In 1994, the Commission of the European Communities sought a finding by the Court of Justice against the Netherlands, Italy, France and Spain regarding their national monopolies on the import and export of electricity (and, in the case of France, of gas).
In the Netherlands, the Electriciteitswet (Electricity Law) 1989 provides that end-consumers are entitled to import electricity for their own needs but, for voltages exceeding 500 V, only the company NV Samenwerkende Electriciieitsproduktiebedrijeven is authorized to import electricity for public distribution.
In Italy, Law No 1643 of 1962 nationalized the electricity industry: all activities of generation, import, export and transmission, transforming, distribution and sale of electricity were entrusted to ENEL, a national body to which were transferred the industrial undertakings operating in the electricity sector. In addition, imports and exports are subject to the grant of a licence by the Minister of Public Works.
In France, Law No 46-628 of 1946 nationalized all activities of generation, transmission, distribution, import and export of electricity and gas, which were entrusted to nationalized undertakings run by public companies (EDF and GDF). However, imports, exports and the transmission of electricity are carried out exclusively by EDF; imports and exports of gas are similarly exclusively entrusted to GDF.
In Spain, Law No 49/84 of 1984 provides that the national high-tension electricity system, as a public service, is managed by a State company, Red Eléctrica de España.
In all four cases, the Commission took the view that the national rules were liable to restrict trade between Member States and were therefore contrary to the principles of free movement of goods and the requirement that national monopolies of a commercial character, run on a direct or delegated basis, should be operated in such a way as to eliminate all discrimination between nationals of Member States. It contended that a national import monopoly prevented producers in other Member States from selling electricity (and gas in the case of France) within the territory of the Netherlands, Italy, France and Spain, to customers other than the holders of the monopoly. Similarly, a potential customer in one of those Member States is unable freely to choose his source of supply for electricity from other Member States. As regards exclusive export rights, the Commission maintains that the holder of such rights tends to reserve national production for the national market, thereby placing the domestic market at an advantage, to the detriment of demand from other Member States.
Specifically with regard to Spain, the Court found that the Commission had alleged that there was a statutory monopoly but had not proved its existence. No exclusive right regarding international trade is conferred by law. On the contrary, in certain circumstances, the State company assigns to each undertaking its due share of international trade. Since the Commission did not prove its allegations, the application was dismissed.
In the case of the Netherlands, Italy and France, the Court considered that the exclusive import and export rights impeded the free movement of goods and had a direct impact on the conditions regarding both outlets and supplies to operators in other Member States.
The Member States, in response, explained the reasons for their restrictive legislation, relying on the Treaty rule which - provided that the development of Community trade is not affected - allows non-observance of the Treaty rules by undertakings entrusted with the management of services of general economic interest, where such rules would prevent them from duly accomplishing their particular tasks, under economically acceptable conditions.
The Member States gave a detailed description of the structure and operation of their respective national systems regarding electricity (or gas), highlighting the fact that their purpose was to allow performance of the tasks entrusted to the State undertakings concerned and that any action to change the way in which the national systems were organized would be detrimental to the objectives of national energy policy and management of the national systems.
The Commission did not take account of the special feature of the national systems but confined itself to purely legal considerations, without explaining the basis of its arguments. The Court did not regard itself as being in a position to consider whether other means were available to the Member States or whether they had exceeded the limits which they should observe when entrusting to an undertaking tasks of general interest to be carried out under economically acceptable conditions. Furthermore, the Commission did not show that the rules on exclusive import and export rights adversely affected the development of Community trade. The Court thus dismissed the Commission's applications in their entirety.
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For the full text of the judgments, please consult the home page of the Court of Justice: curia.eu.int. For further information, please telephone Tom Kennedy, tel (352) 4303 3355; fax (352) 4303 2500.
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