7
a ." :1.'j(, Law Ih p ol"1c l" 11. Nicholas Aquilina I Sarah Pichler, Vienna· Supremacy of EU Law: No Sanctions for Infringing Unjustified Restrictions of the Market Freedoms (Daniele B iasei a nd Others ;/. Min istero dell'lnterno and Q uestu ra di Li vo rn o and Cristian Rai none and Ot hers;/. Minist ero dell'lnte rn o and Ot he rs EC J (Third Cham ber ), Judg ment of 12 Se ptem ber 20 1 3, Joi ned Cases C -660/11 a nd C -8 /12 ) In its recent ruling Biasci and others, the Coun of Justice of the European Union (<<EO») once again had to asse55 the Italian gaming law and its com- patibility with the fundamental freedoms of fU law. The fa once more came to the conclusion that Member States must not restrict the national gaming market to protect t he commercial inter- es ts of incumbents - and in paniculat; if national la ws prohibit cross- border gaming, this is clearly in breach of fU law and has as a consequence that- due to the supremacy of EU law - opera tors not having been able to obtain a licence under terms that comply with fU law must not be sanctioned. (1) Facts and Procedure On 12 September 2013 the ECJ ruled on Joined Cases C-660/11 and (-8/12, Biasci and others, based on the request for a pr eliminary ruling filed by t he It alia n Trib unale amministrativo regionale per la Toscana. In Biasci, the ju dges in Luxembourg once again had to deal wi th Italian gaming law, in particular regarding the complianc e of Itafy 's dual licensing system with Arti cles 43 and 49 fC ( now Arti cles 49 and 56 TFEU) , namely the freedom of establishment and the freedom to provide service s. Italy requires gaming operators to obtain a na t ional licence, without taking into account whether this operator has al - ready obtained a li ce nce in another Mem ber State. In additional a loca l police authorisation is required. Furthermore -a nd very simi l ar to a ques- tion posed in the ECJ's very recent Costa and Ci- fone case, which was decided app r oximately ha lf a year after the Biasci case was referred to the E(l by the national court - the ECJ was asked whether it is in compliance with the market freedoms for a Member Sta te to desig n its national gaming legis- lation in a way that proteds the business position of incumbents. In order to fully understand the Biasci jUdgment, it is crucial to look at the bigger picture and recall the evolution of Italian gaming law, which largely stands in context with very frequent adivity of the ECJ, ruling on the various stages of I talian legisla- tion. Two cases referred by Italian courts have t ruly become «landmark decisions» on gaming law: the GambellP and Placanica 1 ju dgments gradu - ally forced the Italian legislator to regu - late the gaming market in complian ce with EU law and to be opened to foreign oper- ators: T he Gambelli ruling of 2003 concerned the ac· tivi ti es of bookmakers acting as intermediaries for sports betting operators licensed in other Member States, which used to be prohibited in Italy. How- ever, the Court conside red this prohibition as an unjustified restridion on the market freedoms. In 2007, the Pla cani ca ruling referred to the situation that gaming opera t ors listed on regulat- ed ma r kets were not allowed to obta in an Italian gami ng or betting licence an d were t hus excluded f rom the te ndering pr oce dures, t his being an un- lawful exclusion in terms of the market freedoms. The so-called «8ersani decree»l introduced ten- dering procedures for gaming and betting licences by the Italian gaming and bening regulator AAMS (Agenza delle Dogane e dei Monopolt) in the course of 2006. The decree reformed the sedor and was intended to meet the requirements of EU law and thereby remedy the non -compliant legis- lation t hat had been at i ssue in the Gambelli rul- ing. The Italian State 's object ive was to «counter th e sp read of irregular an d il licit betting and gam- ing, tax evasion and avoidance in the betting and gaming sedor and to ensure the protection of gamblers and players» '. However, even after this intended remedy, the I tal- ian market could not be considered as now being regula t ed in compliance wi th EU law as besides combatting illegal gam i ng, t he It alian licensing system has the further obj ect ive of contributing to the public purse -a reason tha t, according to EeJ case law, cannot justify restridions of EU law. S On- line casino games, cash poker, video lottery termi - nals and instant lotteries were officially introduced in 2009 by the so-called «Decreta Abruzzo» l,

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Page 1: Law Ih pol1c l - Brandl & Talosbtp.at/.../88-elr-supremacy-of-eu-law.pdf · tion restricting the market freedoms - although they must justify such restrictions by certain grounds

a ." :1.'j(,

Law Ih pol"1c l"

