C-70/95

O P I N I O N OF MR FENNELLY — CASE C-70/95

O P I N I O N O F ADVOCATE GENERAL FENNELLY delivered o n 6 F e b r u a r y 1997

I — Introduction According to a Decree of 8 August 1985, the latter activities are directly and primarily ori- ented towards protecting citizens' health through prevention, care or physical or psy- chological therapy. ' This can include hospi- talization in sheltered accommodation for the care of elderly infirm persons who can- not be cared for at home. Where the neces- 1. The issue presented by the present case sary health-care services cannot be dissoci- comes to the Court from the Lombardy ated from general social welfare services, the Region of Italy. The Region pays for social regional authorities may conclude contracts, welfare services of a health-care character within the limits of the funds available from provided by non-profit-making operators of the Fondo Sanitario Nazionale (National residential homes for the elderly. Does the Health Fund, hereinafter 'the FSN'), with exclusion of commercially operated homes, public bodies and, in their absence, with pri- combined with the fact that the non-profit- vate bodies, which have appropriate staff and making homes are necessarily almost exclus- facilities to provide such care. The costs are ively Italian, bring the system into conflict in divided between the FSN and the social wel- particular with Article 52 of the Treaty? That fare authorities in accordance with the pro- is the principal question raised by a reference portion of health-care and of other social for a preliminary ruling in the context of an welfare elements of the service provided. 2 action brought by a Luxembourg company and by its Italian subsidiaries.

planning of social welfare services (hereinaf- totally incapable of leading an independent ter 'the 1986 Law') 3 guarantees, in confor- life, than on retirement homes, which cater mity with Article 38 of the Italian Constitu- for partially incapacitated persons. However, tion, the liberty of all persons, associations the prescribed staff ratios are also greater, and other bodies to engage in social welfare within eachof these two categories of resi- activities, subject to rules laid down by law. dential home, for those which conclude con- Pursuant to Article 50(1), (2) and (5) of the tracts pursuant to the 1980 Law than for 1986 Law, establishment of a residential those which are excluded from the contrac- home — whether a retirement home or shel- tual regime. tered accommodation — for elderly persons or for persons who are partially or totally unable to live independently is subject to an authorization from the relevant province. The criteria for authorization regarding, for example, the numbers and qualifications of personnel, the facilities available and the functioning of the home, are fixed by the Piano Regionale Soão Assistenziale (Regional Social Welfare Plan, hereinafter 'PSA'). 4 The PSA also fixes the conditions for entitlement to conclude a contract pursuant to Article 18(3) of the Legge Regionale Lom- bardia (Lombardy Regional Law) N o 39 of 11 April 1980 on the organization and func- tioning of local health and welfare centres (hereinafter 'the 1980 Law'). 5 In answer to a question posed by the Court, Italy indicated that the PSA currently in force 6 prescribes 4. Article 12(1) and (2) of the 1986 Law pro- the same structural norms (regarding vides for the PSA to fix the criteria for hygiene, fire prevention, heating, maximum entitlement to social welfare services, while number of guests per room, etc.) for all resi- establishing the principle of priority for per- dential homes for the elderly, but imposes sons in need and requiring that the costs of higher staffing ratios of nurses, doctors and services provided to other persons be sup- physiotherapists, to residents, on sheltered ported in whole or in part by themselves or accommodation, which caters for those by their local commune. 7 Article 59 deals

5 — Bollettino Ufficiale della Regione Lombardia N o 15 of gin, to benefit from social welfare services. 11 April 1980, 3rd Supplement. This requirement is set out in Article 50(4) of the 1986 Law, as well as in Article 18(1) and (7) of the 1980 Law. 6 — PSA for 1988-1990, approved by the Consiglio Regionale deüa Lombardia (Regional Council of Lombardy) by Decree 7 — Article 12(3) of the 1986 Law defines persons in need by ref- N o 871 of 23 December 1987, as modified and extended by erence to a variety of factors — family income, partial or Decree N o V / 1 2 2 of 12 February 1991 and by Decree total incapacity to live an independent life, risk of marginal- N o V/1425 of 7 March 1995. ization.

