OPINION OF ADVOCATE GENERAL
TANCHEV
delivered on 5 December 2018(1)
Joined Cases C‑473/17 and C‑546/17
Repsol Butano SA (C‑473/17)
DISA Gas SAU (C‑546/17)
v
Administración del Estado
joined parties:
Redexis Gas SL,
Repsol Butano SA
(Request for a preliminary ruling from the Tribunal Supremo (Supreme Court, Spain))
(Reference for a preliminary ruling — Energy — Internal market in natural gas — Directive 2009/73/EC — Judgment of 20 April 2010, Federutility and Others (C‑265/08, EU:C:2010:205) — Member State measure fixing maximum selling price for cylinders of bottled liquefied petroleum gas (LPG) — Compulsory home delivery — Services of general economic interest — Principle of proportionality)
I. Introduction
1. In the present cases, the Court is asked to provide guidance on the compatibility of certain Member State measures regulating prices in the energy sector with Directive 2009/73/EC on common rules for the internal market in natural gas and repealing Directive 2003/55/EC, (2) as interpreted in the Court’s case-law and in particular its landmark judgment in Federutility and Others. (3)
2. In the Federutility judgment and subsequent case-law (‘the Federutility case-law’), (4) the Court established a framework enabling the relevant national court to assess the compatibility with EU law of State intervention in prices in the natural gas sector, and gave some guidance as to the criteria on which that assessment must be based. (5)
3. The questions raised in these references for a preliminary ruling submitted to the Court by the Tribunal Supremo (Supreme Court, Spain) relate to Member State measures setting a maximum selling price and requiring home delivery for certain kinds of cylinders of bottled liquefied petroleum gas (‘LPG’).
4. LPG is a product derived from petroleum processes which consists of substances other than natural gas (typically propane and butane, as well as small quantities of other gases), and is generally stored in liquid form in cylinders and tanks. (6) When LPG is used, it is released slowly from the container through a valve, at which point it turns into a gas and thus serves as a fuel that can be used for cooking, heating and power generation. (7) Bottled LPG denotes LPG which is supplied in a container or cylinder such as the kind at issue in the main proceedings. (8)
5. These cases therefore present the Court with the first occasion to rule on the application of Directive 2009/73 and the Federutility case-law to the LPG sector.
II. Legal framework
A. EU law
6. Article 1(2) of Directive 2009/73 states:
‘The rules established by this Directive for natural gas, including LNG, shall also apply in a non-discriminatory way to biogas and gas from biomass or other types of gas in so far as such gases can technically and safely be injected into, and transported through, the natural gas system.’
B. Spanish law
7. According to Article 1(3) of Ley 34/1998, de 7 de octubre, del sector de hidrocarburos (Law 34/1998 of 7 October on the hydrocarbons sector, as amended, ‘Law 34/1998’): (9)
‘The activities for the supply of liquid and gaseous hydrocarbons shall be exercised in conformity with the principles of objectivity, transparency and free competition.’
8. Article 37(1) of Law 34/1998 provides in relevant part:
‘The activities of oil refining, transportation, storage, distribution and sale of petroleum products, including liquefied petroleum gas, may be conducted freely in the terms provided for in this Law. …’
9. Article 38 of Law 34/1998 further states:
‘The prices of products derived from petroleum shall be freely formed.’
10. However, the fourth transitional provision of Law 34/1998 allowed the Spanish Government to set a maximum selling price to the public of bottled LPG ‘so long as the conditions of access to the market and competition in this market are not considered to be sufficient’. That provision indicated that the maximum selling price included the cost of home delivery.
11. Article 5 of Real Decreto-ley 15/1999, de 1 octubre, por el que se aprueban medidas de liberalización, reforma estructural e incremento de la competencia en el sector de hidrocarburos (Royal Decree-Law 15/1999 of 1 October adopting measures for liberalisation, structural reform and increased competition in the hydrocarbons sector, ‘Royal Decree-Law 15/1999’) (10) established a system for setting the maximum selling price of bottled LPG with a content of 8 kilograms or more while ‘the conditions of access to the market and competition in this market are not considered to be sufficient’.
12. Real Decreto-ley 8/2014, de 4 de julio, de aprobación de medidas urgentes para el crecimiento, la competividad y la eficiencia (Royal Decree-Law 8/2014 of 4 July adopting urgent measures for growth, competitiveness and efficiency, ‘Royal Decree-Law 8/2014’), (11) inter alia, repealed the fourth transitional provision of Law 34/1998 and Article 5 of Royal Decree-Law 15/1999, (12) and inserted the 33rd additional provision into Law 34/1998. (13)
13. The 33rd additional provision of Law 34/1998 provides:
‘1. Users having a contract for the supply of bottled liquefied petroleum gas in containers with a weight of content equal to or greater than 8 kilograms and less than 20 kilograms, except for containers for mixes of liquefied petroleum gas used as fuel, have the right to home delivery.
