C-70/95

Anni Azzurri Rezzato Sri,

supported by

Federation des Maisons de Repos Privées de Belgique (Femarbel) ASBL,

and

Regione Lombardia,

on the interpretation of Articles 3(g), 5, 52, 58, 59, 85, 86, 90 and 190 of the EC Treaty,

after considering the written observations submitted on behalf of:

— Sodemare SA, Anni Azzurri Holding SpA and Anni Azzurri Rezzato Sri, by G. Conte and G. Giacomini, of the Genoa Bar, and G. Tanzella, of the Milan Bar,

— Federation des Maisons de Repos Privées de Belgique (Femarbel) ASBL, by V. Tavormina, of the Milan Bar,

— the Italian Government, by Professor U. Leanza, Head of the Legal Service of the Ministry of Foreign Affairs, acting as Agent, assisted by D. Del Gaizo, Avvocato dello Stato,

— the Netherlands Government, by J. G. Lammers, acting Legal Adviser, acting as Agent,

— the Commission of the European Communities, by E. Traversa, of its Legal Service, acting as Agent,

Judgment

1 By order of 2 March 1995, received at the Court Registry on 10 March 1995, the Tribunale Amministrativo Regionale per la Lombardia (Administrative Court for the Lombardy Region) referred to the Court of Justice for a preliminary ruling under Article 177 of the EC Treaty five questions on the interpretation of Articles 3(g), 5, 52, 58, 59, 85, 86, 90 and 190 of the EC Treaty.

2 Those questions were raised in proceedings brought by the Luxembourg company Sodemare SA (hereinafter 'Sodemare') and two Italian companies, Anni Azzurri Holding SpA and Anni Azzurri Rezzato Sri, for the annulment, first, of Article 18(3)(a) of Legge Regionale Lombardia (Lombardy Regional Law) N o 39 of 11 April 1980 concerning the organization and functioning of local health and welfare centres {Bollettino Ufficiale detta Regione Lombardia N o 15 of 11 April 1980, 3rd supplement, hereinafter 'the 1980 Law'), second, of Order N o 2157 of 3 December 1993 of the Regione Lombardia (Lombardy Region) rejecting their request for approval to enter into contractual arrangements under which they would be reim- bursed for providing social insurance services of a health-care nature and, finally, of Opinion N o 41 of 7 September 1993 issued by the local health and welfare centre. The Federation des Maisons de Repos Privées de Belgique (Femarbel) inter- vened in support of those three companies.

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3 The Italian Decree of 8 August 1985 (GURI N o 191 of 14 August 1985, p. 5727), laying down guidelines and coordinating measures for the autonomous regions and provinces regarding activities of a health-care nature linked with social welfare, draws a distinction between direct social welfare as such and social welfare of a health-care nature. The former includes, in particular, hospitalization in non- hospital sheltered accommodation which fully takes the place, even temporarily, of family care. Social welfare of a health-care nature, for its part, is directly and pri- marily intended to protect the health of citizens through prevention, care and physical and psychological therapy.

7 Pursuant to Article 18(3) of the 1980 Law, a condition for such suitability is that the body in question must be non-profit-making.

s Under Article 18(5) of the 1980 Law, possession of a certificate of suitability entitles the holder to conclude contracts with USSLs. Article 18(10) provides that the contracts are to govern financial relations between the relevant public contract- ing authority and the private operator and also provides for the form of reimburse- ment for each service on the basis of predetermined tariffs within the limits set by the regional social welfare plans, under which, in any event, the actual costs are reimbursable.

9 In addition, Article 50 of the 1986 Law makes management of a home for old people or for people who are partially or entirely unable to live independently subject to the grant of an operating permit issued by the authorities of the prov- ince where the home is situated.

io According to the documents before the Court, the regional social welfare plan in force at the material time, as approved by the Lombardy Regional Council, imposes for old people's homes which have been permitted to enter into contrac- tual arrangements stricter requirements regarding staff than those applicable to homes which have no such arrangements. The regional authorities finance the costs of social welfare services of a health-care nature provided in homes with contrac- tual arrangements up to a specified reimbursement ceiling per day for each resident who is not capable of living independently, regardless of the extent of the latter's needs.

is It also observed that the effect of the article at issue was that the provision of social welfare services of a health-care nature was essentially reserved to non-profit- making companies. The result of reserving public financing to such companies was to make users of the services provided by profit-making companies bear a financial burden to which they would not be subject if they sought the same service from a non-profit-making company.