7. 425 from a total of 430 residential homes for the elderly have concluded contracts with the various USSLs in the Lombardy Region. n Of the residential places available, 6. Article 18 of the 1980 Law sets out the approximately 95% are provided by con- conditions for USSL contracts with private tracting homes (14.5% in the public sector, bodies. Article 18(2), read with Article 18(5) the remainder in private contracting states that private associations, foundations homes). 12 and institutions which intend participating in the planning and organization of USSL ser- vices shall be granted on request, by the Region, entitlement to enter into contracts with the USSLs. Article 18(3) of the 1980 Law makes acquisition of such entitlement conditional (a) on the bodies concerned 8. The Region funds the costs arising from being non-profit-making, 9 and (b) on proper social welfare services with a health-care levels of service, staff qualifications and orga- character (viz. staff costs for the personnel nizational and operational arrangements, as mentioned above) in contracting homes, up provided for in the PSA 10 Contracts are, to a maximum rate of reimbursement of pursuant to Article 18(10), for a term not LIT 50 000 per day in respect of each resi- exceeding three years, but renewable. They dent who is incapable of living indepen- dently, irrespective of financial need. On the other hand, as part of a separate social wel- 8 — Contracts regarding pure health care arc provided for by fare regime, where elderly residents are Legge Regionale Lombardia N o 833 of 3 December 1978. 9 — The PSA currently in force defines as non-profit-making bodies those which, according to their statutes, do not have objectives of an economic character or do not distribute their profits among their shareholders or members. 11 — Figures cited by the applicants in the main proceedings 10 — Pursuant to Article 18(9) of the 1980 Law, the contract sets from Bollettino Ufficiate della Regione Lombardia of out the obligation for the contracting bodies to provide 12 January 1995, 3rd Extraordinary Supplement. their services for the population groups indicated therein, 12 — Figures quoted by the applicants in the main proceedings and to bring the procedures for cntidement for individual from Progetto Obbiettivo Anziani Regione Lombardia, recipients of services into line with those laid down for approved by Decree N o 48808 of 1 March 1994 of the similar public services and facilities. Regional Council.

deemed to be in need, their residential costs the company was not non-profit-making, as in homes are reimbursed in whole or in part required by Article 18(3)(a) of the 1980 by their communes, depending on the Law. 16 The level of occupancy of the three resources available, irrespective of whether residential homes in Lombardy run by Sode- or not the homes in question have concluded mare SA and its subsidiaries is 45% (in the contracts with the relevant USSLs. 1 3 The case of Residenze Anni Azzurri Rezzato applicants in the main proceedings claim that S. r. 1.), 60% and 80%. The level of occu- the health-related costs of residential homes pancy of their home in the neighbouring for elderly persons incapable of leading an Regione Piemonte (Piedmont Region), where independent life, which are underwritten by public subventions for social welfare services the Region in the case of contracting homes, with a health-care character are available, is amount to approximately one-third of total 90%, while that of contracting homes in the costs. 14 Lombardy Region was 97.4% in 1995. Wait- ing lists also exist in Lombardy for places in contracting homes. The applicants indicated, in response to a question posed by the Court, that 2 % of their residents were non- Italians, who tended to stay for periods of between one and three years. Some 10% of the much greater number of enquiries received every year come from persons in other Member States. At the oral hearing, 9. Sodemare SA, a Luxembourg company, counsel for the applicants indicated that one owns in its entirety an Italian company, Anni non-Italian Community national had stayed Azzurri Holding S. p. A., which in turn fully in one of their residential homes in the past owns a number of companies which operate for a short period of post-operative conva- residential homes for elderly persons, includ- lescence, and that a number of queries had ing Residenze Anni Azzurri Rezzato S. r. 1. been received regarding such short stays. The last-named company is authorized by a Decree of the President of the province of Brescia to run sheltered accommodation for persons who are incapable of living indepen- dently. 15 It applied to the Regional Council of Lombardy on 29 April 1993 for the grant of entitlement to conclude a contract with the relevant USSL This request was refused by order of the Regional Council on 3 December 1993, pursuant to the negative opinion of the USSL, on the grounds that