At the peninsular level and in each of the insular and extra-peninsular territories, the wholesale LPG operator with the largest market share for its sales in the bottled liquefied petroleum gas sector, in containers with a weight of content equal to or greater than 8 kilograms and less than 20 kilograms, except containers for mixes of liquefied petroleum gas used as fuel, are obliged to carry out home delivery to all persons who demand it within the corresponding territorial scope.
2. The list of wholesale LPG operators with the home delivery obligation shall be determined by resolution of the General Director of Energy Policy and Mines every three years. This resolution will be published in the “Official State Gazette [BOE]”.
When the evolution of the market and the business structure of the sector require it and, in any case, every five years, the Government will review the conditions to exercise the obligation imposed in this provision or declare the extinction of this obligation.
3. Notwithstanding the provisions of Article 38 of this Law, so long as the conditions of access to the market and competition in this market are not considered to be sufficient, the Minister for Industry, Energy and Tourism, after agreement of the Delegate Commission of the Government for Economic Affairs, shall determine the maximum retail prices of bottled liquefied petroleum gas for containers with a weight of content equal to or greater than 8 kilograms and less than 20 kilograms whose tare weight is greater than 9 kilograms, with the exception of containers for mixes of liquefied petroleum gas used as fuel, establishing specific values of said prices or a system for determining and automatically updating them. The maximum price will include the cost of home delivery.
4. Without prejudice to the provisions of the preceding paragraphs, in the event that the wholesale operator of LPG with the home delivery obligation does not have containers with a weight of content equal to or greater than 8 kilograms and less than 20 kilograms whose tare weight is greater than 9 kilograms, the home delivery obligation at the maximum price referred to in paragraph 3 extends in the case of that operator to containers with a tare weight of less than 9 kilograms, in the corresponding territorial area.
5. Wholesale LPG operators must provide the General Direction of Energy Policy and Mines with the information required for the performance of their duties, especially for the purposes of the application, analysis and monitoring of the home delivery obligation, of the liquefied petroleum gas supplies made and of the maximum prices to the public referred to in the preceding paragraphs.’
14. Article 58 of Royal Decree-Law 8/2014 set forth the list of wholesale operators subject to the home delivery obligation of bottled LPG for each territory as follows: Repsol Butano SA for the Peninsula and the Balearic Islands; DISA Gas SA for the Canary Islands; and Atlas SA Combustibles y Lubrificantes for Ceuta and Melilla. This list was maintained for the following three-year period (2017-2020) in Resolución de 28 de junio de 2017, de la Dirección General de Política Energética y Minas, por la que se establece el listado de operadores al por mayor de gases licuados del petróleo con obligación de suministro domiciliario (Resolution of 28 June 2017 of the General Direction of Energy Policy and Mines which establishes the list of wholesale operators of bottled LPG subject to the obligation of home delivery). (14)
15. Following the foregoing modifications of Law 34/1998 introduced by Royal Decree-Law 8/2014, Orden IET/389/2015, de 5 de marzo, por la que se actualiza el sistema de determinación automática de precios máximos de venta, antes de impuestos, de los gases licuados del petróleo envasados y se modifica el sistema de determinación automática de las tarifas de venta, antes de impuestos, de los gases licuados del petróleo por canalización (Order IET/389/2015 of 5 March updating the system for automatic determination of the maximum selling price, before tax, of bottled liquefied petroleum gas and amending the system for automatic determination of the selling tariffs, before tax, of piped liquefied petroleum gas, ‘Order IET/389/2015’) was adopted. (15)
16. According to Article 1 of Order IET/389/2015, the purpose of that order is to update the system for the automatic determination of the maximum selling price of bottled LPG. Article 3 of that order establishes the formula for determining such prices, and provides in paragraph 5 that these prices must be reviewed every two months.
III. Facts, main proceedings and questions referred for a preliminary ruling
17. Repsol Butano SA (‘Repsol Butano’) and DISA Gas SAU (‘DISA Gas’) are Spanish companies engaged in the LPG business.
18. Repsol Butano and DISA Gas lodged separate actions against the Spanish Administration before the Tribunal Supremo (Supreme Court, Spain), seeking the annulment of Order IET/389/2015 (‘the contested order’) which updates the system for setting the maximum selling price of bottled LPG (see points 15 and 16 of this Opinion).
19. According to the orders for reference, the contested order is based on the 33rd additional provision of Law 34/1998, as inserted by Royal Decree-Law 8/2014. That legislation provides for measures setting a maximum selling price, including the cost of home delivery, for cylinders of bottled LPG with a weight of content between 8 and 20 kilograms whose tare weight is greater than 9 kilograms, and requiring the wholesale operator with the largest market share in a given territory to deliver those cylinders to consumers’ homes upon request ‘so long as the conditions of access to the market and competition in this market are not considered to be sufficient’. However, where the wholesale operator in a given territory does not have cylinders with a weight of content between 8 and 20 kilograms whose tare weight is greater than 9 kilograms, the obligation relating to home delivery at the maximum price extends to cylinders with a tare weight of less than 9 kilograms (see point 13 of this Opinion).
