In the case C-389/08 Base and others v. Belgacom the advocate general made clear that the legislator is no regulator: article 13 of the universal service directive 2002/22 provides that it is the task of national regulatory authorities (NRAs) to decide whether or not an undertaking is subject to an unfair burden (due to universal service obligations). The legislature of a Member States must not take that decision for the regulator. And most certainly it must not do so in retrospective, declaring - as was the case in Belgium - in 2007 that the law passed in 2005 had been preceded by an evaluation of the “unfair burden” (not for the simple reason that no one believes that anyway, but because NRAs have to be notified to the Commission in advance). Of course, the cases C-424/07 Commission v. Germany and C-82/07 CMT come to mind (and are cited by the advocate general).

In C-222/08 Commission v. Belgium, the advocate general also points out that there was no individual and concrete assessment of the “unfair burden” and he also joins the Commission’s view that intangible benefits have to part of equation to determine the net cost of universal service obligations.

*) Shakespeare, King Henry IV, Part 2, Act V Scene 2

The other questions, concerning the validity of regulations requiring the publication of personal data of farmers receiving EU subsidies, are not as hypothetical (but go beyond the the core content of this blog). Just briefly:

• “The importance of transparency is firmly established in EU law.” (para 66)
• “However, sometimes (as here) transparency may have to be weighed against another competing objective.” (para 70).
• “as a matter of principle a person applying for funding from a public body such as the European Union … cannot be required, solely as a condition of obtaining that funding, to forgo a fundamental right” (para 85).
• “Promoting transparency is, in principle, a legitimate basis for interfering with the rights to privacy and the protection of personal data. …  I am therefore prepared to accept that in principle – and I stress those words – some degree of interference with the rights to privacy and to the protection of personal data in order to promote transparency of the democratic process is ‘necessary in a democratic society’ because it corresponds to a pressing social need.” (para 94)
• BUT:  Is the interference proportionate? “The vague (if not actually contradictory) nature of the objectives that the institutions say they are pursuing does not permit the conclusion that the measures put in place satisfy the proportionality test.” (paa 118)
• “In my view, the institutions have not given the Court an explanation that, upon examination, stands up to scrutiny. I do not think that the Court should rubber stamp legislation that refers quite correctly to general principles that are eminently desirable, but – when more specific explanation is sought in order to enable the Court to perform its judicial function – reveals the level of confusion and inter-institutional incoherence that has emerged in this case.” (para 123, emphasis added)

*) Shakespeare, Macbeth, Act II Scene 3

But as the aid in question was handed out by a Berlusconi government, favouring (indirectly) Berlusconi’s media conglomerate Mediaset over (amongst others) its rival Sky Italia, media have referred to it as a “media tycoon battle”. The judgment given today by the General Court in the Case C-177/07 Mediaset SpA v. Commission confirms the Commission decision of 24 January 2007 (case site). If you like personalisation, you can call it a victory for Murdoch - his Sky Italia had filed complaints with the Commission and intervened in the Court proceedings on the Commission side - over his rival Berlusconi.

I don’t think the judgment would attract all that much interest if it weren’t for the involved parties, and I don’t think there is anything extraordinary to it in points of law. But the General Court seems to be very aware of potential media interest in the case: it is rare that for a General Court judgment there is a press release in seven languages from the Court, and equally rare that the judgment is available on the same day in probably pretty much all EU languages  (I have not checked all of them, but it is available in Maltese, Bulgarian, Greek, Latvian, Lithuanian, Estonian, Hungarian, so I guess all efforts have been taken to ensure broad media coverage around the European Union).

But of course it is nice to read that - I am paraphrasing - a Berlusconi company should not have trusted in the legality of the aid a Berlusconi government has shelled out (in the judgment, it is worded a little bit different: “A diligent business operator should have known not only that the measure at issue was not technologically neutral, but also that it had not been notified to the Commission and had not been authorised.”)

*) Shakespeare, King Henry V, Act III, Scene 7 (capitalization added)

As to the legal basis, the Court notes that there was a high level of retail charges, that this was a persistent problem that could not be solved by NRAs, and that there was pressure for Member States to take measures. Such national measures in turn would have been likely to lead to a divergent development of national laws.

