Commission v Slovakia (Judgment) [2015] EUECJ C-361/13 (16 September 2015)

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(Failure of a Member State to fulfil obligations — Regulation No 883/2004 — Article 7 — Old-age benefit — Christmas bonus — Residence requirement)

ACTION for failure to fulfil obligations under Article 258 TFEU, brought on 26 June 2013,

European Commission, represented by A. Tokár, D. Martin and F. Schatz, acting as Agents, with an address for service in Luxembourg,

composed of A. Tizzano, President of the Chamber, S. Rodin, A. Borg Barthet, E. Levits (Rapporteur) and M. Berger, Judges,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

1 By its application, the European Commission asks the Court to declare that, by refusing to grant the Christmas bonus provided for by Law No 592/2006 granting a Christmas bonus to certain beneficiaries of pensions and supplementing certain laws, as last amended (‘Law No 592/2006’) to beneficiaries residing in a Member State other than the Slovak Republic, the Slovak Republic has failed to fulfil its obligations under Articles 45 TFEU and 48 TFEU and Article 7 of Regulation (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems (OJ 2004 L 166, p. 1 and corrigendum OJ 2004 L 200, p. 1), as amended by Regulation (EC) No 988/2009 of the European Parliament and of the Council of 16 September 2009 (OJ 2009 L 284, p. 43) (‘Regulation No 883/2004’).

‘Within the Community there is in principle no justification for making social security rights dependent on the place of residence of the person concerned; nevertheless, in specific cases, in particular as regards special benefits linked to the economic and social context of the person involved, the place of residence could be taken into account.’

‘As the Court of Justice has repeatedly stated, provisions which derogate from the principle of the exportability of social security benefits must be interpreted strictly. This means that they can apply only to benefits which satisfy the specified conditions. It follows that Chapter 9 of Title III of this Regulation can apply only to benefits which are both special and non-contributory and listed in Annex X to this Regulation.’

(w) “pension” covers not only pensions but also lump-sum benefits which can be substituted for them and payments in the form of reimbursement of contributions and, subject to the provisions of Title III, revaluation increases or supplementary allowances’.

‘1. This Regulation shall apply to all legislation concerning the following branches of social security:

2 Unless otherwise provided for in Annex XI, this Regulation shall apply to general and special social security schemes, whether contributory or non-contributory, and to schemes relating to the obligations of an employer or shipowner.

3. This Regulation shall also apply to the special non-contributory cash benefits covered by Article 70.

6 Under Article 7 of Regulation No 883/2004, entitled ‘Waiving of residence rules’:

‘Unless otherwise provided for by this Regulation, cash benefits payable under the legislation of one or more Member States or under this Regulation shall not be subject to any reduction, amendment, suspension, withdrawal or confiscation on account of the fact that the beneficiary or the members of his/her family reside in a Member State other than that in which the institution responsible for providing benefits is situated.’

‘(1) Unless provided otherwise by this Law, the recipients of an old-age pension, an early old-age pension, an invalidity pension, a social pension, a widow/widower’s pension or an orphan’s pension granted in accordance with special rules, who are entitled to the payment of that pension in December of the calendar year and who reside in the Slovak Republic shall receive a Christmas bonus from the Social Insurance consisting in a social benefit from the State, provided that the amount of the pension paid in December of the calendar year shall not exceed 60% of the average monthly salary in the Slovak Republic, as communicated by the National Statistics Office for the calendar year preceding that in which the Christmas bonus is paid.

2. The recipients of a military and police retirement pension, a military and police invalidity pension, a military and police widow/widower’s pension or a military and police orphan’s pension granted in accordance with special rules, whose pension was initially classified as an old-age pension, invalidity pension, partial invalidity pension, a long service pension, a widow/widower’s pension, or an orphan’s pension granted in accordance with the general rules on social security, which were applicable until 30 April 1998 and which have become military and police insurance benefits in accordance with the rules in force since 1 May 1998, or which were applicable until 30 June 2002 and which have become military and police insurance benefits in accordance with special rules, and the recipients of a military and police widow/widower’s pension or a military and police orphan’s pension granted after the death of a person entitled to a reclassified old-age pension, a reclassified invalidity pension, a reclassified partial invalidity pension or a reclassified long service pension who are entitled to the payment of that pension in December of the calendar year and who reside in the Slovak Republic shall receive from the Department of Social Insurance of the Ministry of the Interior, the Ministry of Justice, the Intelligence Service, the National Security Bureau, the Ministry of Transport, the Ministry for Post and Telecommunications, the Ministry of Finance and the Office for Social Security for the Armed Services, (“the authorities”), a Christmas bonus consisting in a social benefit from the State, provided that the amount of the pension paid in December of the calendar year shall not exceed the amount calculated in accordance with paragraph 1.