20. Pursuant to that legislation, Repsol Butano is designated as the operator subject to the home delivery obligation in the territories of the Iberian Peninsula and the Balearic Islands, as is DISA Gas for the territory of the Canary Islands (see point 14 of this Opinion).
21. In support of their actions, Repsol Butano and DISA Gas submit that the Federutility judgment interpreting Directive 2003/55/EC concerning common rules for the internal market in natural gas and repealing Directive 98/30/EC, (16) should be applied by analogy, and that there is a clear conflict between the Spanish legislation and EU law, as a result of which that legislation should be disapplied and the contested order should be annulled.
22. The Spanish Administration argues that Directive 2009/73, which replaced Directive 2003/55, and the Federutility judgment are not applicable to bottled LPG, and even if Directive 2009/73 would be applied by analogy, the contested order is justified on the grounds that the market is not sufficiently competitive.
23. Consequently, the referring court queries, first of all, whether despite the fact that the Federutility judgment concerns the interpretation of a directive relating to natural gas, that judgment is applicable to the circumstances of the main proceedings which are concerned with bottled LPG.
24. In that regard, the referring court has indicated in the orders for reference that, in its judgment of 19 June 2012, (17) it annulled Order ITC/2608/2009, (18) the contents of which are comparable to those of the contested order, without making a reference for a preliminary ruling to the Court. In that judgment, the referring court considered that although the Federutility judgment concerns a directive that deals with the market in natural gas, that judgment provided sufficient interpretative guidelines for application to the public regulation of neighbouring sectors, such as LPG, when the market concerned (in this case, the Spanish market as a whole) has a Community dimension, and despite the fact that there was no directive specifically applicable to LPG.
25. Taking the view that the Federutility judgment is applicable to the bottled LPG sector, the referring court then indicates that it is uncertain whether the measures setting a maximum selling price and requiring home delivery for certain types of cylinders of bottled LPG comply with the criteria laid down in that judgment, particularly from the perspective of the principle of proportionality.
26. The referring court points out that there is no doubt that those measures qualify as ones taken for the protection of socially vulnerable users as well as residents in remote areas which satisfy the general economic interest of maintaining prices for the supply of bottled LPG to final consumers at a reasonable level.
27. Nevertheless, the referring court considers that uncertainties regarding the compatibility of those measures with EU law arise on account of three circumstances. First, they are general measures applicable to all consumers, regardless of their economic or social situation. Secondly, they have lasted for more than 18 years since the adoption of Law 34/1998, despite being based on an explicitly temporary provision. Thirdly, they have potential effects on competition in the market, since they may constitute an effective barrier to the entry of new operators and contribute to freezing the situation of limited competition.
28. It was in those circumstances that the Tribunal Supremo (Supreme Court), in Case C‑473/17, decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:
‘(1) In the light of the case-law laid down in [the judgment of 20 April 2010, Federutility and Others, C‑265/08, EU:C:2010:205], is a measure setting a maximum price for cylinders of bottled liquefied gas, in so far as it is a measure for the protection of socially vulnerable users, compatible with that case-law or with the principle of proportionality where, separately or together, any of the following circumstances occur?
– the measure is adopted as a general measure in relation to all consumers and for an indefinite period “[so long as the conditions of access to the market and competition in] this market are not considered to be sufficient”,
– the measure has already been in force for more than [1]8 years,
– the measure may contribute to freezing the situation of limited competition by impeding the entry of new operators.
(2) In the light of the case-law laid down in [the judgment of 20 April 2010, Federutility and Others, C‑265/08, EU:C:2010:205], is a measure for the compulsory home delivery of bottled liquefied gas, in so far as it is a measure for the protection of socially vulnerable users or residents in areas that are difficult to access, compatible with that case-law or with the principle of proportionality where, separately or together, any of the circumstances listed in the previous question occur?’
29. It was equally in those circumstances that the Tribunal Supremo (Supreme Court), in Case C‑546/17, decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling which are framed in nearly identical terms:
‘(1) In the light of the case-law laid down in [the judgment of 20 April 2010, Federutility, C‑265/08, EU:C:2010:205], is a measure setting a maximum price for cylinders of bottled liquefied gas, in so far as it is a measure for the protection of socially vulnerable users, compatible with that case-law or with the principle of proportionality where, separately or together, any of the following circumstances occur?
– the measure is adopted as a general measure in relation to all consumers and for an indefinite period “[so long as the conditions of access to the market and competition in] this market are not considered to be sufficient”,
– the measure has already been in force for more than [1]8 years,
– the measure may contribute to freezing the situation of limited competition by impeding the entry of new operators.
(2) In the light of the case-law laid down in [the judgment of 20 April 2010, Federutility and Others, C‑265/08, EU:C:2010:205], is the obligation placed on the dominant operator in a given territory to provide home delivery of bottled liquefied petroleum gas, on the ground that it protects socially vulnerable users or residents in areas that are difficult to access, compatible with that case-law or with the principle of proportionality where, separately or together, any of the circumstances listed in the previous question occur?’
