C-197/98

OPINION OF MR FENNELLY — CASE C-197/98

OPINION OF ADVOCATE GENERAL FENNELLY delivered on 9 December 1999 *

1. In the present proceedings, the Commis- argued that a draft Presidential Decree sion is seeking a declaration that Greece which would fully transpose the Directive has not complied with the judgment of the had been submitted to the President of the Court of Justice of 23 March 1995 in Republic for signature, that the Directive Case C-365/93 between the same two par- had already been transposed as regards the ties, 1 and has suggested that the Court health and welfare professions, lawyers and impose a penalty payment of EUR 41 000 auditors, and that the existing services and per day on the defendant Member State procedures were sufficient to enable all the until it has so complied. applications from non-Greek Community nationals to be dealt with properly.

month deadline for compliance. In that admissibility. Greece claims that the omis- opinion, it expressly drew attention to the sion of any mention of the penalty payment possibility that a financial sanction could in the form of order sought renders the be imposed in the case of continued non- application vague on this point and hence compliance. The Commission initiated the inadmissible. The Commission has, as present proceedings pursuant to Arti- required by Article 171(2), clearly and cle 171 of the EC Treaty as amended in unambiguously specified in its application crucial respects by the Treaty on European 'the amount of the ... penalty payment to Union (now Article 228 EC). be paid by the Member State concerned which it considers appropriate in the cir- cumstances'. Most of its application is devoted to explaining how it reached a figure of EUR 41 000 per day in this case. The form of order sought should be inter- preted in the light of the submissions of the 5. The Commission, as required by Arti- party concerned. 4 The Commission has cle 171(2), second indent, has proposed a indicated its views on the amount of the penalty payment; the amount suggested is penalty payment with sufficient precision EUR 41 000 per day, being the product of to enable Greece to defend its own position the uniform flat rate amount (EUR 500) and the Court to come to judgment on the and the gravity and duration coefficients matter. I would therefore reject the argu- (10 and 2 respectively), adjusted to take ment on admissibility. account of Greece's ability to pay (4.1). The penalty should, in its view, be imposed as from the date of the judgment in the present proceedings until the measures are adopted to comply with it.

10. A few preliminary remarks may there- fore be in order, before I examine the application of this provision proposed by 8. As to the amount of the penalty pay- the Commission in the present proceedings. ment, Greece claims only that the Commis- sion has not taken account of the partial transposition of the Directive, or of the fact that there already exist systems, rules and mechanisms which allow the recognition of diplomas and access to legally protected professions, albeit not within the formal 11. The context in which this provision framework of the Directive. It does not, was introduced into the EC Treaty may be otherwise, address either the principles gleaned from a Commission staff paper on upon which the penalty payment is calcu- Compliance with judgments of the Court of lated or the correctness of their application Justice, published with the Commission's to the circumstances of the case. contributions to the Intergovernmental Conference which drafted the Treaty on European Union. Quoting from an earlier Commission opinion, the authors note that 'in the absence of sanctions, Court of Justice rulings are not always implemen- ted ... [and that the] correct application of Community law suffers from the all too frequent reluctance of Member States to (c) Article 171 of the EC Treaty as amen- implement Court judgments declaring that ded — some remarks they have failed to fulfil their obligations, even though Article 171 of the EEC Treaty requires them to comply'. 7A number of different solutions are examined, including the possibility of granting the Court the power to inflict financial penalties through 9. I have discussed the procedure set out in the withholding of Community funds or the Article 171 in an earlier Opinion. By imposition of fines, though the authors reason of the transitional content of the point out that 'the Member States which facts, the Court did not have to rule on the are the most frequent offenders are also matter. 5More to the point, judgment is still

13. Prior to the amendment of these provi- sions, the failure of a Member State to take the necessary measures to comply with a judgment of the Court had the same quality 15. As under standard infringement pro- as any other Member State breach. It was a ceedings, the Commission sets a deadline breach of the Treaty, specifically of Arti- for compliance with the judgment in its cle 171(1). It was amenable to the Court's reasoned opinion, and may, but is not jurisdiction, at the sole instance of the obliged to, bring the matter to the Court

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OPINION OF MR FENNELLY — CASE C-197/98

8 — The Commission considers that it need not ask for a penalty in every case, but that it must state its reasons for retraining 9 — Respectively OJ 1996 C 242, p. 6 and OJ 1997 C 63, p. 2. from so doing (Memorandum No 96/C 242/07, cited in 10 — Memorandum No 96/C 242/07, cited in footnote 9 above, footnote 9 below, paragraph 3). paragraph 4 (emphasis in original).