11. Nicholas Aquilina I Sarah Pichler, Vienna·

Supremacy of EU Law: No Sanctions for Infringing Unjustified Restrictions of the Market Freedoms (Daniele Biasei and Others ;/. Ministero dell' lnterno and Questura di Livorno and Cristian Rainone and Others;/. Ministero dell' lnterno and Others ECJ (Third Chamber), Judgment of 12 September 20 13, Joined Cases C -660/11 and C -8/12)

In its recent ruling Biasci and others, the Coun of Justice of the European Union (<<EO») once again had to asse55 the Italian gaming law and its com­patibility with the fundamental freedoms of fU law. The fa once more came to the conclusion that Member States must not restrict the national gaming market to protect the commercial inter­ests of incumbents - and in paniculat; if national laws prohibit cross-border gaming, this is clearly in breach of fU law and has as a consequence that­due to the supremacy of EU law - opera tors not having been able to obtain a licence under terms that comply with fU law must not be sanctioned.

(1) Facts and Procedure On 12 September 2013 the ECJ ruled on Joined Cases C-660/11 and (-8/12, Biasci and others, based on the request for a preliminary ruling filed by the Italian Tribunale amministrativo regionale per la Toscana. In Biasci, the judges in Luxembourg once again had to deal with Italian gaming law, in particular regarding the compliance of Itafy's dual licensing system with Articles 43 and 49 fC (now Articles 49 and 56 TFEU) , namely the freedom of establishment and the freedom to provide services. Italy requires gaming operators to obtain a national licence, without taking into account whether this operator has al­ready obtained a licence in another Member State. In additional a loca l police authorisation is required. Furthermore -and very similar to a ques­tion posed in the ECJ's very recent Costa and Ci­fone case, which was decided approximately half a year after the Biasci case was referred to the E(l by the national court - the ECJ was asked whether it is in compliance with the market freedoms for a Member State to design its national gaming legis­lation in a way that proteds the business position of incumbents.

In order to fully understand the Biasci jUdgment, it is crucial to look at the bigger picture and recall the evolution of Italian gaming law, which largely stands in context with very frequent adivity of the ECJ, ruling on the various stages of Italian legisla-

tion. Two cases referred by Italian courts have truly become «landmark decisions» on gaming law: the GambellP and Placanica1 judgments gradu­ally forced the Italian legislator to regu­late the gaming market in compliance with EU law and to be opened to foreign oper­ators:

The Gambelli ruling of 2003 concerned the ac· tivities of bookmakers acting as intermediaries for sports betting operators licensed in other Member States, which used to be prohibited in Italy. How­ever, the Court considered this prohibition as an unjustified restridion on the market freedoms.

In 2007, the Placanica ruling referred to the situation that gaming operators listed on regulat­ed markets were not allowed to obta in an Italian gaming or betting licence and were thus excluded from the tendering procedures, this being an un­lawful exclusion in terms of the market freedoms.

The so-called «8ersani decree»l introduced ten­dering procedures for gaming and betting licences by the Italian gaming and bening regulator AAMS (Agenza delle Dogane e dei Monopolt) in the course of 2006. The decree reformed the sedor and was intended to meet the requirements of EU law and thereby remedy the non-compliant legis­lation that had been at issue in the Gambelli rul­ing. The Italian State's objective was to «counter the spread of irregular and illicit betting and gam­ing, tax evasion and avoidance in the betting and gaming sedor and to ensure the protection of gamblers and players»'.

However, even after this intended remedy, the Ital­ian market could not be considered as now being regulated in compliance with EU law as besides combatting illegal gaming, the Italian licensing system has the further object ive of contributing to the public purse - a reason that, according to EeJ case law, cannot justify restridions of EU law. S On­line casino games, cash poker, video lottery termi­nals and instant lotteries were officially introduced in 2009 by the so-called «Decreta Abruzzo»l,

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Etll'Opt'111I Low H('pol'1el'

which intended to create revenues for the Abruz­zo region after the devastating earthquake in early 2009. This law was the legal basis for the further expansion of the gaming market. Moreover, all planned concessions for legal games should be awarded on the basis of tender proceedings. However, the newly introduced licensing require­ments, a consequence of the Placanica ruling, led to another referral to the ECJ, the Costa and Cifo­ne] case referred by the Italian Carte Suprema di Cassazione. One of the main issues in these joined cases was that market entrants faced disadvan­tages compared to established operators: Existing operators, having been able to start up several years earlier than those operators who had been unlawfully excluded from obtaining a licence prior to the legislative changes that had followed the pfacanica ruling, had per se an unfair competitive advantage which was again considered as a breach of Articles 49 and 56 TFEU as welt as the fundamental EU principle of equal treatment.

