C-361/98

ITALY V COMMISSION

OPINION OF ADVOCATE GENERAL COSMAS

delivered on 16 May 2000 1

Table of contents

I — Introduction I - 388

II — Legislative framework I - 388

(b) My opinion I - 398

B — Infringement or misinterpretation of Article 8(1) and (3) of Regulation No 2408/92 owing to misapplication of the principle of proportionality (third plea of nullity) I - 409

C — Infringement of Article 8(1) of Regulation No 2408/92 in light of the rules governing indirect discrimination and manifestly erroneous assessment of the facts (fourth plea of nullity) I - 415

V — Conclusion I - 421

1 — Original language: Greek.

I-387

2 — OJ 1998 L 337, p. 42. 3 — Council Regulation (EEC) No 2408/92 of 23 July 1992 on 'The Council may, acting by a qualified access for Community air carriers to intra-Community air routes (OJ 1992 L 240, p. 8). majority, decide whether, to what extent

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and by what procedure appropriate provi- 7. Moreover, under Article 3(1) of Regula- sions may be laid down for sea and air tion No 2408/92: transport.

The procedural provisions of Article 75(1) and (3) shall apply.' 'Subject to this Regulation, Community air carriers shall be permitted by the Member State(s) concerned to exercise traffic rights on routes within the Community.' 5. The first two recitals in the preamble to Regulation No 2408/92 state that:

'it is important to establish an air transport policy for the internal market over a period 8. Finally, Article 8 thereof provides that: expiring on 31 December 1992 as provided for in Article 8a of the Treaty;

to safety, the protection of the environment al Serio (Bergamo). The distribution of air and the allocation of slots. traffic between those airports was deter- mined by the laws of the market, taking into account existing operational con- straints. That resulted in inefficiency in the use of existing airport capacity, since Linate airport was overutilised and Mal- 3. At the request of a Member State or on pensa airport was underutilised. 4 In addi- its own initiative the Commission shall tion, none of the airports in that system has examine the application of paragraphs 1 been able to develop as a major hub for and 2 and, within one month of receipt of a national, international and intercontinental request and after consulting the Committee flights. referred to in Article 11, decide whether the Member State may continue to apply the measure. The Commission shall com- municate its decision to the Council and to the Member States.

4. Any Member State may refer the Com- mission's decision to the Council within a time-limit of one month. The Council, acting by a qualified majority, may in exceptional circumstances take a different decision within a period of one month. 10. In light of those factors, the Italian authorities decided to reorganise the air- port system of Milan in order to create a hub at Malpensa and provide adequate airport capacity for the future. That objec- ...' tive, known as the Malpensa 2000 project, was to be achieved through the extension

12. On 13 October 1997 the Italian Gov- ernment adopted Decree No 57-T Arti- cle 1(1) of which provided that the priority arrangements referred to in Decree No 46- T were to enter into force on 25 October 1998. The effect of Decrees No 46-T and No 57-T is that, from 25 October 1998 onwards, all air services to and from Milan 11. To that end, on 5 July 1996 the Italian will have to be operated either from Minister for Transport issued Decree Malpensa airport or Orio al Serio airport, No 46-T. That decree laid down traffic with the exception of general aviation distribution rules for the airport system of services and air transport services meeting Milan. Article 1(1) provided that, from the the traffic thresholds defined by Arti- date of entry into service of priority struc- cle 1(4) of Decree No 46-T. In practice, tures at Malpensa 2000, which was to be the only route meeting those thresholds was determined by a further decree, all sched- Milan-Rome. uled and non-scheduled services on inter- continental and intra-Community air routes (including domestic or international intra-Community air routes) were to be operated to and from Malpensa airport. Article 1(2) provided that the same services could also be operated to and from Orio al Serio airport. Article 1(3) and (4) provided that Linate airport was to be used only for general aviation and for the operation of 13. On 16 February 1998 the air carriers direct air services on routes serving Milan British Airways, Iberia, Lufthansa, Olym- whose total annual passenger volume was pic Airways, Sabena, Scandinavian Airlines equal to or more than 2 million in the year System and TAP Air Portugal submitted to the Commission a joint request asking for it to take a decision declaring the traffic 5 — That project was one of the 14 priority projects of the trans- distribution rules adopted by the Italian European network under Decision No 1692/96/EC of the European Parliament and of the Council of 23 July 1996 authorities for the airport system of Milan (OJ 1996 L 228, p.1). It was financially supported by the incompatible with Community law, in Community, the European Investment Fund and the Eur- opean Investment Bank. p a r t i c u l a r with Regulation (EEC)

15. In the reasoning of the contested deci- sion the Commission first outlines the facts and procedure before giving its legal assess- ment of the contested Italian rules in light of Regulation No 2408/92. According to the Commission, whatever restriction was approved under Article 8(1) of the Regula- 6 — On 15 April 1998, Air France informed the Commission tion must be in conformity with both the that it was joining the abovementioned carriers in their action against the Italian rules.

As regards the lead to a competitive advantage in favour of Alitalia as principle of proportionality the Italian authorities conten- opposed to non-Italian Community carriers in the provision ded that the traffic distribution rules were necessary in order of medium and long-haul air-transport services usine its to attain the objective of creating a hub at Malpensa and airport hub. In other words, passengers on flights from keeping Linate as a supplementary airport. Milan to medium or long-haul destinations via an airport In the course of various exchanges of correspondence and will prefer flights which use Alitalia's hub to those used by meetings, the Commission informed the Italian authorities other Community carriers. In addition, according to the air of its view of the matter at issue on the basis of the facts in carriers the absence of adequate transport connections will its knowledge, summarising the grounds on which it reinforce the inconvenient situation or Malpensa airport in entertained doubts as to the compatibility of the Italian contrast with Linate and consequently the discrimination as rules with Article 8(1) of Regulation No 2408/92.

