Commission of the European Communities v Kingdom of Spain.

• Jurisdiction: European Union
• Celex Number: 62001CJ0500
• ECLI: ECLI:EU:C:2004:8
• Court: Court of Justice (European Union)
• Date: 07 January 2004
• Procedure Type: Recurso por incumplimiento – fundado
• Docket Number: C-500/01

Case C-500/01


Commission of the European Communities
v
Kingdom of Spain

«(Failure of a Member State to fulfil obligations – Market for telecommunications services – Tariff rebalancing – Access to the local loop – Directive 90/388/EEC – Article 4c)»

Opinion of Advocate General Léger delivered on 10 July 2003

Judgment of the Court (Fifth Chamber), 7 January 2004

Summary of the Judgment

Competition – Public undertakings and undertakings to which Member States grant special or exclusive rights – Telecommunications sector – Directives 90/388 and 96/19 – Tariff rebalancing by traditional telecommunications organisations – Obligation of Member States to remove obstacles to rebalancing – National rules fixing or limiting variation in tariffs – Not permissible

(Commission Directives 90/388, Art. 4c, and 96/19, Art. 1(6)) Although Article 4c of Directive 90/388 on competition in the markets for telecommunications does not lay down a period within which the obligation to rebalance tariffs must be carried out by the telecommunications organisations, the fact remains that several elements of Directive 96/19, amending Directive 90/388, state that the rebalancing of tariffs must be carried out at a sustained rate in order to facilitate the opening of the telecommunications market to competition. Thus, it is clear from reading the 20th and 5th recitals in the preamble to Directive 96/19 together with Article 4c of Directive 90/388 that the Member States were bound to phase out the restrictions on tariff rebalancing as soon as possible after the entry into force of Directive 96/19 and at the latest by 1 January 1998.Therefore, a Member State fails to fulfil that obligation to remove obstacles to tariff rebalancing where the tariff imbalances persisting for several years after the expiry of that period cannot be attributed exclusively to the traditional telecommunications organisation, but also to the national authorities. Such is the case both where that organisation has no discretion in fixing tariffs and where its power to fix tariffs is limited by a regulatory ceiling on price variations for telecommunications services detrimental to the development of competition with regard to the traditional operator and, therefore, contrary to the objectives of Directive 90/388.see paras 32, 36-37, operative part 1

JUDGMENT OF THE COURT (Fifth Chamber)
7 January 2004 (1)

((Failure of a Member State to fulfil its obligations – Market for telecommunications services – Tariff rebalancing – Access to the local loop – Directive 90/388/EEC – Article 4(c)))

In Case C-500/01, Commission of the European Communities, represented by S. Rating, acting as Agent, with an address for service in Luxembourg,

applicant,

v

Kingdom of Spain, represented by S. Ortiz Vaamonde, acting as Agent, with an address for service in Luxembourg,

defendant,

APPLICATION for a declaration that, by failing to adopt the laws, regulations and administrative provisions necessary to comply with Article 4(c) of Commission Directive 90/388/EEC of 28 June 1990 on competition in the markets for telecommunications services (OJ 1990 L 192, p. 10) as amended by Commission Directive 96/19/EC of 13 March 1996 (OJ 1996 L 74, p. 13), the Kingdom of Spain has failed to fulfil its obligations under those directives and the EC Treaty,

THE COURT (Fifth Chamber),,

composed of: P. Jann, acting for the President of the Fifth Chamber, D.A.O. Edward (Rapporteur) and A. La Pergola, Judges, Advocate General: P. Léger,
Registrar: R. Grass,

having regard to the report of the Judge-Rapporteur,

after hearing the Opinion of the Advocate General at the sitting on 10 July 2003,

gives the following

Judgment

1

By application lodged at the Court Registry on 21 December 2001, the Commission of the European Communities brought an action under Article 226 EC for a declaration that, by failing to adopt the laws, regulations and administrative provisions necessary to comply with Article 4(c) of Commission Directive 90/388/EEC of 28 June 1990 on competition in the markets for telecommunications services (OJ 1990 L 192, p. 10) as amended by Commission Directive 96/19/EC of 13 March 1996 (OJ 1996 L 74, p. 13) ( Directive 90/388), the Kingdom of Spain has failed to fulfil its obligations under those directives and the EC Treaty.

Legal background

Community legislation

2

The fifth recital in the preamble to Directive 96/19 states: ... In order to allow telecommunications organisations to complete their preparation for competition and in particular to pursue the necessary rebalancing of tariffs, Member States may continue the current special and exclusive rights regarding the provision of voice telephony until 1 January 1998. Member States with less developed networks or with very small networks must be eligible for a temporary exception where this is warranted by the need to carry out structural adjustments and strictly only to the extent necessary for those adjustments. Such Member States should be granted, upon request, an additional transitional period respectively of up to five and of up to two years, provided it is necessary to complete the necessary structural adjustments. The Member States which may request such an exception are Spain, Ireland, Greece and Portugal with regard to less developed networks and Luxembourg with regard to very small networks ...

3

According to the 20th recital in the preamble to Directive 96/19: ... Member States should phase out as rapidly as possible all unjustified restrictions on tariff rebalancing by the telecommunications organisations and in particular those preventing the adaptation of rates which are not in line with costs and increase the burden of universal service provision.

4

Article 4(c) of Directive 90/388, introduced by Article 1(6) of Directive 96/19 provides: Without prejudice to the harmonisation by the European Parliament and the Council in the framework of ONP, any national scheme which is necessary to share the net cost of the provision of universal service obligations entrusted to the telecommunications organisations, with other organisations whether it consists of a system of supplementary charges or a universal service fund, shall:

(a)

apply only to undertakings providing public telecommunications networks;

(b)

allocate the respective burden to each undertaking according to objective and non-discriminatory criteria and in accordance with the principle of proportionality. Member States shall communicate any such scheme to the Commission so that it can verify the scheme's compatibility with the Treaty.Member States shall allow their telecommunications organisations to rebalance tariffs taking account of specific market conditions and of the need to ensure the affordability of a universal service, and, in particular, Member...