In particular, new licensees had to observe minimum distances from already autho­rised estab-lishments . These restrictions were imposed only on new licence holders, which obvi­ously resulted in a privileged treatment of the in­cumbents. In this context, the ECJ held that pro­tecting the market positions acquired by existing operators is not in line with EU law.! The require­ment of minimum distances would only have been justifiable if they «did not have as their true objec­tive the protection of the market positions of the existing operators, rather than the objective relied upon I ... ) of channelling the activities of betting and gaming into controlled systems»"', which would have been in line with EU law. The ECJ fur­ther stated that operators who had been unlaw­fully excluded from earlier tendering procedures in breach of EU law could not be sanctioned, there­by reiterating its Placanica case law, in which the ECJ had stated that «in the absence of a proce­dure for the award of licences which is open to op­erators who have been unlawfully barred from any possibility of obtaining a licence under the last tender procedure, the lack of a licence cannot be a ground for the application of sanctions to such operators». '0

Ultimately, the threat of exactly such crimi­nal sanctions had led to the Italian cases that prompted the referral to the ECl The appli­cants in the national proceedings had operated data collection centres in Italy through which they referred bets to a betting operator licensed in an­other EU Member State. In the present case the bets were referred online to Austrian company

Goldbet Sportwetten GmbH {«Goldbet»}, which is established and licensed in the Austrian province of Tyrol. The Italian operators allegedly simply provided access to gaming services offered abroad - which led to the ECJ considering that es­sential parts of the Costa and Cifone judgment were also applicable in the Biasci case. I.

The difficulty is that whoever offers gaming servic­es in Italy must hold an Italian gaming licence or face procedures before national civil, administra­tive and criminal courts. It was the requirement of two permissions which led to the referral in the first place: Article 88 of the Italian Royal Decree no 773/1931 and Article 2(2b} of Decree Law no. 40 of 2010 stipulate that an authorisation issued by the local police is required in order to access the gaming and betting market, hence also to operate a data collection centre as at issue in the current proceedings. However, these authorisations shalt be granted exclusively to individuals or businesses holding an Italian gaming licence. This de facto requirement of two permissions, one granted by the AAMS and one granted by the local police authorities, de-fines the Italian system.

In the present case, the applicants operate the aforementioned data collection centres or data transfer centres on behalf of Goldbet. The task of the operator of such data transfer centres consists merely in putting the customer in contact with the foreign bookmaker by offering the public data connection and transferring the bets. Their appli­cations for the police authorisations were reject­ed, as GOldbet does not hold a licence granted by AAMS. Therefore, the operators of the data trans­fer centres, the applicants in the national proceed­ings, brought actions before the referring court, seeking the annulment of those rejection deci­sions on the basis that, inter alia, the Italian legis­lation at issue allegedly constitutes an infringe­ment of the market freedoms and the principle of mutual recognition between Member States.

The questions referred to the ECJ by the Italian court related to the compatibility of various parts of the Italian gaming legislation with EU law, in particular Articles 49 and 56 TFEU:

• Is national legislation requiring companies wish­ing to offer gaming and betting to obtain a po­lice authorisation in addition to a state-issued li­cence and restricting the grant of such autho­risation to applicants who hold a licence com­patible with Articles 49 and 56 TFEU?

• Is national legislation in compliance with the EU market freedoms which in fact protects com-

,-­:".J.

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mercial positions by the introduction of certain requirements. e.g. minimum distances that must be observed by new licence holders, and which provides for the licence to be withdrawn if cross-border activities analogous to those games managed by AAMS are engaged in di­redly or indirectly or if such games are prohibit­ed under national law?

• Do Articles 49 and 56 TFEU prevent a Member State from requiring operators licensed in an­other Member State to obtain a national licence for operating gaming and betting?