However, In that context all Community carriers ought to have been conditions of the kind envisaged were not deemed adequate permitted to offer services to all relevant airports from or expedient by the Commission. Linate airport.

17. As regards compatibility of the Italian legislation with the principle of proportion- ality, the Commission emphasised at the outset that Article 8(1) of Regulation 16. In the present case, as regards compat- No 2408/92 expressly recognises the legiti- ibility of the Italian rules with the principle macy of an active planning policy for of non-discrimination, the Commission, in Malpensa airport and that the Malpensa light of the competitive situation as 2000 project was aimed at creating a fully between Alitalia and the other Community operational and viable hub at that airport. carriers, reached the conclusion that the The Commission then went on to examine criteria laid down in Decree No 46-T under the restrictions introduced by the rules on which only Alitalia is allowed to service its distribution of air traffic and reached the hub at Fiumicini Airport, Rome, from conclusion that the operational viability of Linate airport, and the other operators will the Malpensa 2000 project (including the be compelled to service their hubs from timely operation of all flights and the Malpensa airport, will confer on Alitalia a prerequisite of normal access by passengers competitive advantage. That advantage to the airport) did not necessitate the will subsist for as long as Malpensa airport complete transfer on 25 October 1998 of does not have the requisite infrastructure the volume of traffic provided for in the permitting access in order to overcome the Italian rules. The operational viability of present situation in which users are reluc- the Malpensa hub necessitated the transfer tant to resort to it. Accordingly, the Com- of a volume of traffic compatible with the mission considered that application of the level of airport facilities and access infra- criteria laid down in Decree No 46-T of structures. Otherwise, the development and 25 October 1998, under Decree No 57-T, future positioning of Malpensa airport as a

18. On the basis of the reasoning set out above, the Commission decided that Italy was not authorised to apply the traffic 21. For the sake of schematic coherence of distribution rules for the Milan airport analysis I will examine the first and second system laid down in the decrees in question. pleas of nullity together, since they both raise the same general problem of interpre- tation of the legal basis of the contested decision (A). I will then go on to examine the third plea of nullity in which it is submitted that in any event the Commis- sion misapplied the principle of propor- tionality (B). Finally, I will examine the fourth plea of nullity going to a breach of 19. No Member State applied to the Coun- the rules governing indirect discrimination cil pursuant to the opportunity to do so and a manifest misappraisal by the Com-

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mission of the facts in the reasoning of the their compatibility with the principle of contested decision (C). non-discrimination. 10

A — Interpretation of the legal basis of the 23. The Commission refutes the arguments contested decision (first and second put forward in support of the first plea of grounds of nullity) nullity and contends that, in the sector of air transport, Regulation No 2408/92 applies all the rules concerning freedom to provide services under Article 59 of the Treaty. Under the literal, systematic and teleological method of interpretation, Arti-

It may be inferred from the formulation of that paragraph, which is clear in terms, that (aa) Lack of competence stemming from the subject-matter of review may be only the compatibility of national measures with the principle of non-discrimina- infringement of Article 8(1) and (3) of tion, as laid down in Article 8(1), and not the compat- ibility of those measures generally with Community law. Regulation No 2408/92 and Articles 155 Moreover, where the Community legislature has sought to (now Article 211 EC) and 169 (now Arti- make provision for a general power of review of that nature, as in the case of Article 9(4) and (5), it has cle 226 EC) of the EC Treaty (first plea of expressly stipulated that such review should not be limited solely to compatibility of national measures with the nullity) provisions of the regulation at issue, but should also examine whether those measures are 'contrary to Com-

the Treaty. According to the applicant, Article 8(3) of the decision at issue, and reviewed the Regulation No 2408/92 must, on account of its excep- Italian rules for compatibility with the tional nature in regard to Article 169 of the Treaty, be strictly interpreted. Consequently, it cannot be construed principles governing freedom to provide as authorising the Commission to use its decision-making power to make appraisals or adopt binding decisions services and, in particular, the principle of which are not strictly connected with the application of proportionality, and did not confine itself, Article 8(1). The latter provision lays down a prohibition on discrimination whose application does not involve as it ought to have done, to a review of discretionary appraisals.

11 — Specifically, the Commission is maintaining, on the one law. The fact that the provisions of Article 9(4) and (5) of hand, that Article 8(1) of Regulation No 2408/92 does not Regulation No 2408/92 expressly provide for general allow the Member States to distribute air traffic in such a review of the legality of national measures does not way as to breach Community law and that, on the other, preclude application of analogous reasoning to Arti- Article 8(3) does not limit the powers of the Commission cle 8(1). In that connection, the Commission relies, in to a review of compatibility of the national measure with support of its analysis, on the judgment in Case T-260/94 the provisions of Article 8(1). On the contrary, Article 8(3) Air Inter [1997] ECR II-997 in which the Court of First requires the Commission to examine whether the Member Instance examined the head of claim concerning a defect in State may continue to apply the measure. the decision on the ground of an infringement of Arti- The Commission stresses that the principle of proportion- cle 90(2) of the EC Treaty (now Article 86(2) EC), ality constitutes a general principle of Community law notwithstanding the fact that that article was not men- which must be observed by the Member States whenever a tioned in Article 8 of Regulation No 2408/92. provision of Community law reserves to them the exercise The Commission goes on to add that to circumscribe its of specific powers. It also points out that, under Arti- decision-making power in that way would be contrary to cle 155 of the Treaty, 'the Commission shall ensure that the principle of sound administration since it would be the provisions of the Treaty and the measures taken by the required to approve a measure on the basis of Article 8(1) institutions pursuant thereto are applied.' In light of the and (3) in order then to initiate proceedings under above, the Commission considers that Article 8(3) of Article 169 of the Treaty. However, such a procedure, Regulation No 2408/92 cannot be interpreted as preclud- which would comprise two stages, review under Arti- ing the Commission from adopting decisions which cle 8(1) and (3), and then under Article 169, would not be disregard any serious breach of the principle of propor- consonant either with the principle of legal certainty or tionality, whilst the Commission is exposed to actions with the need, in terms of air-transport market require- which may be brought against it under Article 173 of the ments, for swift resolution of doubts as to the legality of Treaty for breach ofthat principle, if it fails to examine the national measures. case in light of all the general principles of Community