IV. Procedure before the Court
30. Written observations were submitted by Repsol Butano, the Spanish Government and the Commission in Case C‑473/17, and by DISA Gas, the Spanish Government and the Commission in Case C‑546/17.
31. By decision of the Court, the cases were joined for the purposes of the oral procedure and the judgment.
32. Repsol Butano, DISA Gas, the Spanish Government and the Commission took part in the hearing which was held on 26 September 2018.
V. Observations of the parties
33. Repsol Butano and DISA Gas argue that Directive 2009/73 as interpreted in the Federutility case-law applies to the bottled LPG market.
34. In particular, Repsol Butano and DISA Gas assert that the internal energy market is a shared competence of the Union and the Member States, and the fact that the Union has not yet exercised its competence in the LPG sector does not justify that the Member States can exercise their competence without regard to the common criteria laid down by the Union to establish a free and competitive energy market as has been done in the EU directives on natural gas and electricity, and there is no legal reason not to apply those common criteria, as interpreted by the Court, to the market of another energy product, such as LPG.
35. Repsol Butano and DISA Gas also point out that Article 1(2) of Directive 2009/73 includes in its scope of application ‘other types of gas’ – as is LPG – ‘in so far as such gases can technically and safely be injected into, and transported through, the natural gas system’. In their view, the Federutility case-law applies to markets for other energy products used alternatively or cumulatively to natural gas, such as the market for bottled LPG.
36. Further, Repsol Butano and DISA Gas argued at the hearing that the Federutility case-law is applicable because of the proximity of the natural gas and LPG markets in the EU, and the fact that the provisions of the Treaties and in particular those relating to the fundamental freedoms, Articles 34 and 106(2) TFEU, apply to the bottled LPG market. In that regard, Repsol Butano and DISA Gas underlined at the hearing that although, under Article 14 TFEU, the Member States can entrust services of general economic interest to undertakings, they must comply with the provisions of the Treaties, and the criteria set out in the Federutility case-law are relevant here.
37. On that basis, Repsol Butano and DISA Gas submit that the contested measures do not comply with the criteria set down in the Federutility case-law that must be fulfilled for the allowance of Member State measures imposing public service obligations on undertakings.
38. In particular, Repsol Butano and DISA Gas contend that the setting of a maximum selling price is disproportionate on account of its duration, generalised nature and anticompetitive effects. First, rather than being temporary or limited in time, it has become permanent after 32 years since Spain’s accession to the EU and nearly 20 years since the liberalisation regime introduced by Law 34/1998. Secondly, although aimed at protecting vulnerable users as well as residents in remote areas, it is indiscriminate in nature because it applies to all consumers and is not limited to the targeted groups. Thirdly, it constitutes a barrier to a competitive LPG market and hinders new economic operators from entering that market. In that regard, they point out that Spain is presently the only Member State with a system of maximum prices for bottled LPG that imposes a home delivery obligation on the operator having the greatest share in the market, and that the maximum price is significantly lower than the prices in the markets of other Member States.
39. Likewise, Repsol Butano and DISA Gas submit that the home delivery obligation is disproportionate on account of its general and permanent nature and its anticompetitive effects, and moreover, there are alternative measures available, such as imposing a regulated discount for certain vulnerable consumers (the so-called ‘bono social’) which exists in other energy sectors. They further assert, in light of the criteria set down in the Federutility case-law, that the home delivery obligation is discriminatory because it only applies to the operator with the greatest share of the market in a given territory, thereby excluding other active operators in each territory, and does not guarantee equal access for EU companies to Spanish consumers.
40. The Spanish Government submits that Directive 2009/73 does not regulate the bottled LPG market, as its scope of application is limited to natural gas and other gases using the natural gas pipeline system. (19) It also argues that Directive 2009/73 and the Federutility case-law cannot be applied by analogy to the situation in the main proceedings, since there is no lacunae in the provision of EU law in question, and the LPG sector constitutes a different sector than natural gas in which no harmonising rules for the purposes of the internal market have been established at the EU level.
41. The Spanish Government therefore considers that the questions referred are inadmissible, since it is impossible to extend beyond the will of the Union legislature and the legislators of the Member States the scope of an EU standard adopted for a different factual situation.
42. Nevertheless, the Spanish Government submits that, in order to provide a useful answer to the referring court, the Court should reformulate the questions from the perspective of Articles 14 and 106 TFEU, in conjunction with Protocol (No 26) on Services of General Interest (‘Protocol No 26’), (20) which should be interpreted as not precluding measures such as those at issue in the main proceedings.
43. The Spanish Government stresses, in particular, the Member States’ margin of appreciation when exercising their competence to provide for services of general economic interest as recognised by Article 14 TFEU and Protocol No 26, as well as the Court’s case-law on Article 106(2) TFEU. It takes the view that Article 106 TFEU is satisfied in view of the general economic interest pursued and the proportionality of the contested measures.