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COMMISSION V GREECE

calculating the amount of a penalty pay- which it considers appropriate in the cir- ment: the flat-rate amount (EUR 500), the cumstances'. seriousness coefficient (ranging from 1 to 20), the duration coefficient (ranging from 1 to 3), and a factor n intended to reflect the Member State's ability to pay while ensuring the penalty has a deterrent effect. The factor n is 'a geometric mean based on a Member State's gross domestic product 20. Article 171 has, in my view, even as (GDP) and the weighting of [its] votes in amended, the same character and function the Council'; 11 it goes from 26.4 (Ger- as Article 169 and should be similarly many) to 1 (Luxembourg), with Greece interpreted. This, as I will explain, has a being assessed at 4.1. bearing on the legal value to be attributed to any proposal for a lump sum or penalty payment made by the Commission in its application as required by the second subparagraph of Article 171(2). I will now discuss this issue.

12 — Case C-157/96 [1998] ECR I-2211 (hereinafter 'National 11 — Communication No 97/C 63/02, cited in footnote 9 Farmers' Union'). above, section 4. 13 — Cited in footnote 6 above.

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22. The legal character of the lump sum or 25. I do not consider, therefore, that the penalty payment proposed by the Commis- Court is bound by the Commission's views sion should, in my view, be deduced from in deciding whether or not to impose a its place in the general scheme of Arti- financial sanction, in choosing the sanction, cles 169 to 171 as I have sought to describe or in fixing the amount thereof. The it (paragraphs 10 to 16 above). wording of Article 171(2) contains nothing to justify the restrictive interpretation sug- gested by the Commission. While the second subparagraph of this provision obliges the Commission to 'specify the amount... it considers appropriate', the third subparagraph makes no reference to the amount so specified. The Court may, if it finds the infringement proved, 'impose a 23. The Commission, as is well established, lump sum or penalty payment'. These has the burden of proof of any infringement words do not limit the judicial discretion it alleges against a Member State within the of the Court and, in particular, do not limit framework of Article 169. It must establish it to the amount proposed by the Commis- each aspect of its claim. No presumption is sion. Unlike, for example, Title IV of the made against the defendant Member Protocol on the Statute of the Court of State. 14 Justice of the EC which imposes a number of substantive restrictions on the Court's jurisdiction in dealing with appeals from the Court of First Instance, Article 171(2) imposes no such material limitations on the competence of the Court.

27. The Commission's reference to National Farmers' Union does not appear to me to be pertinent. Certainly the Court recognised in this judgment that, in areas 29. I do not think that the interpretation I where the Commission does enjoy a wide have proposed would reduce the role of the measure of discretion, its power to review Commission to that of a simple amicus Commission decisions is limited. 15 How- curiae; the Commission retains its unfet- ever, the Commission has no decision- tered discretion as to whether to initiate the making power in the matter of financial Article 171 procedure and, by means of its sanctions under Article 171. Its duty is reasoned opinion, fixes the material para- placed in the litigious framework of Arti- meters of the failure of compliance which cle 171. It makes a proposal for the con- the Court must examine. The Commission sideration of the Court. Moreover, in thus exercises, in effect, the authority to National Farmers' Union the contested investigate possible breaches of the duty of Commission decision was a safeguard compliance with Court judgments, and to measure adopted under legislative provi- pursue them before the Court. I can, sions drafted in wide terms, rather than the however, see nothing in the relevant provi- imposition of a sanction against a Member sions which would justify elevating the State as is here suggested. Commission, as regards the determination of a financial penalty, from the status of a party in this procedure to one approaching that of a court of first instance.

