Commission of the European Communities v Kingdom of Belgium (C-384/99)

Contents

Judgment of the Court (Third Chamber)30 November 2000^noteIn Case C-384/99,Commission of the European Communities, represented by B. Doherty, of its Legal Service, acting as Agent, with an address for service in Luxembourg at the office of C. Gómez de la Cruz, of the same service, Wagner Centre, Kirchberg,vKingdom of Belgium, represented by A. Snoecx, Adviser in the Directorate General for Legal Affairs, Ministry of Foreign Affairs, External Trade and Cooperation with Developing Countries, acting as Agent, 15 Rue des Petits Carmes, Brussels,THE COURT (Third Chamber),composed of: C. Gulmann (Rapporteur), President of the Chamber, J.-P. Puissochet and F. Macken, Judges,Advocate General: EG. Jacobs,Registrar: R. Grass,having regard to the report of the Judge-Rapporteur,after hearing the Opinion of the Advocate General at the sitting on 15 June 2000,gives the following

Judgment

1By application lodged at the Court Registry on 8 October 1999, the Commission of the European Communities brought an action under Article 226 EC for a declaration that, by failing correctly to implement Article 5 of Directive 97/33/EC of the European Parliament and of the Council of 30 June 1997 on interconnection in Telecommunications with regard to ensuring universal service and interoperability through application of the principles of Open Network Provision (ONP) (OJ 1997 L 199 p. 32; ‘the Directive’), in conjunction with Annex I thereto, and by failing to adopt all the measures necessary to implement Article 5 of the Directive, in conjunction with Annexes I and III thereto, the Kingdom of Belgium has failed to fulfil its obligations under those provisions and under the EC Treaty.

2Article 5 of the Directive, entitled ‘Interconnection and universal service contributions’, states:1. Where a Member State determines, in accordance with the provisions of this article, that universal service obligations represent an unfair burden on an organisation, it shall establish a mechanism for sharing the net cost of the universal service obligations with other organisations operating public telecommunications networks and/or publicly available voice telephony services. Member States shall take due account of the principles of transparency, nondiscrimination and proportionality in setting the contributions to be made. Only public telecommunications networks and publicly available telecommunications services as set out in Part 1 of Annex I may be financed in this way.2. ...3. In order to determine the burden if any which the provision of universal service represents, organisations with universal service obligations shall, at the request of their national regulatory authority, calculate the net cost of such obligations in accordance with Annex III. The calculation of the net cost of universal service obligations shall be audited by the national regulatory authority or another competent body, independent of the telecommunications organisation, and approved by the national regulatory authority. The results of the cost calculation and the conclusions of the audit shall be open to the public in accordance with Article 14(2).4. Where justified on the basis of the net cost calculation referred to in paragraph 3, and taking into account the market benefit if any which accrues to an organisation that offers universal service, national regulatory authorities shall determine whether a mechanism for sharing the net cost of universal service obligations is justified.5. ...National regulatory authorities shall ensure that an annual report is published giving the calculated cost of universal service obligations, and identifying the contributions made by all the parties involved.6. Until such time as the procedure described in paragraphs 3, 4 and 5 is implemented, any charges payable by an interconnected party which include or serve as a contribution to the cost of universal service obligations shall be notified, prior to their introduction, to the national regulatory authority. Without prejudice to Article 17 of this directive, where the national regulatory authority finds, on its own initiative, or after a substantiated request by an interested party, that such charges are excessive, the organisation concerned shall be required to reduce the relevant charges. Such reductions shall be applied retrospectively, from the date of introduction of the charges, but not before 1 January 1998.’

3Annex I to the Directive defines the specific public telecommunications networks and publicly available telecommunications services of which Member States must, in accordance with Article 3(2) of the Directive, ensure the adequate and efficient interconnection, to the extent necessary to ensure interoperability of these services for all users within the Community. The first part of that annex concerns the fixed public telephone network.