'(1) Under Article 190 of the E E C Treaty, must a national provision which, although dealing with a matter falling "within the field of application" of the Community Treaties, nevertheless con- tains no statement whatsoever of the reasons on which it is based, be 11. By order of 2 March 1995, the national regarded as contrary to Community law court suspended the proceedings in order to with the result that that provision, lack- make a reference to the Court for a prelimi- ing a statement of reasons, cannot be nary ruling pursuant to Article 177 of the applied by the national court: that result Treaty establishing the European Commu- being limited to those cases — of which nity (hereinafter 'the Treaty'). In its order, the present case appears to be one — the national court observed that the appli- where the national provision creates an cant companies, while economically active, ambiguous state of affairs, in that it operate below their potential. The level of keeps the persons concerned in a state occupancy of their residential homes is low. of uncertainty regarding the possibilities Thus, their turnover, which is composed available to them of relying on Commu- largely of the residential fees paid by resi- nity law? dents, is very far from the optimal possible level. The national court remarked, further- more, that the effect of Article 18 of the 1980 Law was that the provision of the social wel- fare services at issue (those with a health-care character) is substantially reserved to non- [Such cases being those in which the profit-making companies. 17 Finally, 'the res- Member State has an "obligation" ervation of financing to non-profit-making (which, for the Italian Constitutional companies entails the consequence that those Court, is a "precise obligation": see who seek the service from a profit-making judgment of the Constitutional Court company must bear a financial burden to (4 July), 11 July 1989, N o 389, last sub- •which they are not subject if they seek the paragraph of paragraph 4 of the grounds of the judgment) to remove from its legal order those provisions which are incompatible with Community law: 17 — This point of view is put more strongly in the second ques- judgment of the Court of Justice in tion, which speaks of an entire category of services being reserved for non-profit-making companies. Case 104/86 [1988] ECR1799.]

(5) Do Articles 3(f), , 8 5, 85 and 86, possi- bly in conjunction with Article 90 of the Treaty, prohibit the legislation at issue which, under the machinery pro- (3) Do Articles 52, 58 and 59 of the Treaty vided by national law, prohibit national legislation which ham- pers the pursuit of a business activity by imposing on an undertaking established in a particular Member State, which wishes to establish itself in another Member State within the meaning of the Treaty, the alternative of either carrying on that activity on a non-economic basis — in that case adopting one of the (a) allows only companies with a par- legal forms which are listed exhaustively ticular legal structure to provide, but do not coincide with those that without charges to be borne by the facilitate establishment — or — if it undertaking, services which are intends carrying on the activity on an ancillary to the services provided by economic basis — accepting the burden it against payment; of services which should be provided at the expense of the public health service?

(4) Does Article 59 of the Treaty prohibit (b) allows them to present themselves national legislation which, by virtue of on the market as a category of the procedures laid down by domestic undertakings 'which, having similar law, directs the users of welfare services qualitative and quantitative charac- — who are allowed by the said domes- teristics, are described to users as a tic law to choose who is to provide largely unitary organization; them — solely towards undertakings to which, exclusively by reference to their legal structure, the State reimburses the 18 — Article 3(0 of the EEC Treaty is now Article 3(g) of the EC costs of the health services which all the Treaty.

