Commission v Belgium (Freedom to provide services) [2005] EUECJ C-287/03 (12 May 2005)

Judgment 1 By its application, the Commission of the European Communities requests the Court to declare that, by applying in a discriminatory and disproportionate manner the conditions of -�similarity-� and -�sole vendor-� as between products and services acquired by a consumer, on the one hand, and products or services made available free of charge or at reduced prices as part of a customer loyalty programme, on the other hand, as a precondition for the operation of such a programme as a cross-border provision of services between undertakings, the Kingdom of Belgium has failed to fulfil its obligations under Article 49 EC. National legislation 2 Article 54 of the Belgian Law of 14 July 1991 on commercial practices and consumer information and protection ( Moniteur Belge of 29 August 1991) prohibits -�any linked offer made to consumers by a vendor-�. A linked offer, for the purposes of this provision, is -�the acquisition, free of charge or not, of products, services, any other benefits or vouchers used to acquire them, -� linked to the acquisition of other, even identical products or services-�. A linked offer to consumers is also prohibited when it comes from -�a number of vendors acting with a unity of intention-�. 3 Article 57 of the Law relates to the exceptions to that prohibition and defines the benefits which a consumer may obtain by means of free vouchers linked to a main product or service. Paragraphs 1 to 3 of that provision refer to exceptions on which a trader may rely only if he is already registered with the Ministry of Economic Affairs, in accordance with Article 59 of that Law. Those exceptions apply to discounts relating to the quantity of products or services acquired (paragraph 1), benefits such as chromos, vignettes and pictures of minimal commercial value and tickets for authorised raffles or lotteries (paragraph 2) and cash refunds (paragraph 3). 4 Article 57(4) of the Law lays down an exception to the prohibition on linked offers, which may benefit traders who are not registered. That provision states as follows: -�It shall also be permitted to offer, free of charge, in connection with a main product or service: -� 4. vouchers giving entitlement, after the acquisition of a certain number of products or services, to a free offer or a price reduction upon the acquisition of a similar product or service, on condition that that benefit is provided by the same vendor and does not exceed one third of the price of the products or services previously acquired. -�-� 5 A free offer of vouchers which does not comply with that legislation is considered unlawful. At the request of the Ministry of Economic Affairs, an interested trader or private consumer protection associations, such an offer may be suspended by order of the commercial courts. Background to the dispute 6 Following a complaint from an undertaking established in the Netherlands, the Commission, by letter of formal notice of 31 March 1999, drew the attention of the Belgian Government to the abovementioned provisions in the light of their compatibility with Article 49 EC. The Belgian Government replied by letter of 2 June 1999. 7 On 1 August 2000, the Commission, considering that response unsatisfactory, sent a reasoned opinion to the Kingdom of Belgium, inviting that Member State to take the measures necessary to comply with it within two months of its notification. 8 By letter of 16 October 2000, the Kingdom of Belgium replied to the reasoned opinion, stating that it was prepared to amend the Law, whilst taking the view that it would be more appropriate to await the Commission-�s initiatives in respect of Community harmonisation in the sector in question. 9 In those circumstances, the Commission brought the present proceedings. The action Admissibility Arguments of the parties 10 The Belgian Government contends that the action is inadmissible because of the excessive duration of the pre-litigation procedure. Nearly three years elapsed between the response to the reasoned opinion and the bringing of the application before the Court. Such a delay is incompatible with the principles of legal certainty and legitimate expectations. 11 The Belgian Government states that it was legitimately entitled to believe that its response to the reasoned opinion could be considered satisfactory since it had not been contradicted by the Commission and no new factor had arisen. 12 In that regard, the Commission submits that, following the response of the Belgian authorities to the reasoned opinion, there was regular contact between the competent services of the two parties. As a consequence, it considers that the Kingdom of Belgium was informed throughout the pre-litigation procedure that the Commission maintained its position. 13 In those circumstances, the Commission considers that the Belgian authorities have failed to show how the duration of the pre-litigation procedure has infringed the rights of the defence. Findings of the Court 14 It should be recalled that, although it is true that the excessive duration of the pre-litigation procedure is capable of constituting a defect rendering an action for failure to fulfil obligations inadmissible, it is clear from the case-law that such a conclusion is inevitable only where the conduct of the Commission has made it difficult to refute its arguments, thus infringing the rights of the defence, and that it is for the Member State concerned to provide evidence of such a difficulty (see, to that effect, Case C-96/89 Commission v Netherlands [1991] ECR I-2461 , paragraphs 15 and 16, and Case C-207/97 Commission v Belgium [1999] ECR I-275, paragraphs 24 and 25). 15 It should be noted, in the present case, that the Kingdom of Belgium has failed to put forward any specific argument to demonstrate that the lapse of time between its response to the reasoned opinion and the lodging of the application before the Court adversely affected the exercise of its rights of the defence. 16 In those circumstances, the action must be declared admissible. The substance Arguments of the parties 17 The Commission claims that the conditions of -�similarity-� and -�sole vendor-� laid down by the Law constitute restrictions on the freedom to provide services. The implementation of those conditions is harmful and discriminatory, particularly as regards foreign undertakings wishing to enter the Belgian market. 18 The Commission considers that, in principle, the Law prevents an undertaking from making a linked offer, through its customer loyalty programme, of products or services dissimilar from those principally sold. However, in practice, that rule is very widely misapplied and undertakings established in Belgium which have their own distribution network are the only ones which benefit from it and therefore extend their customer loyalty programmes to other sectors and/or distribution circuits. Furthermore, the misapplication of that rule is made easier by Belgian case-law, according to which a linked offer fulfils the condition of -�similarity-� where the main products and/or services and the products and/or services offered free of charge or at a reduced price are normally offered for sale by the same industrial or commercial sector. 