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JUDGMENT O F 17. 6. 1997 — CASE C-70/95

i6 In those circumstances, the Tribunale Amministrativo Regionale decided to stay proceedings pending a preliminary ruling from the Court of Justice on the follow- ing questions:

'1. Under Article 190 of the EEC Treaty, must a national provision which, although dealing with a matter falling "within the field of application" of the Community Treaties, nevertheless contains no statement whatsoever of the reasons on which it is based be regarded as contrary to Community law with the result that that provision, lacking a statement of reasons, cannot be applied by the national court: that result being limited to those cases — of which the present case appears to be one — where the national provision creates an ambiguous state of affairs, in that it keeps the persons concerned in a state of uncertainty regarding the possibilities available to them of relying on Com- munity law?

[Such cases being those in which the Member State has an "obligation" (which, for the Italian Constitutional Court, is a "precise obligation": see judgment of the Constitutional Court (4 July), 11 July 1989, N o 389, last sub- paragraph of paragraph 4 of the grounds of the judgment) to remove from its legal order those provisions which are incompatible with Community law: judgment of the Court of Justice in Case 104/86 [1988] ECR 1799. This obli- gation has been mentioned by the Court "on several occasions".]

5. D o Articles 3(f), 5, 85 and 86, possibly in conjunction with Article 90, of the Treaty, prohibit the legislation at issue which, under the machinery provided by national law,

(a) allows only companies with a particular legal structure to provide, without charges to be borne by the undertaking, services which are ancillary to the services provided by it against payment;

(b) allows them to present themselves on the market as a category of under- takings which, having similar qualitative and quantitative characteristics, are described to users as a largely unitary organization;

(c) makes it possible to channel towards the undertakings referred to in para- graph (b) the demand for welfare services provided to old people;

(d) allows imposition on undertakings of the obligation to provide, at their own expense, services ancillary to those provided by them in return for payment;

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i9 The obligation to state reasons laid down in Article 190 of the Treaty concerns only acts of the institutions. It is true that Community law imposes the obligation to state reasons for national decisions affecting the exercise of a fundamental right conferred on individuals by the Treaty (see, in particular, Case 222/86 UNECTEF v Heylens and Others [1987] ECR 4097, paragraphs 14 to 17). However, in view of its purpose, such an obligation concerns only individual decisions adversely affect- ing individuals against which the latter must have some remedy of a judicial nature, and not national measures of general scope.

20 The answer to the first question must therefore be that Community law, and Article 190 of the Treaty in particular, does not lay down conditions concerning the statement of reasons for national rules of general scope which fall within the sphere of Community law.

The second, third, fourth and fifth questions

2i By these questions, the national court seeks essentially to ascertain whether Articles 3(g), 5, 52, 58, 59, 85, 86 and 90 of the Treaty preclude a Member State from allowing only non-profit-making private operators to participate in the run- ning of its social welfare system by concluding contracts which entitle them to be reimbursed by the public authorities for the costs of providing social welfare ser- vices of a health-care nature.

25 As regards Artide 58 of the Treaty, taken in isolation (second question), it must be borne in mind that the effect of that provision is to assimilate, for the purpose of giving effect to the chapter relating to the right of establishment, companies or firms formed in accordance with the law of a Member State and having their registered office, central administration or principal place of business within the Community, to natural persons who are nationals of one of the Member States, although non-profit-making companies are excluded from the benefit of that chapter (see Case 182/83 Fearon v Irish Land Commission [1984] ECR 3677, paragraph 8). Since that provision does no more than define the class of persons to w h o m the provisions on the right of establishment apply, it cannot preclude, as such, national rules of the kind at issue in the main proceedings.

26 As regards Article 52 of the Treaty, read in conjunction with Article 58 thereof (third question), it must be borne in mind that the right of establishment with which those provisions are concerned is granted both to natural persons who are nationals of a Member State of the Community and to legal persons within the

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meaning of Article 58. Subject to the exceptions and conditions laid down, it allows all types of self-employed activity to be taken up and pursued on the territory of any other Member State, undertakings to be formed and operated, and agencies, branches or subsidiaries to be set up (Gebhard, cited above, paragraph 23).

27 In assessing the compatibility of the non-profit condition with those provisions of the Treaty, it must first be borne in mind that, as the Court has already held in Case 238/82 Duphar and Others v Netherlands State [1984] ECR 523, paragraph 16, and Joined Cases C-159/91 and C-160/91 Poucet and Pistre v AGF and Can- cava [1993] ECR 1-637, paragraph 6, Community law does not detract from the powers of the Member States to organize their social security systems.