15. Italy argues that the third, fourth and fifth questions should be held to be inadmis- sible because the national court gave either Ill — Observations cursory reasons (in the case of the third and fourth questions) or no reasons at all (in the case of the fifth) for seeking a preliminary ruling, referring instead to submissions of the parties in the main proceedings which 13. Written observations were received from were not reproduced in the order for refer- the applicants in the main proceedings, ence. It submits that this hinders interested

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B — The first question

18. It is important to draw a distinction 16. It is evident from the order for reference between legislative measures of general that this question relates to national legisla- application and executive decisions affecting tive measures and, in particular, to the provi- individuals. A requirement that reasons be sions of the 1980 Law. 2 0 The applicants in given, at the time of enactment, for any

19 — Sec Joined Cases 141/81 to 143/81 Holdijk [1982] 21 — Case 222/86 UNECTEF v HeyUns [1987] ECR 4097, para- ECR 1299, paragraph 6 of the judgment. graphs 14 and 15 of the judgment. See also Case C-249/88 20 — National measures arc understood throughout this Opinion Commission v Belgium [1991] ECR 1-1275, paragraph 25; to include measures adopted by competent public authori- Case C-340/89 Vlassopoulou [1991] ECR 1-2357, para- ties at levels below that of the State itself, such as regional, graph 22; Case C-19/92 Kraus v Land Baden-Württemberg provincial or local authorities. [1993] ECR 1-1663, paragraph 40.

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fore, I will concentrate exclusively, in this Treaty to Sodemare's relations with its resi- part of my analysis, on answering the third dents and potential residents from Member question. States other than Italy will be examined under the rubric of the fourth question. 25

The relevance of Article 59 of the Treaty Social welfare systems and the Treaty

22. The third question refers to Articles 52, 23. It is necessary, before proceeding further, 58 and 59 of the Treaty. The establishment of to examine whether the contracting regime an undertaking or self-employed person in a in force in Lombardy, because it forms part Member State is assessed by reference to the of a social welfare system, escapes the reach permanence of its activities relative to those of the cited Treaty provisions. Both Italy and of a provider of services who moves to the Netherlands rely upon the decision of another Member State to pursue his activity the Court in Poucet and Pistre v AGF and there only on a temporary basis. Establish- Caricava. 26 The latter, in particular, points ment is marked by participation by an out that the Court's decision in Duphar v undertaking or self-employed person on a Netherfønds27 confirms the principle that stable and continuous basis in the economic Community law does not impinge upon the life of a Member State other than that of ori- competence of Member States to establish gin. 24 It is clear, therefore, that Sodemare their own social security systems. and its subsidiaries, in so far as they engage in economic activity through their perma- nent, continuously operating residential homes for the elderly in Lombardy, must be deemed to have exercised their right of establishment there, rather than to be tempo- rary providers of services in Lombardy from another Member State, such as Luxembourg. 24. In Höfner and Elser,28 the Court stated I shall therefore consider only Articles 52 to that, in the context of competition law, the 58 of the Treaty in answering this question. The possible application of Article 59 of the

concept of an undertaking encompasses that its analysis applies more broadly. In every entity engaged in an economic activity, Garcia 30 the Court followed the Opinion of regardless of the legal status of the entity and Advocate General Tesauro to the effect that the way in which it is financed. In Poucet the Third Non-life Insurance Directive 31 and Pistre, two State-controlled non-profit- could not regulate the field of social security making bodies demanded payment of com- because it 'was adopted on the basis of pulsory contributions to the respective social Treaty provisions pursuing freedom of estab- welfare schemes which they managed. These lishment and freedom to provide services demands were resisted on the ground that (namely Articles 57(2) and 66)', whereas the system infringed Community compe- 'social security matters are governed by dif- tition law; the two individuals in question ferent, specific provisions'. 32 claimed the right to take out equivalent pri- vate insurance. The Court, however, reiter- ated the principle laid down in Duphar and held that the bodies were not engaged in an economic activity. The system of compul- sory contributions was indispensable to the principle of solidarity and the exclusively social function fulfilled by the schemes. That 26. The principle of solidarity was an essen- entailed, for one scheme, redistribution of tial element in the two cases just cited. By income and, for the other, financing of way of contrast with Poucet and Pistre, the retired workers by active workers, as well as Court has held a non-profit-making body solidarity between schemes, whereby sur- entrusted with the management of an pluses would be transferred between optional supplementary, though statutory, schemes as the need arose. The practical old-age pension scheme for self-employed management of the schemes, regarding levels farmers, where there were extremely limited of contribution and benefit, was governed in elements of solidarity, to be carrying on an detail by law. 29 economic activity in competition with life- assurance companies. 33