“As regards the functioning of the roaming market […]  and taking into consideration the considerable interdependence of retail and wholesale charges for roaming services, it is clear that a divergent development of national laws seeking to lower retail charges only, without affecting the level of costs for the wholesale provision of Community-wide roaming services, would have been liable to cause significant distortions of competition and to disrupt the orderly functioning of the Community-wide roaming market, as is clear from recital 14 in the preamble to Regulation No 717/2007. Such a situation justified the Community legislature’s seeking to protect the proper functioning of the internal market”. 

As regards the principle of proportionality, the ECJ points out that the Community legislature must be allowed broad discretion, yet must base its choice on objective criteria. The Court then examines the history of the roaming regulation and comes to the conclusion, that the introduction of ceilings for retail charges “must be considered to be appropriate for the purpose of protecting consumers against high levels of charges” and “that regulation of wholesale charges alone would not have had a direct and immediate effect for consumers. By contrast, only the regulation of retail charges could improve the situation of consumers directly.” The Community legislature therefore “could legitimately take the view that regulation of the wholesale market alone would not achieve the same result as regulation such as that at issue, which covers at the same time the wholesale market and the retail market, and that the latter was therefore necessary.”

In Nr 69 of the judgment, the Court states:

“Finally, in the light of the importance of the objective of consumer protection within the context of Article 95(3) EC, intervention that is limited in time in a market that is subject to competition, which makes it possible, in the immediate future, to protect consumers against excessive prices, such as that at issue, even if it might have negative economic consequences for certain operators, is proportionate to the aim pursued.” [emphasis added]

To me it is rather striking that the Court in its legal reasoning only in this paragraph makes mention of the limited duration of the measure. The advocate general, in contrast, had dwelled on that issue more explicitely (in Nr 42 of his opinion):

“Moreover, the existence of a sunset clause reduces its impact on the rights of the economic operators. Such clauses ensure that the Community legislature will periodically reassess its interventions in areas, such as roaming, that are undergoing rapid social and economic change. [footnote omitted] If the Community legislature were to extend the price controls or make them permanent, that decision would also need to be proportionate and additional reasons would need to be presented to justify it.” 

This of ocurse is not just an academic issue: the roaming regulation meanwhile has been amended and the original “sunset” (30 June 2010) has been extended by two years to 30 June 2012. So according to the advocate general, in a possible future case it would be necessary to examine whether there were sufficient “additional reasons” for the prolongation. The Court - limiting itself strictly to the issue to be decided in the present case, the  original version of the regulation - remains silent on that matter. Still, considering that the Court in its legal reasoning only makes one almost fleeting reference to the “intervention limited in time”, I would expect that the extension until 2012 should not make the regulation invalid (after all, it is still “limited in time”).

Finally, subsidiarity does not pose a problem either:

“As is clear from recital 14 in the preamble to the regulation, the interdependence of retail and wholesale charges for roaming services is considerable, so that any measure seeking to reduce retail charges alone without affecting the level of costs for the wholesale supply of Community-wide roaming services would have been liable to disrupt the smooth functioning of the Community-wide roaming market. […] the Community legislature could legitimately take the view that it had to intervene at the level of retail charges as well. Thus, by reason of the effects of the common approach laid down in Regulation No 717/2007, the objective pursued by that regulation could best be achieved at Community level.”

*) Shakespeare, All’s Well That Ends Well, Act V, Scene 3

The origins of the case go back to 2002,when France Télécom (FT) was in a rather difficult economic situation and French authorities - representing the majority stockholder - issued a series of public declarations. Most notably, the Minister of the Ecomony declared that “the shareholder State will act as a prudent investor and were FT to encounter difficulties, we would take the appropriate measures … I repeat that were FT to face funding problems, which is not the case today, the State would take the necessary decisions in order to overcome them”. The Commission had viewed these declarations, together with an offer by the French State of a shareholder loan for FT (a 9 billion Euro credit line), as state aid and incompatible with teh Treaty.

The General Court agreed that the statements of the French authorities did confer a financial advantage on FT, as they had had a decisive influence on the reaction of the ratings agencies. However, the Court came to the conclusion that there had not been a transfer of State resources. “On account of their open, imprecise and conditional nature, in particular as regards the nature, scope and conditions of possible State intervention in favour of FT, the statements made from July 2002 onwards cannot be construed as a State guarantee or be interpreted as containing an irrevocable commitment to provide specific financial assistance to FT.” (quote taken from the press release; the judgment is available only in French; the relevant paragraphs are 268 to 289).

*) Shakespeare, Measure for Measure, Act I, Scene 2