25. As regards the first limb of the second plea of nullity, the Commission counters the applicant's argument by replying that the principle of freedom to provide air- transport services within the Community is laid down in Article 3(1) of Regulation No 2408/92. The Commission considers that national measures restricting that free- dom must accord with the general princi- ples governing freedom to provide services laid down by the Court. In that connection the Commission points out that the above- 12 — The applicant maintains that, even if the principles laid down in Article 59 of the Treaty are appropriate for the interpretation of the provisions of the decree, the Commis- sion relied on them not in order to interpret Article 8 of the Regulation but mainly in order to supplement it, by giving 13 — The applicant maintains that, under the Court's case-law, it a significance and breadth which go beyond the clear the principle of proportionality is applied in order to content of that provision. Nor, moreover, may the appraise the legality of restrictions based on overriding Commission base itself on Article 59 and the case-law in requirements in the general interest. Consequently, if a connection with that fundamental Treaty provision. The restriction is not based on such a requirement, the question provisions of Title IV do not apply to sea and air transport of the application of the principle of proportionality does

Council [1985] ECR 1513, paragraph 65). Accordingly, in because it is not evident in what way it can have a bearing the present case, the relevant Italian decrees fall to be on the lawfulness under Community law of the decrees reviewed solely under Article 8(1) of the Regulation and distributing traffic between Malpensa and Linate, even in not also under the above principles laid down in the case- light of the legal views — which moreover are called in law. question — on which the contested decision is based.

28. That challenge does not carry convic- tion, nor can it give rise to the annulment of the contested decision. I consider that in the result it was right for review of the Italian rules to be based on both the abovemen- tioned principles of Community law. None the less, I have reached that conclusion 26. As regards the second limb of the following reasoning which partly differs second plea of nullity based on the alleged both from the reasoning in the contested absence of any overriding general-interest decision and from the Commission's argu- requirement, the Commission points out ments before the Court. that there can be no definitive enumeration of such requirements. It follows that the objective of realising a viable operational hub, which might also be termed achieving 'the objective of efficient management of traffic' or the 'need for an appropriate 29. Both the applicant and the Commission adjustment of traffic', is to be deemed an start from the assumption that to opt for overriding general-interest requirement. 14 the principle of proportionality as the legal basis for review of the Italian decrees at issue presupposes either the direct applica- 14 — The Commission takes the view that considerations of tion of the general principles enunciated by transport infrastructures come under the definition of the the Court under Article 59 of the Treaty in general interest, as is borne out by Articles 8(1} and 9 of Regulation No 2408/92. Moreover, according to the connection with the review of restrictions Commission, even if the objective of establishing a viable on freedom to provide services or the operational hub entails macro-economic consequences, those are in fact not the same as the micro-economic interpretation of Article 8(1) and (3) of factors held by the Court not to be permitted for the purpose of justifying restrictions on the freedom to provide Regulation No 2408/92 in light of those services. In any event, however, the Court has acknowl- principles. None the less, before inquiring edged that the fact that the national measures seek at the same time to pursue economic objectives does not prevent into the possible concurrence of those two them from being deemed lawful, inasmuch as they also seek to satisfy overriding general-interest requirements; alternative preconditions in this case and this analysis is justified also by the provisions of Arti- raising the prior issue as to whether and to cle 129c of the Treaty (now, after amendment, Article 155 EC). what extent Regulation No 2408/92 set out

to apply the fundamental principle of free- scope of the general principle of the prohi- dom to provide services in the sector of air bition of discrimination. 1 5Accordingly, it transport, it must be determined whether is correctly stated in the contested decision the need to apply the principle of propor- that: 'the principle of non-discrimination tionality may as a matter of principle be set out in Article 8(1) also precludes any inferred from the very prohibition on measure which, even without explicitly discrimination expressly laid down in Arti- making reference to the carrier's nationality cle 8(1) of the regulation at issue. If that is or identity, none the less produces, even the case, it will then be necessary to indirectly, discriminatory effects in prac- examine whether the general preconditions tice.' 16 of the applicable principle of proportion- ality tally with the general preconditions of the principle of proportionality as applied by the Commission in the contested deci- sion. In the event that this should turn out to be the case, the arguments raised in the first two pleas of nullity would in any event have to be rejected as unfounded, irrespec- tive of the outcome of any inquiry into the possibility of applying or taking account of 32. At this juncture it should be recalled the principles established by the Court that, in the case of direct discrimination, under Article 59 of the Treaty. proof of its existence is by definition self- evident: both the existence of different treatment of similar situations and the similar treatment of different situations (de facto discrimination) and the unlawful nature of that treatment (de jure discrimi- nation) may be directly inferred from reference in the measures at issue of a 30. As a matter of principle I consider that prohibited criterion. Conversely, a finding the need for the principle of proportionality of indirect discrimination presupposes a to be applied may be inferred from the very complex reasoning based, in the first prohibition of discrimination whose obser- instance, on a thorough analysis of the vance is expressly required by Article 8(1) concrete factual situation governed by the of Regulation No 2408/92. measure at issue, and on an examination of whether, in light of that situation, the apparent neutrality of the criterion applied leads in the end to unfair discrimination in

practice. The second stage is the finding mate objectives of the law of which the that that discrimination is unlawful, that is provision at issue constitutes the culmina- to say that it is indirectly but closely tion. It is, then, to be inferred from the connected to a prohibited criterion. In foregoing that, whenever it is a question of other words, under the above reasoning it determining indirect discrimination the is appropriate to determine initially whe- proportionality of the provision at issue ther the emergence in practice of discrimi- has to be reviewed in relation to the nation is, in general terms, the unavoidable legitimate purpose for which that provision consequence of the criterion applied or was adopted. That review should not be whether it is rather a random consequence seen exclusively as an element of the not attributable to the provision at issue. It possible justification for the indirect discri- is not always easy to reach that determina- mination but should be deemed to consti- tion immediately, nor may it, in any event, tute an element of the reasoning leading to prejudge the existence of de jure discrimi- a finding of discrimination, 18 a fact that nation, 17 whether reliance is placed on the precepts of common experience or on

indeed be defined generally by a legal provision, which is the case in regard to Article 8(1) of Regulation No 2408/92 18 — See, for instance, judgment of the Court in Case C-237/94 O'Flynn v Adjudication Officer [1996] ECR I-2617, which provides that the objective of the paragraph 20: 'a provision of national law must be regarded as indirectly discriminatory if it is intrinsically measures at issue must concern distribution liable to affect migrant wotkers more than national workers and if there is a consequent risk that it will place of traffic between the airports within an the former at a particular disadvantage.' See also judgment

fact which affects both the choice of the grounds which may lead to a legitimate justification of such discrimina- tion and determination of the contribution of that justification to the finding itself of the discrimination at 17 — An absolute degree of proof of discrimination occurs only issue (see in that connection commentary by A. Whelan in the case of direct discrimination. Direct proof of indirect and A. Schouten on Decker and Kohll in Revue des discrimination, as in other cases of legal proof, is based on Affaires Européennes — Law & European Affairs, 1999, its probability or, more correctly, on the formation of a p. 90 et seq.). judicial view as to the probability of its existence.

19 — In regard to the significance of the principle of propor- tionality to the doctrine of indirect discrimination, see K. Yiannakopoulos, 'Statistical data and proof of discri- mination founded on sex at Community law', Ed. A.N. Sakkoulas, Athens-Komotini, 1999, p. 144: 'The above- 35. Indeed, at paragraph 31 et seq. of the mentioned application of the principle of proportionality plays a very significant role in the review of indirect discrimination based on sex. First, it is that which contested decision, the Commission, in essentially confers on the justification of indirect discrimi- assessing whether the criteria laid down in nation the objectivity which it should have and which accords with both the objective nature of indirect discri- Decree No 46-T result in de facto discrimi- mination and the objective nature of the statistical information from which the existence of such indirect nation, examined the effects which would discrimination is deduced. Thus, such justification is not be produced by the application thereof as based on the subjective aims which the provisions in question may have in contemplation but on the objective from 25 October 1998, as provided for in possibility, by the means provided under those provisions, Decree No 57-T. of attaining the purpose — regarded as generally legit- imate — for which they were enacted. Secondly, applica- tion of the principle of proportionality is the review mechanism which conforms with the classification (cate- gorisation of cases according to a paradigm) and schema- tisation (general and abstract) of the value judgments necessitated by the structural nature of indirect discrimi- nation. Thirdly, in the endeavour to establish those important differences which justify the different treatment of the contrasting categories, that is to say to establish whether there is a proportionate relationship between the 36. It may be inferred from a reading of different provision and the reason justifying it, review of paragraphs 27, 27.1, 27.2 and 53 of the the proportionality of the criteria of objective justification of manifest discrimination essentially adds the requisite contested decision that the view was taken, proportional dimension to the mathematical equality — in both the reasoning and the operative part or rather inequality — to be deduced from the statistical data which give rise to the presumption of the existence of of the decision, that the provisions intro- such discrimination (...).' duced by the Italian decrees at issue had to

observe both the principle of non-discrimi- 39. Accordingly, it may be inferred from nation and that of proportionality. the foregoing that the Commission at least in the result followed the general dictates of the reasoning process which it was required to conduct. That is true particularly of the dictates of the principle of proportionality which it applied as regards determination of the overriding general-interest require- ment and analysis of the programme of works for establishing the connection with Malpensa airport. 37. At paragraph 47 of the contested deci- sion, the Commission defined the purpose of the decrees at issue and reviewed it for conformity with the aims pursued under Article 8(1) of Regulation No 2408/92. In fact, the Commission considered that: 'The Malpensa project, by extending and upgrading existing facilities at Malpensa airport, aims at creating a fully operational and viable hub at that airport. The Italian rules contribute to that objective by ensur- ing that a sufficient amount of traffic will be transferred from Linate airport to Mal- pensa airport so as to ensure the viability of 40. At this juncture it should be noted that the hub. Article 8(1) of Regulation determination of the general purpose of the No 2408/92 expressly recognises the legiti- national measures under Article 8(1) of macy of an active airport planning policy.' Regulation No 2408/92 not only does not prohibit but rather dictates determination of the specific objective of the national legislation in each case and review of the compatibility of that specific objective with the general purpose of the Community legislation. Accordingly, the Commission correctly sought and identified that specific objective by particular reference to the creation of an operational and viable hub. 38. Finally, at paragraph 47 et seq. of the And it was right to hold that that objective contested decision the Commission exam- constituted a legitimate implementation of ined whether the measures adopted in the the general aim of Article 8(1). Moreover, Italian decrees at issue were proportionate as the applicant itself acknowledges, 20 to the aim pursued, that is to say whether there is no doubt that the operating and they were necessary in order to create a financial needs of a hub constitute legit- viable and operational hub and to imple- imate grounds for adopting measures to ment the trans-European networks project, regulate and distribute traffic within an and also whether the same result could be achieved by the application of less restric- tive rules. 20 — See paragraph 15 of the application.