29. Some general points can be drawn from this very diverse case-law, for the purpose of applying Article 52 of the Treaty. First, the existence of systems of social provision established by Member States on the basis of 28. It does not follow, however, that Mem- the principle of solidarity does not consti- ber State social welfare systems, organized tute, as such, an economic activity, so that on the basis of solidarity, are, none the less, any inherently consequent restriction on the free from compliance with Treaty rules. free movement of goods, services or persons Member States may not discriminate against imports in the choice of medicines whose costs are reimbursed. 35 By the same token, rules which specify laboratories which 37 — Case C-3/88 Commission v Italy [1989] ECR 4035, para- graphs 2 and 9 of the judgment- qualify for reimbursement of the cost of 38 — Case 307/84 Commission v France [1986] ECR 1725 regard- clinical analyses 36 or companies which may ing nurses in the public health system; Case C-473/93 Commission v Luxembourg [1996] ECR 1-3207 regarding tender to provide data-processing systems posts in the public educational and health systems. for public authorities, including the public 39 — See Case 63/86 Commission v Italy [1988] ECR 29 and Case C-484/93 Svensson & Gustavsson v Ministre du Loge- health system, must exclude discrimination ment et de l'Urbanisme [1995] ECR 1-3955 regarding access to social housing assistance; Case 186/87 Cowan v Trésor Public [1989] ECR 195, regarding public criminal injuries

graph 15. Court, in paragraph 10 of both judgments, sutes that, while the Member Sutes have retained legislative competence in 35 — Duphar, cited above, paragraphs 16 and 21 of the judgment; the field of social security for self-employed persons, in the Case C-249/88 Commission v Belgium, cited above, para- absence of Community legislation, they are, none the less, graph 31. under an obligation to observe the requirement of 36 — Case 221/85 Commission v Belgium [1987) ECR 719, para- Article 52 of the Treaty that restrictions on freedom of graphs 9 to 11 of the judgment. establishment be abolished.

31. I consider the instant case to be one to which the Treaty rules apply. The costs incurred by contracting homes in providing social welfare services of a health-care char- acter are reimbursed from public funds, on the basis of solidarity between the general population and elderly members of society. However, in contrast with the circumstances of Poucet and Pistre, neither the financing of this element of the social welfare system, nor the formal standard of provision required of contracting homes, would be affected if the rules on eligibility to conclude contracts 30. Secondly, the relations of other persons, with the USSLs were subject to the Treaty as providers of goods or services, with such provisions on establishment. Authorization systems of social provision can, none the to operate a residential home is contingent less, be economic in character. Community on compliance with standards of care and law requires that such systems comply with facilities and personnel levels specified by Treaty rules in so far as they affect the econ- public authorities, irrespective of the charac- omic activities of others in ways which are ter, profit-making or otherwise, of the pro- not essential to the achievement of their prietor. The higher standards applied to con- social objectives. In the cases discussed in tracting homes cannot affect this. Beyond paragraph 28, the particular implementing having to observe these basic regulatory provisions at issue were ones which could be requirements, contracting homes outside the made subject to Treaty rules on freedom of public sector sensu stricto are independently movement without undermining the opera- managed. In addition, it should be observed tion of the system. Thus, to the extent that Member States co-opt private economic that health care constitutes only a part of the operators into their social security systems, activity of such homes. The residential or contract out the provision of certain ben- aspects of their activities are, as has been out- efits to such operators, or subsidize the lined, subject to a different social welfare activities of a social character of such opera- regime, based on means, with the result that

