A (in)definition of public service through the State aid rule

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 by Ana Filipa Afonseca, member of CEDU

The State often reveals itself (or is said to be) incapable of pursuing the public interest through its own resources. This is the reason why the economic operators are compensated for the public activities they provide, in the so-called Services of General Economic Interest (SGEI), according to Article 14 of TFEU.

Beyond all the political discussion about the raison d’être of the State underlying this rule, the limit between an incompatible State aid and this compensation is often too thin and unclear.

Naturally, several questions arise about the (good or bad) management of state resources – which the CJEU gradually solves. These issues already go beyond the choice of the private entity or even the overcompensation (which is politically the most contested by citizens and the Court always claims to be against EU law) but they also bring up a discussion on the definition of public service of general economic interest.

The case T-92/11 RENV, which opposed Jorgen Anderson to the European Commission, initiated in Denmark concerning public transportation. In that country there are two systems of transport services: the free traffic system, commercially exploited, and the public traffic system, negotiated with public entities through a public contract.
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Judgment “Altun”: priority to fight against cross-border social security fraud and social dumping or a just a trick mirror?

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by Marc Morsa, Senior Researcher at the Faculty of Law of the University of Louvain-La-Neuve

1. Social dumping and binding force of E101 certificate (A1 document)

1.1 The scope of the binding force of E101 certificate

In the fight against cross-border social fraud and social dumping the competent authorities of the host Member State in whose territory posted workers are employed often come up against the binding force attached to the E101 certificates stating that the worker concerned continued to be subject to the legislation of that Member State, and until which date. This binding force has been defined by the ECJ in a well-established jurisprudence[i]. This certificate thus necessarily implies that the other Member State’s social security system cannot apply[ii]. It establishes a presumption that the worker concerned is properly registered with the social security system of the Member State in which the undertaking employing him is established[iii][iv]

1.2 The cornerstone of the binding force of E101 certificate: the principles of loyal cooperation and mutual trust between the EU and its Member States

For the ECJ this presumption of regularity of affiliation derives from the principle of loyal cooperation, set out in Article 4 (3) TEU and its corollary, the principle of mutual trust[v]. Both principles impose on the social security institutions concerned a double reciprocal and interdependent obligation[vi]. Thus, to the negative obligation incumbent on the competent institution of the host Member State (and on all the courts and tribunals of the Member States regardless of the nature of the proceedings brought, whether civil or criminal) not to unilaterally challenge the certificate E101 – its particulars[vii] and not to question the validity of an E 101 certificate in the light of the elements on the basis of which it was issued corresponds to the positive obligation incumbent on the competent institution (issuing the E 101 certificate) to make a proper assessment of the facts relevant for the application of the rules relating to the determination of the legislation applicable to social security and, consequently, to ensure that the information contained in an E 101 certificate is accurate[viii].
Continue reading “Judgment “Altun”: priority to fight against cross-border social security fraud and social dumping or a just a trick mirror?”

Just married, indeed! Same-sex marriage and free movement of EU citizens – the ECJ’s ruling in Coman and Others

 

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 by Sophie Perez Fernandes, Junior Editor

In a previous post, a report was given of the Opinion of Advocate General Wathelet, in the Coman and Others case. Based on a literal, contextual and teleological interpretation of Directive 2004/38, in particular its Article 2(2)(a), the Advocate General called for an autonomous and uniform interpretation throughout the EU of the term ‘spouse’ within the meaning of the directive, an interpretation which is independent of sexual orientation. Now that the European Court of Justice (ECJ) has delivered its ruling, the relevant interpretation of the term ‘spouse’ within the meaning of Directive 2004/38 has been made clear.

The Coman and Others case concerns the situation of Mr. Relu Adrian Coman, who holds both Romanian and American citizenship, and who married Mr Robert Clabourn Hamilton, a US citizen, in Belgium in 2010. Since the end of 2012, the couple have taken steps so that Mr Hamilton could, as a member of Mr Coman’s family, obtain the right to lawfully reside in Romania for a period of more than three months. Their request was denied on the basis that, under the Romanian Civil Code, marriage between people of the same sex is not recognised, and that an extension of Mr Hamilton’s right of temporary residence in Romania could not be granted on grounds of family reunion. Thereafter, the couple brought an action against the decision seeking, inter alia, a declaration of discrimination on the ground of sexual orientation as regards the exercise of the right of freedom of movement in the EU. In that dispute, they also argued that the relevant provisions of the Civil Code were unconstitutional, plea on which the Curtea Constituţională (Constitutional Court, Romania) was requested to rule on.
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MEO – Serviços de Comunicações e Multimedia S.A. v. Competition Authority (C-525/16) case

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 by Nuno Calaim Lourenço, Managing Associate at SRS Advogados

On 19 April 2018, the European Court of Justice (ECJ) delivered its judgment in the MEO – Serviços de Comunicações e Multimedia S.A. v. Competition Authority (C-525/16) case. The judgment provides important criteria of analysis with regard to the constituent elements of an abuse of a dominant position by discrimination, under the regime of Article 102 (c) of the Treaty on the Functioning of the European Union (TFEU) and advances the proposition that such conduct is not subject to a per se prohibition rule. The judgment clarifies, in particular, that in the case of second-degree price discrimination (directed at customers in a downstream market with whom the dominant undertaking does not compete) an infringement of competition rules only occurs if the discrimination entails actual or potential anti-competitive effects that may distort competition between downstream operators. In other words, it is the effective competitive disadvantage that results from discrimination, which must be demonstrated by reference to the actual circumstances of the case, including the impact on the costs, income and profitability structures of the affected party – rather than the practice of discrimination considered in abstract – which constitutes the criterion for the existence of an abuse. Although it does not create any ‘safe harbours’, this important clarification allows dominant companies greater flexibility in adapting their pricing policies to different market realities and does not coerce them into applying uniform tariffs.
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Competition law and tofu – the denomination of products

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 by Filipa Afonseca, member of CEDU

Competition law does not have a strict goal that is objectively qualifiable and quantifiable. This is an old debate, but it has subtly brought new life to the discussion about the functions of competition law. So, what does it have to do with veganism and vegetarianism? Everything, as shown by the Tofu Town’s ruling of the CJEU, Case C-422/16, of 14th June 2017.

The issue was that the 100% plant-based products of Tofu Town were marketed under the denomination of “milk”, “yoghurt” or “cheese”. The Court of Justice ruled favorably on the German company Verband’s argument that such expressions are reserved for products of animal origin, so that even an auxiliary expression such as “oat milk” or “soy yoghurt” would not exempt the risk of consumer confusion. According to the Court, consumers’ expectations could be affected as well as concluding that the proper identification of a product is a form of fair competition in the European Union.

In fact, this argument is not new. It reminds us of the well-known distinction of whisky and wine in the Port Charlotte case, in which the Court stated that white Oport wine does not run the risk of being confused with whiskey.

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Sitchting Brein v. Ziggo BV and XS4ALL Internet BV – after all the The Pirate Bay does communicate to the public

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by Ana Margarida Pereira, lawyer at CCM and member of CEDU

The concept of ‘communication to the public’ within the meaning of Article 3(1) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society has been much discussed by the Court of Justice[i]. One of the most recent developments, and in my opinion the one which has the most impact in the information society, is the Case C-610/15, Sitchting Brein v. Ziggo BV and XS4ALL Internet BV.

The Court decided that making available and managing on the internet a sharing platform which by means of indexation of metadata relating to protected works and the provision of a search engine allows users of that platform to locate those works and to share them in the context of a peer-to-peer network constitutes a ‘communication to the public’, within the meaning of Article 3(1) of Directive 2001/29/EC.
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E pur si muove! After all, we do have a highest level of protection of fundamental rights… (about the Taricco saga)

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 by Alessandra Silveira, Editor 
 and Sophie Perez Fernandes, Junior Editor

On 5 December 2017, the European Court of Justice (ECJ) ruled again on the Taricco saga. The interpretation set out in the judgment in Taricco I gave rise to heated debate, particularly within the Italian legal community, since the compatibility of the interpretative solution set out therein was called into question in the light of supreme principles of the Italian constitutional order, particularly the principle of legality in criminal matters [Article 25(2) of the Italian Constitution], the disregard of which would allegedly violate the constitutional identity of the Italian Republic.

At the origin of the judgment in M.A.S. and M.B. (or Taricco II) is thus the interpretation laid down in Taricco I regarding Article 325 TFEU, the provision concerning the obligations on Member States to combat fraud affecting the financial interests of the Union. In Taricco I, the ECJ held it to be incompatible with EU law, in particular with Article 325 TFEU, a national regime on limitation periods for criminal offenses which has the effect that facts constituting serious fraud affecting the financial interests of the Union would escape criminal punishment, in the framework of a de facto impunity.

The contentious point was that, within the Italian legal system, and with support of constitutional case-law, the legislation governing limitation periods of criminal offences is characterised as being substantive (rather than procedural) in character and is, therefore, subject to the principle of legality in criminal matters laid down by Article 25(2) of the Italian Constitution. Since the Italian constitutional order would ensure (according to the Italian Constitutional Court) a higher level of protection of fundamental rights than the one guaranteed under EU law, the Italian Constitutional Court held that both Article 4(3) TEU (respect for national constitutional identities) and Article 53 CFREU (principle of the highest level of protection of fundamental rights) would allow national courts not to comply with the obligation laid down by the ECJ in Taricco I (see commentary here).

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The concept of undertaking strikes back – the activity of religious orders and congregations

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by Ana Filipa Afonseca, member of CEDU

The Court of Justice, final interpreter of the Treaties, has dealt with a broad spectrum of concepts of undertaking, making certain decisions somewhat perplexing to lawyers unsuspicious of the particularity of the concept of undertaking in the context of competition rules. These decisions are still the living proof that competition is at the heart of legal (and political) modeling process of European integration.

On the other hand, regarding the field of state aids, in the Congregación de Escuelas Pisa’s ruling, Case C-74/16, 27th June 2017, the Court of Justice had the important and difficult task of deciding whether the activities carried out by Spanish religious establishments were of economic nature. With this assumption, the Congregación de Escuelas Pías had received an illegal fiscal exemption and this measure is a forbidden state aid in the terms of the Article 107(1).

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COTY: a luxury case

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by Joana Whyte, Associate Lawyer at SRS Advogados and member of CEDU


Coty
[i] is a much awaited case among competition law practitioners and scholars. This judgement of the Court of Justice of the European Union (CJEU) is expected to be a landmark for the luxury goods industry and will determine how the industry can protect their brands and whether restrictions on certain internet sales can be lawfully upheld.

The judgment will also be of extreme importance for Amazon and similar online marketplaces (such as eBay) who are concerned that internet sales bans will impede the growth of their businesses.

Coty Germany is one of Germany’s leading suppliers of luxury cosmetics who sells luxury cosmetic brands via a selective distribution network, on the basis of a general framework distribution agreement uniformly applied throughout Europe. The agreement is supplemented by other more specific contractual clauses designed to organise the said network.

Parfümerie Akzente has, for many years, distributed Coty Germany’s products as an authorised retailer, both at brick and mortar locations and over the internet. Internet sales are made partly through its own online store and partly via the “amazon.de” platform.

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Taricco continues – between constitutional national identity and highest level of protection of fundamental rights, where does effectiveness of EU law stand?

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 by Alessandra Silveira, Editor 
 and Sophie Perez Fernandes, Junior Editor

In September 2015, and in the wake of the case-law set in Fransson, the European Court of Justice (ECJ) detailed in Taricco the scope of the Member States’ obligations to combat VAT fraud (see comment here). The ECJ is now faced with the repercussions of said judgment as the Corte costituzionale [the Italian Constitutional Court (ICC)] questions the compatibility of the solution established therein with supreme principles of the Italian constitutional order.

As is well known, the Taricco case called into question the Italian regime on limitation periods for criminal offenses. The national provisions in question were such that, given the complexity and duration of criminal proceedings, defendants accused of VAT evasion constituting serious fraud affecting the EU’s financial interests were likely to enjoy de facto impunity as a result of the expiration of the limitation period. Having established that the Italian regime in question was not in conformity with EU law, the ECJ interpreted Article 325 TFEU as having “the effect, in accordance with the principle of the precedence of EU law, in their relationship with the domestic law of the Member States, of rendering automatically inapplicable, merely by their entering into force, any conflicting provision of national law”. Therefore, national courts were to “ensure that EU law is given full effect, if need be by disapplying those provisions (…), without having to request or await the prior repeal of those articles by way of legislation or any other constitutional procedure”. The ECJ significantly added that, if a national court decides to disapply the national provisions at issue, “it must also ensure that the fundamental rights of the persons concerned are respected” as penalties might be applied to them, which, in all likelihood, would not have been imposed under those national provisions. In this regard, the ECJ did not consider that such a disapplication of national law would infringe the rights of the accused as guaranteed by Article 49 CFREU on the principles of legality and proportionality of criminal offences and penalties.

The Taricco judgment caused some stir within the Italian legal community. A few days after the delivery of the judgment, the Corte d’appello di Milano (Court of Appeal of Milan), instead of applying the solution formulated therein in a case pending before it concerning serious fraud in relation to VAT, stayed the proceedings to raise a question of constitutionality before the ICC, which would be followed months later by the Corte suprema di cassazione (Court of Cassation). Both courts have doubts as to the compatibility of the case-law established in Taricco with supreme principles of the Italian constitutional order and with the requirement to respect inalienable human rights as laid down by the Italian Constitution, with particular reference to the principle of legality in criminal matters [Article 25(2) of the Italian Constitution]. Hearing such concerns, the ICC sought a preliminary reference from the ECJ (here and here) according to an expedited procedure, the application of which was deferred (here). Advocate-General Yves Bot recently rendered its Opinion (here).

Continue reading “Taricco continues – between constitutional national identity and highest level of protection of fundamental rights, where does effectiveness of EU law stand?”