42. On the one hand, it should be pointed out that in the present case there can be no application of the Court's case-law accord- ing to which: 'national rules which are not applicable to services without discrimina- tion as regards their origin are compatible Thirdly, in any event, it is clear, as the with Community law only if they can be Commission rightly states, that the over- brought within the scope of an express riding requirements of the Italian decrees at exemption, such as that contained in Arti- issue, as mentioned in the contested deci- cle 56 of the Treaty. (...) economic aims sion, entail macroeconomic consequences cannot constitute grounds of public policy of an organisational and functional nature within the meaning of Article 56 of the going to the very existence of a hub and in Treaty.' 21 no way — or at least not primarily — aim to produce microeconomic effects. Accord- ingly, under the aforementioned case-law, they cannot be deemed to constitute invalid grounds for the adoption of the measures at issue given the fact that the Court held in its Campus Oil and Others judgment that 'the First, application of the abovementioned fact that the rules are of such a nature as to case-law presupposes determination of the make it possible to achieve, in addition to issue whether the general principles of the objectives covered by the concept of Article 59 et seq. apply to Regulation public security, other objectives of an No 2408/92, 22 which is not a preliminary economic nature which the Member State issue to an analysis of the prohibition on may also seek to achieve, does not exclude the application of Article 36.' 23 21 — See judgment in Case C-288/89 Stichting Collectieve Antennevoorziening Gouda [1991] ECR I-4007, para- graph 11. 23 — See judgment in Case 72/83 Campus Oil and Others 22 — See below at paragraph 47 et seq. of my Opinion. [1984] ECR 2727, paragraph 36.

44. Accordingly, the Commission made a 43. However, since in the present case the correct determination of the general-inter- existence of indirect discrimination is est requirement against which the propor- reviewed in the context of Article 8(1) of tionality of the provisions and criteria of Regulation No 2408/92, the legality of the the Italian decrees fell to be assessed. objectives pursued by the Italian decrees at issue is not judged in general and abstract terms against the yardstick of the principles laid down by the Court in regard to overriding general-interest requirements capable of justifying the adoption of national measures but on the basis of the specific aim of the Italian decrees at issue and their conformity with the general 45. Finally, it is equally unfounded for the objective defined in Article 8(1) aforesaid. applicant to maintain that the programme Indeed, once the objectives of the Italian of works for establishing a link with decrees at issue are found to constitute Malpensa airport is of relevance for the legitimate grounds for the enactment of purposes of Regulation No 2408/92. measures to regulate the distribution of air Owing to the fact that indirect discrimina- traffic within an airport system in confor- tion is by definition dependent on the mity with Article 8(1) of Regulation actual effects of the measures at issue, it is dynamic and variable over time; this requires the forecasting and monitoring of 24 — See, for example, in regard to discrimination on the ground of sex, judgment in Case C-343/92 Roks and Others [1994] ECR I-571 in which it was held that budgetary considerations could not justify discrimination to the 25 — See, in relation to the discretionary power of the Council, detriment of one of the two sexes (paragraph 35). paragraph 50 of my Opinion.

48. As a matter of principle there can be n o doubt that Regulation N o 2408/92 trans- posed freedom to provide services to the field of air t r a n s p o r t . 2 6 That follows clearly, first, from the first two recitals in

26 — As stated, moreover, in the judgment of the Court of First Instance in Case T-260/94 Air Inter v Commission [1997] ECR II-997, paragraphs 1 and 21: 'With a view to the gradual establishment of the internal market for air transport, the Community legislature adopted three sets of measures in 1987, 1990 and 1992 which were known as "packages" on account of the fact that they consisted of 46. In light of the foregoing I consider that several documents. The third "package", adopted on 23 July 1992, consists of five regulations which aim to elucidation of the issue as to applicability ensure the freedom to provide air transport services and of the general principles formulated in the the application of the Community competition rules in that sector. One of those five regulations is Council Regulation Court's case-law in connection with free- (EEC) No 2408/92 of 23 July 1992 (...).'

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27 — See, in that connection, the Opinion of Advocate Genetai Van Gerven (paragraphs 14 and 23) in Case C-18/93 Corsica ferries [1994] ECR I-1783. 28 — Cited above at footnote 11, paragraph 65.

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and adequately justified in light of the where he is established.' 32 Furthermore, specific characteristics of the transport under the Court's case-law, the abovemen- sector. tioned restrictive provisions must comply with the principle of proportionality. T h e application of national provisions to pro- viders of services established in other Member States must be such as to guaran- tee the achievement of the intended aim and must not go beyond that which is necessary in order to achieve that objective. In other words, it must not be possible to obtain the same result by less restrictive rules.' 33

29 — See, for instance, judgment in Case 205/84 Commission v 32 — See judgment in Case C-43/93 Vander Elst [1994] ECR I-3803, paragraph 16. It is worth noting that, unlike Germany [1986] ECR 3755, paragraph 25. restrictions which do not apply indiscriminately (see above 30 — See, for instance, judgment in Case C-360/89 Commission at paragraph 42 of my Opinion) it is not necessary in the v Italy [1992] ECR I-3401, paragraph 11. present case for justification of the measures to be based 31 — See, for instance, judgment mentioned above at foot- solely on an express exempting provision, such as Arti- note 21 in Stichting Collectieve Antennevoorziening cle 56 of the EC Treaty (now, after amendment, Article 46 Couda (paragraph 12 et seq.) and judgment in Case EC). C-3/95 Reisebüro Broede [1996] ECR I-6511, para- 33 — See judgment in Collectieve Antennevoorziening Gouda, graph 25. paragraph 15.

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54. It is to be inferred, then, from the above observations that in the contested decision the Commission correctly reviewed the legality at Community law of the Italian decrees at issue in light of the principle of proportionality. At the same time, it cor- 53. Accordingly, the Commission was right rectly defined the parameters of that review to rely on Article 8(1) and (3) in examining and, in particular, the overriding general- the legality at Community law of the Italian interest requirement against which the decrees at issue in light of the Court's case- proportionality of the rules and criteria law concerning restrictions on freedom to laid down in the decrees at issue falls to be provide services 36 and, in actual fact, it determined. Consequently, whether the determined, first, whether the measures interpretation adopted by the Commission in regard to determination of the legal basis of the contested decision is upheld or it is 34 — In that connection I consider there to be no doubt that the deemed expedient, as contended for, to provisions at issue indeed constitute restrictions on free- modify that interpretation in part, the dom to provide services. As is correctly stated at para- graph 48 of the contested decision: 'Under the Italian applicant's submissions on the first and rules, air carriers will no longer be allowed to choose Linate airport for the operation of air routes other than second pleas of nullity must be rejected as those meeting specific thresholds. In practice, this will unfounded. apply to all air routes except Milan-Rome. Consequently, these rules will restrict the freedom to provide air services in the Community to and from Milan.' 35 — See above at paragraph 43 of my Opinion. 36 — See paragraph 27.2 of the contested decision. 37 — See paragraph 48 of the contested decision.

B — Infringement or misinterpretation of Italian decrees at issue is not in doubt. Article 8(1) and (3) of Regulation Indeed, as paragraph 47 of the contested No 2408/92 owing to misapplication of decision correctly states, the Italian decrees the principle of proportionality (third plea contribute to the Malpensa 2000 project by of nullity) ensuring that a sufficient amount of traffic will be transferred from Linate airport to Malpensa airport so as to ensure the viability of the hub. 55. In its third plea of nullity, raised by the applicant in the alternative and in the event that the Court does not uphold the allega- tions in connection with the preceding pleas, the applicant is calling in question the correctness of the application in the present case of the principle of proportion- ality. In fact, the Italian Government 58. Accordingly, on the basis of the gen- entirely dismisses the submission that the erally accepted individual criteria of the Italian decrees at issue imposing restrictions principle of proportionality the following on freedom to provide services run counter matters must be established in the present to the principle of proportionality which case: first, whether the provisions at issue the Commission regards as being applicable were necessary, that is to say whether they as a matter of principle to the issue under were justified by their purpose; secondly, examination. The applicant is chiefly call- whether they were appropriate, that is to ing in question the specific parameters of say whether they were in fact capable of that principle, that is to say the framework serving that aim; and, thirdly, whether they within which the specific criteria of pro- were reasonable (stricto sensu proportion- portionality are formulated. At the same ate), that is to say whether they imposed time, on certain points it is questioning the differential treatment (case in which the correctness of the appraisal of certain principle of proportionality is applied in factual matters in the application of those order to prove indirect discrimination) or criteria. were restrictive of the freedom to provide services (case in which the principle of proportionality is applied in accordance with the Court's case-law on Article 59 et seq. of the Treaty), to the extent actually necessary in order to attain the above aim 56. I do not consider that the applicant's and provided that the attendant advantages submissions can avail it; that is the conclu- outweigh or are at least equal to the sion to be drawn from a review of the disadvantages. stages in the reasoning of the contested decision.

62. Indeed, in terms of the general notion of the review of proportionality in the present case, the applicant cannot be regar- 60. At this juncture it should be empha- ded as accurately following the requisite sised that the application, as described reasoning process in its plea that the above, of the individual criteria of propor- contested decision ought to have appraised tionality is not of à theoretical nature, nor the issue of proportionality principally by can it be founded solely on general and reviewing whether the projected concentra- abstract teleological views. In a review of tion of traffic at Malpensa airport went proportionality, as with any legal reason- beyond the Italian Government's objective ing, both the major and the minor premiss of rendering the new airport a viable must be correctly formulated. In that hub. 38 What is important in the present connection, in reviewing proportionality, case is not the concentration per se of account has first to be taken of the specific traffic at Malpensa airport but the degree circumstances of the actual situation in of different treatment or of the restriction which the necessity, appropriateness and on freedom to provide services engendered reasonableness of the measures at issue are by the transfer of traffic from Linate to evaluated in relation to their purpose. But Malpensa. The matter to be weighed in the that review must then also be determined teleologicallyby the broader legal reason- ing applicable to it. In the present case the 38 — The Italian Government points out that the Commission individual criteria of proportionality must acknowledges that the rules on traffic distribution adopted by the Italian authorities are in accordance with the therefore be applied not in a neutral objective of transferring a sufficient amount of traffic in order to guarantee the profitability of the investment and manner but always within the terms of that that objective is compatible with Community legisla- the logical process by which proof of tion. In that connection the applicant considers that the concentration of a volume of traffic sufficient to enable indirect discrimination is deduced and by connections between flights from regional airports and long-haul flights is a determining factor in the establish- reference to the rules determining the limits ment of a hub. The Commission's recommendation that of restrictions applied without distinction 45% of traffic be allocated to Linate and 55% to Malpensa would guarantee the functioning of the two to freedom to provide services in the field regional airports but not of an airport intended to serve as a hub. The suggestion therefore runs counter to the of air transport. declared objective of the plan.

balance cannot, generally and in abstract case also subsist in regard to the individual terms, be the Italian Government's objec- allegations made by the applicant against tive of creating an economically viable hub. the arguments contained in the statement of In other words, the sole focus of attention reasons on which the contested decision is cannot be on the finally completed hub. based. Yet, a significant amount of time is undoubtedly required to realise such an ambitious project; there is therefore no room for doubt that proportionality of the provisions at issue must be evaluated in light of the existing situation and of the scheduling and state of completion of the requisite works. The features of the actual situation have a major bearing on review of 64. The applicant submits that the Com- the reasonableness of the provisions at mission's first argument, to the effect that issue, a matter to which the applicant does the volume of traffic transferred would not not have particular regard. In actual fact, as be in keeping with the existing access has already been stated, it is a matter of infrastructure at Malpensa airport, is not assessing, on the basis of an evaluation of relevant to the sole valid criterion of advantages and disadvantages of the provi- proportionality, namely the adjustment of sions at issue, whether the same result may concentration of flights to Malpensa in line be attained by less restrictive means. In that with the Italian Government's objective. connection, however, it is not sufficient However, this fails to take account of the merely to say that the measures at issue are fact that the proportionality of the provi- justified in general terms by the long-term sions at issue must be evaluated in relation objectives of the project; plainly, what is to the existing factual situation, together needed is an analysis of the factual situa- with the general schedule and progress of tion obtaining at the time of adoption of the requisite works. More specifically, by those measures. insisting on an overarching teleological approach to the issue of the proportionality of the provisions at issue, the applicant does not take account of the fact that the individual criteria of proportionality (necessity, appropriateness, reasonableness) have to be determined in light of the specific requirements of the Malpensa 2000 project, as they appeared at the time when those provisions were applied.

rectly pointed up the need for appraisal of As may be inferred from paragraphs 49.1 necessity 39 and reasonableness 40 of the and 39 to 43 of the contested decision — provisions at issue in relation to the pro- and without there being any need to refer gress of access and infrastructure works at to matters emerging after adoption of that Malpensa airport. That it did so is entirely decision 42 — the failings in the infrastruc- in keeping with the fact that the Commis- ture concerning access to Malpensa airport sion also took into account the level of on which the findings of both de facto access infrastructure at Malpensa airport, discrimination and disproportionality of in reaching its determination that there was the volume of traffic transferred to Mal- de facto discrimination in favour of Alita- pensa airport were based, were made on lia; and that determination logically gov- the basis of information actually available erns application of the principle of propor- to the Commission 43 and unchallenged by tionality. 41 the applicant on the basis of factual and appropriate evidence. In order to demon- strate that there is no significant problem of access to Malpensa airport, the applicant merely points to studies which state that there are no traffic problems on the road leading to that airport apart from at certain times, on certain holidays and for 5% of the time during which the road is in use. 44 None the less, the establishment of those facts, which are not called in question by the Commission, 45 militates in favour of 66. On that point it should also be pointed the reasoning in the contested decision. In out that the argument put forward in that the present case it does not matter whether connection by the applicant that, in any in general terms the existing access infra- event, the national authorities demonstra- structure impedes attainment of the Italian ted the compatibility of the access infra- Government's objectives or whether the structure with the volume of traffic to be originally scheduled infrastructure works transferred would appear to be of no avail.

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to improve the access to Malpensa airport traffic as at 25 October 1998 was not have for the most part been completed. necessary. Since, as stated above, the find- What is of prime importance in reviewing ings in connection with infrastructure fail- the legality of the Italian decrees at issue is ings in the access to Malpensa airport have whether the conditions for access to that not been refuted and the applicant has not airport render it accessible to the same demonstrated the necessity for transferring degree as Linate and fully justify the all traffic prior to 31 December 2000, the volume of traffic transferred to it as at disproportionate nature of the provisions 25 October 1998 in such a way as not to adopted may plainly be inferred from that give rise, at that specific moment in time, to fact, nor is that altered by the argument as unjustified discrimination on the ground of to Member States' autonomy in the con- the nationality and/or identity of the air duct of airport policy. Again it must be carrier or to a disproportionate restriction emphasised that the relevant factor in the on the freedom to provide air-transport present case, over and above a finding of services. In other words, since there general conformity of the measures undoubtedly are traffic problems, particu- adopted in connection with the 'Malpensa larly at peak times and, in general, issues 2000' project, is review of the specific and around access infrastructure which could concrete necessity, appropriateness and impede passengers from reaching Malpensa reasonableness of those measures in light airport, cause delayed departures of flights of the actual situation obtaining at the time and, finally, are likely to cause travellers to when they were adopted. prefer Linate airport to Malpensa, it mat- ters little whether the scheduled infrastruc- ture works are to proceed or have already proceeded in accordance with an initial overall plan.

of the contested decision and, in any event, whether the advantages associated with does not carry conviction. First, the Com- those provisions outweigh or at least are mission's argument is ancillary; to refute it counterbalanced by the disadvantages. In would not invalidate the Commission's the event that it is established that there earlier assessments concerning the propor- was a means of attaining the relevant tionality or otherwise of the provisions at objectives by the adoption of other fairer issue. Secondly, as is made clear by para- or less restrictive measures, then the provi- graph 51 of the contested decision, the sions at issue must be characterised stricto relevant factor is not whether, following sensu as being disproportionate to their the transfer of traffic, Linate airport would objective. Plainly, then, assessment of the continue to function in some way but reasonableness of those provisions to some precisely what sector and carriers it would extent constitutes a review of their expe- serve and to what extent. Moreover, as diency. None the less, such review is not stated in the same paragraph of the con- arbitrary but must be set within the rele- tested decision, the volume of traffic trans- vant interpretative and teleological frame- ferred could not be deemed appropriate to work for applying the principle of propor- achieving the objective of retaining point- tionality. to-point routes, as stated in the preamble to the Italian decrees at issue.

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Italian Government but a correct applica- 71. In light of the above, I consider, then, tion of the criterion of the reasonableness that the submissions put forward in con- of the provisions at issue within the limits nection with the third plea of nullity must of the Commission's competence. Accord- be rejected as unfounded in their entirety. ingly, the submissions to the contrary put forward by the applicant must be rejected as unfounded.

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Accordingly, I do not consider that it can avail the applicant to attempt objec- tively to justify the provisions at issue on 74. In light of the foregoing the first the basis of the specific objective of reorga- allegation raised by the applicant relates nising the operations at Linate airport to the second stage of the procedure for entailed by creation of the Malpensa hub. proving indirect discrimination, that is to In particular, just as under the situation say review of the objectivity of the provi- obtaining until 25 October 1998 the com- sions at issue. In that connection the plete transfer of traffic to Malpensa airport applicant alleges that there is no indirect was not essential, nor was it essential to discrimination because the measures restrict the flights operating in and out of adopted in the Italian decrees at issue were Linate airport to the extent to which that objectively justified and were aimed at restriction was established in the decrees at giving effect to the new use of Linate issue. Conversely, acceptance of the view airport and restricting its operation to the that the rules introduced by Decree No flights which were the most appropriate for 46-T were aimed at restricting use of Linate safeguarding business transfers and the airport solely to the Milan-Rome route in competitiveness of the airport connection as opposed to that of the Milan-Rome principle corroborates the analysis adopted connection. 48 by the Commission in the contested deci- sion concerning the practical effects of the provisions at issue. Moreover, as the Com- mission observes, the applicant's submis- 4 7 — See above at paragraph 32 of my Opinion. 48 — T h e Italian Government points out that the Commission sion that the purpose of the provisions was viewed Linate as the airport at which, before the redis- tribution, traffic from and to Community hubs w a s to secure continuity in the Milan-Rome concentrated and that, following adoption of the decree service and not the transfer of travellers to at issue, Linate would offer connections with one h u b , namely that of Rome-Fiumicino, whilst routes for the Rome airport is to no avail since the former other hubs (Frankfurt, Paris, etc.) would be transferred t o another less convenient airport, namely Malpensa.

hibited. Conversely, it may be inferred from Italian decrees at issue were objectively justified because they were aimed at giving effect to the new use of Linate airport and restricting its operation to one route only, namely the Milan-Rome connection. In that connection the Italian Government observes that the Milan-Rome route essentially responds to the need for business jour- neys, the majority of which provide for a same-day return journey. It insists, therefore, that that route is the most appropriate one for serving Linate airport, at the same time as ensuring that the air link remains competitive in relation to the rail link. According to the applicant, if the Commission had taken the above matters into account it would not have concluded that there is indirect discrimi-

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the case-file and, in particular, from the that connection, the Italian Government statistics concerning travellers in 1997 5 0 emphasises that a provision may not be and the measures proposed by the Italian deemed to entail indirect discrimination authorities for restricting possibilities for unless it is fully proven to be capable of transit in Rome-Fiumicino airport, 51 that favouring or harming a person. at the time when the contested decision was adopted, the supply of passengers was an actual fact and, in any event, remained practicable. Consequently, the applicant's first allegation must be rejected as unfoun- ded. 77. That second allegation concerns the first stage of proof of indirect discrimina- tion, that is to say determination of whe- ther there is de facto discrimination and whether that is a necessary consequence of the provisions at issue or is a random occurrence.

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of the long-term stability of those effects so prospects and likelihood of a change in that as to prevent the likelihood of the concur- situation. 54 In the context of that delicate rence of random factors not in principle appraisal, it established, finally, that deter- attributable to those provisions. 52 None mination of indirect discrimination must be the less, that analysis of the long-term confined to particular time frames, 55 which stability of the practical effects of the is the correct way to deal with and interpret provisions at issue cannot result in regard the dynamic nature of that kind of discri- being had to a purely future situation mination in the present case. whose occurrence, though uncertain, is anticipated and which is not founded with immediate certainty in the actual circum- stances prevailing at the time when the existence of indirect discrimination is reviewed. That would run counter to the rule under which the legality of a legal act is as a matter of principle to be assessed in light of the factual and legal circumstances obtaining at the time of its adoption. 53

81. In that connection the finding of indir- ect discrimination was not based on mere conjecture or a small degree of likelihood but on a sufficient degree of probability

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based on information available to the matters subsequent to the contested deci- Commission. sion, 59 that that hub continues to be operational and may be fed from Malpensa airport. Moreover, as the Commission rightly states in its rejoinder, the number of flights served and the corresponding importance of a hub are not in themselves relevant factors. The mere existence of an additional hub in Fiumicino gives rise to a finding of indirect discrimination. Nor, finally, may any significance be attached to the scale of the consequences of that discrimination. Even discrimination of minor significance is prohibited by Com- munity law. 60

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statistical evidence. For that reason, in a the file and is not challenged in argu- secondary stage complementing the proce- ment, 6 3 once the Commission had dure for proving indirect discrimination it informed the Italian authorities about the is necessary to inquire as to the objectivity problems caused by the decrees at issue, of the provisions at issue, which also gives consulted with the competent consultative rise to application of the principle of committee and, generally, taken all requi- proportionality. 61 site steps (exchange of letters, meetings etc.) for the matter to be ventilated and the rights of the defence to be exercised, the sole competence left to it, subsequently, was to adjudge whether the decrees at issue were lawful and to decide 'whether the Member State may continue to apply the measure.' 64 Consequently, it was not com- petent to modify the national measures by substituting itself for the national autho- 84. In light of the foregoing I consider that rities. Conversely, it is for those authorities the second allegation raised in the fourth to adopt the requisite measures in order to plea of nullity must be rejected as unfoun- comply with the contested decision, which ded. they did by issuing the decree of 9 October 1998. 65Moreover, whatever may be the duty of loyal collaboration under Article 5 of the EC Treaty (now Article 10 EC), it cannot be deemed to alter the abovemen- tioned express allocation of competences as between Member States and Commission and to transfer to the latter the initiative and responsibility for adopting the appro- priate measures. 85. Finally, as regards the third allegation raised by the applicant, to the effect that the contested decision did not observe the principle of proportionality in regard to the prohibitive measures imposed, 62 the Com- mission correctly observes that it is not bound, under Article 8(3) of Regulation No 2408/92, to give preference to measures which are less onerous for the national authorities concerned. As is apparent from

(2) order the Italian Republic to pay the costs.

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