than is would cause consumers to lose confi- necessary to meet actual needs. dence in natural gas and return to other sources of energy, mainly oil. Therefore French energy policy would have failed in one of its main aims, namely to achieve the greatest possible diversification of energy sources. 78. With regard to natural gas, the French Government makes the following observa- tions:

— In producer countries, production and 79. Finally, the Spanish Government con- marketing are normally controlled by tends that the Spanish legislation which, national monopolies. Only a large according to the Commission, creates exclu- importer which is sure of the long-term sive rights to import and export electricity, 82 demand which it will have to meet can is in any case justified under Article 36 of the negotiate with such monopolies on con- Treaty because the legislation, which pro- ditions which are satisfactory from the vides for the 'unified operation' of the economic viewpoint and which will national electricity system by Redesa, has the ensure security of supply. object of keeping the average cost of electric- ity and, ultimately, the price to the consumer, as low as possible.

natural gas without which it is impossible for supply of petroleum products is totally or the State and the economy to function and to almost totally dependent on imports may, in cover the basic needs of the population, or principle, rely on grounds of public security also where such measures are designed to within the meaning of Article 36 for the pur- supply those forms of energy at the best pos- pose of requiring importers to cover a cer- sible price and with associated services of the tain proportion of their needs by purchases highest possible quality? In other words, from a refinery situated in its territory at may measures which have an effect equiva- prices fixed by the competent minister, lent to quantitative restrictions on imports although the quantities of petroleum prod- and exports and are adopted in the sectors in ucts covered by such a system must not in question be deemed to have been imposed any circumstances exceed the minimum sup- on grounds of 'public security' for the pur- ply requirement without which the operation pose of Article 36 of the Treaty only where of the essential public services and the sur- they are designed to ensure the supply of the vival of the inhabitants of the State con- minimum necessary quantities of electricity cerned would be affected. I think it is clear and natural gas, or is that also the case where from the paragraphs I have cited that the they are intended to ensure supplies under Campus Oil judgment is a carefully consid- the best conditions? ered step. The Court accepts, on the one hand, that a measure for ensuring the supply of petroleum products may, in principle, be justified on grounds of public security, but it stresses repeatedly that the object of such a measure must be to ensure the vital mini- mum without which the very existence of the State would be endangered and it would be impossible to meet the basic needs of the population.

84. There is likewise no foundation, in my view, for the arguments of the Netherlands Government and those of the French and Italian Governments to the effect that the exclusive import and export rights are justi- fied under Article 36 of the Treaty because, without them, it is impossible to plan effec- tively the development of the production potential necessary to meet future demand. Of course, it would be inconceivable to for- mulate and implement a national energy 83. When considered in that light, the defen- policy without a medium and long-term dant States' arguments that the exclusive plan, particularly in a sector such as electric- rights in question are justified on grounds of ity, where those responsible for taking deci- public security should, in my opinion, be sions must make allowance for the special dismissed. If measures which do not have the characteristics of electricity (dependency on particular, direct object of ensuring a mini- the grid, the security of which requires sup- mum supply of electricity and natural gas ply and demand to be absolutely matched at cannot be deemed to contribute to safe- all times, with no possibility of storage). I guarding public security for the purposes of also understand the Member States' submis- Article 36 of the Treaty, it is quite certain sions that the abolition of exclusive import that the retention of the contested rights can- rights and the resultant imports by indi- not be justified under Article 36 by the fact vidual operators would probably lead to that their abolition would endanger the electricity surpluses because medium or machinery for fixing tariffs which are reason- long-term production plans would have able for the average consumer or uniform taken account of the demand from those throughout the country (as claimed by all operators. But neither the Netherlands Gov- the defendant States), or would endanger the ernment, nor the Italian or French Govern- Optimum functioning of the national elec- ments have offered a convincing explanation tricity system' (as claimed by the Italian of why such surpluses should endanger secu- Government) or, finally, would undermine rity of supply, that is to say, the minimum attainment of the aims of a Member State's supply necessary to safeguard public secu- energy policy relating to diversification of rity. The submissions of the Netherlands the sources of energy used in that State and Government on this point refer to the

B — Article 90(2)

83 — According to Campus Oil (paragraph 36), if it is shown that certain national rules are justified by objective circum- stances corresponding to the needs of public security, 'the fact that the rules are of such a nature as to make it possible (a) Can Article 90(2) justify the derogation to achieve, in addition to the objectives covered by the con- from the provisions of the Treaty reding to cept of public security, other objectives of an economic nature which the Member State may also seek to achieve, the free movement of goods? does not exclude the application of Article 36'. However, in the present case to plead the strictly economic conse- quences of abolishing the exclusive rights is certainly not sufficient to deem them compatible with the Treaty if it is not shown that they are justified on grounds of public security, within the meaning of the term as used in this Opinion. 84 — For those reasons, mutatis mutandis, I am not persuaded by the arguments of the Italian and French Governments that the abolmon of the exclusive rights would deprive E N E L 86. In the alternative, the defendant States and G D F respectively of the opportunity to prepare a cor- rect estimate of the demand which it will be necessary to contend that, even assuming that the con- meet and would therefore also deprive them of the oppor- tested rights were found to be contrary to tunity to negotiate, from an advantageous position, for the importation of large volumes of electricity (in Italy's case) Articles 30, 34 and 37, they could neverthe- and natural gas (in the case of France). N o reason is given as to why the import, on the basis of 'large contracts', of less be deemed compatible with the Treaty quantities which may be shown to exceed the demand originally anticipated should direcdy jeopardize the mini- pursuant to Article 90(2), which provides as mum supply. follows: 'Undertakings entrusted with the

87. The Commission opposes those argu- 88. Although the position taken by the ments on the ground that Article 90(2) can- Court in the last sentence of the above para- not cover national measures contrary to the graph from Campus Oil may be explained provisions on the free movement of goods. by the place where the relevant provision That submission is based mainly on Campus appears among the Treaty rules relating to Oil which has already been cited several competition, and by the Court's concern not times. In that case (which concerned the to allow exceptions to the provisions on the interpretation of the Treaty provisions on the free movement of goods other than those set free movement of goods in relation to out in Article 36, the question whether that national provisions which required importers position is compatible with the actual word- to obtain a certain percentage of their sup- ing of the provision remains open. Having plies from a refinery on national territory), laid down the principle that undertakings the Greek Government contended, referring entrusted with the operation of services of to Article 90(2), that 'a refinery is an under- general economic interest are to be subject to taking of general economic interest and that all the rules contained in the Treaty, Article a State refinery could not, without special 90(2) provides for the possibility of derogat- measures in its favour, compete with the ing from those rules, without making any major oil companies'. In paragraph 19 of the distinction between them. Moreover, it is judgment, the Court made the following clear from the last paragraph of the provision observations on this point: 'Article 90(1) in question that the measures it covers may

affect directly not only the principles of meaning of Article 90(2) of the Treaty, and healthy competition but also intra- whether the application to that undertaking Community trade. S5 of certain provisions of the Treaty, including Article 30, could obstruct the performance of the particular task assigned to it, the Court stated first (paragraph 27) that it did not appear from the documents supplied by the national court or from the observations sub- mitted to the Court that dock work was of a general economic interest exhibiting special characteristics distinguishing it from other economic activities, and added that 'even if it 89. However, regardless of the foregoing were, [...] the application of the rules of the considerations, the Court's position in Cam- Treaty, in particular those relating to compe- pus Oil was not followed in later decisions. tition and freedom of movement, would be such as to obstruct the performance of such a task' (emphasis added). Finally, according to the judgment in Corbeau (paragraph 14), 87 Article 90(2) of the Treaty, correctly construed, 'permits the Member States to confer on undertakings to which they entrust the operation of services of general economic interest exclusive rights which may hinder the application of the rules of the In France v Commission cited in footnote 64, Treaty on competition in so far as restric- the Court described the objectives of Article tions on competition, or even the exclusion 90(2) in the following terms: 'In allowing of all competition, by other economic opera- derogations to be made from the general tors are necessary to ensure the performance rules of the Treaty on certain conditions, that of the particular tasks assigned to the under- provision seeks to reconcile the Member takings possessed of the exclusive rights'. A States' interest in using certain undertakings, similar point was made in paragraph 46 of in particular in the public sector, as an the Almelo judgment (cited in footnote 23). instrument of economic or fiscal policy with Nevertheless, in accepting in those judg- the Community's interest in ensuring com- ments that the Member Sutes may rely on pliance with the rules on competition and Article 90(2) in order not only to impose the preservation of the unity of the Common restrictions on competition, but also in some Market' (emphasis added). The judgment in instances to exclude all competition, the Mera Convenzionali Porto di Genova 86 is Court confirmed, in my opinion, the conclu- even clearer. In reply to a request for a pre- sion to which the actual wording of that pro- liminary ruling as to whether a dock-work vision puma facie leads, namely that Member undertaking and/or company is an undertak- States may in principle rely upon it in order ing entrusted with the operation of services of general economic interest within the

