Belgacom Mobile SA v Commune de Schaerbeek (Freedom to provide services) [2005] EUECJ C-545/03 (08 September 2005)

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(Article 59 of the EC Treaty (now, after amendment, Article 49 EC) - Telecommunications services - Directive 90/388/EEC - Article 3c - Lifting of all restrictions - Communal taxes on pylons, masts and transmission antennae for GSM)

REFERENCES for a preliminary ruling under Article 234 EC from the Conseil d-�État (Belgium), made by decisions of 8 December 2003, received at the Court on 23 December 2003, in the proceedings

composed of P. Jann, President of the Chamber, K. Lenaerts, N. Colneric (Rapporteur), E. Juhász and Ilešič, Judges,

having regard to the written procedure and further to the hearing on 20 January 2005,

- la Commission of the European Communities, par J.-'P. Keppenne, M. Shotter and L. Ström van Lier, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 7 April 2005,

1 The references for a preliminary ruling concern the interpretation of Articles 59 of the EC Treaty (now, after amendment, Article 49 EC) and 3c 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, with regard to the implementation of full competition in telecommunications markets, by Commission Directive 96/19/EC of 13 March 1996 (OJ 1996 L 74, p. 13, -�Directive 90/388-�).

2 Those references were submitted in the context of actions brought by mobile telephone operators established in Belgium, Mobistar SA (-�Mobistar-�) and Belgacom Mobile SA (-�Belgacom Mobile-�). Those two operators seek annulment of taxes adopted by the communes Fléron (Belgium) and Schaerbeek (Belgium) on pylons, masts and transmission antennae for GSM or for external antennae.

3 By order of the President of the Court of 4 March 2004, the cases were joined for the purposes of the written and oral procedures and of the judgment.

-�Within the framework of the provisions set out below, restrictions on freedom to provide services within the Community shall be prohibited in respect of nationals of Member States who are established in a State of the Community other than that of the person for whom the services are intended.-�

5 The first sub paragraph of Article 86 of the EC Treaty (now the first sub paragraph of Article 82 EC) stipulates:

-�Any abuse by one or more undertakings of a dominant position within the common market or in a substantial part of it shall be prohibited as incompatible with the common market in so far as it may affect trade between Member States.-�

-�1. In the case of public undertakings and undertakings to which Member States grant special or exclusive rights, Member States shall neither enact nor maintain in force any measure contrary to the rules contained in this Treaty, in particular to those rules provided for in Article 12 and Articles 81 to 89.

2. Undertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly shall be subject to the rules contained in this Treaty, in particular to the rules on competition, in so far as the application of such rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them. The development of trade must not be affected to such an extent as would be contrary to the interests of the Community.

3. The Commission shall ensure the application of the provisions of this article and shall, where necessary, address appropriate directives or decisions to Member States.-�

-�In addition to the requirements set out in the second paragraph of Article 2, Member States shall, in attaching conditions to licences or general authorisations for mobile and personal communications systems, ensure the following:

(i) licensing conditions must not contain conditions other than those justified on the grounds of the essential requirements and, in the case of systems for use by the general public, public service requirements in the form of trade regulation within the meaning of Article 3;

(ii) licensing conditions for mobile network operators must ensure transparent and non-discriminatory behaviour between fixed and mobile network operators in common ownership;

(iii) licensing conditions should not include unjustified technical restrictions. Member States may not, in particular, prevent combination of licences or restrict the offer of different technologies making use of distinct frequencies, where multistandard equipment is available.

-�Member States shall ensure that all restrictions on operators of mobile and personal communications systems with regard to the establishment of their own infrastructure, the use of infrastructures provided by third and the sharing of infrastructure, other facilities and sites, subject to limiting the use of such infrastructures to those activities provided for in their licence or authorisation, are lifted.-�

9 Articles 3a and 3c of Directive 90/388 were introduced by Commission Directive 96/2/EC of 16 January 1996 amending Directive 90/388 with regard to mobile and personal communications (OJ 1996 L 20, p. 59). The first recital to Directive 96/2 is drafted is follows:

-�In its communication on the consultation on the Green Paper on mobile and personal communications of 23 November 1994, the Commission set out the major actions required for the future regulatory environment necessary to exploit the potential of this means of communication. It emphasised the need for the abolition, as soon as possible, of all remaining exclusive and special rights in the sector through full application of Community on competition rules and with the amendment of Directive 90/388 -�, as last amended by Directive 95/51/EC -� Moreover, the communication considered removing restrictions on the free choice of underlying facilities used by mobile network operators for the operation and development of their networks for those activities which are allowed by the licences or authorisations. Such a step was seen as essential in order to overcome current distortions of fair competition and, in particular, to allow such operators control over their cost base.-�

-�Several Member States have already opened up certain mobile communications services to competition and introduced licensing schemes for such services. Nevertheless, the number of licences granted is still restricted in many Member States on the basis of discretion or, in the case of operators competing with telecommunications organisations subject to technical restrictions such as a ban on using infrastructure other than those provided by the telecommunications organisation...-�

-�-� restrictions on the self-provision of infrastructure and the use of third party infrastructure is slowing down the development of mobile services, in particular because effective pan-European roaming for GSM relies on the widespread availability of addressed signalling systems, a technology which is not yet universally offered by telecommunications organisations throughout the Community;

Such restrictions on the provision and use of infrastructures constrain the provision of mobile and personal communications services by operators from other Member States and are thus incompatible with Article 90 in conjunction with Article 59 of the Treaty. To the extent that the competitive provision of mobile voice services is prevented because the telecommunications organisation is unable to meet the mobile operator-�s demand for infrastructures or will only do so on the basis of tariffs which are not oriented towards the costs of the leased line capacity concerned, these restrictions inevitably favour the telecommunications organisation-�s offering of fixed telephony services, for which most Member States still maintain exclusive rights. The restriction on the provision and use of infrastructure thus infringes Article 90, in conjunction with Article 86 of the Treaty. Accordingly, Member States must lift these restrictions and grant, if requested, the relevant mobile operators on a non-discriminatory basis access to the necessary scarce resources to set up their own infrastructure including radiofrequencies.-�

12 Article 11(1) of Directive 97/13/EC of the European Parliament and of the Council of 10 April 1997 on a common framework for general authorisations and individual licences in the field of telecommunications services (OJ 1997 L 117, p. 15) entitled -�Fees and charges for individual licences-� reads as follows:

-�Member States shall ensure that any fees imposed on undertakings as part of authorisation procedures seek only to cover the administrative costs incurred in the issue, management, control and enforcement of the applicable individual licences. The fees for an individual licence shall be proportionate to the work involved and be published in an appropriate and sufficiently detailed manner, so as to be readily accessible.-�

13 Directives 90/388 and 97/13 were repealed with effect as of 25 July 2003 by Commission Directive 2002/77/EC of 16 September 2002 on competition in the markets for electronic communications networks and services (OJ 2002 L 249, p. 21) and Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services (Framework Directive) (OJ 2002 L 108, p. 33), which are however subsequent to the main proceedings.

14 At its sitting on 27 January 1998, the conseil communal de Fléron adopted a regulation imposing a tax on pylons, masts and transmissions antennae for GSM. The tax was imposed with effect from 1 January 1998 and was effective for a period of three years expiring on 31 December 2000. The tax was set at a rate of BEF 100 000 per pylon, mast or antennae, and was payable by their owner.

15 On 12 April 1999 Mobistar requested annulment of that regulation imposing the tax before the Conseil d-�État.

16 Amongst its pleas for annulment submitted in support of its action Mobistar claims that the contested regulation imposing the tax restricts the development of its mobile telephony network. That restriction is prohibited by Article 3c of Directive 90/388.

17 Considering first, that the Conseil d-�État is not in a position to rule on the validity of that plea without applying a measure of Community law, which raises a problem of interpretation and second, that an issue also arises as to whether the contested tax is compatible with Article 49 EC, it decided to stay the proceedings and to refer the following questions to the Court:

-�(1) Should Article 49 [EC] be interpreted as precluding the introduction, by legislation of a national or local authority, of a tax on mobile and personal communications infrastructures used to carry on activities covered by licences and authorisations?

(2) Given that Article 3c of Commission Directive 90/388 -� refers to the lifting of -�all restrictions-�, does that article preclude the introduction, by regulation of a national or local authority, of a tax on mobile and personal communications infrastructures used to carry on activities covered by licences and authorisations?-�

18 At its sitting of 8 October 1997, the conseil communal de Schaerbeek adopted a regulation concerning the tax on external antennae and amending the regulation imposing a tax on parabolic antennae which was previously adopted by that same conseil communal. The tax is imposed on an annual basis and applies to external antennae for the financial years 1997 to 1999. The expression external antennae covers not only parabolic antennae but also relay antennae for GSM or other communications media. The tax was set at a rate of BEF 100 000 per GSM relay antenna and at BEF 5 000 per parabolic or other antenna.

19 On 19 December 1997 Belgacom Mobile sought annulment of the regulation imposing the tax before the Conseil d-�État.

20 One of the pleas submitted in support of the application alleges infringement of Community provisions relating to the establishment of a high quality, unrestricted, mobile telephony network, in particular Article 3c of Directive 90/388.

21 Considering also that the Conseil d-�État was not in a position to issue a ruling on the validity of the that plea without applying a measure of Community law, which raises a problem of interpretation, it decided, pursuant to Article 234 EC, to refer two questions for preliminary ruling identical to those referred in Case C-544/03.