(2) Judgment (a) The first question The first question, whether the requirement of a licence p lus a police au thorisa tion is in compliance with EU law, had already been as­sessed by the Court in its previous judgments and therefore the ECJ referred to its case law by first stat ing that such national legislat ion obviously constitutes a restriction on the freedom of estab­lishment and the freedom to provide services, as it restricts activities in the betting and gaming sec­tor, which in principle is prohibited by EU law. '2 Nevertheless, it is also established that Member States are granted rather broad discretion as re­gards national gaming legislation to set the level of player protection as high as they wish, and in that context Member States may introduce legisla­tion restricting the market freedoms - although they must justify such restrictions by certain grounds either stipulated directly in the TFEU or developed by ECJ case law.1l As regards the legis­lation at issue, the ECJ recalled that in the very specific Italian case «a licensing system may con­stitute an efficient mechanism enabling operators active in the betting and gaming sector to be con­trolled with a view to preventing the exploitation of those activities for criminal or fraudulent pur­poses»". Furthermore, «the restrictive measures imposed must satisfy the conditions laid down in the ECrs case-law as regards their proportionali­ty» 's, meaning that there must not be any less re­strictive measures than those implemented to achieve the pursued goals. The EC) considered that the licensing requirement clearly contributes to the objective of preventing criminal or fraudu­lent activities on behalf of the operators."

However, even though the Court ruled that in principle Articles 49 and 56 TFEU must be inter­preted as not precluding national legislation requiring a police authorisation in addition to a licence and restricting the grant of such authorisa­tion to applicants who already hold a licence, it

fl " 9

E III"Op t'U Il La w Il e po rl e r

rei terated its consistent case law that «the lack of a police authorisation cannot be held against per­sons who were unable to obtain authorisations because the grant of an authorisation presup­posed the award of a licence - a licence which, contrary to European Union law, those persons were unable to obtain». '7 The ECJ thereby stated that while, in principle, a Member State may re­quire operators to obtain authorisations which de­pend on holding a national licence, operating without such authorisation may not be sanc­tioned if obtaining a licence had been impossible under terms that are in compliance with EU law.

(b) The second question Referring to the protection of incumbents' com­mercial positions and the withdrawal of licences in case games as those managed by the national reg­ulator AAMS are offered cross-border, the ECJ pointed out that this question is in essence identi­cal to the questions in the Costa and Cifone case. The ECJ repeated that Member States «must re­frain from protecting the market positions ac­quired by the existing operators, by providing, inter alia, that a minimum distance must be ob­served between the establishments of new licence holders and those of existing operators». 11

As regards the compliance of the licence with­drawal clause, the Court again referred to Costa and Cifone and Placanica stating that «an opera­tor cannot be criticised for deciding not to apply for a licence in the absence of legal certainty, with uncertainty remaining as to whether its business model complied with the provisions of the con­tract to be signed if a licence were to be grant­ed». 19 Articles 49 and 56 TFEU preclude Member States from excluding all cross-border activitylO, for example by including a clause in the contract to be concluded with operators that obliges the regulator to withdraw the licence if the operator offers games analogous to those managed by the national regulator directly or indirectly in a cross­border manner.

In the context of assessing the lega l (un-) certainty of such a contract , the ECJ once again stressed the well-known principles for ten­dering procedures preceding a licence award. The principles of equal treatment and legal certainty and the obligation of transparency lead to the re­quirement of clear, precise and unequivocallicens­ing conditions and procedure. I '

As regards the third question asking whether a Member State can make an operator established and authorised to operate gaming and betting in another Member State subject to national autho-

I

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I •

I I

/lOO 9

Europellll Lllw Repor1cr

risation issued by its own authorities, the ECJ reit­erated its thoughts on national licensing systems: as Mem-ber States are, in essence, free to estab­lish the level of protection they seek due to the lack of har-monisation in the gaming sedor, «there is no obligation of mutual recognition of authorisations issued by the various Member States» .ll Given the broad discretion granted to Member States by consistent ECJ case lawn, the freedom of establishment and freedom to provide services do not preclude national legislation re­quiring national licences for operators already au­thorised in other Member States.

(3) Comments In the first and third question the ECJ had to dis­cuss the compliance of a national licensing frame­work with the EU market freedoms and, in partic­ular, the mutual recognition of licences. In Uga Portuguesa the ECJ ruled that there is no obliga­tion of mutual recognition of licences granted in other Member States.l

' Due to the absence of EU harmonisation in the field of games of chance and the significant moral, religious and cultural differences between the Member States, the latter are granted broad discretion as regards gaming legislation.

