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4. Every year the government issues an order updating the charges. Under a system of discounts introduced by Implementing Order No 352/98 of 23 June 1998, which Legal background was adopted pursuant to Decree-law No 102/90, a 7.2% discount is allowed at Lisbon Airport (18.4% at other airports) after 50 landings each month. After 100 and 150 landings discounts of 14.6% and 22.5% respectively are allowed at Lisbon 2. Article 18 of Portuguese Decree-law Airport (24.4% and 31.4% at other air- No 102/90 of 21 March 1990 provides ports). A discount of 32.7% is allowed that airport charges are to be determined, after 200 landings (40.6% at other air- at airports administered by Aeroportos e ports). Navegação Aérea — Empresa Publica (the public undertaking responsible for airports and air navigation, hereinafter 'ANA-EP'), by ministerial order. Article 18(3) states that the charges may differ according to the category, function and utilisation of the airport in question. 5. ANA-EP is a public undertaking respon- sible for administering the three mainland airports (Lisbon, Faro and Oporto) that 1 — Original language: French. form the subject of the contested decision.

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Facts of the case and contested decision meet the overriding requirements of eco- nomic and social cohesion. Lastly, for international flights the Portuguese airports were in competition with airports at 6. By letter of 2 December 1996, the Com- Madrid and Barcelona, which employed mission informed the Portuguese Republic the same charging mechanism. The current that it had begun an investigation into the system was also intended to achieve econo- way in which discounts were allowed on mies of scale as a result of more intensive landing charges at the airports of the use of Portuguese airports and to promote Member States. It asked the Portuguese Portugal as a tourist destination. authorities to send it all the information available on the Portuguese legislation on landing charges so that it could determine whether the discounts were compatible with the Community rules on competition.

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Treaty, which enjoys the exclusive right services can be regarded as a substan- to administer the airports of Lisbon, tial part of the common market; Oporto and Faro and the four airports in the Azores;

— ANA-EP's pricing policy is based on — since ANA-EP enjoys an exclusive right legislative and regulatory provisions in respect of each airport it administers which constitute a State measure it occupies a dominant position in the within the meaning of Article 90(1) of market for aircraft landing and take-off the Treaty; services for which a charge is levied;

— the relevant markets are those in ser- vices linked to access to airport facil- — the system of landing charges in ques- ities at each of the seven airports tion has the effect of applying dissim- administered by ANA-EP; ilar conditions to airlines for equivalent operations, thereby placing them at a competitive disadvantage;

— on the other hand, the 50% reduction enjoyed by domestic flights places air- lines operating intra-Community ser- 11. The Commission therefore decided that vices at a disadvantage, which cannot the system of discounts on landing charges be justified either by the objective of differentiated according to the origin of the providing support for flights between flight, provided for at the airports of the Azores and the mainland or by the Lisbon, Oporto and Faro by Decree-law short distance of domestic flights. First, No 1 0 2 / 9 0 , Implementing Decree the contested decision does not apply No 38/91 and Implementing Order to flights in or out of the Azores in any No 352/98, constituted a measure incom- case. Second, the charge is calculated patible with Article 90(1) of the Treaty on the basis of the weight of the read in conjunction with Article 86 (Arti- aircraft rather than the distance, cle 1 of Decision 1999/199). The Portu- although short-haul international guese Republic was directed to terminate flights do not enjoy the reduction in that infringement and to inform the Com- question; mission, within two months of the date of notification of the decision, of the measures it had taken to that end (Article 2 of the Decision).

— for an undertaking occupying a domi- nant position like ANA-EP to apply the abovementioned conditions with regard to its trading partners constitu- tes abuse of a dominant position within 12. In its application the Portuguese the meaning of subparagraph (c) of the Republic relies on pleas which relate to second paragraph of Article 86 of the both the form and the procedure adopted Treaty; by the Commission and to the merits of the contested act.

15. Moreover, it was incumbent on the Commission to explain why, in the con- 20. As regards the need to state the reasons tested decision, it considered the matter for the choice the Commission made from the standpoint of the rules on compe- between Article 90(3) of the Treaty and tition and not that of freedom to provide Article 169 of the EC Treaty (now Arti- services as in the proceedings for failure to cle 226 EC), it should be observed that the act. Court has consistently held that Arti- cle 90(3) of the Treaty requires the Com- mission to ensure that Member States comply with their obligations as regards the undertakings referred to in Arti- cle 90(1) and expressly empowers it to take action for that purpose by means of 16. Similarly, the Commission should have directives or decisions. The Court has explained the situation at the airports of therefore recognised that the Commission the other Member States in much greater has the power to determine that a given detail than it did. State measure is incompatible with the

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26. It follows that the Commission was 23. The Commission's right to base its entitled to limit the subject of its proceed- measure on Article 90(3) of the Treaty is ings for failure to act to specific charges also not affected by the fact that it brought and not to include others. As regards the proceedings for failure to act in respect of latter, it was, as I said, permissible for it to measures regarded by the applicant as take a decision based on Article 90(3) of being connected with the contested landing the Treaty once it considered that the charges. substantive conditions laid down in that provision were met.

3 — Joined Cases C-48/90 and C-66/90 Netherlands and Others v Commission [1992] ECR I-565, paragraphs 25 to 28. 4 — Case C-35/96 [1998] ECR I-3851, paragraph 27.

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27. Even if it is therefore established that 31. The applicant does not contend that the the Commission was entitled to opt for Commission failed to comply with that Article 90(3) rather than Article 169 of the obligation in the present case. It does not Treaty, the applicant's arguments require us therefore dispute the fact that the text of to consider whether the Commission was the decision enables it without any diffi- required to state the reasons for the choice culty to understand the nature of, and it made. justification for, the charges made by the Commission.

33. I should add lastly that at all events, according to the case-law of the Court, the Commission has a discretion to determine whether or not it is appropriate to bring 30. It follows in the present case that the proceedings for failure to act. 7 It follows contested decision should show in sufficient necessarily that its choice in the matter is detail the nature of the infringement of not open to judicial review. As I said, the which the person to whom the decision is obligation to provide a statement of rea- addressed is charged, the reasons why the sons must be viewed in the context of such Commission considers that an infringement a review and cannot therefore extend to has occurred, and the measures it expects aspects of the contested measure that fall the person to whom the decision is addressed to take. 6 — See, as an example of the consistent case-law, Case C-478/93 Netherlands v Commission [1995] ECR 1-3081, paragtaphs 48 to 50. 5 — See, as an example of the consistent case-law, Case 250/84 7 — Case 247/87 Star Fruit v Commission [1989] ECR 291, Eridania and Others [1986] ECR 117. paragraph 11.

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within the discretion of its author and 38. This argument should therefore also be therefore cannot be the subject of an rejected. action.

39. The applicant also claims that the 34. For the reasons stated, I consider that Commission ought to have referred to the the applicant's first plea should be rejected. situation in the other Member States.

35. The applicant goes on to claim that the 40. This argument cannot be accepted. The Commission should have explained why it purpose of the contested decision is to relied on the competition rules of the establish the existence of an infringement Treaty rather than the rules concerning of the rules on competition. The existence freedom to provide services. of such an infringement does not depend in any way on the existence of similar mea- sures in one or more other Member States. Moreover, the applicant does not claim that there is such a link.

48. But the applicant's argument relates principally to the Commission's choice to adopt not a directive but a decision.

45. It mentions in this context the fact that the Commission, without using its own power to adopt a directive, had submitted to the Council a proposal for a directive on airport charges, 8 which shows that the 49. In this connection, let us recall, first of matter should have been resolved by means all, that the Court has held 10 that 'it is of legislation and not an individual deci- apparent from the wording of Article 90(3) sion. and from the scheme of Article 90 as a whole that the Commission enjoys a wide discretion in the field covered by para- graphs 1 and 3, both in relation to the action which it considers necessary to be taken and in relation to the means appro- 46. One must concur with the Commis- priate for that purpose'. sion, however, when it points out that the Court has held that the purpose of the power conferred on the Commission by Article 90(3) of the Treaty is different to, and more specific than, the purpose of the legislative powers granted to the Council. 50. It follows that the Commission was on Hence, the possibility that rules containing the face of it entitled to resort to a decision. provisions which impinge upon the specific sphere of Article 90 might be laid down by 9 — Case C-202/88 France v Commission [1991] ECR I-1223. 10 — Case C-107/95 P Bundesverband der Bilanzbiichhalter v Commission [1997] ECR I-947, and Netherlands v Com- 8 — COM(97) 154 final. mission, cited above.

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case. A directive based on Article 90(3) of 61. The fact that the infringement exists in the Treaty could only apply to State other Member States is irrelevant in that measures and would have no effect there- regard. fore on schemes that were attributable not to a Member State but merely to under- takings administering an airport.

62. Thus, the Court held in Netherlands v 58. The Portuguese Republic contends that Commission, cited above, that a Commis- all such undertakings in fact meet the sion decision based on Article 90(3) of the conditions for coming within the scope of Treaty is 'adopted in respect of a specific Article 90, but it does not produce any situation in one or more Member States'. It evidence of this, or question the validity of is not therefore, contrary to what the the example quoted by the Commission in applicant's argument implies, dependent support of its view, namely the Finnish on the infringement's existing only in the airports, which, having adopted a similar Member State to which the decision is system of discounts on their own initiative, addressed. were the subject of a decision based on Article 86 of the Treaty alone, without the Commission having recourse to Article 90.

63. In addition, and even if the applicant denies it, its argument amounts to uphold- 59. The Commission also points to the ing the right of a Member State to maintain case-law cited above, which grants it a wide in force a measure that is contrary to discretion in the use of Article 90(3) of the Community law on the pretext that similar Treaty. measures exist in other Member States.

67. The applicant claims in this connection 71. I therefore propose that the plea of that the Commission does not have unfet- abuse of process should be rejected and tered freedom to decide whether to adopt a shall make the following remarks purely for decision on the basis of Article 90(3) of the purposes of completeness. Treaty or to bring proceedings for failure to act.

72. The Commission liberally interprets the applicant's arguments as an allegation of 68. Indeed, if it is established that the infringement of the rights of the defence, alleged infringement exists in several Mem- arising from the fact that Article 169 of the ber States the Commission is obliged, if it is Treaty provides for a pre-litigation proce- dure that the Commission would not be required to follow if it had recourse to 1 1— Case 232/78 Commission v trance |1979| ECR 2729. Article 90(3) of the Treaty.

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79. The fact remains, as the Commission 12 — Case 69/83 Lux v Court of Auditors [1984] ECR 2447. states in the contested decision, that in

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practice Portuguese carriers receive much Absence of abuse of a dominant position larger discounts, 30 % and 22 % on average respectively, than those granted to carriers from other Member States, which vary between 8 % and 1 %. These figures are not challenged by the applicant. 83. We have seen that the contested dis- counts are criticised by the Commission on two counts. First, a 50% discount is granted only to domestic flights. Secondly, the contested regulations provide for the granting of progressive discounts to carriers making a large number of take-offs and 80. Even if one may therefore question landings at the airports concerned. whether the discounts in question are really not discriminatory, it is quite clear that there should not be any debate on this. The wording of Article 90(3) of the Treaty does not leave room for any doubt and makes it quite clear that application of Article 90(3) is not restricted to cases where a State 84. It is appropriate to consider first of all measure infringes Article 6 of the Treaty. It the issue of the differentiation between also refers expressly to Article 86 of the domestic and international services. Treaty.

81. It is therefore quite permissible for the Domestic services Commission to rely on that provision to sanction a measure which, although the Commission does not state that it is a case of formal discrimination, it still considers to be incompatible with Article 86 of the Treaty. In this case that is precisely what it 85. The applicant states first of all that has done. Community carriers, who may operate such domestic services under Community regulations, enjoy those discounts in the same way as their Portuguese competitors. The system does not therefore involve discrimination but, on the contrary, estab- lishes a distinction on the basis of an objective criterion justified by reasons that 82. It follows that I should base my analy- have nothing to do with seeking to favour sis on Article 86. local airlines.

93. As regards routes between the main- land and the autonomous regions, or between one autonomous region and another, the applicant relies on the refer- 89. I consider that that argument should be ence to the objective of economic and social accepted. In fact it is difficult to see that cohesion in Article 3 of the EC Treaty Article 86 of the Treaty leaves any room (now, following amendment, Article 3 EC), for doubt. An undertaking in a dominant and on the status as an ultra-peripheral position is not entitled, as subparagraph (c) region granted to the Azores and Madeira of the second paragraph of Article 86 under Article 227 (now, following amend- states, to apply 'dissimilar conditions to ment, Article 299 EC). equivalent transactions with other trading parties, thereby placing them at a compe- titive disadvantage'. 13 — Case C-18/93 [1994] ECR I-1783, paragraph 45.