Again, the differing views of Advocate - follow the example already set nearly half a General Ruiz-Jarabo Colomer on this century ago by Article 88 of the ECSC aspect merit careful consideration. How- Treaty, which allows the Commission itself ever, in my opinion, such appreciations to act against breaches of that Treaty either may legitimately be made, by a political by suspending payments due to the offend- institution acting 'in the general interest of ing Member State or by imposing or the Community', at an earlier stage of the authorising other sanctions by derogation procedure. Once the Commission has exer- from Article 4 of the ECSC Treaty (now cised its discretion in the matter of initiat- Article 4 CS). Recourse to this provision ing proceedings, the matter of the Member requires the assent of the Council acting by State's alleged non-compliance with an a two-thirds majority; it has never been earlier Court judgment is subjected to an applied. While the Commission is clearly essentially judicial procedure to which independent of the Member States in this as political considerations are irrelevant. The in other respects, recognising that the Court exercises in such proceedings an exercise of its power to suggest a sanction integral part of the judicial function, in should only be subject to marginal judicial deciding on the imposition of a sanction for review seems to me to run the converse risk a breach of a legal obligation. The fact that to that to which my learned colleague the Commission is only obliged to declare adverted, that is, of transferring a judicial its position on the question of a sanction power to the executive. Moreover, the when it initiates proceedings before the Commission's view in this case goes rather Court, and that in such cases it has no further than that which it expressed in its discretion not to suggest a financial sanc- memoranda on the application of Arti- tion, seems to me to be clearly designed to cle 171, where it merely claims the power take this particular issue out of the political to 'give its view on the actual amount of the arena. The Commission was therefore cor- lump sum or penalty payment'. 17 It would rect in the present case to have simply also come close to recognising that the mentioned the possibility of a financial Commission itself determines the amount sanction of unspecified amount, at the stage of the lump sum or penalty payment, which of the reasoned opinion. solution was rejected by the authors of the Treaty on European Union.

State concerned. 18 However, it seems to me tence and extent of non-compliance; the that the procedure laid down by Arti- Commission can also guide the Court, as cle 171(2) already provides the necessary Advocate General Ruiz-Jarabo Colomer guarantees. The Member State must be has suggested, 19 in ensuring that the Court given the opportunity to be heard on the respect the principle of equal treatment in substantive question of the failure to com- its decisions on the imposition of financial ply before the reasoned opinion is issued, sanctions. and may again at the litigious stage contest the Commission's position both on this primary issue and on the appropriateness of the penalty payment proposed. A Member State would be deprived of a key part of its rights as a defendant in infringement pro- ceedings if it were not permitted the same latitude in criticising the financial conse- (e) The establishment of a breach of quences of any possible adverse judgment Article 171(1) and the period in respect of to the same extent as that which it enjoys which a penalty may be imposed regarding the issue of non-compliance. In deciding whether to impose a sanction and, if so, its amount the Court should have the benefit of the views of the Commission and the counterarguments, if any, of the defen- 34. Two other preliminary matters merit dant Member State. Giving the Commis- consideration here: the determination of sion a largely unchallengeable right to the moment at which the breach of Arti- determine the nature and the amount of cle 171(1) is established, and the period of the financial sanction would not appear to time in respect of which a penalty payment me adequately to respect the rights of the is payable. The obligation to comply with a defence of the Member State concerned. judgment finding an infringement is effec- tive from the date of that judgment, 20 and the duration of the infringement under Article 171(2) begins to run on that date. This provision none the less accords Mem- ber States a period of grace, until the expiry of the deadline for compliance fixed in the reasoned opinion, before the Commission can establish that the Member State is in fact in breach of its obligation to comply. 33. This is not to say that in deciding on This date also constitutes the beginning of the imposition and the amount of a finan- any period in respect of which a financial cial sanction the Court will act without penalty may be imposed; though the infrin- regard to the views of the Commission, or, gement of Article 171(1) exists from the indeed, to those of the defendant Member date of the first judgment, it seems to me State. It is the Commission which must that Article 171(2) should be interpreted as supervise the compliance by Member States meaning that a financial penalty may only with judgments of the Court concerning infringements, and must establish the exis- 19 — Op. cit., paragraph 97. 20 — Case 169/87 Commission v France [1988] ECR 4093, 18 — See, for example, op. cit., paragraphs 31, 42 and 91. paragraph 14.

be imposed in respect of the period follow- future, namely, from the date of notifica- ing the establishment by the Commission of tion of the judgment in the present pro- the infringement. Clearly, the Court, in ceedings until the date of the cessation of assessing the amount of any financial the infringement, without indicating how sanction, can take account of any develop- or by whom a decision determining the ment subsequent to the date of expiry of latter date is to be taken. In the absence of the deadline set in the reasoned opinion to any express indication in Article 171, it which its attention has been drawn in due seems to me that the date of cessation of the time. failure to comply with the judgment in the first infringement should be determined by the Commission, as a corollary to its power to find the existence of that failure in the first place. In Commission v France, the Court based its finding that 'the Commis- 35. It might be argued that the penalty sion is ... under a duty to ensure ... that payment may only cover the period from Member States comply with the judgments the date of expiry of the deadline for delivered by the Court of Justice' on compliance set in the reasoned opinion Article 155 of the EEC Treaty (now Arti- until the Court's judgment in the Arti- cle 211 EC), 21 and I am of the view that a cle 171(2) proceedings, on the ground that power for the Commission to decide that the Court cannot hold that a breach will compliance has been effected can be based continue to occur in the future. I would not on the same provision. subscribe to this view. In the first place, the imposition of such a financial sanction, which would in effect (though not necessa- rily in law) be a lump sum in that the amount could be precisely calculated on the day of the second judgment, would not 37. As a decision refusing to recognise that serve to persuade a Member State to compliance has been effected would have comply with the first infringement judg- legal effects on the situation of the Member ment, as its exposure to a financial sanction State concerned, it would in principle be would be limited to the period before the amenable to judicial review in ordinary Court's second judgment. In empowering annulment proceedings. In recognising that the Court to impose a penalty payment as the Commission enjoys such a power, an alternative to a lump sum, Arti- which is not expressly granted by the cle 171(2) entitles the Court to impose a Treaty, it should not be thought that this financial sanction for the future, unless the institution would in some way be able to Member State can show the Court in good modify a decision of the Court; as the time that it has complied with the first Court's imposition of a penalty payment judgment. depends on the continuance of a particular factual and legal situation, a Commission decision recognising the cessation of the failure to comply would merely constitute a finding of fact that the situation has changed. Such a decision could be taken 36. In the present proceedings, the Com- mission has suggested that the Court 21 — Order in Joined Cases 24/80 R and 97/80 R [1980] impose a penalty payment only for the ECR 1319, paragraph 11.

on the basis of the same criteria as those area of law. Whether or not this was the which obtain when the Commission deci- case, the imposition of a penalty payment is des whether or not to issue a reasoned the more appropriate course for the Court opinion under the first subparagraph of to take to deal with a continuing failure of Article 171(2). Because the objective of the compliance by a Member State with a imposition of a penalty payment is to judgment finding it to have committed an ensure complete compliance with the first infringement of its Treaty obligations. I judgment, I do not consider that the would agree with the position adopted by Commission would be entitled, for exam- the Commission in its Memorandum ple, to reduce the amount of a penalty No 96/C 242/07 that such a sanction payment imposed by the Court to take would contribute to ensuring compliance account of any partial compliance claimed as rapidly as possible. 23 The imposition of by the Member State. a lump sum payment, on the other hand, might be more appropriate where the Member State has complied with the origi- nal infringement judgment after Arti- cle 171 proceedings have been initiated before the Court but before judgment has been given, and where the Court considers (f) The criteria for choosing a financial that such a payment would serve a useful sanction and evaluating the amount thereof purpose, for example to compensate for a loss to the own resources of the Commu- nity as a result of the wrongful action or inaction of the Member State or as a 38. Article 171 distinguishes between two deterrent to other instances of non-compli- categories of financial sanction, the lump ance. sum and the penalty payment, without giving any indication as to the criteria for choosing between them. The distinction is a familiar one in Community law, and in particular in the area of competition law; Articles 15 and 16 of Regulation No 17 of 39. The Commission bases its assessment 1962, for example, empower the Commis- of the amount of the penalty payment on sion to impose fines and periodic penalty the seriousness of the underlying infringe- payments on undertakings for breaches of ment, its duration and the deterrent effect Articles 85 and 86 of the EC Treaty (now of the sanction. Both the initiative of Articles 81 EC and 82 EC) and for proce- proposing publicly accessible general cri- dural infringements in this area. 22 Though teria for the calculation of the amount of a the circumstances in which these provisions penalty payment, and the general criteria may be applied are quite different from themselves, as set out in Commission those which obtain in proceedings under Communication No 97/C 63/02, 24 seem Article 171(2), it is reasonable to assume to me at first sight and, in the absence of that the authors of the Treaty on European any cogent criticisms in the present case, to Union borrowed the distinction from this be unexceptionable. However, I am uncon- vinced by the specific criterion by which the

41. When questioned on this issue at the 40. While a Member State's comparative hearing, the agent for the Commission GDP is incontestably a relevant considera- argued that the comparative voting tion in assessing its ability to pay, the strength of a Member State was an objec- Commission has failed to demonstrate the tive criterion which reflected the impor- relevance of the comparative voting tance of each Member State in the decision- strength in the Council of the Member making process. This rather overlooks the State in default. This latter figure results fact that not all the obligations imposed on from a political arrangement which is in Member States are adopted by the Council practice renegotiated on each occasion new by a qualified majority; taken to its logical Member States are admitted to the Com- conclusion the comparative voting factor munity, and now Union. 26 Whatever fac- should be 1 for each Member State where tors are taken into account in determining the underlying breach concerns Treaty the number of votes in Council a Member provisions or provisions adopted by the State enjoys, there is nothing in the Treaty, Council acting unanimously, and 0 where and in particular in the figures set out in the underlying obligation arises under leg- Article 148(2) of the EC Treaty (now islation adopted by the Commission, and Article 205(2) EC), to indicate that such a should be halved for each Member State determination is in any way related to the where the legislation imposing the obliga- ability of Member States to pay the amount tion was adopted by the Council and the European Parliament under the codecision procedure. 25 — See footnote 12 of Communication No 97/C 63/02, cited in footnote 9 above. 26 — See the Protocol on the institutions with the prospect of enlargement of the European Union annexed to the Treaty on European Union and the three Community Treaties, 27 — My colleague Advocate General Ruiz-Jarabo Colomer also adopted along with the Treaty of Amsterdam, OJ 1997 has some doubts on this point: Opinion cited in footnote 6 C 340, p. 111. above, paragraph 112, footnote 40.

42. Exclusion of the element of compara- account of both the seriousness of the tive voting strength would leave compara- underlying infringement (of which the tive GDP as the sole frame of reference for duration is in my view merely one aspect) taking account of a Member State's ability and the requirement that the sanction have to pay. It does not follow that all other a sufficient deterrent effect. The former is a considerations should be excluded. It will reflection of the principle of equal treat- be open to the Commission to review its ment which is so fundamental to the method of calculation for future cases. In Community's legal order, and which this context, it seems useful to refer to the requires that equal situations be treated provisions of Council Regulation (EC) equally and unequal situations be treated No 1467/97 of 7 July 1997 on speeding unequally. 29 It would therefore be wrong up and clarifying the implementation of the to treat with equal severity, for example, an excessive deficit procedure. 28 This regula- infringement arising from an erroneous tion contains, inter alia, provisions to application in good faith of a possibly implement Article 104c(11) of the EC ambiguous rule of Community law, and Treaty (now Article 104(11) EC), which one which results from a deliberate and empowers the Council, albeit in very spe- flagrant breach of a well-established rule. 30 cific circumstances, to impose fines on a The same principle would justify the Member State which has failed to comply Court's normally 31 being required to take with a Council decision laying down mea- account of a Member State's ability to pay sures to reduce its excessive government a financial sanction in evaluating the deficit. Article 12 of the regulation requires a defaulting Member State to make a amount thereof. The requirement of a deposit comprising 'a fixed component sufficient deterrent effect is inherent in the equal to 0.2% of GDP, and a variable conferral on the Court of a power to component equal to one tenth of the impose financial sanctions in the first place, difference between the deficit as a percen- and the need to give Article 171(2) its tage of GDP in the preceding year and the useful effect. Faced with a similar lack of reference value of 3 % of GDP', up to a precision in the definition of sanctions maximum of 0.5% of GDP. The deposit required to give effect to Council Directive may be converted into a fine if the Member 76/207/EEC of 9 February 1976 on the State fails to correct its deficit within two implementation of the principle of equal years. treatment for men and women as regards access to employment, vocational training and promotion, and working conditions, 32 the Court held in Von Cohort and Kamann that Member States must ensure that any such sanction be 'effective and that it has a

45. I have expressed the view that the Commission's proposal regarding financial sanctions should be treated as the proposal of one party to a judicial proceeding, subject to the normal burden of proof but also to the right of the defendant Member (g) Application to the present case State to contest it and, ultimately, to the exercise of the judicial assessment of the Court. In most cases this would mean that, where a cogent and credible argument is made by one party, the Commission, and is not contested by the other, the Member 44. The doubts I have expressed in the State, it would be accepted by the Court. previous section concerning the Commis- However, three elements present in these sion's criteria for assessing the amount of proceedings lead me to propose a different the penalty payment it suggests should be approach in respect of the element of imposed on Greece do not affect the issue voting rights. Firstly, this is only the second of whether the Court should impose such a of the cases referred to the Court to have penalty payment in the present case. In the been heard under this new procedure. The first place, as explained above, I take the Court has not, at the time of writing, given view that the Court is not bound by the judgment in the first case. It is important Commission's proposal, and therefore no that clear guidelines be established for error of law or appreciation on the part of future cases, to the extent that this is the Commission would affect the Court's possible in the context of these proceedings. determination. Secondly, while it has in Secondly, the inclusion of the element of effect contested the Commission's assess- comparative voting strength raises an ment of the seriousness and the duration of important issue of principle which should the failure to comply, Greece has not not, in my view, be passed over. Thirdly, it seems, at first sight, that no Member State would have an interest in contesting the inclusion of this element. For all Member 33 — Case 14/83 Von Colson and Kamann v Land Nordrhein- Westfalen [1984] ECR 1891, paragraph 28; see also the States except Luxembourg, which is taken Opinion of Advocate General Rozès, ibid., pp. 1917 to as the point of reference, its inclusion will 1919, paragraphs 3 and 4.

have the effect of reducing the amount of 47. I agree with the Commission that a the financial sanction proposed. 34 In the penalty payment is the proper financial case of Luxembourg, it is neutral. In this sanction in the present case, that the respect, it seems to raise doubts as to the underlying infringement which gave rise equality of treatment of Member States. to the judgment in the first infringement case is a serious one, and that the duration of the failure to comply is sufficiently long to be reflected in the amount of the periodic payment. I am somewhat perplexed, how- ever, by the Commission's assertion that it took account of all the measures adopted by the Greek authorities to deal with this problem, when neither party has shown, to cite the Commission's agent at the hearing in Case C-387/97, the shadow of an outline of a suggestion of a commencement to respect the original judgment. The failure of a Member State to take any concrete action to comply with a judgment finding an infringement must be considered an 46. Greece has not contested its failure to aggravating factor. comply with the judgment in the original infringement case. Apart from the admissi- bility point dealt with above, its sole defence is that certain professions are already covered and that the signature of a draft Presidential Degree is imminent, which are the same arguments it relied upon unsuccessfully in the original case. At the hearing, Greece argued that it had a 48. In the absence of either any indication very advanced system for the recognition of in the Treaty or any established practice in qualifications awarded by foreign educa- this regard, I would suggest that the Court tional establishments; at the same time, it adopt the Commission's figures in the informed the Court that in the 22-month present case regarding the uniform flat rate period ending in October 1999, the com- amount and the gravity and the duration petent administrative authority had coefficients. However, for the reasons given rejected one third of the 12 000 requests above, I do not consider that a Member submitted to it. Neither of these facts, even State's voting strength in the Council is a if they were proven, suffices to show that relevant factor for determining its ability to Greece has complied with the judgment in pay, and would therefore propose that the the original case, and, moreover, Greece simpler figure of its comparative GDP be explicitly admits that the transposition of adopted instead. In the case of Greece, the Directive in the Greek legal order is not working back from the Commission's sug- complete. gested n factor would give an ability to pay of 6.724, or a penalty payment of EUR 67 240 per day. I am aware that this 34 — Thus, for example, the application of the n factor reduces figure is somewhat higher than that sug- Germany's ability to pay coefficient from approximately 140 to 26.4. gested by the Commission. I do not con-

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— Order the Hellenic Republic to pay to the Commission a penalty payment of EUR 67 240 per day until the necessary measures have been taken; and

— Order the Hellenic Republic to pay the costs of the present proceedings.

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