4Annex III to the Directive defines the system for calculating the net cost of universal service obligations for voice telephony. The organisations assuming such obligations must, in accordance with Article 5{3) of the Directive, use the system thus defined in order to determine the burden if any which the provision of that service represents.

5Under the first subparagraph of Article 23(1) of the Directive, Member States are to bring into force the laws, regulations and administrative provisions necessary to comply with the Directive by 31 December 1997 and they are immediately to inform the Commission thereof.

6By letter of 13 January 1998, the Belgian Government notified to the Commission the Law of 19 December 1997 amending the Law of 21 March 1991 on the reform of certain public business undertakings in order to adapt the regulatory framework to the obligations in connection with free competition and harmonisation on the telecommunications market flowing from the decisions of the European Union (Moniteur Belge of 30 December 1997, p. 34986). The Commission reached the conclusion, however, that that law had not completely implemented the Directive. By letter of 24 August 1998, it therefore gave the Kingdom of Belgium formal notice to submit to it within two months of the reception of that letter its observations on the complaints set out therein.

7Subsequently, by several letters, the Belgian Government informed the Commission of a certain number of measures designed to complete the transposition of the Directive into Belgian law. After analysing that information, the Commission formed the view that the measures adopted by the Kingdom of Belgium did not comply with certain provisions of the Directive.

8On 9 March 1999, the Commission therefore sent the Kingdom of Belgium a reasoned opinion concluding that, by extending the field of services capable of being financed as part of the universal service to the provision of services at preferential tariffs to the press, which did not comply with Article 5(1) of the Directive, in conjunction with Annex I thereto, and by failing to adopt the laws, regulations and administrative provisions necessary to comply with Article 5 of the Directive, in conjunction with Annexes I and III thereto, in respect of the universal service or, in any event, by failing to communicate to it those provisions, the Kingdom of Belgium had failed to fulfil its obligations under the Directive. The Commission called on the Kingdom of Belgium to take the measures necessary to comply with the reasoned opinion within two months of its notification.

9On 26 April 1999, the Belgian Government notified to the Commission the Royal Decree of 4 March 1999 adapting certain provisions of the Law of 21 March 1991 on the reform of certain public business undertakings to the directives of the European Union and amending certain provisions of that law relating to the universal service (Moniteur Belge of 14 April 1999, p. 12149). First, that decree extends to calls to the Centre Européen pour Enfants Disparus et Sexuellement Exploités (European Centre for Missing and Sexually Exploited Children) the classification of free calls to the emergency services which are financed as part of the universal service. Second, it takes into account the new system of tariffs of the operator Belgacom, in charge of the universal service in Belgium, as regards the beneficiaries of the social service provided and financed as part of the universal service.

10Since the Commission took the view that the Belgian Government had not communicated any legislative or regulatory amendment responding to the complaints set out in the reasoned opinion of 9 March 1999 and that, accordingly, those complaints subsisted in full and unchanged, it decided to bring the present action.

11In its application, the Commission claims that Belgian law fails to comply with the Directive and makes the following three complaints:— First, preferential tariffs are granted to some daily newspapers and certain weekly publications as well as to the press agency Belga. That goes beyond what is allowed under Annex I to the Directive, which limits the special measures financed as part of the universal service to ‘customers with disabilities or with special social needs’.— Second, the method for calculating the contributions of operators to the financing of the net cost of the universal service is incomplete and does not fulfil the obligations of transparency defined in Article 5(1) of the Directive. More precisely, the Kingdom of Belgium has not adopted or published, or in any event notified to the Commission, the measure specifying that method of calculation.— Third, the method for calculating the cost of the universal service, which is currently described in general terms by the Law of 21 March 1991, as amended, is incorrect in so far as it fails to take into account the ‘nonmaterial’ benefits connected with the provision of the universal service and therefore does not comply with Article 5(4) of the Directive. Furthermore, it fails to take into account the principles for calculation set out in Annex III to the Directive as regards the concept of avoidable net cost, the taking into account of forward-looking, not historical, costs and revenues and the taking into account of the direct and indirect revenues inherent in the provision of each of the services financed as part of the universal service.