19 With regard to possible justifications for these restrictions, the Commission notes that the mere fact that two products or two services belong to the same industrial or commercial sector is not sufficient to ensure transparency in the prices of those products or services. The same is true of the condition according to which the products or services forming part of the linked offer must be offered by the same vendor. 20 The Commission also considers that the conditions of -�similarity-� and -�sole vendor-� are not necessary to ensure consumer protection or the fairness of commercial transactions. 21 The Belgian Government submits that the Law and the manner of its application are not such as to prohibit, hinder or render less attractive the activities of providers established in another Member State. 22 That Government points out that any undertaking which intends to launch a commercial promotion identical to that described by the Commission in support of its action is in the same situation whether it is established within Belgium or elsewhere. In that regard, the interpretation of the conditions of -�similarity-� or -�sole vendor-� does not vary according to the place of establishment of the undertaking. 23 As regards justification for the legislation at issue, the Belgian Government submits that the prohibitions which it lays down are, in substance, based on market transparency. The aim of that legislation is to avoid the consumer being misled as to actual prices and deceived by practices of linked offers. Findings of the Court 24 As a preliminary point, it should be noted that, as is clear from the form of order sought in the application initiating proceedings, the present action for failure to fulfil obligations does not seek to call into question the compatibility of the wording of Article 57(4) of the Law with Article 49 EC, but is confined to the issue of the application of the conditions laid down by that provision by the competent Belgian authorities. 25 In reply to a question put by the Court at the hearing, the Commission expressly confirmed, moreover, that the action concerns solely the application of the national legislation in the reality of the market, and not that legislation itself. 26 As a result, the Court must assess whether the application made by the national authorities, namely the administrative authorities and the courts, of Article 57(4) of the Law constitutes an infringement of Article 49 EC. 27 In that regard, it must first be noted that it is established case-law that, in proceedings for failure to fulfil obligations, it is for the Commission to prove the existence of the alleged infringement and to provide the Court with the information necessary for it to determine whether the infringement is made out, and the Commission may not rely on any presumption for that purpose (see, in particular, Case 96/81 Commission v Netherlands [1982] ECR 1791, paragraph 6; Case C-62/89 Commission v France [1990] ECR I-925 , paragraph 37; Case C-300/95 Commission v United Kingdom [1997] ECR I-2649, paragraph 31; and Case C-217/97 Commission v Germany [1999] ECR I-5087, paragraph 22). 28 With regard in particular to an action concerning the implementation of a national provision and as the Advocate General observes in points 41 and 43 of his Opinion, proof of a Member State-�s failure to fulfil its obligations requires production of evidence different from that usually taken into account in an action for failure to fulfil obligations concerning solely the terms of a national provision. In those circumstances, the failure to fulfil obligations can be established only by means of sufficiently documented and detailed proof of the alleged practice of the national administration and/or courts, for which the Member State concerned is answerable. 29 It is necessary to add in this regard that, although a State-�s action consisting in an administrative practice contrary to the requirements of Community law can amount to a failure to fulfil obligations for the purposes of Article 226 EC, that administrative practice must be, to some degree, of a consistent and general nature (see Case C-387/99 Commission v Germany [2004] ECR I-3773, paragraph 42, and Case C-'494/01 Commission v Ireland [2005] ECR I-0000, paragraph 28). 30 It must be held that the Commission has not shown the existence in Belgium of an administrative practice with the characteristics required by the Court-�s case-law. The Commission refers solely to a complaint lodged by an undertaking which organises a customer loyalty programme, without adducing evidence of a -�discriminatory and disproportionate-� application of the conditions of -�similarity-� and -�sole vendor-� under Article 57(4) of the Law. 31 As for whether, having regard to the principle of burden of proof, there is in Belgium case-law giving rise to an interpretation of the abovementioned provision which is incompatible with Article 49 EC, it must be observed that the Commission has also failed to cite decisions showing that national courts have interpreted the notions of -�similarity-� and -�sole vendor-� as presupposing that the main products and/or services or the products and/or services offered free of charge or at reduced prices are usually offered for sale by the same distribution circuit and/or belong to the same industrial or commercial sector. 32 Consequently, it must be held that the Commission has failed to prove that the Kingdom of Belgium has failed to fulfil its obligations under Article 49 EC, by applying in a discriminatory and disproportionate manner the conditions of -�similarity-� and -�sole vendor-� as between products and services acquired by a consumer, on the one hand, and products or services made available free of charge or at reduced prices as part of a customer loyalty programme, on the other hand, as a precondition for the operation of such a scheme as a cross-border provision of services between undertakings. 33 The Commission-�s action must therefore be dismissed. Costs 34 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party-�s pleadings. Since the Kingdom of Belgium has applied for costs and the Commission has been unsuccessful, the latter must be ordered to pay the costs. On those grounds, the Court (Second Chamber) hereby: 1. Dismisses the action; 2. Orders the Commission of the European Communities to pay the costs. [Signatures] * Language of the case: French. BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII