Firma Städtereinigung K. Nehlsen KG v Freie Hansestadt Bremen (47/79)

I —Facts and procedure

II —Written observations submitted pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC

The Council of the European Com munities first notes that the order making the reference refers on two occasion the validity of Regulation (EEC No 543/69, and, in a brief statement reserves the right to submit obser intended to uphold the validity of the measure should it be questioned the course of the proceedings.However, the question of the validity of Regulation (EEC) No 543/69 has not been raised in any of the statements lodged with the Court.The Government of the Federal Republic of Germany, whose view's are shared without reservation by the Freie Hansestadt Bremen, considers that the reply to the first question should be that the words ‘vehicles which are used by other public authorities for public services’ can refer only to vehicles which are owned by or under the control of the public authorities.In its view Article 4 (4) of Regulation (EEC) No 543/69 as supplemented by Regulation (EEC) No 2827/77 in fact constitutes a derogative provision and must accordingly be interpreted narrowly. Regulation (EEC) No 543/69 is intended to implement the social provisions of Decision No 65/271/EEC of the Council of 13 May 1965‘on the harmonization of certain provisions affecting competition in transport by rail, road and inland waterway’. Its objective is accordingly to eliminate, both between the various forms of transport and within each of those forms, differences which might distort conditions of competition to a significant extent and not, at any rate initially, to enact general measures of social policy as such. In the light of that objective the derogative provisions embodied in the said Article 4 are justified by reason of the fact that the fields to which they relate do not include competition. The exception is, nevertheless, to be interpreted as narrowly as possible since only the ‘public authority’ as such is not in competition with the private sector.Even if Regulation No 543/69 is viewed from the standpoint of social policy it none the less remains true that the exception laid down by Article 4 (4) cannot apply to vehicles belonging to private undertakings. It is in fact acceptable that the regulation should not apply to vehicles owned by a public authority since such authority is regarded as able itself to guarantee that social provisions will be observed in the use of its vehicles. On the other hand there is no such guarantee where public duties are performed by private undertakings on the basis of a contract since the means whereby such work is carried out by those undertakings does not come within the responsibility of the public authority but remains under the control of the private undertaking.The entrusting of certain public tasks to private undertakings which do not form part of the public sector thus falls entirely under the rules on competition and there is thus no exemption from Community measures intended to create uniform conditions of competition within the framework of the common transport policy.Finally, it must in addition be emphasized that a private undertaking carrying out work on the basis of a contract governed by private law in order to attain public objectives is certainly not a ‘public service licensee’ exercising the powers of a public authority. It is thus possible to disregard the question whether the operations of a ‘public service licensee’ may fall within the exception provided for by Article 4 (4) of Regulation No 543/69.With regard to the second question the Government of the Federal Republic of Germany observes first of all that it is only submitted in case, contrary to its view, the reply to the first question is given in terms of the second paragraph thereof. It nevertheless wishes, in order to make provision for all eventualities, to give its view on the second question to which it suggests an affirmative reply should be given.In order to establish whether persons providing public services compete with ‘professional road hauliers’ the point at issue is whether the competition in question is for the provision of a public service and not competition during the provision of that service. It is in fact clear that during the duration of the contract concluded with the public administration there is no competition since the performance of public duties is in principle entrusted to one private undertaking alone for a particular field. On the other hand such competition revives when the contract is to be concluded since at that point the public authority has the opportunity of choosing the most advantageous of the various offers submitted by the private undertakings. Competition would be distorted if a particular tenderer were enabled at that point to enjoy a competitive advantage simply because he provided less favourable working conditions for his employees. It is thus indispensable in order to maintain equal conditions of competition on the common market in transport to have regard only to competition for‘use’ by the public authority. Any other interpretation — in particular with regard to the wide interpretation of the word ‘use’ which is assumed for this argument — would jeopardize the common policy in a considerable part of the transport sector.The Commission of the European ommunities first of all sets out certain general considerations concerning the objectives and characteristics of Regulation (EEC) No 543/69. It remarks that the aims pursued by that regulation are: (I) the social protection of drivers; (II) an improvement in road safety; (III) the elimination of disparities which are capable of bringing about considerable distortions in the conditions of competition in transport. The provisions of the regulation concerning driving periods in fact ensure the simultaneous attainment of these three objectives.The above-mentioned regulation made provision for a number of exceptions, including those relating to vehicles used for performing a public service. Since an exhaustive list of exceptions proved too inflexible in view of the different ways in which the public services are organized in the Member States, Regulation (EEC) No 2827/77 supplemented that list by a general provision referring to ‘vehicles which are used by other public authorities for public services and which are not in competition with professional road hauliers’. That general provision is not a supplementary exception but rather a clause including all vehicles other than those expressly indicated in the preceding list, which, by reason of their use, are excluded from the scope of Regulation No 543/69.The exception provided for in the said Article 4 (4) is based on two criteria: (a) the use of the vehicles for a purpose in the general public interest and (b) the absence of any competition with professional road hauliers.With regard to the first criterion an activity in the public interest (in this case the removal of refuse), certainly does not cease to be so by reason of the fact that it is not affected directly by the public authority. The vehicles used in connexion with that activity are thus ‘used by the public authority for public purposes’ even though they belong to private undertakings with which the administration has concluded a contract for the hire of services. This is borne out by the fact that a restrictive provision (‘service vehicles’) which appeared in the Commission's proposal was not included in the final wording of Regulation No 2827/77 adopted by the Council.The absence of competition with professional road hauliers must then be considered. It is common ground that during the validity of the contract the undertaking carrying out an operation in the public interest is not in any way in competition with other professional road hauliers. The question, however, remains whether Article 4 (4) refers solely to the absence of actual competition or whether it requires in addition the absence of potential competition, that is to say of competition which revives each time the contract with the private undertaking is to be extended or terminated.Which of those two factors must thus be considered as taking precedence: the possibility of potential competition or the temporary exclusion of actual competition?According to the Commission a private undertaking cannot rely on the derogative provision in Article 4 (4) unless the contract, by excluding actual competition in a specified field, also prevents all potential competition from other professional road hauliers during the period of validity of the contract.The Commission emphasizes finally that, as the file makes clear, the Industrial Inspectorate and the Verwaltungsgericht Bremen applied the original version of Article 4 (4) since the new version entered into force only on 1 January 1978. It thus follows that at the time in question, persuant to the narrower definition appearing in that article, vehicles used by a private undertaking for the removal of refuse were covered by Regulation No 543/69.In conclusion the Commission suggests that the following reply be given to the question submitted by the Oberverwaltungsgericht Bremen:1. The last phrase of the derogative provision contained in Article 4 (4) of Regulation No 543/69 as amended by Regulation No 2827/77 excludes from the scope of the said regulation all vehicles used for public services in the general interest regardless of the means by which such services are administered, whether by the public authority itself or by a private undertaking under contract.2. A private undertaking can rely on that derogation only if it is established that, pursuant to the powers conferred upon it, such undertaking, using vehicles employed for such public services within the area covered by the contract, excludes actual competition in such a way that all potential competition remains ineffective during the period of the validity of the contract’.

III —Oral procedure

At the sitting on 26 September 1979 the Freie Hansestadt Bremen, represented by Fritz Rumler, acting as Agent, the Government of the Federal Republic of Germany, represented by Martin Seidel, acting as Agent, and the Commission of the European Communities, represented by its Legal Advisers, Gerhard Bebr and Etierine Lasnet, acting as Agents, presented oral argument. The Council, represented by its Legal Adviser, Antonio Sacchettini, acting as Agent, was also present.The Commission of the European Communities subsequently clarified its suggestions with regard to the second question to which it now suggests that the reply should be that a private undertaking cannot rely on the derogation in Article 4 (4) of Regulation No 543/69 as amended by Regulation No 2827/77 unless it is established that, under the contract empowering it to perform the public service, the continuity of the public service is ensured and the use of its vehicles in the public service excludes competition within the area covered.The Advocate General delivered his opinion at the hearing on 6 November 1979.

Costs