Advocate General Paolo Mengozzi brought this to the point in his Opinion on the Markus StoB and others case while also stressing the importance of the ECJ preventing Member States from abusing their wide discretion: «Consequently, without har­monisation there will always be limitations to the ap-plication of the f reedom of movement. It is the task of case-law to delimit the restrictions which, in this non-harmonised sector, comply with the provisions of the Treaty».lS Therefore, «Member States are free to set the objectives of their policy on betting and gaming and, where appropriate, to define in detail the level of protection sought>J 16

and hence impose a system of national licences, which per se restricts the freedom to provide ser­vices and the freedom of establishment. While, in principle, restrictions are prohibited, Article 52 TFEU lists «public policy, public security or public health» as justification grounds for restrictions of the freedom of establishment, which are also applicable to the freedom to provide services by virtue of Article 62 TFEU. Furthermore, the ECJ has the right to develop «objectives of overriding pub­lic interest» to justify restrictionsY The ECJ, for example, found consumer protection, combating addiction and fraud related to gaming as well as the protection of players as overriding interest objectives.ll

Apart from the overriding public interest objec­tive, the ECJ further defined requirements for the justification of any restrictions on the freedom of establishment and the freedom to provide services imple-mented by Member States in its so-called «Four-Part-Test» : «National measures liable to hinder or make less attractive the exercise of fun­damental freedoms guaranteed by the Treaty must fulfil four conditions: they must be applied in a non-discriminatory manner; they must be justi­fied by imperative requirements in the general in­terest, they must be suitable for securing the at­tainment of the objective which they pursue, and they must not go beyond what is necessary in order to attain ih.1'

The restrictive measures imposed must also satisfy the condition of proportionality, which means there must not be any less restrictive measures than those implemented which could also achieve the pursued goal. For example, the ECJ found in Enge/mann that «the categorical exclusion of op­erators whose seat is in another Member State ap­pears disproportionate, as it goes beyond what is necessary to combat crime»lD.

In Biasci the Court very briefly noted that it is legit­imate for a Member State «to monitor an eco­nomic activity which is carried on in its territory, and that would be impossible if it had to rely on checks done by the authorities of another Mem­ber State using regulatory systems which itself does not control»J! in order to achieve a particular level of protection of consumers, which another Member State may not pursue. While this objec­tive constitutes an objective of overriding public interest and is, if applied correctly, suitable for jus­tifying restrictive legislation, the national licensing system may not amount to a duplication of licence requirements: If the regulatory requirements pro­vide for the same level of quality and probity, the licence requirements fulfilled in the Member State of establishment must be recognised. This princi­ple has been stressed in numerous ECJ cases, most recentty in Neukirchinger. In that case, the Court held that the requirement of a licence without considering the conditions already fulfilled in the Member State of establishment is disproportion­ate, as the fad that the licensing conditions are in principle the same leads to the assumption that the interests referred to by one Member State were already taken into account when the first li­cence had been issued by the other Member State.l1

Ultimately, restrictive national legislation can only be justifiable if it is set up in a con-

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• ,,!MJ

sistent and systematic manner. This is com­monly referred to as the ECJ's «hypocrisy test» , meaning that the objectives Member States claim to pursue must actually be reflected in the relevant legal framework requiring an offer that is quantitatively measured and qualitatively planned. ll Therefore, Member States must not, on the one hand, (allegedly) pursue the objective of minimising the opportunities to take part in games of chance in order to combat gaming ad­diction and protect players, but on the other hand allow incumbents to aggressively advertise their products and expand their gaming offer,loI In that context the ECJ repeatedly, but for the first time in Markus StaB, ruled that all advertising activities must be strictly limited to what is necessary in order to channel consumers to the regulated gam­ing networkS.H In her very recent Opinion of 14 November 2013 on the Austrian case Pffeger and others, Advocate General Eleanor Sharpston made it as clear as can be by stating that «an ex­pansionist policy is plainly inconsistent with an aim of achieving a high level of protection for con­sumers»,

The consistency of the Italian gaming market was a major issue in Costa and Cifone as welt as in the case at hand. Can the Italian government claim to have introduced restrictive measures in order to curb the possibilities for Italian citizens to gamble while at the same time creating legislation that is obviously designed to increase the supply and thereby the tax revenues from gaming and bet­ting? Concerning the justification grounds Ita ly may raise, the ECJ very strictly applied the consis­tency test. The Italian gaming system «has long been marked by a policy of expanding activity with the aim of increasing tax revenue, and no jus­tification can therefore be found in that context in the objectives of limiting the propensity of con­sumers to gamble or of curtailing the availability of gambling».ll As regards the elements within the Italian legislation that may serve to protect the market positions of longestablished operators, the ECJ once again pointed out what it had already found in Costa and Cifone, namely that if as a result incumbents' market positions are protected by the national legislation the tender of an adequate number of new li­cences cannot be considered an appro­priate remedy of the prior unlawful exclusion of certain operators,l8 However, the ECJ chose not to go into further detail in that matter, but left it for the referring court to assess the facts and con­sequences for the present case resulting from Costa and Cifone.

