C-429/99
ECLI:EU:C:2001:282
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OPINION OF MR LÉGER — CASE C-429/99
OPINION OF ADVOCATE GENERAL LÉGER delivered on 17 May 2001 1
1. By application dated 3 November 1999, 'the commercial provision for the public of the Commission of the European Commu- the direct transport and switching of speech nities brought this action under Article 226 in real-time between switched network EC for a declaration that the Portuguese termination points, enabling any user to Republic has failed to fulfil its obligations use equipment connected to such a network under the fourth sub-paragraph of Arti- termination point in order to communicate cle 2(2) of Commission Directive 90/388/ with another termination point'. EEC 2as amended by Commission Direc- tive 96/19/EC. 3
2. The Portuguese Republic contends that the action should be dismissed. 4. Under Article 2(1)(a) of Directive 90/388, as amended by Directive 96/19, the Member States are to withdraw all those measures which grant exclusive rights for the provision of telecommunications I — Legal background services, including the establishment and the provision of telecommunications net- works required for the provision of such services. A — Community law
Directives 90/388 and 96/19
3. The seventh indent of Article 1(1) of 5. Article 2(2) of Directive 90/388 as Directive 90/388 defines 'voice telephony' amended by Directive 96/19 provides: in these terms:
1 — Original language: French. 2 — Commission Directive of 28 June 1990 on competition in the markets for telecommunications services (OJ 1990 L 192, p. 10). 3 — Commission Directive of 13 March 1996 amending Direc- tive 90/388/EEC with regard to the implementation of full competition in telecommunications markets (OJ 1996 L 74, 'Member States shall take the measures p. 13). necessary to ensure that any undertaking is
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entitled to provide the telecommunications two years, provided it is needed to achieve services referred to in paragraph 1 or to the necessary structural adjustments. ...' establish or provide the networks referred to in paragraph 1.
Commission Decision 97/310/EC
Without prejudice to Article 3c and the third paragraph of Article 4, Member States may maintain special and exclusive 6. By this decision of 12 February 1997 rights until 1 January 1998 for voice tele- (hereinafter 'the Decision') the Commission phony and for the establishment and provi- allowed the Portuguese Republic additional sion of public telecommunications net- periods for the implementation, in particu- works. lar, of Directive 90/388 as regards full competition in the telecommunications markets. 4
Member States shall, however, ensure that all remaining restrictions on the provision 7. In the terms of its Article 3, 'Portugal of telecommunications services other than may postpone until 1 January 2000 the voice telephony over networks established abolition of the exclusive rights currently by the provider of the telecommunications granted to Portugal Telecom as regards the services, over infrastructures provided by provision of voice telephony and the estab- third parties and by means of sharing of lishment and provision of public telecom- networks, other facilities and sites are lifted munications networks, provided that [cer- and the relevant measures notified to the tain conditions] are implemented according Commission no later than 1 July 1996. to [a given timetable] ...'.
As regards the dates set out in the second B — The Portuguese legislation and third subparagraphs of this paragraph, in Article 3 and in Article 4a(2), Member States with less developed networks shall be granted upon request an additional 8. It follows from Article 47(1 )(a) of Reg- implementation period of up to five years ulamento de Exploração do Serviço Fixo de and Member States with very small net- works shall be granted upon request an additional implementation period of up to 4 — OJ 1997 L 133, p. 19.
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Telefone (Rules on the provision of fixed 11. The Portuguese Government repeated telephone services), approved by Decree- this argument in its letter of 18 June 1999 Law No 240/97 of 16 September 1997, in response to the reasoned opinion of the that the commercial supply, direct or indir- Commission of 4 May 1999. ect, of a fixed telephone service by unau- thorised entities, when it involves interna- tional connections which use 'call-back' systems, is an infringement of the exclusive rights of the holder of the licence for the 12. In its application the Commission supply of fixed telephone services. describes the 'call-back' system as a service, the purpose of which is to reverse the traffic on the public telephone network of opera- tors of the switched telephone network. 5 The service consists of re-routing calls on the public switched networks in order to take advantage of the lowest available tariffs. According to the Commission the 'call-back' system is a service of routing and I I — Claims and pleas in law of the parties charging offered as an extra to the voice telephony service. It cannot be considered to be a substitute for this service since it does not involve the direct transport of the voice, which is left to the operator of the public network. 9. Taking the view that the 'call-back' system is a service which adds value and not a voice telephony service and that it therefore does not benefit from the addi- tional period for implementation allowed to the Portuguese Republic, the Commis- 13. The Commission claims that since it is sion, on 27 May 1998, sent the Portuguese not a voice telephony service within the Government a letter of formal notice. meaning of Directive 90/388, the 'call- back' service should have been liberalised in Portugal on the entry into force of that Directive. The prohibition to which it is subject under Decree-Law No 240/97 is therefore contrary to Directive 90/388.
10. In its reply of 14 July 1998, the Portu- guese Government contended that the sys- tem was a voice telephony service. In its submission 'call-back' is a technological 14. In its defence the Portuguese Govern- system introduced into telecommunications ment submits that the permission which it networks which allows advantage to be taken of the transport capacity of a net- 5 — According to the Commission, the function of switching work, outside the territory in which it is circuits includes the operations of connection and handling established, and also allows spoken com- of calls and control. Handling calls consists of making and intercepting connections according to instructions given by munications in real time. the subscriber.
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was granted to maintain, until 1 January proportional to what is necessary to 2000, exclusive rights in respect of voice achieve the requisite structural adjustment. telephony, covers the 'call-back' service. In the case of the Portuguese Republic, these adjustments consist in expanding the distribution of the system of voice tele- phony. However, the position is not the same as regards the modernisation of the telephone network since Portugal Telecom 15. It points out that, although the opera- is in advance of other telecommunications tor of the 'call-back' service effectively operators in the Community. takes the place of the operator of the voice telephony service, it is really the latter who remains in control of the direct transport of the voice.
19. The Commission adds that the out- come of the action depends on the defini- tion of the term 'voice telephony service'. 16. The position of the Portuguese Govern- As the term was harmonised by Directive 90/388, every subsequent legislative mea- ment is, in its submission, dictated by the sure which refers to it must be interpreted spirit and purpose of the derogation in accordance with its definition in the granted by the Decision, which is based Directive. on the need to provide for further transi- tional periods so as not to jeopardise the financial stability of the public telecommu- nications operators, and to allow the necessary structural adjustments prior to the liberalisation of telecommunications services, particularly as regards tariffs. 20. The Commission points out that an operator of a 'call-back' service can never take the place of an operator of a voice telephony service. The latter provides the transport and the switching of the voice in real time between two network termination 17. Otherwise, those adjustments could not points, and is therefore necessary to the be effected since they would then be proper functioning of the 'call-back' sys- dictated by market forces. The 'call-back' tem. service would distort the operating condi- tions of the voice telephony service.
21. In the Commission's submission the purpose of the Decision has nothing to do 18. In its reply the Commission points out with the commercial operation of the voice that under paragraph 26 of the grounds of telephony service. The additional period the Decision, the additional period provi- allowed to the Portuguese Republic is ded for by Directive 90/388 must be strictly justified only by the necessity to expand
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the distribution of the telephone system in 25. The question which arises is whether Portugal. The retention of Portugal Tele- the temporary exclusive rights to commer- com's exclusive licence is limited to the cial operation of the voice telephony service voice telephony service. Because it is a granted to Portugal Telecom are compati- derogation from one of the Community ble, from an economic point of view and in rules of freedom of movement, this provi- the light of the applicable legislation, with sion must be interpreted strictly. the 'call-back' system.
22. Finally, the Commission points out that the 'call-back' system operates only for 26. The Portuguese Government points out international calls. The actual impact of the that 'call-back' is a method of changing the liberalisation of this service is therefore direction of the direct routing of the voice, minor, more especially as even among this which continues to be transported on the type of call its position is marginal. public switched network. It is therefore a service provided by means of apparatus connected at network terminal points. It allows its operator to change the conditions of commercial operation of the voice transport service offered by the operator of the public network. Since it owes its 23. In its rejoinder, the Portuguese Govern- existence to the price differences between ment states that it does not dispute that the different providers of voice telephony ser- term 'voice telephony service' corresponds, vices and it assumes that the competition essentially, to the meaning given in Arti- between them is legal, the competitive cle 1 of Directive 90/388. It must therefore operation of the 'call-back' service is be construed and applied in accordance incompatible with the exclusive rights cov- with that definition. ering the voice telephony service.
24. In its submission the case does not concern this term, but the subject-matter of 27. The Portuguese Government argues the exclusive rights which Portugal Tele- that the Decision must be construed in com enjoys in the field of voice telephony, accordance with its aim, which is to protect and the setting up and provision of public the voice telephony services from competi- telecommunications networks. These rights tion, in order to reconcile the expansion of do not strictly coincide with the voice telephone distribution with tariff adjust- telephony service, but include the prohibi- ments. The practical effect of the 'call-back' tion of the freedom to provide 'call-back' system is to provide a voice telephony services. service on conditions different from those
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which are offered by the holder of the I I I— The action for failure to fulfil obli- exclusive right to operate voice telephony. gations
31. Under the terms of Article 3 of the Decision, the Portuguese Republic was allowed to postpone, until 1 January 2000, the abolition of the exclusive rights 28. Such a reading would not be incompa- currently granted to Portugal Telecom in tible with the principle of proportionality respect of voice telephony and the putting as the Decision makes no mention of the in place and provision of public telecom- extent of the competition which Portugal munications networks. Telecom might face.
32. The outcome of the present action depends on whether, as the Portuguese Government claims, the retention of these exclusive rights precludes the liberalisation 29. According to the Portuguese Govern- of the 'call-back' service. ment, the Commission's contention that the 'call-back' service is marginal in interna- tional traffic cannot be accepted.
33. Let me make clear from the outset that, according to the parties, 'call-back' is a service offered to the public in addition to the simple direct transport and the simple switching of the voice in real time. 30. The scale of the service varies in relation to the amount of competition between operators. Its prohibition under national law explains the absence of data on the real impact which it would have 34. Like the Commission, the Portuguese had, had it been permitted. Since the end of Government does not dispute that the 'call- the additional period allowed to the Portu- back' service is not, strictly speaking, a guese Republic, it is significant that no voice telephony service within the meaning application has been made for an operator's of Article 1 of Directive 90/388. It states licence for the 'call-back' service, which can that it 'does not claim to stretch this perhaps be seen as a sign of the re- definition so as to include the "call-back" adjustment of Portugal Telecom's prices in service'.6 In its submission although the line with competitive models, and as evi- operator of the 'call-back' service effec- dence of the opportunistic nature of the tively takes the place of the operator of the interest shown in the 'call-back' system during the period of protection allowed to Portugal Telecom. 6 — Paragraph 4 of the rejoinder.
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voice telephony service, the latter remains Article 86 of the EC Treaty (now Article 82 no less responsible for effecting the direct EC), had been introduced, in 1990, pur- transport of the voice. The operator of the suant to Article 90(2) of the Treaty, so fai- 'call-back' service lays down, firstly, the as voice telephony was concerned. 8 conditions on which the transport is brought about, and, secondly, those on which the service is provided from a commercial point of view. 7
35. However, according to the Portuguese 38. That derogation from the rules of free- Government, the temporary exclusive dom of competition and freedom to pro- rights to commercial operation of the voice vide services was terminated by Directive telephony service are incompatible with a 96/19, save for Member States with less 'call-back' system open to competition, developed or very small networks which since such liberalisation would jeopardise enjoyed, under certain conditions, a tem- the financial equilibrium of the public porary derogation. 9 Therefore, the Deci- operator and constitute an obstacle to the sion by which the Commission allowed tariff adjustments. additional periods to the Portuguese Republic, in application of those provi- sions, prolonged, for the benefit of the Member State, the derogation which it had initially been granted. 36. Apart from the fact that there is no basis for this argument in the text of the Decision, which restricts the postponement of the abolition of the exclusive rights enjoyed by Portugal Telecom to voice telephony and to the putting in place and provision of public telecommunications networks, it means counter to the principle that derogations from the rules of Commu- 39. According to the settled case-law of the nity law must be interpreted strictly. Court, every derogation from the rules intended to guarantee the effectiveness of the rights recognised by the Treaty must be strictly interpreted. 10 Therefore it is correct that the exclusive rights to which Portugal 37. It should be borne in mind that, as is Telecom is entitled should be confined as clear from the preamble to Directive 96/19/ provided by Article 3 of the Decision ·—• EC, that derogation from Article 90 of the outside the field of public telecommunica- EC Treaty (now Article 86 EC), in connec- tion with Articles 59 of the EC Treaty (now, after amendment, Article 49 EC) and 8 — Third and fourth recitals. 9 — Fifth recital of Directive 96/19 and Article 2(2) of Directive 90/388. 10 — See, for example, Case C-40/93 Commission v Italy [1995] 7 — Paragraph 14 of the defence. ECR I-1319, paragraph 23.
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tions networks —, to the field of voice rights in respect of voice telephony does not telephony. exceed two years.
40. This construction of Article 3 of the Decision does not seem contrary to the aims of Directive 90/388 expressed in the 44. No evidence has been adduced to preamble to Directive 96/19/EC and in the support the idea that the liberalisation of Decision itself. the 'call-back' system two years before that of voice telephony would have sufficed, or merely have tended, to jeopardise the aims of Directive 90/388, as regards voice tele- phony. In particular, the Portuguese Gov- ernment has not put forward, in support of its statements, any evaluation of the part 41. The retention of exclusive rights is that a 'call-back' service could play within justified by the need for telecommunica- the telecommunications services overall, in tions operators to make structural adjust- case of liberalisation of its method of ments in particular in the form of the operation, or on the actual competition gradual modification of charges and the which such a service would constitute for expansion of the distribution of the voice the voice telephony service, within a period telephony network. of two years.
42. The Portuguese Government has not shown how the exclusion of the 'call-back' service from the exclusive rights granted to 45. In the absence of such information, it is the Portuguese Republic regarding voice doubtful that the Court is in a position to telephony would prejudice those aims. assess the merits of the Portuguese Govern- ment's arguments that the Commission's interpretation is liable to undermine the aims of Directive 90/388, with regard to certain Member States, in respect of voice telephony.
43. It is clear from the observations of the Commission, which were not disputed on this point, that the 'call-back' system is limited to international calls. 11 Moreover, the period of extension of the exclusive
46. Therefore this application must be 11 — Paragraph 11 of the application and 21 of the reply. upheld.
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IV — Conclusion
47. In the light of these considerations, I propose that the Court should:
(1) declare that by postponing until 1 January 2000 the abolition of Portugal Telecom's exclusive rights in respect of the 'call-back' system, the Portuguese Republic failed to fulfil its obligations under the fourth subparagraph of Article 2(2) of Commission Directive 90/388/EEC of 28 June 1990 on competition in the markets for telecommunications services, as amended by Commission Directive 96/19/EC of 13 March 1996 amending Directive 90/388/EEC with regard to the implementation of full competition in telecommunications markets, and by virtue of Article 3 of Commission Decision 97/310/EC of 12 February 1997 concerning the granting of additional implementation periods to Portugal for the implementation of Commission Directives 90/388/EEC and 96/2/EC as regards full competition in the telecommunications market;
(2) order the Portuguese Republic to pay the costs.
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