44. At the hearing, the Spanish Government emphasised that the governing framework for the present cases rests on norms of primary Union law, including the fundamental freedoms, Article 106(2) TFEU, Protocol No 26 and Article 36 of the Charter of Fundamental Rights of the European Union (‘the Charter’) which guarantees the fundamental right of access to services of general economic interest. As regards the fundamental freedoms, the Spanish Government asserted at the hearing that while the contested measures could be considered to constitute a restriction within the meaning of the Treaty provisions on the free movement of goods, they are in any event justified and proportionate. In that regard, the proportionality test to be applied is not that set out in the Federutility case-law, but rather, is based on the general principles of EU law and takes into account Article 36 of the Charter.
45. With regard to the proportionality assessment, the Spanish Government emphasises, inter alia, that the measures are not directed at all users or all categories of cylinders, but instead primarily target domestic consumption and vulnerable consumers, and are subject to periodic review by the competent national authorities. Moreover, the Spanish Government contends that there are particular circumstances in the Spanish bottled LPG market which support maintaining a maximum selling price, (21) and that several alternative measures were considered, including the possibility of the ‘bono social’, but rejected as being less proportionate than the contested measures.
46. The Commission submits that Directive 2009/73 does not apply to bottled LPG, since it is not mentioned in Article 1 of Directive 2009/73, nor can it ‘technically and safely be injected into, and transported through, the natural gas system’ within the meaning of that provision.
47. Still, the Commission contends that the fundamental freedoms and Article 106(2) TFEU are pertinent to the bottled LPG sector. The Commission therefore proposes that the Court should reply to the questions referred to the effect that it is for the referring court to verify the application of the fundamental freedoms to this sector, whether the contested measures constitute a restriction of such freedoms, and if so, whether they are justified and proportionate. In the Commission’s view, the criteria set out in the Federutility case-law regarding proportionality can be used as a reference in that regard.
48. In particular, the Commission considers that it cannot be excluded that the contested measures are likely to hinder, albeit indirectly or potentially, imports into Spain of LPG from other Member States, and thus constitute an obstacle to the free movement of goods. The Commission further asserted at the hearing that the specific features of the Spanish bottled LPG market, as presented in the Spanish Government’s observations, are the first causes of the lack of entry of new operators into this market, and that the contested measures are non-discriminatory and proportionate, since they do not exclude a priori any undertakings operating on the market and the Spanish Government has respected the margin of appreciation which it has to determine the most adequate and proportionate instrument to meet its public service objectives.
VI. Assessment
49. By its questions, the referring court asks in essence whether certain Member State measures, imposing public service obligations on undertakings based on the general economic interest in the bottled LPG market, are compatible with the criteria laid down in the Federutility case-law with particular regard to the principle of proportionality. The Member State measures in question consist of: first, setting a maximum selling price, including the cost of home delivery, for cylinders of bottled LPG with a weight of content between 8 and 20 kilograms whose tare weight is greater than 9 kilograms, and, secondly, imposing on the wholesale operator with the largest market share in each territory the obligation to deliver those cylinders to the consumer’s home upon request. (22)
50. I have come to the conclusion that bottled LPG does not come within the scope of Directive 2009/73 and that Directive 2009/73 and the Federutility case-law cannot be applied by analogy to the bottled LPG sector. I therefore consider that Directive 2009/73 as interpreted in the Federutility case-law does not preclude Member State measures such as those at issue in the main proceedings.
51. I also take the view that the Court should not reformulate the questions referred in relation to the applicability of other rules of EU law.
52. My reasoning is detailed below, but first I will address the admissibility of the references.
A. Admissibility
53. The Spanish Government submits in substance that the references are inadmissible because the subject matter of the dispute in the main proceedings does not fall within the scope of Directive 2009/73 (see point 41 of this Opinion). While the Spanish Government proposes that the Court may answer the questions referred, as reformulated, in respect of the interpretation of Articles 14 and 106 TFEU, in conjunction with Protocol No 26, its objection should nonetheless be addressed.
54. First, as far as this objection is understood in the Court’s case-law to bear on the relevance of the questions referred, there is no support for the claim that the questions referred have no relation to the actual facts of the main action or relate to a hypothetical problem or that the Court does not have the factual and legal material necessary to give a useful answer to the questions submitted to it, so as to rebut the presumption of relevance of the references. (23)
55. Moreover, the question whether Directive 2009/73 as interpreted by the Federutility case-law is applicable to the bottled LPG sector relates to the substance, and not to the admissibility, of the questions referred. (24)
56. The objection to the admissibility of the references should therefore be rejected.
B. Substance
1. Applicability of Directive 2009/73 and the Federutility case-law to the main proceedings
(a) Scope of application of Directive 2009/73
57. The Court has yet to address the question of the scope of application of Directive 2009/73 in relation to LPG. (25)
58. As the Court has ruled, the aim of Directive 2009/73 is to pursue the achievement of an internal market in natural gas that is entirely and effectually open and competitive and in which all consumers can freely choose their suppliers and all suppliers can freely supply their products to their customers. (26)
59. To that end, Article 1 of Directive 2009/73 sets out rules concerning its subject matter and scope. Article 1(1) of Directive 2009/73 provides that this directive establishes common rules on the transmission, distribution, supply and storage of natural gas.