90. In principle, therefore, the Member States may rely on Article 90(2) to justify the exclusive rights in question. Of course, it remains to be seen whether the requirements of that provision are fulfilled for those rights, although contrary to Articles 30, 34 and 37, (aa) Netherlands to be regarded as nevertheless compatible with the general system of the Treaty. 89 Therefore, in paragraph (b), I shall consider whether, in relation to each of the defendant States in turn, the holders of the contested rights have been entrusted by the public authorities with the operation of a service of general economic interest and, if so, whether the application of the relevant rules of the Treaty, namely Articles 30, 34 and 37, 91. As I have already said (see paragraph 29 obstructs the performance of the particular of this Opinion), SEP was designated by task assigned to them. Then, assuming that Ministerial Order of 20 March 1990 as the the derogation from the rules of the Treaty only company entitled to import electricity which I have just mentioned is necessary for for public distribution in the Netherlands the performance of the particular tasks in (except with a voltage under 500 V). Under question, I shall consider, in paragraph (c), Article 2 of the EW, the undertaking holding whether nevertheless such derogation cannot that exclusive right, and undertakings hold- be accepted because it affects intra- ing licences for the construction or operation Community trade to such an extent that the of units producing electricity for public dis- interests of the Community are damaged. tribution, have 'a duty in common to ensure the efficient operation of the national public electricity supply at costs which are as low as 88 — That is the meaning which Advocate General Darmon also possible and in a socially responsible fash- gives to paragraph 14 of the Corbeau judgment. In his ion'. It seems to me there is no doubt that Opinion relating to the Almelo casc, cited in footnote 23, he observes (footnote 111) that the Court, in acknowledging this provision confers upon SEP the opera- that Member Sutes may rely on Article 90(2) of the Treaty in order to adopt measures excluding all competition, 'reap- tion of a service of general economic interest praised' the position it took in paragraph 19 of Campus for the purpose of Article 90(2) of the Treaty. Oil. 89 — For a list of the conditions under which it is possible, by Although that term must be construed virtue of Article 90(2), to disapply Treaty provisions, see strictly, given that the aforementioned provi- paragraph 26 of Mera Convenzionali Porto di Genova^ citedin footnote 86. sion permits derogation from the rules of the

93. Among the Dutch Government's sub- missions on this question, I think the follow- 92. The Commission is in no doubt that SEP has been entrusted with the operation of a service of general economic interest. Further- 93 — The complaint which led to Decision 91/50 referred to a more, by Decision 91/50, 92 on a complaint clause of an agreement signed in 1986 (that is to say, before the EW entered into force) by the electricity generation presented by local Dutch electricity distribu- undertakings and SEP. The clause granted SEP an exclusive right to import and export electricity and imposed on the tion undertakings, claiming that SEP and a parties an obligation to stipulate, in supply contracts with electricity distribution undertakings, that the latter should regional electricity distribution undertaking neither import nor export electricity. The Commission had infringed Articles 85 and 86 of the ruled that the clause infringed Article 85(1) of the Treaty in so far as it had the object or effect of restricting imports and Treaty, the Commission took the view exports of private industrial consumers. Nevertheless, no ruling was given on the question whether the same clause was compatible with the Treaty in so far as it prohibited distribution undertakings from importing electricity for public distribution. After observing that the ban on imports was laid down in Article 34 of the EW, after that Law came 90 — See Case 127/73 BRT [1974] ECR 157, paragraph 19. into force, the Commission stated (see paragraph 50 of Decision 91/50) that it would not 'pass judgment here on 91 — The Almelo judgment concerned certain questions from a the question whether such restriction of imports is justified Dutch court which, in the context of an arbitration pro- for die purposes of Article 90(2) of the Treaty' because 'to cedure, had to consider the validity of contracts signed by do so would be to anticipate the question whether the new regional and local electricity distribution undertakings Law is itself compatible with the Treaty'. The action which imposed on the latter a prohibition on importing brought against Decision 91/50 was dismissed by the judg- electricity for public distribution even before the EW took ment of 18 November 1992 of the Court of First Instance, effect. T-16/91 Renda md Others v Commission [1992] ECR 92 — Commission Decision 91/50/EEC of 16 January 1991 relat- 11-2417, which was partly set aside by the judgment of 19 ing to a proceeding under Article 85 of the EEC Treaty October 1995 of the Court of Justice, C-19/93 P Rendo and (IV/32.732 — IJsselcentrale and Others, OJ 1991 L 28, Others v Commission [1995] ECR 1-3319. p. 32.

ing point should be particularly borne in ply system, which must in all cases be kept at mind: Article 2 of the EW imposes on SEP a the lowest possible level. duty to ensure the efficient operation of the national public electricity supply at costs which are as low as possible. It may also be inferred from paragraph 14 et seq. and para- graph 113 of the defence that all the provi- sions of the EW relating to the fixing of elec- tricity tariffs are governed by the principle that the cost of operating the national elec- tricity supply system must be passed on in a balanced fashion to all consumers.

abolished. It points out, in paragraph 34 of generation undertakings according to the tar- the defence, that if it were abolished much of iff resulting from the said increase, called the the electricity generated in the Netherlands 'basic national tariff' ('LBT'). The generators would remain unused, which would lead add to the LBT the 10% of the generation ultimately (because it is obviously impossible cost which is not jointly managed and sup- to store surpluses for supply to consumers at ply the electricity to the distribution under- a later date) 94 to a rise in the cost of generat- takings at the tariff resulting from that increase, called the 'regional basic tariff' ing electricity domestically, which, moreover, ('RBT'), which fluctuates between certain would be borne solely by the undertakings maximum limits laid down on each occasion. which continued to obtain supplies from the Finally, the distributors supply the electricity national grid and, ultimately, through those to consumers at tariffs which must not undertakings, by their customers (final con- exceed certain maximum limits and which sumers), most of whom would not be in a vary according to the different categories of position, because of their low consumption,

Darmon in Almelo.

95. The summary of the arguments on each of the functions of which are performed by side shows that they differ on an important SEP. point. According to the Commission, to agree that the exclusive right in question was justified under Article 90(2), it would have to be shown in any case that its abolition would upset SEP's economic equilibrium. Accord- ing to the Netherlands Government, on the contrary, it is sufficient to show that the abo- lition of the exclusive right would make it impossible to observe one of the principles which govern the national electricity system and which, under the EW, must be applied by the holder of the exclusive right. This is the essential issue between the parties, as is clear from their submissions in the reply and the rejoinder. In its reply, the Commission, after stressing (paragraphs 35 and 36) that in its opinion, since SEP is not responsible for 96. In my opinion, the Commission's argu- supplying electricity to final consumers, it ment concerning the reasons which may jus- does not have the obligations set out in para- tify derogation from the Treaty under Article graph 48 of the Altneh judgment, which 90(2) is too narrow. Of course, I do not relates solely to a distribution undertaking, underestimate the fact that the exceptional adds (paragraphs 38 and 39) that the argu- nature of this provision demands particular ment of the Netherlands Government that care in construing and applying it. Neverthe- the exclusive right in question is necessary less, I think that since Article 90(2) permits for SEP to perform its task, consisting in the derogation from the Treaty to the extent nec- equitable apportionment of the cost of oper- essary for the performance of the particular ating the national electricity supply system, task assigned to an undertaking entrusted is irrelevant because the need for all electric- with the operation of services of general ity consumers to share in the cost of main- economic interest, Article 90(2) must be taining production capacity is not a reason regarded as intended to ensure not only the which would justify relying on Article 90(2) economic equilibrium of the latter undertak- of the Treaty. In its rejoinder (paragraphs 66 ing, 95 where such equilibrium is the mini- and 67), the Netherlands Government for its mum requirement for the performance of the part contends that, to justify the exclusive particular task, but also to ensure all the right by reference to Article 90(2), it is not other conditions necessary for that task. It is necessary to show that its abolition would sufficient if that task does not go beyond the upset SEP's economic equilibrium, but it is powers and responsibilities reasonably sufficient to show that abolition would inter- regarded as associated with the operation of fere with the basic principles of operation of a 'service of general economic interest' the national electricity supply system, some within the meaning of that term in Commu- nity Uw. Of course, on this question the Court of Justice always has the last word.

97. In view of what has been said, can SEP's would obstruct the performance of that 'par- exclusive import right be justified in the light ticular task' for the reasons stated above of Article 90(2) of the Treaty? I think the (paragraph 94). reply must be in the affirmative. Keeping the cost of generating electricity at the lowest possible level and sharing among consumers the generation cost and generally the overall cost of operating the electricity supply sys- tem are, in my opinion, principles imposed by the very logic governing the operation of a 'service of general economic interest'.

It seems to me that the abolition of that right, although not that the first two proposals are in such gen- threatening SEP's economic equilibrium, eral terms that it is impossible to determine whether they would actually ensure the complete fulfilment of SEP's obligations in relation to ensuring the lowest possible cost of generation and uniform distribution of the cost of operating the national electricity sup- ply system. With regard to the third pro- posal, I would point out that the desired alternative must be less restrictive of trade in the Community than the exclusive right in question. However, if the charge for use of the national transmission system is set at such a level that the importer of electricity for public distribution bears a cost for gener- 96 — Therefore the appearance of electricity surpluses which, for the reasons given above (paragraph 84), do not endanger ating national electricity which is exactly the security of the supply and cannot therefore be a ground of 'public security' for the purpose of Article 36 of the equal to that borne by a distributor who Treaty, nevertheless becomes important owing to the continues to obtain supplies in the Nether- adverse effect which they may have on the cost of generat- ing electricity, if the question is considered in the light of lands, the potential competitive advantage of Article 90(2). electricity generated outside the Netherlands, 97 — It must not be forgotten that undertakings with the right to import electricity for public distribution should, in view of because of its lower price, will be completely the fundamental principle of universal service governing neutralized and the objective of removing operators of services of general economic interest (sec Cor- beau and Almek, paragraphs 15 and 48 respectively), retain obstacles to the free movement of the prod- intact their right to use trie national supply system to meet their needs when they consider it necessary. uct in question will not have been attained.

99. In conclusion, I consider that, even if the its specific obligations in the performance of exclusive right to import electricity for pub- its task. lic distribution is a measure having equiva- lent effect to a quantitative restriction on imports and constitutes a form of prohibited discrimination between nationals of Member States regarding the conditions under which goods are procured and marketed, the grant of such a right to SEP is justified by the need for it to perform the particular task assigned to it in operating a service of general econ- omic interest. 101. The Italian Government contends in reply that the abolition of those rights would make it impossible for ENEL to perform its task and, in particular, its obligation to sup- ply electricity to consumers at low, stable prices in order to ensure the balanced national development. In its reply (para- graphs 8 and 9), the Italian Government adds that ENEL's obligation under Article 1 of the abovementioned Law N o 1643 of 1963, as construed by the Corte Constituzionale (bb) Italy (Italian Constitutional Court), is fulfilled by means of setting up and operating an inte- grated electricity distribution system through which it is possible to make up for losses in certain sectors with profits in oth- ers. However, according to the Italian Gov- ernment, the abolition of ENEL's exclusive rights would result in most large-volume consumers turning to foreign suppliers (since most such consumers are located in regions of northern Italy, which makes it easier to use other suppliers, as those regions are not 100. I have already mentioned (see para- far from Italy's land borders), thus depriving graph 36) that Law N o 1643 of 16 December E N E L of its main means of offsetting the 1962 assigned to ENEL the functions of the cost of distributing electricity, which is generation, importation and export, trans- increased by the need to ensure a regular mission, transformation, distribution and supply to each and every consumer, includ- sale of electricity throughout Italy, irrespec- ing those in remote areas or areas to which tive of its source. Consequently there is no access is difficult. The need to make up for doubt that E N E L is entrusted with the those losses would mean increasing the aver- operation of a service of general economic age price of electricity, to the detriment of interest within the meaning of Article 90(2) those consumers who, either because of their of the Treaty. This is not directly called into low consumption or because they are located question by the Commission, but it claims in regions from which access to foreign sup- that the Italian Government has not shown pliers is impossible or not economically that ENEL's exclusive rights to import and worthwhile, have no alternative but to obtain export electricity are necessary for fulfilling

102. In my opinion, the Italian Govern- ment's argument is persuasive in so far as it seeks to justify the maintenance of exclusive rights to import electricity. As repeatedly stated in Corbeau (paragraph 15 et seq.) and Almelo (paragraphs 48 and 49) cited above, the objective, in the context of a service of general economic interest, of applying uni- form tariffs so far as possible throughout a country 'irrespective of the specific situa- tions or the degree of economic profitability of each individual operation', 98 may require the establishment of a mechanism making it possible 'to offset less profitable sectors against the profitable sectors', " so that the need for profitable operation may in turn 103. O n the other hand, the Italian Govern- justify derogating from the rules of the ment has not put forward any convincing Treaty pursuant to Article 90(2). However, reasons why the abolition of the exclusive the abolition of ENEL's exclusive right of right to export electricity should impede the importation may, for the reasons stated by abovementioned task or any other particular the Italian Government, in the normal course task of ENEL. 10° of events interfere with the compensatory mechanism whereby ENEL sets off the results of unprofitable sectors against those 100 — According to the Italian Government, apart from the par- of the profitable ones. This possibility is suf- ticular task referred to at length in the body of this Opin- ion, ENEL has all the obligations, as stated in paragraph ficient, in my opinion, to justify the failure 48 of the Almelo judgment, of operators responsible for to comply with the Treaty by retaining that supplying electricity throughout the national territory, the obligation to encourage the selective use of energy, and right. Furthermore, the Commission's claim certain special obligations relating to protection of the environment. However, the Italian Government has made that ENEL's particular task described above no detailed submissions to show why the abolition of the could be performed by other means cannot exclusive right to import and/or export electricity would prevent the fulfilment of those obligations. be accepted, primarily because the alterna- In any case, the Italian Government's claim that the rights in question are supported by Articles 130a and 130b ofthe tives suggested by the Commission are Treaty is unfountfed. Those provisions, which require the Community (in formulating and implementing its policies and developing the internal market) and the Member Sutes (in conducting their economic policies) to take account of the need to promote the economic and social cohesion of the Community, cannot be seen as a basis for 98 — Sec Corbeau, paragraph 15, and Almelo, paragraphs 48 and the adoption by Member States of measures which 49. infringe fundamental provisions of the Treaty, such as 99 — See Corbeau, paragraph 17, and Almelo, paragraph 49. those relating to the free movement of goods.

(i) Exclusive rights relating to electricity 107. According to the French Government, EDF's obligation to observe the principle of equal treatment for customers is laid down by Article 24 of the General Conditions which, after being approved by means of a decree, were appended to the concession 105. EDF, which was made responsible, agreement signed by the State and EDF on under Law N o 46-628 of 9 April 1946, for 27 November 1958 (see Annex 4 to the the management of the nationalized electric- defence). That agreement granted EDF the ity undertakings, is clearly an undertaking right to operate the general electricity power entrusted with the operation of a service of supply, that is to say, the high-voltage grid general economic interest. The parties are which links all the points where electricity is not in agreement regarding the exact nature of its obligations in performing that func- tion. Among all the arguments of both par- ties on this question, the only ones relevant 101 — In its rejoinder (paragraph 38) the French Government, in response to the arguments in the Commission's reply, to the outcome of the present action are appears to claim that the abolition of the exclusive riehts in question would make it impossible for E D F to fulfil its those concerning the legal basis and the universal service obligation. However, the French Govern- scope of the obligations of E D F whose per- ment gives no spécifie, detailed reasons as to why it con- siders that the removal of the exclusive rights would pre- formance would be impeded, according to vent fulfilment of the latter obligation.

109. Finally, I cannot agree with the Com- mission in questioning whether EDF has a 'particular task' within the meaning of Article 90(2) of the Treaty in relation to the protection of the environment and town and country planning. It is true that the French Government does not refer, in its defence, to the legal basis of EDF's obligations in those two spheres. However, the rejoinder (para- graph 35) mentions the provisions of the 108. The Commission does not doubt that 'contrat de plan' signed by the State and E D F is under such an obligation. However, E D F for 1993-96 (see footnote 102), 103 by it does not consider that the General Condi- means of which EDF was given certain tions appended to the concession agreement specific obligations relating to protection of of 27 November 1958 or any other docu- ment show that E D F has a particular obliga- tion to supply electricity at the lowest pos- 102 — The French Government also refers to the 'contrat de sible prices. O n this point the French plan' signed by the State and E D F for the period 1993-96, Article 2 of which provides that E D F and the public Government nevertheless seeks to rely on authorities undertake to reduce the existing tariff levels by 1.25%. I think this 'contrat de plan' may be taken into Articles 20 and 22 of the General Condi- account in the present case as it had taken effect on the tions, entitled 'Fixing of maximum tariffs' date which, as the Court has consistently held (see Case C-105/91 Commission v Greece, cited in footnote 54, para- and 'Review of maximum tariffs' respec- graph 21, and Case C-123/94 Commission v Greece [1995] ECR 1-1457, paragraph 7), must be taken into account by tively. Although those provisions do not the Court in order to determine whether the failure expressly require EDF to adjust its tariffs to alleged by the Commission exists. Clearly the 'contrat de plan' for 1993-96 has been in force since 1 January 1993, the lowest possible level, in my opinion they and the two-month period allowed to the French Republic in the Commission's reasoned opinion of 26 November are as a whole inspired by that principle in 1992 had not expired by that date. determining the conditions under which 103 — Regarding the question whether the 'contrat de plan' can EDF's tariffs for supplying electricity may be taken into account in these proceedings, see footnote 102.