The existence of discrimination 33. The Court had occasion in O'Flynn v Adjudication Officer 44 to analyse the various types of factual circumstances which have arisen in the Court's case-law in which indi- rect discrimination against workers o n grounds of nationality was deemed to exist: 32. I will now examine whether the confine- ment to non-profit-making private bodies of status to conclude contracts with USSLs for provision of social welfare services with a health-care character, pursuant to

paragraph 29. prohibition of all discrimination on grounds 44 — Case C-237/94 [1996] ECR 1-2617. The footnotes t o the of nationality, and I will have recourse to the uotation which follows arc the references to case-law in âic original text. 45 — See Case 41/84 Pinna v Caisse d'Allocations Familiales de la Savoie [1986] ECR 1, paragraph 24 of the judgment; Casc 33/88 Allué and Another v Università degli Studi di Venezia [1989] ECR 1591, paragraph 12; and Case C-27/91 41 — The place of registration of a company, while indicating its Le Manoir [1991] ECR 1-5531, paragraph 11. 'nationality' in most contexts, may in some circumstances be more readily assimilable to the place of residence of 46 — See Case C-279/89 Commission v United Kingdom [1992] natural persons, which can be a justifiable ground of dis- ECR 1-5785, paragraph 42 of the judgment, and Case tinction, for example, in the field of taxation. Sec Case C-272/92 Spotti v Freistaat Bayern [1993] ECR 1-5185, 270/83 Commission v France [1986] ECR 273, para- paragraph 18. graphs 18 and 19 of the judgment 47 — See Case C-l 11/91 Commission v Luxembourg [1993] 42 — Case 22/80 Boussac v Gerstenmeier [1980] ECR 3427, para- ECR 1-817, paragraph 10 of the judgment, and Case graph 9 of the judgment; Case C-3/88 Commission v Italy, C-349/87 Paraschi [1991] ECR 1-4501, paragraph 23. cited above, paragraph 8; Case C-l/93 Halliburton Services 48 — See Case C-175/88 Biehl [1990] ECR 1-1779, paragraph 14 v Staatssecretaris van Financiën [1994] ECR 1-1137, para- of the judgment, and Case C-204/90 Bachmann v Belgium

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19. It is otherwise only if those provisions such considerations, which are purely sub- are justified by objective considerations jective.' independent of the nationality of the work- ers concerned, and if they are proportionate to the legitimate aim pursued by the national law. 49

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States are equivalent. 56 It is not the distinc- 'charity begins at home' and most charitable tion between commercial and non-profit- endeavour in this field takes place at making bodies as such which is of interest in national, regional or local level. This is cer- the present case, but rather, the question tainly the case in Lombardy, as all of the pri- whether the favoured type of body is pre- vate contracting homes are run by bodies dominantly domestic relative to other types. based in the Region. Thus, we are permitted If a Member State were to single out for to presume that non-Italian companies favour or disadvantage any one or more of would be unwilling to assume a non-profit- the multitude of legal forms of business making legal form in order to operate in enterprise among the broad categories of Lombardy. 57 As in O'Flynn, the merits of corporate or unincorporated bodies, partner- the motives of commercial companies rela- ships, companies, public and private, limited tive to those of non-profit-making compa- and unlimited, it would equally be called nies are not relevant. 5S As we have seen, it is upon to provide objective justification if the also irrelevant that Italian commercial com- result were to favour in fact its own nation- panies are prevented from concluding con- als. tracts with USSLs in Lombardy, or that non- profit-making companies from other regions of Italy may be no more attracted to estab- lish in Lombardy than companies from other Member States. 59

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between two categories of taxpayer 'may for the elderly, pursuant to Article 50 of constitute discrimination within the meaning the 1986 Law and to the more detailed terms of the Treaty where there is no objective dif- of the PSA. These provisions define the ference between the situations of the two standard of care and facilities required of such as to justify different treatment in that homes, irrespective of ownership. Contrary regard'. 61 Therefore, while there are evident to Italy's submission, it is irrelevant that differences between non-profit-making and contracting homes are required to observe commercial companies, it is necessary to higher standards as regards levels of establish whether objective differences exist health-care personnel. Even if a commercial which justify the difference in treatment at company were willing to comply with these issue in the present case. 62 requirements, it would be excluded from entitlement to conclude a contract. This is not a case of objective differences between the parties involved. Rather, the difference in the standard of care required to be provided by contracting and non-contracting homes arises from the same legal regime which gives rise to the discrimination. Furthermore, the health-care costs of contracting homes are fully reimbursed, subject to specified ceilings. It has not been suggested that there is any relationship between the additional costs imposed by higher personnel levels and the reimbursement. There is no material 37. As regards the provision of publicly difference between the non-health-care funded social welfare services of a health- (i. e. residential) services provided by care character, non-profit-making and com- commercial and non-profit-making bodies, mercial companies, in my view, can perform as they are required to perform the same the same function. They are both subject to tasks and to observe the same standards, and authorization to operate residential homes are subject to the same reimbursement regime regarding needy residents.

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the Regions to limit participation in the con- regard, as existing non-profit-making homes. tractual regime to those bodies for whom the Indeed, this requirement already seems to be pursuit of social objectives is the first prior- implicit in Article 18(10) and (11) of the 1980 ity. Thus, public monies were expended Law. Such an approach would be more exclusively on the basic cost of providing transparent and less restrictive of the exercise health care to the homes' elderly residents, of Community-law rights than outright without resources being diverted to provide exclusion from the regime. Commercial a profit to the proprietors. Italy referred at homes could continue to seek profit from the oral hearing to the traditional social role the purely residential aspect of their activities of religious charitable institutions, which or from additional health-care services pro- were seen as being more committed than vided at residents' own expense. Fourthly, commercial companies to the assistance of the admission of commercial companies to the poor. As they were non-profit-making, the contractual regime would not entail the the subventions provided by the Region exclusion of traditional charitable institu- were an important source of funds. Further- tions from the system. more, health-care services could not, in their case, be financed by profits from other aspects of their activities.

The relevance of Article 90(2) of the Treaty

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contracting homes were deemed to be under- nationality, and is, thus, a prohibited restric- takings entrusted with the operation of ser- tion on freedom of establishment. vices of general economic interest, I do not think that this would change the outcome of the above analysis. Article 90(2) permits a derogation only in so far as the application of Treaty rules would obstruct the perfor- mance, in law or in fact, of the particular tasks assigned to the undertakings in ques- D — The fourth question tion. I observed at paragraph 31 above that neither the financing of social welfare ser- vices of a health-care character in residential homes for the elderly nor the formal stan- dard of provision would be undermined by the application to the Lombardy Region of the Treaty rules on freedom of establish- ment. In paragraph 37, I have indicated that no objective difference exists between non- 42. In order to answer the fourth question, profit-making and commercial homes as it is necessary to establish whether the appli- regards the performance of the tasks cants in the main proceedings are in a pos- required of them by law which would justify ition to rely upon the Treaty provisions on the exclusion of the former from the con- services. In my view, they are not. tractual regime. In these circumstances, the condition for application of Article 90(2) of the Treaty is not satisfied.

43. It is clear from, inter alia, the decision of the Court in Alpine Investments that 'the Conclusion regarding the second and third right freely to provide services may be relied questions on by an undertaking as against the State in which it is established if the services are pro- vided for persons established in another Member State'. M This view is in no sense inconsistent with the statement in Gebhard that 'the provisions relating to services apply only if those relating to the right of estab-