60. Article 1(2) of Directive 2009/73 states that the rules established by that directive for natural gas, including LNG, ‘also apply in a non-discriminatory way to biogas and gas from biomass or other types of gas in so far as such gases can technically and safely be injected into, and transported through, the natural gas system’. (27)
61. Neither Article 1(2) of Directive 2009/73 nor any other provision of that directive mentions LPG.
62. Following from the wording of Article 1(2) of Directive 2009/73, the fact that LPG may be considered to constitute another ‘type of gas’ (28) or an alternative or complement to natural gas (29) is not by itself decisive or sufficient for the purposes of delineating the scope of Directive 2009/73. Rather, Article 1(2) of Directive 2009/73 stipulates that, in order to fall within the scope of Directive 2009/73, the ‘other type of gas’ in question must be capable of being technically and safely injected into, and transported through, the natural gas system.
63. As indicated by the Commission and the Spanish Government, LPG cannot be technically and safely injected into, and transported through, the natural gas system within the meaning of Article 1(2) of Directive 2009/73. Subject to verification by the referring court that this is so, it can be concluded that bottled LPG does not come within the scope of Directive 2009/73.
64. This finding, it may be useful to point out, appears to be in line with the travaux préparatoires for Directive 2009/73.
65. Directive 2009/73 is part of the so-called Third Energy Package comprising a set of EU measures in the natural gas and electricity sectors. (30) Following the previous packages, which for natural gas concerned, first, Directive 98/30 (31) and, secondly, Directive 2003/55, Directive 2009/73 aims at the full achievement of the liberalisation of the natural gas sector, thereby eradicating the remaining barriers to the supply of natural gas throughout the EU. (32)
66. Originally, as regards the scope of Directive 98/30, Article 1 of that directive referred solely to ‘the natural gas sector, including liquefied natural gas (LNG)’. Through amendments introduced by the European Parliament, (33) Article 1(2) of Directive 2003/55 contained similar language (34) to what is now found (with some amendment) in Article 1(2) of Directive 2009/73. (35) Through the course of these amendments, there does not appear to have been any consideration of LPG.
67. This also seems to be the case in the context of the Commission’s recent proposal to amend Directive 2009/73 with a view to addressing apparent gaps in the EU regulatory framework for natural gas pipelines to and from third countries. (36) In particular, although at present the European Parliament has not yet completed its first reading of the proposal, preparatory documents issued by the Parliament contain a proposed amendment of Article 1(2) of Directive 2009/73 so as to include ‘green hydrogen and synthetic methane from renewable energy’ within the scope of that directive. (37) Yet, there is no mention of LPG.
68. In view of the fact that green hydrogen and synthetic methane (also referred to as substitute natural gas) are gaseous fuels which can be injected into and transported through natural gas infrastructure, (38) it may be inferred from this proposed amendment, along with the preceding amendments relating to Directive 2009/73, that the Union legislature’s intent is to restrict the scope of that directive to natural gas and other types of gases that can use the natural gas system.
69. Moreover, the exclusion of LPG from the scope of Directive 2009/73 is consistent with some other EU measures within the EU energy law framework which distinguish LPG and natural gas as different energy products. For example, Regulation No 1999/2008 on energy statistics generally classifies LPG under the category of oil and petroleum products separate from the category of natural gas. (39) Directive 2014/94/EU on the deployment of alternative fuels infrastructure also lists natural gas and LPG in separate categories in the definition of ‘alternative fuels’ for the purposes of that directive. (40)
(b) Application of Directive 2009/73 and the Federutility case-law by analogy
70. I am not persuaded that, as argued by Repsol Butano and DISA Gas, Directive 2009/73 and the Federutility case-law can be applied by analogy to the situation in the main proceedings for the following reasons.
71. First, the conditions for an analogous application of Directive 2009/73 to the main proceedings are lacking.
72. Under the Court’s case-law, recourse to application by analogy presupposes, first, the existence of some inadvertent lacuna in a provision of EU law which is remedied by applying provisions of EU law relating to similar cases, and secondly, that the interests at stake in the situation under examination are comparable to those at issue in the situation for which the EU legislation is drafted. (41)
73. Moreover, on the basis of the Court’s case-law, and in particular the Court’s judgment in Kernkraftwerke Lippe-Ems, (42) an argument to apply a provision of a directive by analogy must be refused when it would extend the scope of application of that directive in violation of its express provisions.