Europeall Law He port(' r

Without any doubt, the non-applicability of the principle of mutual recognition in the gaming and betting sector and the broad discretion granted to Member States as a consequence of the lack of EU-wide harmonisation have prompted the major fragmentation that is currently so characteristic of the EU's gaming and betting sector. The European Commission has in the last few years attended to the multiple problems in the sector, lastly with its Communication «Towards a comprehensive Euro­pean framework on online gambling» J'l, published on 23 October 2012, which is based on a public consultation and sets out an action plan, seeking to enhance the compliance of national legislation with EU law and ECJ case law. On 20 November 2013 the Commission announced to take meas­ures to push for this goal and, as ultima ratio, re­opened infringement proceedings against a num­ber of Member States that still pursue gaming laws that breach EU law.tO

The very specific Italian situation of requiring not only a national licence for the operation of gam­ing and betting granted by AAMS but also an au­thorisation issued by local police authorities re­quired the ECJ 's more detailed look at whether this is in conformity with the powers granted to Member States when requiring national licences, Already in Costa and Cifone the ECJ considered this «double licensing» requirement as compati­ble with EU law as long as the abovementioned rules for justifying restrictive legislation are ob­served.·'

However, the ECJ recalled its long-standing case law on the applicability of sanctions for operating without a licence (or police authorisation), Already back in 2007 the ECJ had stated in Placanica that «the lack of a police authorisation cannot, in any case, be a valid ground for complaint in respect of persons such as the defendants in the main pro­ceedings, who were unable to obtain authorisa­tions because the grant of an authorisation pre­supposed the award of a licence - a licence which, contrary to [EUjlaw, those persons were unable to obtain».oll Due to the fact that under Italian law­as in many other Member States - the lack of a li­cence leads to criminal sanctions, the ECJ had to touch on an area of legislation lying in the Mem­ber States' own competence. In order to guaran­tee the effective implementation of EU law, it fol­lows that Member States may not apply sanctions - including criminal sanctions­which protect national legislation con­trary to EU law, as otherwise Member States could easily circumvent their obligations under EU law. The ECJ had already stated this in Rienks,

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EUl'opean Lllw Repol"lt'l'

holding that «legislation which provides for the bringing of criminal or administrative proceed­ings against [legislation] in breach of [EU] law, is incompatible with [EU] law in SO far as its result is to deprive of any effectiveness the provisions of the Treaty ( ... k u Accordingly, the ECJ ruled out the applicability of any national (criminal) sanc­tions «for failure to complete an administrative formality where such completion has been re­fused or rendered impossible by the Member State concerned, in infringement of [EUjlaw» .... In her Opinion in pfleger, Advocate General Eleanor Sharpston described the essence of this by recall­ing that if a «restriction is precluded by Article 56 TFEU, then EU law also precludes the imposition of criminal penalties for infringing the restric­tion».·~ It follows that acting contrary to an unjustified restriction must not lead to any sanctions.

looking at the ECJ's existing case law, the ques­tion remains how these principles must be applied and understood in the specific context which gave rise to the referral in Biasci. Recalling the facts, the Austrian company Goldbet had been un­able to obtain an Italian licence under terms compliant with EU law. Apart from various aspects of Italian legislation being (indirectly) dis­criminatory against operators licensed in other Member States, such as the minimum-distance re­quirements protecting the business positions of (mostly national) incumbents, Goldbet would have had to enter into an agreement with AAMS including a clause obliging the regulator to with­draw the licence if the operator offers games anal­ogous to those managed by AAMS directly or in­directly in a cross-border environment. What does this mean? According to the provision at stake, the Italian licence will be withdrawn if the licensee operates via technical equipment (data sites, servers) located outside Italian territory. Given that Goldbet offers its services from Austria, the com­pany - if it had decided to apply for an Italian li­cence - could not have been sure if its offer was going to be considered compliant with that agree­ment. Therefore, Goldbet faced significant legal uncertainty - legal uncertainty as re­gards the requirement of maintaining a server on national territory, which the ECJ long time ago had qualified as equal to a seat requirement and prohibited by EU law, in particular the freedom of establishment.OIi Consequently, the ECJ stated that an operator «cannot be criticised for deciding not to apply for a licence in the absence of legal cer­tainty, with uncertainty remaining as to whether its business model complied with the provisions of

the contract to be signed if a licence were to be granted».4? The ECJ made it clear that Goldbet was not to blame, given the legal uncertainty re­garding Italian legisla-tion that in fact violates EU law.

However, in Biasc; it was not the operator lacking a licence, but those intermediaries referring cus­tomers to a foreign provider who had proceedings initiated against them at national level and who were fighting the decisions rejecting their own ap­plications for local police authorisations. What did they do wrong? Mr Biasci and the other applicants were - as intermediaries - offering their services on Italian territory to Italian customers, but the company to which they referred their customers' bets - Goldbet - was not licensed in Italy. Howev­er, as described above, Goldbet is not to blame for not even having tried to obtain an Italian licence in the first place as there was no legal certainty that such licence would not have been withdrawn the very next day. Therefore, Mr Biasci's and the other applicants' only «wrongdoing» was referring cus­tomers to servers based outside Italy. Consequent­ly, the clause in the AAMS contract has the effect of prohibiting such cross-border operations. The ECJ accordingly points out that legislation, ((which in fact precludes all cross-border activity in the betting and gaming sector, irrespective of the form in which that activity is undertaken [ .. . ] is contrary to Articles [49 and 56 TFEUj».48 There­fore, neither Goldbet nor Mr Biasci and his fellow applicants may be sanctioned as they all would have been hit by the Italian with­drawal clause, in fact prohibiting operating gam­ing and betting via servers outside Italy. The non­applicability of sanctions against operators unable to obtain an Italian licence in compliance with EU law thus extends to intermediaries such as Mr Bi­asci and the other applicants. The ECJ held that «where police authorisations are granted only to licence-holders. irregularities in the licence-grant­ing procedure also vitiates the procedure for grant­ing police authorisations. Consequently, the lack of a police authorisation cannot be held against persons who were unable to obtain authorisations because the grant of an authorisation presup­posed the award of a licence - a licence which, contrary to European Union law, those persons were unable to obtain» .09

The ECJ leaves the decision whether the cross-bor­der activity would have precluded Goldbet and thus Mr Biasci and the other applicants - from ob­taining licences and respectively police authorisa­tions up to the referring court. Looking at the Ital­ian licence procedures and the AAMS contract at

.!6 f

Page 7: Law Ih pol1c l - Brandl & Talosbtp.at/.../88-elr-supremacy-of-eu-law.pdf · tion restricting the market freedoms - although they must justify such restrictions by certain grounds

• lG:!

stake, it seems that even jf Goldbet had applied and been granted the licence, the contract would have re-qui red AAMS to withdraw such licence the next day due to Goldbet's cross-border activity and foreign server environment. The Italian court is now called upon to detect this violation of EU law. In further consequence, the Italian legislator is well advised to implement laws that render the cross-border offer legitimate in a national (licens­ing) system, respecting the main principles of EU law developed for the gaming and betting sector.

Mag. Nicholas Aquil ina is an Associate and Sarah Pichler is a Research Assistant at Brandl & Ta los Attorneys at Law, Vien-00.

Eel of 6 November 2003, ( -243101 Gambelli. Eel of 6 March 2007, ( -338/04 Placanica. Bersani Decree, law No 248 of 4 August 2006. Bersani Decree, Art icle 38, para. 1 E(J of 6 November 2003. ( -243/01, Gambelli, para 61 Decreto Abruzzo, law No. 39 of 28 April 2009. E(J of 16 February 20 12, ( -72110 and (-77/10 Costa and Ci/one. Judgment, para . 32; E(J of 16 February 2012, (-72/10 and ( -77110 Costa and Cifone, para, 66. E(J of 16 February 2012, (-72/10 and ( -77/10 Costa and (ifone, para. 65,

10 E(J of 6 March 2007, C-338/04 Plaeaniea, paras. 63 and 69. 11 Judgment, para. 35: «the situation of a data collection cen­

tres' manager linked to Goldbet being part of a specif ic legal and fa ctua l framewo rk l .. l is in essentia l respects identical to that in the Costa and (ifone case»