With regard to the obligation to ensure equal treatment for EDF's customers and the obli- gation to supply electricity at the lowest pos- sible price, the French Government contends that, if the exclusive import right were abol- ished, EDF's customers (and, what is more, those who are the biggest consumers) would turn to foreign sources of supply, which would necessarily offer more competitive 111. I find the French Government's argu- prices than those of EDF, and the resulting ments persuasive with regard to the impossi- exclusion of the latter from using those bility of EDF fulfilling its obligations to sup- sources would lead to an increase in the aver- ply electricity at the lowest possible cost and age price of electricity supplied by EDF, to ensure the equal treatment of customers if since the basis of the mechanism for setting the exclusive right to import it were abol- tariffs is the fixing by E D F of a 'single price' ished. For the reasons given by the French for electricity, by reference to the average Government, removal of that right might, in the ordinary course of events, lead to an increase in the average price of electricity, which would be borne precisely by those 104 — According to the case-law, in order for the question of the application of Article 90(2) of the Treaty to arise, the consumers who continued to obtain their operation of a service of general economic interest must supplies from E D F (unless its tariffs remain have been entrusted to a particular undertaking by 'a measure adopted by the public authorities' (see BRT, cited unchanged, which might endanger its finan- in footnote 90, paragraph 20; Case 172/80 Züchner [1981] ECR 2021, paragraph 7, and Case 66/86 Ahmed Saeed cial equilibrium) while, at the same time, Flugreisen [1989] ECR 803, paragraph 55). As I see it, not consumers who used foreign suppliers for only a unilateral declaration of intent in the form of a leg- islative or regulatory measure of a body exercising official the most part would always be able to turn authority, but also a declaration of intention of the same body in the context of a contractual relationship m a y b e to the national market, in reliance on the regarded as 'a measure adopted by the public authorities' principle of universal public service, when- in the sense indicated, whereby the operation of a service of general economic interest is entrusted to a particular ever foreign prices ceased to be advanta- undertaking or the obligations of that undertaking for that purpose are specified. geous. Furthermore, the Commission's claim

115. The Commission does not question that G D F is an undertaking entrusted with the operation of a service of general econ- omic interest. However, it has doubts as to 113. Finally, the French Government has not the exact nature of GDF's specific obliga- put forward any specific argument relating tions in operating that service and doubts

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116. The French Government observes, every respect, no matter who they may be firstly (see paragraph 20 of its defence), that (Article 21). 106 not only does G D F hold the exclusive rights in question, but it has also been entrusted with a function in the transmission and dis- tribution of natural gas. The transmission of natural gas through the high-pressure system for delivery to distributors and to industrial undertakings which obtain supplies direct from that system is the subject of a State

The principal concession-holder is GDF, but 4% of distri- bution is handled by 15 other public under- 105 — It should be observed that the provision referred to in the rejoinder as 'Article 23' of the standard conditions for the takings. concession of the natural gas transmission service is not the same as that shown as Article 23 in the copy of those conditions forming Annex VIII to the rejoinder. The latter Article 23 does not expressiv impose an obligation of equal treatment of customers by the concession-holder. 106 — In its defence the French Government contends that G D F also has an obligation to ensure the supply of natural gas at the lowest possible price, but does not refer to a specific legal basis for it. The French Government adds that G D F has specific obli- gations in relation to protection of the environment and town and country planning. However, it specifies as the legal basis for those obligations provisions which cannot

Likewise with regard to the legal basis for GDF's obligations con- each concession agreement (see Annex VIII cerning town and country planning, the French Govern- to the rejoinder), with any modifications ment refers to measures (Joint Ministerial Circular of 17 February 1993, as amended by Ministerial Circular of 5 necessary in each case, require the May 1995, and the 'contrat de plan' signed by the S u t e and G D F for 1994-96) which were adopted after the concession-holder to provide a continuous abovemenrioned cut-off date for the purposes of the supply of natural gas (Article 19) and to treat present action.