5. The recipients of an old-age pension or an invalidity pension who also receive a social pension shall receive the Christmas bonus referred to in paragraph 1 only if the total of the amount of the old-age pension and the social pension or the invalidity pension and the social pension paid in December of the calendar year does not exceed the amount calculated in accordance with paragraph 1. The recipients of an old-age pension, an early old-age pension, an invalidity pension, a social pension, a military and police retirement pension, or a military and police invalidity pension, referred to in paragraphs 1 to 3, who also receive a widow/widower’s pension, an orphan’s pension, a military and police widow/widower’s pension or a military and police orphan’s pension shall receive the Christmas bonus if the total of the amount of the pensions paid in December of the calendar year does not exceed the amount calculated in accordance with paragraph 1. If the recipients of a pension referred to in paragraphs 1 to 3 also receive a pension from the Social Insurance and the authorities, and if the amount of those pensions paid in December of the calendar year does not exceed the amount calculated in accordance with paragraph 1, the Christmas bonus shall be added to the amount of whichever pension is higher.

(a) EUR 66.39 if the amount of the pension or the combined amount of the pensions is less than or equal to the minimum subsistence income for an adult, in accordance with the special rules in force …

(b) shall be calculated in accordance with the formula in the annex if the amount of the pension of the combined amount of the pensions is greater than the minimum subsistence allowance for an adult, in accordance with the special rules in force.’

8 The formula in the annex to Law No 592/2006 provides that if the amount of the pension or the combined amount of the pensions exceeds the minimum subsistence allowance for an adult, the amount of the Christmas bonus shall be progressively reduced.

9 Having received complaints from a number of Slovak pensioners and having corresponded in relation to that matter with the Slovak Republic, on 28 February 2012 the Commission sent a letter of formal notice to that Member State, indicating that the Christmas bonus provided for by Law No 592/2006 was to be regarded as a ‘benefit’ within the meaning of Regulation No 883/2004. Therefore, in accordance with Article 7 thereof, its payment could not be dependent on the beneficiary’s place of residence.

10 The Slovak Republic responded to the letter of formal notice with a letter of 17 April 2012, in which it maintained that the Christmas bonus is a special State social benefit having the characteristics of the special non-contributory cash benefits referred to in Article 70 of Regulation No 883/2004 and that, therefore, the law governing the grant of the Christmas bonus does not infringe that regulation or Articles 45 TFEU and 48 TFEU.

11 Since it was not satisfied with the reasons given by the Slovak Republic, the Commission issued a reasoned opinion on 22 November 2012 in which it called upon that Member State to adopt the measures necessary to comply with that opinion within two months of its receipt. In the reasoned opinion, the Commission maintained that the Christmas bonus was to be regarded as an ‘old-age benefit’ within the meaning of Regulation No 883/2004 and not a ‘special non-contributory cash benefit’ within the meaning of Article 70(2) thereof, and, therefore, that the Slovak Republic also had to pay that benefit to beneficiaries not residing in the Slovak Republic.

12 The Slovak Republic responded to the reasoned opinion by a letter dated 16 January 2013, arguing that the Christmas bonus constitutes a social assistance benefit which does not fall within the scope of Regulation No 883/2004.

13 Since the Commission was not convinced by the Slovak Republic’s arguments, it decided to bring the present proceedings.

14 The Slovak Republic claims, both in its defence and its rejoinder, first, that since the Commission’s action is based on the assertion that the Christmas bonus is an ‘old-age benefit’, within the meaning of Article 3(1)(d) of Regulation No 883/2004, it cannot concern the refusal to grant that bonus to recipients of pensions covering other risks than that of loss of income on account of age, such as an invalidity pension, a widow/widower’s pension, an orphan’s pension or a social pension, who do not reside in Slovakia.