Iishment do not apply'. 65 The latter proposi- 45. The Court observed in Procureur du Roi tion, which is reflected in the view I have v Debauve67 that 'the provisions of the expressed in paragraph 22 of this Opinion, Treaty on freedom to provide services cannot indicates that an undertaking deemed to have apply to activities whose relevant elements become established in a Member State other are confined within a single Member than that of its origin cannot simultaneously State'. 68 The Court stated in Steymann v be deemed to provide services in that State. Staatssecretaris van Justitie 69 that '[i]t is clear It may, however, from that State, engage in from the actual wording of Article 60 that an the provision of services in, or to residents activity carried out on a permanent basis or, of, a third Member State (or even its State of in any event, without a foreseeable limit to its duration does not fall within the Commu- origin) and Articles 59 and 60 will apply. nity provisions concerning the provision of services. O n the other hand, such activities may fall within the scope of Articles 48 to 51 or Articles 52 to 58 of the Treaty, depending on the case'. It concluded that 'Articles 59 and 60 of the Treaty do not cover the situa- tion where a national of a Member State goes to reside in the territory of another Member State and establishes his principal residence there in order to provide or receive services there for an indefinite period'. 70

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the activity in question are not confined anomalous if such persons were treated as within a single Member State, such as where recipients of services while workers and self- a person provides services of limited dura- employed persons whose residence in the tion in a Member State other than that in Member State in question was equally per- which he is established to a recipient estab- manent or indefinite were not. 74 The entitle- lished in the same State as the provider. 71 ment of permanent residents to rely upon The element of 'transnational "trade" in the services provisions of the Treaty qua products which are not "goods'" is thereby recipients would otherwise vary according to preserved. 72 whether the person in question was engaged in economic activity, and could therefore vary over time, even in the case of any given individual.

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SODEMARE A N D OTHERS v REGIONE LOMBARDIA

78 — Joined Cases C-140/94, C-141/94 and C-142/94 DIP and 76 — This is consistent with the position taken by Advocate Others v Comune di Bassano del Grappa and Comune di General Lenz at paragraphs 28 and 29 of his Opinion in Chioggia [1995] ECR 1-3257, paragraph 14 of the judgment Cowan, cited above, who favoured reasoning ex ante, by As regards Article 85 of the Treaty, see also Case 267/86 which the status of a recipient of services is determined at Van Eycke v ASPA [1988] ECR 4769, paragraph 16, Case the beginning of the journey, over an ex post approach C-185/91 Reiff [mi] ECR 1-5801, paragraph 14 and Case focusing on the services actually received. C-153/93 Delta Schiffahrts-und Speditionsgesellschaft 77 — See Alpine Investments, cited above, paragraph 19 of the [1994] ECR 1-2517, paragraph 14; as regards Article 86, see judgment. Case 13/77 INNO v ATAB [1977] ECR 2115, paragraph 31.

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O P I N I O N O F MR FENNELLY — CASE C-70/95

51. The Court has indicated that the simple fact of creating a dominant position by granting special or exclusive rights within the meaning of Article 90(1) of the Treaty is not

79 — Aet/f, cited above, paragraph 15 of the judgment; Delta Schiffahrts-und Speditionsgesellschaft, cited above, para- graph 15. 52. I conclude that the circumstances 80 — Van Eycke, cited above, paragraph 16 of the judgment; Reiff, cited above, paragraph 14; Delta Schiffahrts-und Spe- described in the fifth question do not ditionsgeseUschaft, cited above, paragraph 14. amount to a breach of Articles 3(g), 5, 85, 86 81 — For a collective dominant position to exist, according to the judgments of the Court in Case C-393/92 Almelo [1994] or 90 of the Treaty. E C R 1-1477, paragraph 42, and in DIP, cited above, para- graph 26, the undertakings in the group must be linked in such a way that they adopt the same conduct on the mar- ket, which has not been established. The Court stated, at paragraph 27 of its judgment in DIP, that a salient feature of a collective dominant position would be that traders did 82 — Case 311/84 CBEM [1985] ECR 3261, paragraph 17 of the not compete against one another, which has not been judgment; Hafner and Elser, cited above, paragraph 29. shown to be the case in respect of contracting homes in the 83 — Höfner and Eher, cited above, paragraphs 30 and 31 of the Lombardy Region. judgment.

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SODEMARE AND OTHERS » REGIONE LOMBARDIA

V — Conclusion

53. On the basis of the foregoing analysis, I recommend that the Court rule as fol- lows: