Report for the Hearing in Case C-92/91

I — Legal background

1. Commission Directive 88/301/EEC

Article 3 of Commission Directive 88/301/EEC of 16 May 1988 on competition in the markets in telecommunications terminal equipment (OJ 1988 L 131, p. 73) provides that Member States are to ensure that economic operators have the right to import, market, connect, bring into service and maintain terminal equipment. However, Member States may:

in the absence of technical specifications, refuse to allow terminal equipment to be connected and brought into service where such equipment does not, according to a reasoned opinion of the body referred to in Article 6, satisfy the essential requirements laid down in Article 2(17) of Council Directive 86/361/EEC of 24 July 1986 on the initial stage of the mutual recognition of type-approval for telecommunications terminal equipment (OJ 1986 L 217, p. 21);

require economic operators to possess the technical qualifications needed to connect, bring into service and maintain terminal equipment on the basis of objective, nondiscriminatory and public criteria.

Article 5(1) of Directive 88/301/EEC provides that Member States must, not later than three months after notification of the directive, communicate to the Commission a list of all technical specifications and type-approval procedures which are used for terminal equipment, and provide the publication references. Where they have not been published in a Member State, the latter shall ensure that they arc published not later than the dates referred to in Article 8.

Article 5(2) provides that Member States are to ensure that all other specifications and type-approval procedures for terminal equipment are formalized and published. Member States are to communicate the technical specifications and type-approval procedures in draft form to the Commission in accordance with Council Directive 83/189/EEC of 28 March 1983 laying down a procedure for the provision of information in the field of technical standards and regulations (OJ 1983 L 109, p. 8; amended by Council Directive 88/182/EEC of 22 March 1988, OJ 1988 L 81, p. 75) and according to the timetable set out in Article 8.

Finally, Article 6 of Directive 88/301/EEC provides that Member States are to ensure that, from 1 July 1989, responsibility for drawing up the specifications referred to in Article 5, monitoring their application and granting type-approval is entrusted to a body independent of public or private undertakings offering goods and/or services in the telecommunications sector.

2. The relevant national rules

(a) Provisions relating to the requirement of approval

Decree No 85-712 of 11 July 1985 implementing the Law of 1 August 1905 on equipment capable of being connected to the State telecommunications network {Journal Officiel de la République Française of 14 July 1985, p. 7976) provides that equipment referred to in the decree may not be manufactured for the domestic market, imported, stocked for sale, marketed or distributed unless it complies with the provisions of the decree (Articles 1 and 2) and in particular with various essential requirements for safeguarding the network and user safety (Articles 3 and 4). To show that the equipment complies with those requirements, operators must submit either a report drawn up by a body authorized by the Minister for Industry or the approval certificate issued pursuant to the Posts and Telecommunications Code, or a certificate or other document recognized as equivalent by order of the Minister for Industry (Article 6).

(b) The penalty for infringing the requirement of approval

Article 7 of the decree fixes the penalty for contravening the requirement to show that such equipment is in conformity, that is to say the fine imposed for fourth class offences, without prejudice to the application of Articles 1 and 2 of the Law of 1 August 1905 on fraud and falsification in relation to products or services. Those articles provide for a three-month to two-year term of imprisonment and a fine of FF 2000 to FF 250000 for those who mislead a party to a contract, especially as regards substantial qualities, suitability for use or checks carried out on any goods. Those penalties may be doubled if there are aggravating circumstances.

(c) Provisions relating to the organization of the public telecommunications sector in France

In the Notice relating to the application of Decree No 85-712 (Journal Officiel de la République Française of 1 November 1985, p. 12679), it is stated that pursuant to Article 6 of the decree approval is to be issued by the General Directorate for Telecommunications in respect of equipment complying with the specifications in the annexed list.

Under Article 1(4) of Decree No 86-129 of 28 January 1986 on the organization of the central administration of the Ministry for Posts and Telecommunications, the General Directorate for Telecommunications comprises, inter alia, the Directorate for Commercial and Telematic Affairs, the Directorate for Industrial and International Affairs and the Directorate for Production. Article 15 of the decree provides that the Directorate for Industrial and International Affairs is to lay down, together with the Directorate for Production, purchasing policy for telecommunications and is to make detailed proposals for that policy. Furthermore it is responsible for technical checks on telecommunications equipment.

Decree No 89-327 of 19 May 1989 (Journal Officiel de la République Française of 21 May 1989, p. 6412), the terms of which were adopted by Decree No 90-1121 of 18 December 1990 (Journal Officiel de la République Française of 19 December 1990, p. 15615), altered the organization of the central administration of the Ministry for Posts and Telecommunications by creating, in particular, the Directorate for General Regulations (see the new Article 1(1) of the aforementioned Decree No 86-129). The latter is, inter alia, responsible for drawing up and publishing the specifications and procedures for approval of terminal equipment connected or capable of being connected directly or indirectly to telecommunications networks open to third parties and for issuing certificates of approval for terminal installations (see the new Article 2 of Decree No 86-129). Article 15 of Decree No 86-129 has, inter alia, been amended so that the Directorate for Industrial and International Affairs of the General Directorate for Telecommunications is to propose, in conjunction with the Directorate for Production and the Directorate for Commercial and Telematic Affairs, technical specifications for terminal equipment connected or capable of being connected, directly or indirectly, to the general network of the State.

Finally, Law No 90-568 of 2 July 1990 on the organization of the public postal and telecommunications services (Journal Officiel de la République Française of 8 July 1990, p. 8069) set up from 1 January 1991 two public companies under the responsibility of the Minister for Posts and Telecommunications, respectively named La Poste and France Télécom, both of which arc described as public service operators. Under Article 3 of Law No 90-568, France Télécom is responsible for providing all public telecommunications services in respect of domestic and international connections and in particular for ensuring access to the telephone service for any person who applies for it as well as providing, subject to the rules of competition, all other telecommunications services, installations and networks. In consequence the General Telecommunications Directorate was removed from the central administration of the Ministry for Posts and Telecommunications (see the aforementioned Decree No 90-1121).

(d) Notification under Directive 88/301/EEC

Pursuant to Article 5(1) of Directive 88/301/EEC, the French Government communicated, by letter dated 9 November 1988, a list of the specifications and type-approval procedures used for terminal equipment, as well as the publication references. A copy of the type-approval procedure, as recast, was also communicated to the Commission in accordance with Article 8 of Directive 83/189/EEC, to which Article 5(2) refers.

II — Facts and procedure

1. Mrs Neny was summoned to appear before the Tribunal de Police, Vichy, for selling on 5 April 1990 one hundred telephones in contravention of Decree No 85-712 of 11 July 1985. The public prosecutor asked for her to be fined FF 100 for each offence. Mrs Neny, however, pleaded that Decree No 85-715 was unlawful as being contrary to Directive 88/301/EEC.

2. Since it took the view that the case raised a question concerning the interpretation of the Community rules at issue, the Tribunal de Police, Vichy, by judgment of 5 March 1991, stayed the proceedings pursuant to Article 177 of the EEC Treaty and referred the following question to the Court of Justice for a preliminary ruling:

‘Does Commission Directive 88/301/EEC of 16 May 1988 on competition in the markets in telecommunications terminal equipment prohibit a procedure whereby telecommunications equipment to be offered for sale to the consumer must be submitted for the approval of the national telecommunications authority, the absence of a reference to such approval on the equipment being punishable by a fine of between FF 1300 and FF 2500, as provided for in Decree No 85-712 of 11 July 1985?’

3. The judgment of the Tribunal de Police, Vichy was registered at the Court on 13 March 1991.

4. Pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC, written observations were lodged by the Government of the French Republic, represented by Philippe Pouzoulet, Deputy Director in the Directorate for Legal Affairs of the Ministry for Foreign Affairs, acting as Agent, and Géraud de Bergues, Principal Deputy Secretary in the same ministry, acting as Deputy Agent, by the United Kingdom, represented by Rosemary Caudwell of the Treasury Solicitor's Department, acting as Agent, assisted by Eleanor Sharpston, Barrister, and by the Commission of the European Communities represented by Richard Wainwright, Legal Adviser, acting as Agent, assisted by Hervé Lehman, of the Paris Bar.

5. Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry. The French Government and the Commission were requested to reply in writing to various questions; replies were given within the time-limits laid down.

III — Written observations submitted by the parties

1. The notification required under Article 5 of Directive 88/301/EEC

The United Kingdom considers that the present reference for a ruling concerns the same French decree, namely Decree No 85-712, as that which is the subject of Case 69/91 Decoster and therefore raises the same issues as to the legal effects of national technical regulations falling within the scope of Directive 88/301/EEC which have not been notified to the Commission in accordance with the provisions of Directive 83/189/EEC. As in Case C-69/91 Decoster, the United Kingdom's observations are confined to the question whether technical regulations enacted by a Member State that fall to be notified to the Commission under the terms of Council Directive 83/189/EEC are enforceable against third parties where the Member State concerned has failed to comply with that notification requirement.

The French Government observes in that respect that it has complied with its obligations regarding notification under Article 5 of Directive 88/301/EEC. The existing type-approval procedure for terminal equipment, a list of specifications in force and the publication references were communicated to the Commission in November 1988, in accordance with Article 5(1) of the directive. The French Government points out that an amended version of the type-approval procedure in draft form was notified to the Commission in accordance with Article 5(2) of Directive 88/301/EEC in conjunction with Article 8 of Directive 83/189/EEC.

2. The obligation in Article 6 of Directive 88/301/EEC to ensure the independence of the body responsible for drawing up rules in the telecommunications sector

The French Government observes that in France the separation of operational responsibilities and those for drawing up rules was carried out in two stages. Decree No 89-327 of 19 May 1989 created the Directorate for General Regulations responsible directly to the Minister for Posts and Telecommunications. That directorate is responsible inter alia for drawing up and publishing specifications and type-approval procedures concerning terminal equipment and for issuing certificates of approval of terminal installations. It is independent of the public service operator, France Télécom, which since 1 January 1991 has independent legal personality under Law No 90-568 of 2 July 1990.

The Commission considers that under the preliminary ruling procedure the Court does not have to give a ruling on the independence in relation to economic operators of the body responsible for drawing up the specifications and for granting approval in the specific case of the 2197 facsimile machines sold by the defendant.

3. The compatibility with Article 30 of the Treaty of an approval procedure such as that provided for and applied by the French authorities

The Commission considers that Article 3 of Directive 88/301/EEC and Article 30 of the EEC Treaty preclude a ban on the marketing of telecommunications terminal equipment imported from a Member State in which it is lawfully manufactured or marketed, where such equipment is not intended to be connected to the public telecommunications network.

4. The compatibility with Community law of a penalty such as that provided for in Article 7 of Decree No 85-712

The French Government observes that, according to the case-law of the Court (Case 203/80 Casati [1981] ECR 2595, paragraph 27, and Case 299/86 Drexl [1988] ECR 1213, paragraph 23), a system of penalties cannot have the effect of jeopardizing the freedoms provided for by the Treaty. That would be the case if a penalty were so disproportionate to the gravity of the infringement that it became an obstacle to the freedom guaranteed by Community law.

The imposition of a penalty of between FF 1300 and FF 2500 in the event of an infringement of rules guaranteeing observance of essential requirements such as network and user safety cannot be regarded, in the opinion of the French Government, as so disproportionate as to hinder the free movement of goods.

IV — Replies to questions from the Court

The Court requested the French Government and the Commission to reply in writing to five and three questions respectively.

1. Questions put to the French Government

(a). In its first question the Court asked the French Government to supply further details of changes in the situation with regard to the public telecommunications operator and in particular to amendments of its statute, the structure and composition of its administrative bodies, the exclusive and special rights conferred on it by the public authorities, the various links with the public administration and in particular with the administration of posts and telecommunications. The French Government replied as follows: The French Government also refers the Court to the extract from the report of activities for 1990 of the Directorate for General Regulations in the Ministry for Posts and Telecommunications concerning the ‘new legal system for telecommunications’.

‘The Law of 2 July 1990 on the organization of the public postal and telecommunications service set up from 1 January 1991 France Télécom, a legal person governed by public law. The public network operator is thus no longer a department of the State but is an independent body. The Decree of 12 December 1990 provides for the structure and composition of the administrative bodies of France Télécom.

The rights and duties of the public service operator and the framework within which its activities are performed are, in accordance with Article 8 of the Law of 2 July 1990, governed by the Decree of 29 December 1990 on the general conditions of the public service operator.

Under Article 34 of that Law, the Minister responsible for telecommunications is generally responsible for that independent public service operator and is assisted in that task by the Commission Supérieure du Service Public created by Article 35. It is the same responsibility which the State has over any public undertaking.’

(b). The second question seeks to ascertain the number of cases in which telecommunications terminals were denied approval in the last ten years; the percentage of cases refused concerning domestic products, products from other Member States and products from nonmember countries; whether and, if so, what reasons are given for the refusal to grant approval. According to the French Government,

‘in view of its relatively recent creation (Decree of 19 May 1989), the Directorate for General Regulations in the Ministry for Posts and Telecommunications which issues certificates of approval in respect of terminal equipment has no statistics available prior to 1989. However, according to the information supplied to it by the former General Directorate for Telecommunications which has become France Télécom, the number of applications for approval and refusals has scarcely changed in the last ten years.

Thus, in 1990, of the 1100 applications for approval made to the Directorate General for Regulations, 60% related to equipment of French origin as regards most of the manufacturing process and the remainder was equally divided between the other Member States of the EEC and the rest of the world. 10% of the applications were refused because the terminal equipment did not comply with the essential requirements applicable to it. Although there are no figures for refusals to grant approval according to the place of manufacture of the equipment, a summary review of the refusals indicates that they are to be broken down in the same manner as for the origin of the equipment. When the terminal equipment is brought into line with the essential requirements applicable to it, a fresh application for approval may always be lodged. Reasons are stated for refusals to grant approval, as with any administrative decision, and may be the subject of an application to the administrative court.’

(c). In its third question the Court asks the French Government to give its views on the cases of refusal to grant approval cited in Chapter III of Mrs Gillon's observations. The French Government observed in that respect that

‘in Chapter III of her observations Mrs Gillon states that approval was refused by the competent French authorities for the PANAFAX UF 150 whereas a similar machine, the MATRACOM 100, was approved. As another example of the so called “uncertain nature of approval”, Mrs Gillon cites the example of the TOSHIBA 211 fax machine, approval for which was first given for a period of 10 years but then withdrawn after four months.

On the first point, approval of the PANAFAX UF 150 was not refused as there was never any application for approval.

For information purposes PANASONIC obtained approval for the following fax machines:

PANAFAX UF 100,

PANAFAX UF 200,

PANAFAX UF 210,

UF 104,

UF 106/106 M.

On the second point, it is true that the TF 211 fax machine, marketed by TOSHIBA France and manufactured by TELIC ALCATEL, was at first approved on 8 December 1988 for a period of 10 years under No 8819F. Subsequently, however, another machine with the same references (TF 211) but manufactured in Japan and marketed until then by other TOSHIBA subsidiaries in Europe apart from France appeared on the French market.

Since the existence of those two machines was likely to cause confusion, the Ministry for Posts and Telecommunications, upon application by TOSHIBA France itself, withdrew on 30 April 1989 the approval which it had previously given.’

(d). The fourth question is whether the Centre National d'Etudes et Télécommunications (CNET) still exists and, if so, what its administrative status is. According to the French Government,

‘CNET is part of France Télécom as its research centre. It is active in the telecommunications field and, more generally, communication techniques.

According to Article 18 of France Télécom's general conditions, under the procedure for approval of terminal equipment “the Minister responsible for telecommunications may request France Télécom to undertake laboratory tests. Such services shall be charged to the applicants seeking approval”.

In view of their competence and impartiality, two laboratories have so far been recognized in France to carry out the tests, namely LCIE for tests in relation to electricity and CNET for tests relating to the main requirements other than safety applicable to terminal equipment.

As regards the approval tests, some of CNET's activities have been separated for administrative purposes. Staff carrying out such tests are part of a clearly identified service and the results of the tests are signed by certain members of staff. Arrangements are being made for CNET to have separate accounts in relation to “laboratory tests carried out in connection with the grant of approval”. That stage, which gives an additional guarantee of the independence and impartiality of the laboratory, should be followed in the medium term by another stage giving it independent legal personality.’

(e). Finally, in its fifth question the Court asked the French Government to describe the structure of the French market in telecommunications terminals, and in particular to state the market share held by Télic-Alcatel and Matra Communication and the links between France Télécom on the one hand and Télic-Alcatel, Matra Communication and other domestic terminal manufacturers on the other. According to the French Government,

‘the French authorities do not have any data on the precise structure of the French market in telecommunications terminals. According to information provided by the specialized press in the telecommunications sector, the market is as follows:

for the so-called general public terminals (telephones — answer phones — radiophones):

Matra's share is between 30 and 35%;

Alcatel Business System's share is between 18 and 20%;

Alcatel is very active in the PABX (private automatic branch exchange) market.

There are no special links between Matra, Alcatel Business System and France Télécom. Before the Law of 2 July 1990, France Télécom was subject to the French rules on public contracts. Following an invitation to tender, the tenders submitted by Matra and Alcatel were accepted by France Télécom because of the quality of their terminals. Under its general conditions France Telecom has been subject, since the Law of 2 July 1990, to the rules of private law on the award of contracts and to the rules of competition.’

2. Questions put to the Commission

(a). In its first question the Court asks whether notification by the French Government of the technical specifications in force pursuant to Article 5(1) of Commission Directive 88/301/EEC affects the legal consequences, where appropriate, of the fact that those specifications were not notified at the draft stage in accordance with Article 8(1) of Council Directive 83/189/EEC. The Commission replied as follows:

‘Article 8 of Directive 83/189/EEC requires Member States to communicate any draft technical regulation before its adoption.

The object of that requirement is to enable the Commission and the other Member States to ascertain potential obstacles to intra-Community trade and to insist that the rules relating to such obstacles should not be adopted by the authorities of the notifying Member State.

Article 5(1) of Directive 88/301/EEC, which provides that Member States must communicate to the Commission a list of all technical specifications and type-approval procedures which are used for terminal equipment, has a different objective and scope.

The object of the communication procedure is to enable the Commission within a limited period to draw up an inventory of the existing specifications and approval procedures, whether or not they have already been notified in draft under Directive 83/189/EEC, without giving detailed consideration to draft technical regulations as is instead the case under the notification procedure provided for in Directive 83/189/EEC.

That procedure is intended in addition to draw the Commission's attention to specifications which have not been notified under Directive 83/189/EEC either because they were adopted prior to that directive's entry into force or because they relate to equipment distributed under a commercial monopoly.

The communication required by Article 5(1) of Directive 88/301/EEC is confined to a list of specifications, whereas that provided for by Article 8(1) of Directive 83/189/EEC concerns the whole of the draft technical regulation since it is necessary to assess the risk of obstacles arising from the draft.

Since the scope, object and terms of the two requirements are different, compliance with the requirement under Directive 88/301/EEC cannot be regarded as affecting noncompliance with that under Directive 83/189/EEC.

The Commission is able to inform the Court that it drew the attention of the French authorities by a telex message of 4 February 1991 to the fact that the technical specifications referred to in the list of specifications notified under Directive 88/301/EEC ought to have been notified in draft form under Directive 83/189/EEC.’

(b). The second question put by the Court is worded as follows: ‘In its written observations the French Government pointed out that in France separation of the operational function and that of drawing up regulations was effected in two stages, namely by Decree 89-327 of 19 May 1989 setting up the Directorate for General Regulations, which is independent of the public service operator, France Télécom, and Law 90-568 of 2 July 1990 which gave the latter independent legal personality as from 1 January 1991. Does the Commission take the view that at the material time, namely between May and October 1989 and in April 1990 there was in France an “independent body” as referred to in Article 6 of Commission Directive 88/301/EEC?’ According to the Commission,

‘it is apparent from the French Government's observations that Law 90-568 of 2 July 1990 gave France Télécom independent legal personality as from 1 January 1991.

Before that date, France Télécom was therefore a directorate of the Administration des Postes et Télécommunications.

The Commission considers that two different directorates of the same administration, placed under a common authority, cannot be regarded as independent of one another within the meaning of Article 6 of Directive 88/301/EEC.’

(c). In its third question, the Court asks the Commission to set out the legal and technical considerations for its conclusion (paragraph 15 of its written observations) that the right to import terminals legally manufactured and marketed in another Member State must be recognized only in respect of equipment which is not intended to be connected to the public network. The Commission replied that

‘it does not take the view that a ban on the importation of terminals legally manufactured and marketed in another Member State is justified in respect of equipment intended to be connected to the public network.

On the contrary, such a ban is contrary to the provisions of Article 30 of the EEC Treaty.

The position taken by the Commission is that the requirement of approval prior to the marketing of such equipment is justified by mandatory requirements for the purposes of Article 30 of the EEC Treaty, referred to as essential requirements in Directives 86/361/EEC and 88/301/EEC.

Those requirements are intended to ensure protection of the public network and its users and the efficiency of that network, and in consequence to prevent equipment not meeting the necessary specifications to ensure such protection and efficiency from being connected to the network.

On the other hand, where equipment is intended to be connected to a private network or to be exported or re-exported, there is no risk of disturbing the public network; accordingly there is no justification for requiring approval prior to marketing from the point of view of Article 30 of the EEC Treaty, and the possibility of refusing to connect the equipment and bringing it into service provided for in Article 3 of Directive 88/301/EEC does not apply.’

M. Zuleeg

Judge-Rapporteur

1 Language of the case: French.