3i According to the Italian Government, application of the non-profit condition has been found to represent the most logical approach, having regard to the exclusively social aims of the system at issue in this case. The choices made in terms of orga- nization and provision of assistance by non-profit-making private operators are not influenced by the need to derive profit from the provision of services so as to enable them to pursue social aims as a matter of priority.

32 In that regard, it must be stated that, as Community law stands at present, a Mem- ber State may, in the exercise of the powers it retains to organize its social security system, consider that a social welfare system of the kind at issue in this case neces- sarily implies, with a view to attaining its objectives, that the admission of private operators to that system as providers of social welfare services is to be made sub- ject to the condition that they are non-profit-making.

33 Moreover, the fact that it is impossible for profit-making companies automatically to participate in the running of a statutory social welfare system of a Member State by concluding a contract which entitles them to be reimbursed by the public authorities for the costs of providing social welfare services of a health-care nature is not liable to place profit-making companies from other Member States in a less favourable factual or legal situation than profit-making companies from the Mem- ber State in which they are established.

34 In view of the foregoing, the non-profit condition cannot be regarded as contrary to Articles 52 and 58 of the Treaty.

38 O n the other hand, those same provisions do not cover the situation where a national of a Member State goes to the territory of another Member State and establishes his principal residence there in order to receive services there for an indefinite period (Case 196/87 Steymann v Staatssecretaris van Justitie [1988] ECR 6159, paragraph 17). Those provisions cannot be applied to activities which are

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confined in all respects within a single Member State (Case 52/79 Procureur du Roi v Debauve and Others [1980] ECR 833, paragraph 9, and Case C-41/90 Höfner and Eher [1991] ECR 1-1979, paragraph 37).

39 In this case, the nationals from other Member States who go to Italy to stay in the plaintiffs' homes do so in order to enjoy permanently or for an indefinite period the services provided in those homes. As is clear from the documents before the Court, it is essentially on that basis that the plaintiffs offer to take in residents.

40 The answer to the fourth question must therefore be that Article 59 of the Treaty does not cover the situation of a company which, having established itself in a Member State in order to run old people's homes there, provides services to resi- dents who, for that purpose, reside in those homes permanently or for an indefi- nite period.

44 As regards Articles 3(g), 5 and 86 of the Treaty, they could only apply to rules of the kind at issue in the main proceedings if it were proved that such rules placed an undertaking in a position of economic strength enabling it to prevent effective competition from being maintained on the relevant market by placing it in a pos- ition to behave to an appreciable extent independently of its competitors, of its customers and ultimately of consumers {Centro Servizi Spediporto, cited above, paragraph 31, and DIP and Others, cited above, paragraph 24).

45 The Court has held that Article 86 of the Treaty prohibits abusive practices result- ing from the exploitation by one or more undertakings of a dominant position on the common market or in a substantial part of it in so far as those practices may affect trade between Member States (Case C-393/92 Almelo and Others [1994] ECR 1-1477, paragraph 40).

46 For a collective dominant position to exist, the undertakings in the group must be sufficiently linked to each other to adopt the same conduct on the market {Almelo, paragraph 42).

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47 In this case, there is no reason to infer that national rules of the kind at issue in the main proceedings, which make the conclusion of contracts with the USSLs confer- ring entitlement to be reimbursed for the costs of providing social welfare services of a health-care nature conditional on the private operator being non-profit- making, place individual undertakings permitted to enter into such contractual arrangements in a dominant position or result in the creation of sufficiently strong links between them as to give rise to a collective dominant position.

On those grounds,

THE COURT,

in answer to the questions referred to it by the Tribunale Amministrativo Regio- nale per la Lombardia by order of 2 March 1995, hereby rules:

1. Community law, and Article 190 of the EC Treaty in particular, does not lay down conditions concerning the statement of reasons for national rules of general scope which fall within the sphere of Community law.

2. Articles 52 and 58 of the EC Treaty do not preclude a Member State from allowing only non-profit-making private operators to participate in the running of its social welfare system by concluding contracts which entitle them to be reimbursed by the public authorities for the costs of providing social welfare services of a health-care nature.

3. Article 59 of the EC Treaty does not cover the situation of a company which, having established itself in a Member State in order to run old peo- ple's homes there, provides services to residents who, for that purpose, reside in those homes permanently or for an indefinite period.

Gulmann Jann Ragnemalm

Wathelet Schintgen

Delivered in open court in Luxembourg on 17 June 1997.

R. Grass G. C. Rodríguez Iglesias

Registrar President

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