12The Belgian Government does not deny that Article 5 of the Directive, in conjunction with Annexes I and III thereto, have not been correctly implemented within the time-limit laid down in the first subparagraph of Article 23(1).

13However, the Government contends that, in respect of the Commission's first complaint, on 3 December 1999, it adopted a Bill which provides, essentially, that the preferential tariffs granted to certain daily newspapers, certain magazines and the agency Belga may no longer be financed through the contributions of other operators. The preferential tariffs will henceforth be covered by the publicservice obligations which are laid upon Belgacom and financed through contributions from the Belgian State.

14As regards the second and third complaints, the Belgian Government submits that, on 23 December 1999, it adopted the Royal Decree adapting Articles 1 and 4 of Annex 2 to the Law of 21 March 1991 on the reform of certain public business undertakings to Directive 97/33 (Moniteur Belge of 9 February 2000, p. 3926). The relevant new provisions describe in detail the method for calculating the net cost of the universal service obligation, taking account of the advantages which may accrue to an operator of universal services and the criteria set out in Annex III to the Directive. The Government also adopted an administrative circular of 31 January 2000 (Moniteur Belge of 18 February 2000, p. 5142) which clarifies the concept of turnover to be used to calculate the contribution of operators to the net cost of the universal service.

15In a letter sent to the Court on 3 April 2000, the Commission observes that, in its view, the Belgian legislation now complies with the Directive as regards the aspects referred to in the second and third complaints. However, in respect of the first complaint, the Commission claims that it is still in the process of assessing the compatibility of the preferential tariffs granted to the Belgian press under the new legislation with the provisions of the Treaty on State aid. In that letter, the Commission did not, however, withdraw any of its three complaints.

16In this respect, it should be pointed out that, according to settled case-law, the question whether a Member State has failed to fulfil its obligations must be determined by reference to the situation prevailing in the Member State at the end of the period laid down in the reasoned opinion and that the Court cannot take account of any subsequent changes (see, in particular, Case C-316/96 Commission v Italy [1997] ECR I-7231, paragraph 14).

17In the present case, the Royal Decree adapting Articles 1 and 4 of Annex 2 to the Law of 21 March 1991, which is relied on by the Belgian Government, was adopted on 23 December 1999 and the administrative circular clarifying the concept of turnover to be used to calculate the contribution of operators to the net cost of the universal service, which is also relied on, was adopted on 31 January 2000, whereas the period laid down by the Commission in the reasoned opinion expired on 9 May 1999. Accordingly, even if those measures correctly implemented the Directive, they could not be taken into account in the context of the present action.

18It must therefore be declared that, by failing to bring into force within the prescribed period the laws, regulations and administrative measures necessary to comply with Article 5 of the Directive, in conjunction with Annexes I and III thereto, the Kingdom of Belgium has failed to fulfil its obligations under the Directive.

Costs

19Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Since the Commission has applied for costs and the Kingdom of Belgium has been unsuccessful, the latter must be ordered to pay the costs.

Operative part

On those grounds,THE COURT (Third Chamber),hereby:

1.Declares that, by failing to bring into force within the prescribed period the laws, regulations and administrative measures necessary to comply with Article 5 of Directive 97/33/EC of the European Parliament and of the Council of 30 June 1997 on interconnection in Telecommunications with regard to ensuring universal service and interoperability through application of the principles of Open Network Provision (ONP), in conjunction with Annexes I and III thereto, the Kingdom of Belgium has failed to fulfil its obligations under that directive;

2.Orders the Kingdom of Belgium to pay the costs.

Delivered in open court in Luxembourg on 30 November 2000.