" Judgment, para, 21. " Judgment. para . 22. ,. Judgment , para , 24. ,. E(J of 8 September 2009, (-42107 Uga Portuguesa de Fu­

tebol Profissional and Others, paras. 58 and 59. •• Judgment, para 24; furthermore E( J of 6 March 2007, ( -

338/04 Plaeanka, para. 57. " Judgment, para. 28; with further reference to E(J of 6 March

2007, ( -338/04 Placanka, para. 69. 10 Judgment. para. 32. ., Judgment, para. 33; with refe rence to E( l of 16 February

2012, ( -72/10 and ( -77/10 Costa and Ofone, para. 90. '" Judgment, para. 37. " Judgment. para . 38. " Judgment, para. 40; with re ference to E(J of 8 September

2009, (-42107 Liga Portuguesa de Futebol Profissional et ai, para 69; ECJ of 8 September 2010, (-316107. ( -358/07. ( -360/07, (-359107, ( -409107 and C -4 10/07 Markus StoB and

n" 9

Eu ropeall La,," Rcpor ler

Others, para. 112; and E(J of 15 September 2011, ( -347109 Dickinger and Omer, para. 96 and 99.

" E(J of 24 March 1994, (-275192 Schindler, para, 6 1. ,. E(J of 8 September 2009, ( -42/07 Liga Portuguesa de Fu­

tebol Profissional and Others para, 69. " Opinion of Advocate Genera l Mengozzi in Joined (ases ( -

316107 Markus StoB and Others, 3 March 2010, para. 101. ,. E(J of 6 March 2007, C -338/04 Plaeanica. para . 48. " ECJ of 24 March 1994, (-275192 Schindler, para. 60, ,. E(J of 24 January 2013, ( -186111 and ( -209111 Stanleybet

International and Others, para. 22 . ,. E(J of 30 November 1995, C -55/94 Gebhard, para, 37: see

also E(J of 31 March 1993, ( -19192 Kraus, para , 32; E(J of 6 November 2003, ( -243101 Gambelli, para . 65; ECJ of 13 November 2003, C -42102 Lindman, para. 29; E(J of 6 March 2007, (-338/04 Placanica, para. 49; and E(J of 8 Septem­ber 2009, (-42107 Liga Portuguesa de Futebol Profissional and Othef5, para. 60.

'" E(J of 9 September 20 10, ( -64108 Engelmann, para. 37. " Judgment, para. 42, and E(J of 15 September 20 11, (-

347109 Diekinger and Omer, para, 98. " E(J of 25 January 2011, ( -382108 Neukirchinger, para , 42. JJ E(J of 8 September 2010, ( -316/07, Markus StoB and

Othef5, para. 83. " See TalosJAquilina, E(J Defines Stringent Hypocrisy Test for

Online Gambling Monopol ies, ELR 912011, 255. }\ E(J of 8 September 20 10, (-316/07, Markus StaB and

Others, para, 103. ,. Opinion of Advocate General Sharpston in Case ( -390/12

PFleger and Others, 14 November 2013. para . 60 , " EeJ of 16 February 2012, (-72/10 and (-77/10 Costa and

Cifone, para. 62, • Judgment, paras. 30 et seq; with reference to E(J 0116 Fe­

bruary 2012, (-7211 0 and C -77110 Costa and Cifone, paras. 52 et seq.

.. Available at httpJ/ec.europa.eulinternal_markeUgamblingl communical ionlindex_en.htm.

.., Press release available at htt p: //eu ropa.eulrapidlpress-re­leaseJP-13-1 1 01_en,hlm ?Iocale=en.

., Judgment para. 29; E(J of 16 February 2012, ( -72/10 and (-7711 0 Costa and Cifone, paras 55 et seq .

'" EeJ of 6 March 2007, (-338/04 Plaeaniea, para. 67, " ECJ of 15 December 1983, (ase 5183 Rienks, paras. 10 et

"q. .. E(J of 6 March 2007, ( -338/04 Piaeanica, para. 69. '" Opinion of Advocate General Sharpston in Case C -390/12

PFleger and Othef5, 14 November 20 13, para 73. .. E(l of 9 September 20 1 0, (-64108 Engelmann, para 40; E(l

0129 April 2004. ( -1 71102 Commission /. Portugal, para. 42.

., Judgment, para. 33.

... Judgment, para, 37.

.. Judgment. para 28.