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94. The Commission is correct, however, in Qtiantity discounts stating that such considerations would only be relevant if, under the terms of Arti- cle 90(2) of the Treaty, the rules on com- petition prevented the undertakings con- cerned from performing their public service 98. As far as quantity discounts are con- duties, which is not claimed in this case. cerned, the applicant puts forward various arguments, one of which seems to me to be of particular interest.

99. The applicant states, first of all, that 95. In addition, Community regulations 14 the practice of quantity discounts is a permit the Portuguese Republic to impose commercial policy option that ANA-EP public service obligations in order to take should not be deprived of on the pretext account of specific features of the destina- that it enjoys a dominant position. tions concerned.

from Article 222 of the EC Treaty (now 105. That argument is linked to the one put Article 295 EC) 15, under which undertak- forward by the Portuguese Republic to ings must not be treated less favourably by justify quantity discounts on the ground Community law on the pretext that a that they promote intensive use of the Member State has granted them special or airports concerned. 'The frequency or exclusive rights. intensity of the use of such costly facilities as regards both their initial cost and their maintenance, is decisive in the conduct of a strategic policy of (re)investment in the development of such airport facilities; besides which, it also has a bearing on the final cost of writing off investment'. 17 102. The Commission is not criticising such action and, moreover, quotes itself the case-law of the Court under which, if an undertaking granted such exclusive rights is likely, as a result, to be in a dominant position, it does not follow that the granting of such rights in itself consti- tutes abuse. 16 106. In this connection, may I point out first of all that, as the Commission also states in the contested decision, 18 the prohibition on an undertaking in a domi- nant position offering quantity discounts is not absolute. It is clear from the case-law of the Court that if increasing the quantity 103. It is not therefore the existence of the supplied results in lower costs for the exclusive rights accorded to ANA-EP which supplier, the latter is entitled to pass on is the subject-matter of the Commission's that reduction to the customer in the form decision, but the use of the resultant of a more favourable tariff. 19 dominant position, a matter quite foreign to the ambit of Article 222 of the Treaty, the article invoked by the applicant.

108. I share the Commission's view that the cost of the service provided by the under- taking administering the airport is the same 113. According to the Commission, the whether it is a company's first or its objective of encouraging the intensive use hundredth flight. of airports is not likely to be affected by the contested discounts. As a result of the large number of landings each month that they assume, the discounts are of almost exclu- sive benefit, as we have seen above, to Portuguese operators who are based at the 109. I consider, however, that this does not airports in question and who would there- entirely answer the point made by the fore use them any way. A scale of discounts Portuguese Republic. From a general point which did not involve such thresholds of view, it is undeniable that, on the face of would not incur the same criticism and it and all things being equal, intensively- would therefore be more appropriate to used facilities make it possible to achieve achieve the objective in question. unit costs that are lower than those of under-used facilities.

115. It seems at first sight much more likely and specifically lower costs for the airports' that the number of flights depends primar- operator. ily on the volume of traffic on the route concerned. The way in which that number of flights is divided between the various carriers should be irrelevant as far as the airport's operator is concerned. 119. The Portuguese Republic also claims that it is a case of providing an incentive to make refuelling stops, to compete with other Community airports. Such stops are by nature not dependent on the amount of traffic. 116. That number may certainly be reached by one or two carriers each oper- ating many flights, but it could also be attained by a larger number of carriers each engaging in a smaller number of landings. It is therefore quite conceivable that, by 120. The Commission replies, and is not structuring its tariffs in a way that would contradicted on this point, that the con- enable a larger number of carriers to tested discounts do not in any case apply to benefit from the discounts, the airport refuelling stops. operator would in fact be able to increase the airport's rate of use.

121. Lastly, the applicant also considers that the fact that no Community carrier has 117. To this must be added the fact that the complained indicates clearly that the dis- figures quoted in point 79 of this Opinion, count system applied by ANA-EP does not put forward by the Commission and not harm other Community operators. disputed by the applicant, in fact show that the discounts in question tend to favour very clearly carriers established at the air- ports concerned. 122. Be that as it may, the Commission is entitled to take decisions on competition matters on its own initiative.