74. As I discussed in my Opinion in Cristal Union, (43) in Kernkraftwerke Lippe-Ems, the Court was asked whether the compulsory exemption laid down in Article 14(1)(a) of Council Directive 2003/96/EC restructuring the Community framework for the taxation of energy products and electricity (44) applies to nuclear fuel, since it is, as required by that provision, ‘used to produce electricity’, but it is not listed among the ‘energy products’ to which, according to Article 2(1) of Directive 2003/96, that directive applies. The Court held that nuclear fuel falls outside the scope of that directive, and rejected the argument that that directive should be applied by analogy to nuclear fuel used to produce electricity. There is no question that, had the Court applied that exemption to nuclear fuel used to produce electricity, it would have extended the scope of Directive 2003/96 in violation of Article 2(1) of that directive. (45)
75. In the present cases, the fact that bottled LPG does not come within the scope of Directive 2009/73 is not a lacuna, but rather, appears to represent the Union legislature’s intent not to cover bottled LPG within that directive. For the Court to apply by analogy the rules laid down in Directive 2009/73 to the bottled LPG sector would extend the scope of that directive beyond the explicit terms of Article 1(2) of Directive 2009/73.
76. The same considerations apply in respect of the analogous application of the Federutility case-law to the situation of the main proceedings, since that case-law interprets Directive 2009/73.
77. In that case-law, the Court held that although State intervention in the fixing of prices in the natural gas sector constitutes an obstacle to the achievement of an operational natural gas market, that intervention may nonetheless be accepted within the framework of Directive 2009/73, (46) and in particular on the basis of Article 3(2) of that directive, (47) allowing for public service obligations in the general economic interest to be imposed on undertakings, if three conditions are satisfied: first, the measure must pursue an objective of general economic interest; secondly, the measure must comply with the principle of proportionality; and thirdly, the measure must lay down public service obligations that are clearly defined, transparent, non-discriminatory and verifiable and that guarantee equal access of EU gas undertakings to consumers. (48)
78. In that case-law, the Court also provided the following indications to the relevant national court with regard to the second condition concerning proportionality, so as to ensure that the public service obligations which Article 3(2) of Directive 2009/73 allows to be imposed on undertakings may, from 1 July 2007, compromise the freedom to determine the price of supply of natural gas only in so far as is necessary to achieve the objective of general economic interest pursued and, consequently, for a period that is necessarily limited in time: first, the measure must be appropriate for securing the objective of general economic interest which it pursues; secondly, the duration of State intervention in prices must be limited to what is strictly necessary for achieving the objective pursued; thirdly, the method of intervention used must not go beyond what is necessary to achieve the objective of general economic interest being pursued; and fourthly, the requirement of necessity must also be assessed with regard to the scope ratione personae of the measure and, more particularly, its beneficiaries. (49)
79. It should be emphasised that the Federutility case-law is situated within the harmonised framework established by Directive 2009/73 which balances, on the one hand, the primary objective of that directive to ensure a fully open and competitive internal market in natural gas within a specific timeframe and, on the other hand, the allowance for certain State intervention in the regulation of prices in the form of public service obligations in the general economic interest under Article 3(2) of that directive, so long as the strict parameters laid down in that provision and developed in the Federutility case-law interpreting that provision are complied with. (50) On that basis, I do not find that the Court’s criteria set out in that case-law are framed generally and may be considered to apply outside this harmonised framework in a sector which is not the subject of an EU directive of sectoral liberalisation.
80. Along the lines of the arguments advanced by my colleague Advocate General Szpunar in his Opinion in Kernkraftwerke Lippe-Ems, (51) I take the view that the extension of the criteria in the Federutility case-law to the bottled LPG sector would encroach on the scope of Directive 2009/73 and on the competences of the Member States to set down rules outside the harmonised area covered by Directive 2009/73.
81. Accordingly, I consider that LPG does not come within the scope of Directive 2009/73 and that Directive 2009/73 and the Federutility case-law do not apply by analogy to the situation in the main proceedings.
82. I therefore propose to the Court to answer the questions referred in the present cases that Directive 2009/73 as interpreted in the Federutility case-law does not preclude national measures, such as those in question in the main proceedings.
2. Applicability of other rules of EU law to the main proceedings
83. I note that the questions referred, as worded, enquire about the compatibility of the Member State measures in question with the Federutility case-law ‘or with the principle of proportionality’ (see points 28 and 29 of this Opinion). Thus, should the Court find that Directive 2009/73 and the Federutility case-law are not applicable to the situation in the main proceedings, it could be considered that the questions referred call on the Court to provide guidance on the assessment of those measures with proportionality outside that framework.
84. Yet, the proportionality assessment does not exist in a vacuum. (52) Indeed, as indicated in their observations before the Court, the parties propose three different approaches for examining the compatibility of the contested measures with EU law and in particular the principle of proportionality. Whereas Repsol Butano and DISA Gas rely on the criteria set out in the Federutility case-law interpreting Directive 2009/73, the Spanish Government relies on the Treaty provisions concerning services of general economic interest, including Articles 14 and 106 TFEU, in conjunction with Protocol No 26 and Article 36 of the Charter. The Spanish Government also appears to join the Commission in its observations about the application of the fundamental freedoms, and in particular the free movement of goods, in the present cases.