15 Consequently, the Slovak Republic considers that, by its action, the Commission criticises it only for the refusal to grant the Christmas bonus to recipients of an old-age pension, an early old-age pension or a military and police retirement pension who do not reside in Slovakia.

17 Second, the Slovak Republic argues that the action is inadmissible as regards the alleged infringement of Articles 45 TFEU and 48 TFEU, since the application does not contain any reasoning, as required by Article 120(c) of the Rules of Procedure of the Court of Justice, regarding the alleged infringement of those articles.

18 In that connection, the Commission states in its reply that Articles 45 TFEU and 48 TFEU and Regulation No 883/2004 form a single legal framework, appropriate in the present case, and that, by failing to pay the Christmas bonus to beneficiaries residing outside its territory, the Slovak Republic has infringed both Regulation No 883/2004, the principle of the exportability of benefits set out in Article 48 TFEU, and the right to freedom of movement for persons within the European Union enshrined in Article 45 TFEU.

19 It must be held, first of all, that in order to determine the effects which, taking account of the class of recipients entitled to the Christmas bonus, flow from the Commission’s assertion that it is an old-age benefit, the Christmas bonus must be classified in the light of Regulation No 883/2004, and in particular Article 3(1)(d) thereof, as interpreted by the Court.

20 Such an assessment is a substantive issue and must be carried out as part of the examination of the merits of the case.

21 Second, it should be borne in mind that it follows from Article 120(c) of the Rules of Procedure and the relevant case-law that an application must state the subject-matter of the proceedings and a summary of the pleas in law on which the application is based, and that that statement must be sufficiently clear and precise to enable the defendant to prepare its defence and the Court to rule on the application. It is therefore necessary for the essential points of law and of fact on which a case is based to be indicated coherently and intelligibly in the application itself and for the heads of claim to be set out unambiguously so that the Court does not rule ultra petita or indeed fail to rule on an objection (see, to that effect, judgments in Commission v Czech Republic, C‑343/08, EU:C:2010:14, paragraph 26 and the case-law cited, and Commission v Spain, C‑360/11, EU:C:2013:17, paragraph 26).

22 It must be held that, although the Commission maintains in its application that Article 7 of Regulation No 883/2004, which the Slovak Republic is criticised for infringing, must be interpreted in the light of Article 48 TFEU, the application does not contain any arguments capable of supporting the complaints relating to the alleged infringement of Articles 45 TFEU and 48 TFEU.

23 In those circumstances, the complaints relating to the infringement of Articles 45 TFEU and 48 TFEU must be considered to be inadmissible and the merits of the Commission’s action must be determined solely with regard to Article 7 of Regulation No 883/2004.

24 The Commission claims that the Christmas bonus is an ‘old-age benefit’ within the meaning of Article 3(1)(d) of Regulation No 883/2004, and must therefore also be paid to recipients who are not resident in Slovakia. By providing that only beneficiaries residing in that Member State may receive the bonus, the Slovak Republic infringes Article 7 of Regulation No 883/2004.

25 The Commission maintains that the Christmas bonus meets the two conditions set out in the case-law of the Court which justify the conclusion that a specific benefit is a social security benefit falling within the scope of Regulation No 883/2004.

26 Thus, first of all, the Christmas bonus is granted without any individual and discretionary assessment of the beneficiaries’ personal needs on the basis of a legally defined situation. The Christmas bonus is granted to all persons who meet the conditions laid down by national legislation, that is to say that they are entitled to one of the types of pension defined by the law and to receive, by way of the pensions paid in December of the calendar year, an income which does not exceed 60% of the average monthly salary in Slovakia. Those conditions are general and binding and do not allow for individual treatment or a discretionary assessment by the Slovak authorities.

27 Second, the Christmas bonus relates to the categories of risk referred to in Article 3(1) of Regulation No 883/2004. Specifically, Article 3(1)(d) thereof designates old-age benefits as falling within the scope of Regulation No 883/2004. The scope of the regulation corresponds to the scope of Law No 592/2006, which provides that the Christmas bonus is to be granted to beneficiaries of an old-age pension or an early old-age pension, an invalidity pension, a widow/widower’s pension, an orphan’s pension or a social pension.