36 of the Treaty (see paragraph 78 supra) that 119. On the other hand, the French Govern- as, in the countries which produce natural ment's submissions make no specific, suffi- gas, production and marketing are normally ciently explicit mention of the potential controlled by State monopolies, G D F is impact of the abolition of the exclusive right compelled, in order to ensure the fulfilment to export natural gas on the fulfilment of of its obligation to provide a continuous GDF's obligations. supply, to sign contracts for exceptionally large quantities of gas which often contain onerous long-term obligations ('take or pay' clauses, contribution to costly investment programmes). If the exclusive import right were abolished, the only way in which G D F would be able to make up for the loss of cus- tomers, who, by signing short-term contracts 120. In conclusion, the maintenance of with foreign suppliers, would be able to GDF's exclusive right to import natural gas, obtain better prices than those offered by despite being a prohibited measure having an G D F (unless tariffs remained unchanged, at effect equivalent to a quantitative restriction the risk of upsetting GDF's financial equilib- on imports and also constituting a form of rium), would be to increase the tariffs for prohibited discrimination between nationals consumers who remain its customers. of Member States regarding the conditions Although the French Government puts for- under which goods are procured and mar- ward those arguments to show that the abo- keted, is justified by the need to ensure ful- lition of the exclusive rights would make it filment of GDF's particular task in operating impossible for G D F to fulfil its continuous a service of general economic interest. On supply obligation, they seem to me to prove the other hand, that consideration cannot that G D F would find it impossible to fulfil justify the maintenance of GDF's exclusive another obligation, that of the equal treat- right to export natural gas, which infringes ment of customers, 107 if the exclusive import Articles 34 and 37. rights were abolished, having regard also to the fact that customers of G D F who might use foreign suppliers in order to obtain bet- ter prices than those of domestic suppliers would always retain the right to return to G D F if and when they found it necessary, in reliance on the principle of universal public service. (dd) Spain

(c) Does the maintenance of exclusive rights affect the development of trade to such an extent as would be contrary to the interests of 123. The Spanish Government contends in the Community? its defence (page 32) that (1) pursuant to Article 2(1) of Law 49/84 on the unified operation of the national electricity system, Redesa has an obligation, in operating a ser- vice of general economic interest, to ensure that the national market is supplied with electricity at the lowest possible cost and in such a way that security and quality of sup- ply are ensured, and (2) the liberalization of 125. One final question remains: are the international trading in electricity 'would exclusive import rights existing in the Neth- affect' security of supply and 'would impede' erlands, Italy and France which, as we have supply of the national market at the lowest seen, are justified by the need to ensure per- possible cost, as it would only result in formance of the particular task assigned to 'upward pressure on prices'. However, no the holders of those rights, nevertheless explanation is given as to why the abolition incompatible with the Treaty because they of the exclusive rights referred to in the do not fulfil the requirement laid down in the second sentence of Article 90(2), that is to say because they affect the development of trade to such an extent as would be contrary 108 — It will be remembered that, in my opinion, that is not the to the interests of the Community? case (see point 41 et seq. above).

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COMMISSION v NETHERLANDS

— In the last few years, the holder of the exclusive right in question in the Nether- lands imported 15% of the total volume — With regard to natural gas, the French of electricity available through the public Government claims that 90% of French needs are met by imports and that in 1992 14% of the country's natural gas supplies were met by imports from the 109 — See to that effect Pin C of the Opinion of Advocate Gen- Netherlands (see paragraphs 24 and 27 of eral Rozès in Case 78/82 Commission v Italy, cited in footnote 41. its defence).

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110 — Cited in paragraph 3. I l l — With regard to the volume of trade in electricity through the major interconnected grids, see also the Opinion of Advocate General Darmon in Almelo, points 87 et seq. and 170 et seq.

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COMMISSION v NETHERLANDS

— order the French Republic, Ireland and the United Kingdom to bear their own costs.

(2) In Case C-158/94 Commission v Italy:

— declare that, by maintaining exclusive rights to export electricity, the Italian Republic has failed to fulfil its obligations under Articles 34 and 37 of the Treaty;

(4) Case C-l60/94 Commission v Spain:

— dismiss the application;

— order the Commission to pay the costs of the Kingdom of Spain;

— order the French Republic, Ireland and the United Kingdom to bear their own costs.

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