85. I acknowledge that under the Court’s case-law, the fact that the referring court has limited its questions to the interpretation of certain provisions of EU law does not prevent the Court from providing that court with all the elements of interpretation of EU law which may be of assistance to it in adjudicating the case before it, and to that end, the Court may provide guidance based on, inter alia, the written and oral observations which have been submitted to it. (53) Moreover, in order to provide a useful answer to the referring court, the Court may reformulate the questions referred and take into account provisions of EU law to which the referring court did not refer in its questions. (54)
86. Nevertheless, I consider that it is not appropriate in the circumstances of these proceedings for the Court to reformulate the questions referred along the lines of the approaches proposed by the Spanish Government and the Commission for the following reasons.
87. First, while Articles 14 and 106 TFEU give expression to the importance of services of general economic interest (55) in the Union legal order, these provisions do not provide a basis on their own for the assessment under EU law of the contested measures and in particular that concerning the principle of proportionality in the circumstances of the present cases.(56)
88. Article 14 TFEU, along with Protocol No 26, enshrines the place occupied by services of general economic interest in the shared values of the Union. (57) Article 14 TFEU (58) is a ‘provision having general application’ to the various EU policies and activities which establishes, inter alia, that services of general economic interest should operate in conditions enabling them to fulfil their missions, without prejudice to Article 4 TEU and Articles 93, 106 and 107 TFEU and under the responsibility of the Union and the Member States within their respective competences and within the scope of application of the Treaties. As the Court held in the Federutility case-law, Protocol No 26 expressly recognises the essential role and the wide discretion of the authorities of the Member States in providing, commissioning and organising services of general economic interest. (59)
89. As the Court also underlined in the Federutility case-law, Article 106(2) TFEU (60) aims to reconcile the Member States’ interest in using certain undertakings as an instrument of economic or social policy with the EU’s interest in ensuring compliance with the rules on competition and preserving the unity of the internal market. (61) In that context, Member States are entitled, while complying with EU law, to define the scope and organisation of their services of general economic interest and, in particular, to take account of objectives pertaining to their national policy. (62) Yet, according to its observations, (63) the Spanish Government does not rely on Article 106(2) TFEU in derogation from the application of particular Treaty rules. (64)
90. Moreover, although the fundamental freedoms have been mentioned in the parties’ observations, I do not consider there to be sufficient information in the file before the Court to determine which fundamental freedom is applicable in relation to the contested measures on the basis of which the Court could provide indications in relation to the assessment of those measures with the principle of proportionality. In that regard, when questioned on this point at the hearing, the Commission submitted that there are not sufficient elements in order to determine clearly which fundamental freedoms are applicable, and while the free movement of goods is used as the reference, the other fundamental freedoms and the Services Directive (65) cannot be ruled out.
91. Thus, while it may be the case that other rules of EU law, such as the fundamental freedoms or competition law, may apply to the situation in the main proceedings, the Court has not been asked by the referring court to interpret such rules, and it does not have sufficient factual and legal elements in order to make such an assessment. (66) For the Court to alter the substance of the references in that regard would be incompatible with its duty to ensure that the Member States and the parties concerned are given an opportunity to submit observations under Article 23 of the Statute of the Court of Justice of the European Union, given that only the order for reference is notified to the interested parties within the meaning of that provision. (67)
92. Consequently, I take the view that the Court should not reformulate the questions referred but, rather, may indicate in its reply that it is for the referring court to determine the applicability of the rules of the Treaties, and in particular the fundamental freedoms, in relation to the contested measures. That court is of course able to make a further reference under Article 267 TFEU.
VII. Conclusion
93. In light of all of the foregoing considerations, I propose that the Court should answer the questions referred by the Tribunal Supremo (Supreme Court, Spain) as follows:
(1) Directive 2009/73/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC, as interpreted by the judgment of 20 April 2010, Federutility and Others (C‑265/08, EU:C:2010:205), and subsequent case-law, does not preclude a measure setting a maximum price for cylinders of bottled liquefied petroleum gas, in so far as it is a measure for the protection of socially vulnerable users, where, separately or together, any of the following circumstances occur:
– the measure is adopted as a general measure in relation to all consumers and for an indefinite period ‘so long as the conditions of access to the market and competition in this market are not considered to be sufficient’,
– the measure has already been in force for more than 18 years,
– the measure may contribute to freezing the situation of limited competition by impeding the entry of new operators.
(2) Directive 2009/73, as interpreted by the judgment of 20 April 2010, Federutility and Others (C‑265/08, EU:C:2010:205), and subsequent case-law, does not preclude a measure for the compulsory home delivery of bottled liquefied petroleum gas, in so far as it is a measure for the protection of socially vulnerable users or residents in areas that are difficult to access, where, separately or together, any of the circumstances listed in the previous point occur.