28 Moreover, the fact that the Christmas bonus does not in itself enable the beneficiary’s basic needs to be met does not preclude its classification as an ‘old-age benefit’, since it takes the form of a ‘revaluation increase of pensioners’ income’ for the purposes of Article 1(w) of Regulation No 883/2004.

29 The purpose of the Christmas bonus is to increase the income of the beneficiaries of a pension, which confirms its classification as an old-age benefit in Article 3(1)(d) of Regulation No 883/2004 and as a benefit governed, in particular, by Article 7 thereof.

30 In that connection, it is immaterial whether or not the Christmas bonus is financed in the same manner as the pension itself, as such a requirement would be contrary to Article 3(2) of Regulation No 883/2004, would considerably undermine the effectiveness of that regulation, and also cannot be inferred from the judgment in Noteboom (C‑101/04, EU:C:2005:51, paragraph 27) because the use of the adverb ‘moreover’ to indicate the appropriate mode of financing for the benefits concerned indicates that that element was not indispensable to the Court’s reasoning.

31 The fact that the case which gave rise to the judgment in Noteboom (C‑101/04, EU:C:2005:51) concerns a non-contributory benefit paid to all those entitled to a pension does not diminish the relevance of that judgment for the present case. The fact that the Christmas bonus is paid only to a certain group of those entitled to pensions is relevant only if membership of that group depends on an individual and discretionary assessment, which is not the case, since the bonus is paid to all those persons who meet the conditions laid down by law.

32 As an old-age benefit, the Christmas bonus therefore falls within Article 7 of Regulation No 883/2004. That article, which must be interpreted in the light of Article 48 TFEU, requires Member States to ensure that the benefits which fall within the scope of that regulation are not subject to ‘any reduction, amendment, suspension, withdrawal or confiscation on account of the fact that the beneficiary or the members of his/her family reside in a Member State other than that in which the institution responsible for providing benefits is situated’. It is clear from that article that the exceptions to that rule must be laid down by the regulation itself. Therefore, the Slovak Republic cannot refuse the payment of a Christmas bonus to persons residing outside Slovak territory, since neither Regulation No 883/2004 nor any other provision of EU law allows for that possibility.

33 Finally, the Commission argues that the Christmas bonus does not constitute a ‘special non-contributory cash benefit’, within the meaning of Article 70(2) of Regulation No 883/2004, ‘since it is a benefit’ within the meaning of Article 3(1) of that regulation.

34 The Slovak Republic agrees with the Commission that the Christmas bonus is not a ‘special non-contributory cash benefit’ within the meaning of Article 3(3) and 70 of Regulation No 883/2004.

35 However, contrary to the Commission’s arguments, that Member State claims that the Christmas bonus does not fall within Regulation No 883/2004 because it meets the conditions necessary to be classified as a ‘social assistance benefit’, expressly excluded from the scope of Regulation No 883/2004.

36 The Christmas bonus is intended not merely to increase the income of beneficiaries, but to alleviate the difficult social situation of recipients on a low income by differentiating according to the amount of their income. As a special non-automatic social benefit financed by resources from the State budget, that bonus is a gesture of solidarity from society as a whole to a group of low-income recipients in order to ensure a minimum income during a period during which they may personally experience the economic and social burden of their low income.

37 The grant and calculation of the amount of the Christmas bonus take account of the recipient’s personal circumstances, since that bonus is granted only to recipients for whom the amount of benefits does not exceed 60% of the average monthly salary in Slovakia, and its amount is reduced progressively to the extent that the amount of their benefits exceeds the minimum subsistence income for an adult in that Member State.

38 Given the fact that that bonus is a one-off payment and of a small amount, a more detailed examination of the individual circumstances of each beneficiary, including the determination of the specific amount of his assets and other income, would be a disproportionate administrative burden for the social insurance which pays the Christmas bonus.

39 The grant and the amount of the Christmas bonus are independent of periods of employment or affiliation or contribution by recipients to insurance schemes. The detailed rules for the non-contributory financing of the Christmas bonus, although not in themselves decisive for establishing whether or not that bonus is a social security benefit, together with the purpose and conditions for granting, confirm that that bonus is a social assistance benefit.

40 Finally, the Christmas bonus does not fulfil either of the two conditions for classification as a ‘social security benefit’ covered by Regulation No 883/2004, in so far as the recipients have no legal entitlement to that bonus and it does not fall within the categories of risks referred to in Article 3(1) of Regulation No 883/2004.

41 As regards the latter point, the Slovak Republic contends that the Christmas bonus is neither an ‘old-age benefit’, within the meaning of Article 3(1)(d) of Regulation No 883/2004, nor a ‘pension’ as such, within the meaning of Article 1(w) thereof. That is not least because of the small amount and the one-off nature of that bonus: its purpose is not to ensure sufficient means to cover the subsistence needs of persons who, after reaching pension age, have left their jobs.

42 The Christmas bonus also does not correspond to any of the other specific benefits mentioned in Article 1(w) of Regulation No 883/2004, which must be classified as ‘pensions’, or, in particular, to a supplementary benefit, since the Christmas bonus is financed by non-contributory means, directly by the Member State and by means that are completely independent of the collection of insurance contributions on other benefits paid by the social security office.

43 In any event, denying the exportable nature of the benefit at issue is not arbitrary, but flows from circumstances relating to the specific situation in Slovakia. Those circumstances are reflected in the conditions for granting the Christmas bonus and in the calculation of its amount by reference to the average salary and minimum subsistence allowance in Slovakia. The exportable nature of that benefit would completely contradict its connection to domestic social circumstances.

44 It is to be remembered, as a preliminary point, that, according to settled case-law, in proceedings for failure to fulfil obligations it is incumbent upon the Commission to prove the alleged failure. It is the Commission’s responsibility to place before the Court the information needed to enable the Court to establish that the obligation has not been fulfilled, and in so doing the Commission may not rely on any presumption (see, inter alia, judgments in Commission v Netherlands, 96/81, EU:C:1982:192, paragraph 6; Commission v Spain, C‑404/00, EU:C:2003:373, paragraph 26; Commission v Italy, C‑135/06, EU:C:2007:250, paragraph 26; and Commission v Greece, C‑305/06, EU:C:2008:486, paragraph 41).

45 In the present case, in order to assess the merits of the present action, it must be determined whether the Christmas bonus constitutes a ‘social security benefit’ within the meaning of Regulation No 883/2004, to which the waiving of residence clauses laid down in Article 7 thereof applies.

46 It must be recalled that the distinction between benefits excluded from the scope of Regulation No 883/2004 and those which fall within it is based not on whether a benefit is classified as a social security benefit by national legislation, but essentially on the constituent elements of each particular benefit, in particular its purpose and the conditions on which it is granted (judgment in Molenaar, C‑160/96, EU:C:1998:84, paragraph 19).

47 It is settled case-law that a benefit may be regarded as a social security benefit if it is granted to the recipients, without any individual and discretionary assessment of personal needs, on the basis of a legally defined position and relates to one of the risks expressly listed in Article 3(1) of Regulation No 883/2004 (see, inter alia, judgment in da Silva Martins, C‑388/09, EU:C:2011:439, paragraph 38 and the case-law cited).

48 It follows from the provision relating to the grant of the Christmas bonus, first of all, that it is granted to persons entitled to one of the types of pension mentioned in Article 1(1) and (2) of Law No 592/2006, who are entitled to the payment of that pension in December of the relevant calendar year, who reside in Slovakia and for whom the amount of the income from legal pensions is less than or equal to 60% of the average annual salary in Slovakia during the reference period.

49 Next, Article 1(5) of Law No 592/2006 lays down the rules according to which the persons receiving a number of pensions mentioned in Article (1) to (3) may receive the Christmas bonus.

50 Finally, Article 1(8) of Law No 592/2006 and the annex thereto lay down the rules according to which the amount of that bonus is calculated.

51 It follows, as regards the first condition for the grant of the benefit without any individual and discretionary assessment of personal needs, that the grant of the Christmas bonus is subject to the conditions laid down in an exhaustive list in Article 1 of Law No 592/2006, without the competent authorities having a margin of discretion in that regard.

52 It is true that the Christmas bonus is to be granted or refused and its amount calculated by taking into account the amount of income from pensions received by the beneficiary. However, this is an objective, legally defined criterion which gives entitlement to that bonus without the competent authority being able to take other personal circumstances into consideration. Therefore, the grant of the Christmas bonus is not dependent on an individual assessment of the claimant’s personal needs, which is a characteristic feature of social assistance (see, to that effect, judgments in Hughes, C‑78/91, EU:C:1992:331, paragraph 17; Acciardi, C‑66/92, EU:C:1993:341, paragraph 15; and De Cuyper, C‑406/04, EU:C:2006:491, paragraph 23).

53 As regards the second condition, it should be recalled, the Commission claims, that the Christmas bonus must be classified as an ‘old-age benefit’ within the meaning of Article 3(1)(d) of Regulation No 883/2004 and takes the form of a ‘revaluation increase of pensioners’ income’ for the purposes of Article 1(w) thereof.

54 In accordance with the case-law cited in paragraph 46 of the present judgment, in order to determine whether the Christmas bonus may be classified as an ‘old-age benefit’ within the meaning of Article 3(1)(d) of Regulation No 883/2004, the constituent elements of that bonus, in particular its purpose and the conditions on which it is granted, must be examined.

55 In that respect, it should be noted that the essential characteristic of the old-age benefits referred to in Article 3(1)(d) of Regulation No 883/2004 lies in the fact that they are intended to safeguard the means of subsistence of persons who, when they reach a certain age, leave their employment and are no longer required to hold themselves available for work at the employment office (see judgment in Valentini, 171/82, EU:C:1983:189, paragraph 14).

56 Furthermore, the Court has held that an allowance paid as a supplementary allowance granted exclusively to beneficiaries of a retirement and/or survival pension, financed by the same resources that are used to finance those pensions and which is linked to the retirement pension by providing the recipients with means of subsistence ensuring that they may take a holiday, may be classified as an ‘old-age pension’ within the meaning of Article 3(1)(d) of Regulation No 883/2004 (judgment in Noteboom, C‑101/04, EU:C:2005:51, paragraphs 25 to 29).

57 In the present case, it must be held that the Christmas bonus is not paid exclusively to recipients of an old-age pension, an early old-age pension or a military and police retirement pension, but the group of beneficiaries also includes recipients of other types of pension, in particular, an invalidity pension, a social pension, a widow/widower’s pension or an orphan’s pension.

58 The Commission has not given the reasons why, given the group of persons covered, which is defined so broadly, it considers that the Christmas bonus must be classified as an ‘old-age pension’ within the meaning of Article 3(1)(d) of Regulation No 883/2004.

59 It is clear from the documents submitted to the Court that the purpose of the Christmas bonus is to provide a financial supplement to the recipients of the various legal pensions whose income does not exceed the threshold defined by law.

60 In so far as the Christmas bonus is paid to recipients of retirement pensions or pensions treated as retirement pensions, that bonus supplements the means of subsistence of persons having reached a certain age. Nevertheless, it cannot be held that the purpose of the Christmas bonus depends only on the type of pension it aims to supplement.

61 First, as the Slovak Republic argues, the financial supplement, paid in the form of the Christmas bonus, is intended to alleviate the difficult social situation of recipients on low incomes in a period during which they may personally experience the economic and social burden of their low income. Second, the true purpose of the Christmas bonus also derives from the rules laid down in Article 1(5) of Law No 592/2006 relating to the receipt of that bonus where the recipient receives several pensions. It is clear from that provision, in essence, that the recipients of a number of legal pensions receive only one Christmas bonus if the total amount of the pensions does not exceed the threshold laid down.

62 Therefore, it must be held that the Commission has failed to establish that the constituent elements of the Christmas bonus support its classification as an ‘old-age benefit’ within the meaning of Article 3(1)(d) of Regulation No 883/2004.

64 Under Article 138(1) of the Rules of Procedure of the Court of Justice, the unsuccessful party must be ordered to pay the costs if they have been applied for in the other party’s pleadings. Since the Slovak Republic applied for costs and the Commission has been unsuccessful, the latter must be ordered to pay the costs.

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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Commission v Slovakia (Judgment) [2015] EUECJ C-361/13 (16 September 2015) URL: http://www.bailii.org/eu/cases/EUECJ/2015/C36113.html Cite as: [2015] EUECJ C-361/13, EU:C:2015:601, ECLI:EU:C:2015:601

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