22 By document lodged at the Court Registry on 2 May 2005, the Netherlands Government requested the Court to order the reopening of the oral procedure pursuant to Article 61 of the Rules of Procedure.

23 In support of its request that government essentially submits that, in his opinion, the Advocate General proposed to base the answer on different bases to those referred to by the referring court, namely Directive 97/13, which was not discussed in any depth between the parties either in their written observations or in those put forward at the hearing. That government wishes to make observations in that respect.

24 In that respect, in is appropriate to recall that the Court may of its own motion, or on a proposal from the Advocate General, or at the request of the parties, reopen the oral procedure, in accordance with Article 61 of its Rules of Procedure, if it considers that it lacks sufficient information, or that the case must be dealt with on the basis of an argument which has not been debated between the parties (see the order in Case C-17/98 Emesa Sugar [2000] ECR I-665, paragraph 18, the judgments in Case C-309/99 Wouters and Others [2002] ECR I-1577, paragraph 42, and in Case C-147/02 Alabaster [2004] ECR I-3101, paragraph 35).

25 In the present case, however, the Court, after hearing the Advocate General, considers that it is in possession of all the facts necessary for it to answer the questions referred and that those facts have been the subject of argument presented before it. The application for the oral procedure to be reopened must therefore be dismissed.

26 By its first question the referring court is seeking to find out whether Article 59 of the Treaty should be interpreted as precluding the introduction, by legislation of a national or local authority, of a tax on mobile and personal communications infrastructures used to carry on activities covered by licences and authorisations.

27 If, in the current state of Community law, direct taxation does not as such fall within the scope of the Community-�s jurisdiction, Member States must nevertheless exercise their retained powers in compliance with Community law (Case C-279/93 Schumacker [1995] ECR I-225, paragraph 21; Case C-436/00 Xand Y [2002] ECR I-10829, paragraph 32, and Case C-9/02 De Lasteyrie du Saillant [2004] ECR I-2409, paragraph 44).

28 In the context of freedom to provide services the Court has already recognised that a national tax measure restricting that freedom may constitute a prohibited measure regardless of whether adopted by the State itself or by a local authority (see in that respect Case C-17/00 De Coster [2001] ECR I-9445, paragraphs 26 and 27).

29 According to the Court-�s case-law, Article 59 of the Treaty requires not only the elimination, against a person providing services who is established in another Member State, of all discrimination on the ground of his nationality but also the removal of any restriction, even if it applies without distinction to national providers of services and to those of other Member States, when it is liable to prohibit or otherwise impede the activities of a provider of services established in another Member State where he lawfully provides similar services (Case C-43/93 Vander Elst [1994] ECR I-3803, paragraph 14, and De Costa, cited above, paragraph 29).

30 Furthermore, the Court has already held that Article 59 precludes the application of any national rules which have the effect of making the provision of services between Member States more difficult than the provision of services purely within one Member State (De Costa judgment, cited above, paragraph 30, the case-law cited above, and paragraph 39).

31 By contrast, measures, the only effect of which is to create additional costs for the service in question and which affect the provision of services between Member States and within a Member State in the same way, do not fall within the scope of Article 59 of the Treaty.

32 As regards the question whether the levy by the local authorities of taxes such as those in question in the main proceedings amounts to a restriction incompatible with Article 59, it is necessary to point out that such taxes apply without distinction to all owners of mobile telephone installations within the commune in question, and that foreign operators are not, either in fact or in law, more heavily affected by those measures than national operators.

33 Neither do the imposition measures in question make the provision of cross-border services any more difficult than national service provision. However, introducing tax on pylons, masts and antennae can make communication tariffs by mobile telephone to Belgium from abroad and vice versa more expensive. None the less, domestic telephone service provision is, to the same extent, subject to the risk of repercussions of the tax on tariffs.

34 It is appropriate to add that nothing in the documents before the Court leads to the conclusion that the cumulative effect of local taxes compromises the free movement of mobile telephone services between other Member States and the Kingdom of Belgium.

35 It is thus necessary to answer the first question so as to affirm that Article 59 of the Treaty should be interpreted as precluding the introduction, by legislation of a national or local authority, of a tax on mobile and personal communications infrastructures used to carry on activities covered by licences and authorisations, which applies without distinction to national providers of services and to those of other Member States and affect the provision of services between Member States and within a Member State in the same way.

36 By its second question the referring court essentially asks whether tax measures apply to mobile communications infrastructures within the meaning of Article 3c of Directive 90/388.

37 It is necessary to point out at the outset that the event which gives rise to taxes on communications infrastructures is not the issuing of a licence. Therefore, Directive 97/13, as pleaded by Mobistar at the hearing, is not applicable to the facts of the present case.

38 As regards Directive 90/388 it is first of all appropriate to note that the wording of Article 3c, in so far as it requires the lifting of -�all restrictions-� on operators of mobile and personal communications systems with regard to infrastructure, does not prevent the aforementioned restrictions also from applying to tax measures on mobile communications infrastructures.

39 According to the Court-�s settled case-law, in interpreting a provision of Community law, it is necessary to consider not only its wording but also the context in which it occurs and the objects of the rules of which it is part (see, in particular, Case 292/82 Merck [1983] ECR 3781, paragraph 12; Case 337/82 St.Nikolaus Brennerei [1984] ECR 1051, paragraph 10; and Case C-17/03 Vereinigung voor Energie, Milieu en Water and Others [2005] ECR I-0000, paragraph 41).

40 In its original form Directive 90/388 provided for the abolition of exclusive or special rights granted by Member States to provide telecommunications services but did not include mobile communications services in its field of application. In order to extend its application to mobile and personal communications it was amended by Directive 96/2.

41 The latter is intended to establish a legislative framework enabling the potential of mobile and personal communications to be exploited by abolishing, as soon as possible, all exclusive and special rights, by removing, for operators of mobile networks, both restrictions on the freedom to operate and develop those networks for the purpose of carrying out the activities authorised by their licences or authorisations and distortions of competition and by allowing those operators control over their costs (see Joined Cases C-396/99 and C-397/99 Commission v Greece [2001] ECR I-7577, paragraph 25, and Case C-462/99 Connect Austria [2003] ECR I-5197, paragraph 96).

42 Directive 96/2 is based on Article 90(3) EC. It follows from this that Article 3c of Directive 90/388 is not applicable to restrictions which are incompatible with Article 90 of the Treaty.

43 According to the 16th recital to Directive 96/2, that directive was adopted for the purpose of a situation where competitive provision of mobile voice services is prevented because telecommunications organisations are unable to meet the mobile operator-�s demand for infrastructures and most Member States have maintained exclusive rights in favour of those organisations. On the basis of the fact that the restriction to the provision and use of an infrastructure amounts to an infringement of Article 90 of the Treaty in conjunction with Article 86 of the Treaty, the Commission concluded that the Member States have to remove those restrictions and grant, on demand, access to the mobile operators concerned on a non-discriminatory basis to the necessary scarce resources to set up their own infrastructure.

44 It follows from this that the restrictions contained in Article 3c of Directive 90/388 are characterised, first, by their link with exclusive and special rights of previous operators, and second, by the fact that they can be remedied by access on a non-discriminatory basis to the necessary scarce resources.

45 Thus, restrictions such as those mentioned by way of example in the fourth recital to Directive 96/2 are also included, namely a limitation on the number of licences granted on the basis of discretion or, in the case of operators competing with telecommunications organisations subject to technical restrictions such as a ban on using infrastructure other than those provided by those organisations.

46 In addition, only measures which significantly affect competition fall within the notion of restriction in the specific sense of Article 3c of Directive 90/388.

47 By contrast, national measures applicable to all mobile telephone operators without distinction and which do not favour, directly or indirectly, operators which have or have had exclusive or special rights to the detriment of new operators placed in competition with them do not fall within the scope of Article 3c of Directive 90/388.

48 It is for the referral court to make sure that those conditions are met in the cases in the main proceedings.

49 In the context of its examination the referral court will have to assess the effects of the taxes bearing in mind, in particular, the point at which the operators concerned entered into the market. It can be established that operators which have or have had exclusive or special rights could have benefited, before other operators, from a situation allowing them to write off their costs for setting up networks. However, the fact that operators entering the market are subject to public service duties, including those concerning territorial cover, is likely to put them, in terms of controlling their costs, in an unfavourable situation in comparison with previous operators.

50 It results from the above that it is necessary to answer the second question so as preclude tax measures on mobile communications infrastructures from the field of application of Article 3c of Directive 90/388, except where those measures favour, directly or indirectly, operators which have or have had exclusive or special rights to the detriment of new operators and significantly affect competition.

51 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

1. Article 59 of the EC Treaty (now, after amendment, Article 49 EC), must be interpreted as not precluding the introduction, by legislation of a national or local authority, of a tax on mobile and personal communications infrastructures used to carry on activities covered by licences and authorisations which applies without distinction to national providers of services and to those of other Member States and affects the national provision of services within a Member State and the provision of services between states in the same way.

2. Tax measures on mobile communications infrastructures do not fall within the scope of Article 3c of Commission Directive 90/388/EEC of 28 June 1990 on competition in the markets for telecommunications services, asamended,with regard to the implementation of full competition in telecommunications markets, by Commission Directive 96/19/EC of 13 March 1996, except where those measures favour, directly or indirectly, operators which have or have had exclusive or special rights to the detriment of new operators and significantly affect competition.

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